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Business management simulation exercise

Growing a business from a small company to a large corporation is not an easy task. It requires making many decisions from time to time. A business leader can be static and follow their plans through to the end. Alternatively, they could also be flexible and make decisions based on the situation. I would prefer the latter. The business environment is ever changing, and therefore business leaders should also have an open mind when making a decision. They should be dynamic in their decision. The world has become a global village courtesy of technology and globalization. This means that businesses are not only competing with their next door neighbors, but also with other businesses across the globe.

In our case study, the business was facing three challenges. These included;

  1. Competition from other companies from China and South America. As mentioned before competition has increased due to globalization. This means that businesses have to be good at what they do. Otherwise, they face being kicked out of the market.
  2. The business also lacked investment in technology. Each and every day there are new products being introduced into the market. These products can be used as leverage to your advantage or can kill your business. Every business needs always to find ways of improving their products and processes to remain competitive.
  • The business was also facing a challenge of poor quality in their deliverables. Their designs could not meet their unique customer requirements. Through research and development, this can be reduced.

To be able to remain competitive the business needed to make a decision on how to curb the three challenges. To do this, they needed to come up with a plan. Business planning is crucial as it sets a path of the next year’s goals and objectives. The company came up with three achievement goals. These include:

  1. Mine into the existing customer base for more repair jobs.
  2. Come up and deliver a CapEx plan for new equipment and tool requirements.
  • Reorganize the floor efficiencies so as to achieve economies of scale.

The business did not have well set out plans before. This could have contributed to the challenges it was facing. The junior management team had not had the privilege of planning before. This means that they are skeptical of changes, as everyone would be.

Any plan has to be communicated, and the information has to flow so that it can succeed. Hearing a plan from your supervisor makes you internalize it more. The way the message is passed could be a win or lose, all together. The more the channels that a message passes through, the more distorted it is. The charge hands are also skeptical of the new plans. First, as a division head, you need to ensure that they buy in, into the plan. They are key implementers of the plan and should not be left behind. As a hands-on leader, I would attend a meeting with each division to pass the plans. This would take a lot of time but, it would be worth it as it contributes highly to the success of the plan.

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Businesses do not operate in a vacuum. They also deal with other corporates. The king of relationship should be mutual to ensure that both parties are benefiting. Dealing with suppliers who are also your client can be tricky. In one hand you need them to deliver, and on the other hand, you don’t want to frustrate them as they will refuse to buy from you.  Big Dog Ltd needs to maintain Motorworks as their client and also as a supplier. This way the business will not lose business to competition. Motorworks should also supply on time. To solve this stalemate Big Dog needs to reach out to Motorworks and have a service guarantee agreement between the two companies. All legal implication to the contract needs to be looked into. This will enable us to get supplies in time and also to maintain one of our biggest customers.

To achieve efficiency and economies of scale, all equipment used by the business need to be operational and up to standard. The secondary blade housing from WatcherMo needs to be fixed or replaced. This could be the reason for the delays. Improving the housing is a good strategy; however, that is a long-term goal. In the short run, the secondary blade needs to be fixed.

Some industries e.g. manufacturing, require specific skills. Losing a staff to competition would mean that they leave with some of your secrets. They might not reveal to the new competition, but they will be working with knowledge on what you aim to achieve. Attracting top quality staff is critical to business.

Research and development is an important function in today`s business. Despite their crucial role, managing the department can be vague. On the one hand, you need to develop new products, on the other, you need to maintain and improve the current ones. As a division head, we would have two working structures for the R&D department. When the business is not straining with sales and suppliers, they will put 70% of their time in new technology and products and 30% improving the current ones. When the business is facing challenges e.g. now when there is a humidity challenge to our robots, they focus 70% on product improvement.

The bottom line of a business is to make sales. The sales and marketing department is charged with this responsibility. To improve sales, I would separate the sales and marketing division into three sections, the marketing division, sales deepening division and acquisition division. The marketing division would be charged with the authority to advertise, organize sales promotions, manage public relations and ensure the overall corporate image is maintained through branding. The sales deepening section would be primarily mining and managing portfolios of the current clients. This would add a personal touch to our clients and also have a contact person with us. The sales acquisition would be attracting new clients to the business. This model will ensure a seamless interaction with our clients. The sales team will also be compensated on a commission basis. The deepeners will be paid a commission of the additional business they generate from our current clients while acquirers will be paid a fraction of the revenue they bring onboard. This would create completion among the salespeople and also the energy and zeal to work. We would also provide them with a comprehensive medical cover and a transport allowance to go and meet their clients.

Technology is an important part to be added to business. This technology can either be inborn or bought from other businesses; speed is of the essence when making technology decisions. A bad decision or a missed opportunity could result in the closure of business. NewTech, a technology firm has just discovered a way to reduce humidity in mobots. No, any another business has come up with such an idea. Humidity is a challenge to mobots as it leads to breakdowns leading to repairs and maintenance regularly. I would buy the technology from NewTech before competitors did while we waited for two years for our R&D division to complete. This would mean that our mobots are competitive, require less maintenance hence fewer costs on repairs and maintenance. Our sales figures will eventually increase and gain more market share.

Mowco one of our biggest clients is requesting for a 10% price reduction on their sales. The business does not have a policy on sales cut. This would have to be thought of and implemented for the future. For the case of Mowco, a competitor analysis would be done. How much are our competitors charging and at how much would they charge Mowco in case approached. If there are chances of Mowco getting a better deal with competitors we would negotiate with the company for less reduction e.g. 6%, If we are competitive we would decline the request and maybe offer something else like an account manager to handle their issues.

The compensation structure for salesforce is very important to be discussed in a sober mood and to be structured in a strategic way. The compensation of salespeople acts as a motivator and also as a way of giving them a sense of belonging. No one in the organization would work without pay. They all have bills to pay.

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The best proven strategy for the compensation of salespeople is through  commission basis. If paid on commission the sales force drives itself and therefore needing less supervision and more sales. The more a salesperson sells the more money they make. The team also starts competing amongst themselves. Friendly competition amongst team members is good as it increases productivity.

The sales environment is very diverse and dynamic. It also comes with a lot of pressure to perform. Research has also shown that salespeople live for shorter spans as compared to other professionals. This is due to the risks they are exposed to doing their jobs. Taking all this into consideration it is important to have a robust, working medical scheme for salespeople.

With a management team in place, change the shop to increase production, agreement with our supplier I believe that the business will be back to profits mark. With the ongoing market analysis on pricing, change of compensation structure for salespeople and purchase of software from NewTech the business future looks bright.

REFLECTION

This exercise has taught me many things. First of all, management is not easy. Every time you are at crossroads. Every team is pulling strings towards themselves. They want you to make a decision that is favorable to them. This could make them forget the importance and goals of the business.

Before the exercise, I did not have the clear picture of the magnitude of the decisions I will be required to make as a business leader. The exercise has opened up my mind on what to expect on the ground. Some decision will be easy to make as they are rational. Others will be hard as they will require hard lining.

Before the exercise, I thought that being a hard liner leader was good. However from the exercise I have learned that it is important to be flexible over time. This would mean making a decision based on circumstances but also focusing on the future.

A business leader should not only just focus on the current situation. They should also think about what the future holds and what they can do now to ensure their existence and profitability in future. The past should be used for analysis and based on that analysis business decisions can be made.

The weight of the decision you take as a leader is immense. A single decision can lead to the collapse of the business. An example is the NewTech decision. It is either you acquire the technology, incur the initial costs, or wait for your competitors to get hold of it and crash you. This exercise was really important and educative.

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References

Clemen, R. T., & Reilly, T. (2013). Making Hard Decisions with DecisionTools. Cengage Learning.

Hammond, J., Keeney, R., & Raiffa, H. (2015). Smart choices: A practical guide to making better decisions. Harvard Business Review Press.

Mullins, J., Walker, O. C., & Boyd Jr, H. W. (2012). Marketing management: A strategic decision-making approach. McGraw-Hill Higher Education.

 

 

 

 

 

 

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Accounting Information System

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A  credit union is developing a new AIS. The internal auditors suggest planning the systems development process in accordance with the SDLC concept. The following nine items are identified as major systems development activities that will have to be completed.

REQUIRED

  1. Arrange the nine items in the sequence in which they should logically occur.

 

  1. User specifications
  2. Technical specifications
  3. Systems survey
  4. Programming
  5. System test
  6. Post-implementation planning
  7. Implementation planning
  8. conversion
  9. User procedures and training

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  1. One major activity is to convert data files from the old system to the new one. List three types of file conversion documentation that would be of particular interest to an auditor. (CMA Examination, adapted)

 

  1. Parallel running
  2. Phased conversion
  3. Direct changeover

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