Business Simulation D361: Unit 2: Organizing the Business

Organizing the Business Introduction

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Unit 2: Organizing the Business Introduction

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Unit 2: Organizing the Business Introduction

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Competency

Unit 2:

The graduate applies the competencies from across the business curriculum, demonstrating the ability
to lead the implementation of the mission, strategy, and goals of an organization.
turned_in

Proficiency Statement

The student applies integrated business skills to structure a business.

You are planning to open a bike company. Where do you begin?

In this unit, you will decide how to organize your business and plan for the opening of your first bike
shop.

Photoopens a new window by Authoropens a new window, Pixabayopens a new window is licensed
under Pixabay Licenseopens a new window

In the first quarter, your task will be to organize your business and plan your operations. Like any
company, you will need to think strategically about your approach and analyze the market to establish
corporate goals and a business strategy that will deliver value to your target market segment.

Because you will be an integrated company, you will need to consider all aspects of the organization,
from research and development to marketing and human resources. You have limited resources, so it is
critical to organize your business efficiently and strategically.

What will you name your company? What corporate goals and strategies will you pursue? What market
segments will these goals and strategies address? When will you open your first bike shop? What
capacity will you need from your production facility?
In this unit, you will address these questions and more as you consider aspects of organizing your new
business.

Learning Objectives

 Name the company. Establish corporate goals and overall business strategy. Understand the
functions within an organization.

As you set up and organize your business, you will need to define the overall business strategy that will
guide your decision-making. Strategic planning is an organization's process of defining its strategy, or
direction, and making decisions on allocating its resources to pursue this strategy. A good strategy is
grounded in business analysis, allowing you to make data-driven decisions.
Through the strategic planning process, you will set the direction and establish goals for your bicycle
business in the simulation.

Photoopens a new window by Authoropens a new window, Pixabayopens a new window is licensed
under Pixabay Licenseopens a new window

Strategic planning seeks to answer these questions: What does your business do or create? For whom?
How do they excel against the competition?1 In the context of this simulation, this will involve
determining what type(s) of bicycles you will design for your chosen target market and customer and
how you will differentiate your offering from that of your competitors.

In this module, you will review the key aspects of strategic planning and prepare to develop goals,
strategies, and tactics for your business in the simulation.

Lesson 1: Developing SMART Goals

Lesson Introduction

An organization’s vision and mission combined offer a broad, overall sense of the organization’s
direction.

SMART goals help an organization stay on target to achieve its desired outcomes.

Photoopens a new window by Authoropens a new window, Pexelsopens a new window is licensed
under Pexels Licenseopens a new window
To work toward achieving these overall aspirations, organizations also need to create goals—narrower
aims that should provide clear and tangible guidance for decision-making.1 A goal is a brief, clear
statement of an outcome to be reached within a specified time frame.2 The most effective goals are
those that are specific, measurable, attainable, realistic, and time-bound, which is known as SMART
goals.1 These goals can be used to develop organizational and functional strategies and tactics.

What Is a SMART Goal?

SMART is an acronym for specific, measurable, attainable, relevant, and timed. Following are some
considerations for each element.

Specific:

 What will the goal accomplish?

 Does the goal avoid generalities?

 Does the goal focus on a particular aspect of performance?

Measurable:

 How will you measure success?

 What metrics or key performance indicators (KPIs) are important to you?

 Will there be a visible outcome or impact to indicate the goal has been achieved?

 How will you measure quality, quantity, timeliness, and cost?

Attainable:

 Is it possible? Have others done it successfully?

 Does your executive team agree that the actions are suitable for implementation?

 Does your organization have the necessary knowledge, skills, abilities, and resources to
accomplish the goal?

 Have you developed too many goals to be achieved?

Relevant/Realistic:

 What is the reason, purpose, or benefit of accomplishing the goal?

 What is the result (not activities leading up to the result) of the goal?

 Have you linked to the larger organizational-level goals for the functional areas?

 Is the goal (and the strategies and tasks required to achieve it) something that the
organization can achieve given its strengths and weaknesses?

Timed/Time-bound:
  What is the established completion date?

 Does that completion date create a practical sense of urgency?

 Can realistic milestones be set to achieve the goal by the completion date?3

Essential Video

Question 1

This is not a form; we suggest that you use the browse mode and read all parts of the question carefully.

"How to Use SMART Goals" (1:57)

Watch "How to use SMART Goals" (opens new tab)opens a new window.

SMART goals help ensure your organization is driving toward the right business outcomes. As this video
explains, goals drive activity and help align behaviors throughout the organization to specific,
measurable results.

I watched it.

Component Question to Ask

Specific What does your organizatio

Measurable How will you know your org

Attainable Do you have the capability a

Realistic What is the benefit of accom

Time-bound When will the goal be achie

Goals, Strategies, and Tactics

A goal is a broad primary outcome that your organization hopes to achieve. In the simulation, you will
notice that goals are called objectives; these two words are often used interchangeably in business.
A strategy is the approach you take to achieve a goal. A tactic is a tool you use in pursuing your
strategy.2 You can think of goals, strategies, and tactics not only at the organizational level but also at
other levels of the business, such as functional areas. The goals, strategies, and tactics adopted by all
areas of the business should align to organizational goals.

Tactics support strategies, which align to business goals.

Goal, Strategy, Tactic. © 2019 WGU.

Companies do not have a single strategy. At any time, they are executing a range of different strategies. A
company might simultaneously execute on strategies to enter a new market, grow market share in an
existing market, and improve organizational efficiency. Moreover, strategy at the corporate level will
guide the development of strategies for each function, including marketing. Remember, a business
strategy must identify a plan that will use the company's resources most effectively to achieve its mission
and goals. Likewise, the marketing strategy must identify a plan that will use the marketing function's
resources and expertise most effectively to achieve its mission and goals.4

Like a play in a game of soccer, tactics are the tools you use to execute a strategy to achieve a goal.
Photo by Authoropens a new window, Pexelsopens a new window is licensed under Pexels Licenseopens
a new window

For example, in the simulation your company's goal might be to achieve a 25 percent profit margin in the
New York mountain bike market by the end of Q6. What strategies will help you achieve this goal? In this
example, your goal is not about market share, it is about profitability, so a strategy based on cost
leadership would not be the best choice. While lowering your prices might drive sales, you would have
to decrease manufacturing costs by rapidly scaling your operation to also increase profitability. Instead,
you use a differentiation strategy to focus on a targeted customer group (mountain bikers) that may be
willing to pay a higher price for a more tailored product, driving profitability without rapid scaling of
production.

Tactics align to your strategy to help your organization achieve its goals. In the example above, you might
adopt tactics such as posting a blog article every week and promoting it on social media to your target
market.

Aligning Organizational Functions to Your Business Strategy

Organizing a business involves coordinating and allocating a firm’s resources so that the firm can carry
out its plans and achieve its goals. This organizing, or structuring, process is accomplished by
determining work activities and dividing up tasks (division of labor), grouping jobs and employees
(departmentalization), and assigning authority and responsibilities (delegation). Human, material,
financial, and information resources are deliberately connected to form the business organization.5

In the simulation, you will be responsible for planning and organizing all the functions of the business.
The decisions you make should align to your strategic plan for the business.

In each quarter, this will involve making decisions for each of these functions:

 Human Resources: Recruiting the best employees, providing adequate training, and
motivating employees to excel

 Marketing: Developing a marketing strategy for your selected target market that includes
products, prices, and advertising

 Sales Channel: Selecting retail store locations and staffing to serve your target market

 Manufacturing: Managing production capacity and optimization at your production facilities

 Accounting: Using your quarterly financial statements as a budgeting tool

 Finance: Sourcing and using financial resources to start your company, maintain growth, and
deliver return on investment

Lesson Summary

Take a moment to review the key points from this lesson:

  Developing SMART goals helps focus your organization on what you want to achieve and sets
a direction for all your activities.

 Your company's goals inform your strategies and the tactics you will use to execute them.

 As you organize your business, the different functions should be aligned to your business
strategy.

Module 1

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Lesson 2: Fundamentals of Strategic Planning

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Lesson 2: Fundamentals of Strategic Planning

Lesson Introduction

As you have learned, the strategic planning process defines organizational goals, or objectives. Strategic
planning sets direction for the organization through business-level strategies (also referred to as strategic
initiatives or strategic thrusts) and functional area strategies that align to organizational goals. Tactics
detail the steps an organization will take to execute on its strategy.

In the microsimulation, you will learn about strategic planning and analysis.

Screenshot of Strategic Planning Microsimulation. © 2018 Innovative Learning Solutions Marketplace

Simulation, all rights reserved.
Simulation Tool

If you are unable to view the embedded Marketplace Simulation Tool above, open the simulation in a
new windowopens a new window. Closed captioning is also available when the simulation is opened in a
new window.

Lesson Summary

Take a moment to review the key points from this lesson:

 The building blocks of a strategic plan include strategic analysis, business opportunity analysis,
strategic objectives (goals), strategic thrusts (strategies or initiatives), and tactics.

 As you organize your start-up company in the simulation and

prepare to enter the market, the strategic planning process
helps identify your organization's goals, the strategies you will
use to achieve them, and the tactics you will implement.
Defining SMART goals allows you to track progress against
your goals and, if necessary, make strategic adjustments as
you progress through each quarter in the simulation.

Module 2: Operating in a Global Marketplace

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Module 2: Operating in a Global Marketplace

Learning Objectives

 Analyze the market survey.

As you organize your bicycle company in the simulation, you will be operating in a global marketplace. In
making your strategic decisions, think about what you have learned regarding considerations for a global
business environment.
In the simulation, you will be operating in a global business environment.

Photoopens a new window by Authoropens a new window, Pixabayopens a new window is licensed
under Pixabay Licenseopens a new window

In the first quarter of the simulation, you will set up your operations and develop your business strategy.
This will affect both your manufacturing and marketing activities. You will be operating a fully integrated
company, managing your own production facilities and retail locations.

All your bicycles will be manufactured at your production facility in the area around Bangalore, India.
Each customized bicycle will be fabricated in the facility then shipped either directly to the customer or
for pickup at your retail store.

In the first quarter, you will have the choice of where to open your first retail store based on market
potential and sales costs for four geographic markets: New York City, Rio de Janeiro, Amsterdam, and
Bangalore. To help you make these decisions, in this module you will review some key concepts of global
business.

Module 2

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Lesson 3: Global Business Concepts

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Lesson 3: Global Business Concepts

Lesson Introduction

Globalization introduces a number of challenges that are unique to operating simultaneously in different
countries and global markets.

There are multiple considerations for businesses entering a global environment.

Photoopens a new window by Author,opens a new window Pixabayopens a new window is licensed
under Pixabay Licenseopens a new window

What is the best way to enter or take advantage of a global market? When should you adjust a product's
features to customize it to consumer needs in a different global market? How do you manage the costs
and complexities of producing and promoting products in different locations, with different languages,
cultural sensitivities, and consumer expectations?1

Entering the Global Market

In today's economy, businesses may choose to look beyond borders to seek greater opportunity. As you
have learned, there are several common strategies companies use to participate in global markets.

Exporting and importing are the easiest and most straightforward ways to engage with the global
market. Exporting is taking goods that were produced within a company's home country and shipping
them to another country. Importing is the process by which a good is brought into a jurisdiction,
especially across a national border, from an external source.

With exporting, the company does not have to invest in factories, equipment, or other production
facilities located in another country. Most of the costs involved in exporting are associated with finding a
buyer or distributor in the destination market. For these reasons, exporting is considered to be the
quickest and least expensive means to enter the global market. However, once products arrive in the
destination market, the business may lose some control of them, which can result in products being
misrepresented, copied by other manufacturers, or even sold on a black market. In addition, because the
business is not active in the new market, it may have less ability to gain insight into or experience with
local consumer preferences and demand. This lack of information can create uncertainty and potentially
cost the company opportunities down the road.

Outsourcing and offshoring are two additional strategies that a business can use in order to take
advantage of the global market. Outsourcing involves contracting with another party outside the
organization to perform a specific business process and may include either foreign or domestic
contracting or both of these. Offshoring is relocating a business process from one country to another—
typically this will be an operational process, such as manufacturing, or sometimes a supporting process,
such as accounting. Offshoring and outsourcing offer some benefits: The destination country gains jobs,
and the original company lowers its production or operational costs. However, some firms find that
offshoring and outsourcing carry additional costs in terms of lack of control over product quality, working
conditions, labor relations, and ethical concerns.

Businesses may also gain access to global markets through licensing and franchise agreements. These are
typically the least profitable ways of entering a foreign market, since a portion of the profits go to the
franchisee or licensee.

A joint venture establishes a new business that is jointly owned by two or more otherwise independent
businesses. The most common joint ventures involve two companies that are equal partners in the new
firm, investing money and resources while sharing control of the newly formed firm. Often, the foreign
partner provides expertise on the new market, business connections, and networks, and access to other
in-country aspects of business such as real estate and regulatory compliance. Joint ventures may afford
tax advantages in many countries, particularly where foreign-owned businesses are taxed at higher rates
than locally owned businesses. Some countries require all business ventures to be at least partially
owned by domestic business partners.

A strategic alliance is formed between two or more corporations, each based in their home country, for a
specified period of time. Unlike a joint venture, a new company is not formed. Generally, strategic
alliances are pursued when businesses find that they have gained all they can from exporting and want
to expand into a new geographic market or a related business. This approach can be particularly useful
when a government prohibits imports in order to protect domestic industry.

Of all the ways that a business can reach the global market, the most intensive approach is
through foreign direct investment (FDI). FDI is an investment in the form of a controlling ownership in a
business enterprise in one country by an entity based in another country. In a Greenfield venture, the
company enters a foreign market and establishes a new subsidiary as a start-up business. The amount of
time it takes to build a presence in the foreign country may be substantial. If a business is not already
established in other global locations and lacks experience with FDI, it may be in for a series of unpleasant
surprises in the form of regulations, licensing, taxes, and other red tape. Businesses that are not ready to
take on the challenge of establishing a new facility or subsidiary in a foreign country will usually choose
either a merger or an acquisition as a means of expanding their global reach.2

Essential Video

Question 1

This is not a form; we suggest that you use the browse mode and read all parts of the question carefully.

Watch "Prioritizing across Country Markets" (opens new tab)opens a new window from LinkedIn
Learning.

Once you have decided on a business model that will enable you to enter the global marketplace, how
do you decide where to begin? In the simulation, you will need to choose a market to set up your first
retail location. This video covers some considerations businesses should take into account when making
this decision.

I watched it.

Global Trade Forces

As you have learned throughout the business curriculum, many forces affect a company's participation in
the global marketplace.
Trade restrictions, such as tariffs on shipments of imported goods, are one force impacting the global
business.

Photoopens a new window by Author,opens a new window Pixabayopens a new window is licensed
under Pixabay Licenseopens a new window

These include sociocultural, political, economic, physical, and environmental forces, as well as legal
differences and restrictions on global trade.

Organizations that intend to sell products and services in different countries must be sensitive to the
cultural factors at work in their target markets. Certain features of a culture can create an illusion of
similarity, but businesses need to delve deeply to make sure they truly understand the people and
environments in which they work. These are some sociocultural considerations.

 Language differences can be a challenge for businesses designing international marketing

campaigns, product labels, brand and product names, taglines, and so on.

 All cultures have their own unique sets of customs and taboos, and businesses should learn what
is acceptable and unacceptable for their foreign operations.

 Values are part of the societal fabric of a culture, and they can also be expressed individually,
arising from the influence of family, education, morals, and religious beliefs. Values are also
 learned through experiences. As a result, values can influence consumer perceptions and
purchasing behavior.

 Different cultures have different sensitivities around time and punctuality.

 Business norms vary from one country to the next and may present challenges to foreigners not
used to operating according to the particular norms of the host country. Business norms around
greetings and physical contact also vary.

 It is important for companies to understand the influence of religion on consumer culture in the
markets where they operate, so that their business activities can be appropriately sensitive.

The nature of a country's political economy plays a big role in whether it is attractive to foreign business
and entrepreneurship. Historically, there has been a direct relationship between the degree of economic
freedom in a country and its economic growth—the more freedom, the more growth, and vice versa.
Another aspect of a country's political economy is the stability of its current government. Business
activity tends to grow and thrive when a country is politically stable. Exchange rates are an important
consideration for companies wanting to take their business global, since they will likely have to buy and
sell even the most mundane commodities once they arrive in the foreign market.

Businesses must understand and conform to the legal and regulatory environments of the countries and
regions in which they operate. Laws and regulations affect contracts, trademark registration, labeling
requirements, patents, freedom of expression, pricing regulations, product safety, environmental
protection, privacy, financial reporting, and other areas. Additionally, trade restrictions imposed by
governments may include tariffs, import quotas, local content requirements, or embargos.3

Lesson Summary

Take a moment to review the key points from this lesson:

 Organizations can adopt one of several different business models to enter foreign markets,
including exporting, licensing, joint ventures, and direct investment. They vary in level of
involvement and each carries different risks and benefits.

 Entering a global marketplace opens up a number of additional considerations, ranging from

sociocultural factors to trade restrictions.

 Organizations that extend their operations into the

international market encounter additional benefits and
challenges than those operating exclusively within a domestic
market.
 

 In the simulation, you will set up production facilities in the area near Bangalore,
India.
 Photoopens a new window by Authoropens a new window, Pixabayopens a new
window is licensed under Pixabay Licenseopens a new window
 In the simulation, you will set up your production facilities in
Bangalore, India, to take advantage of the Indian government's
program to attract businesses like yours. You will have the
option, however, about where to open your retail locations
from four different global markets. Keep in mind what you have
learned about the global marketplace as you evaluate this
decision.
 "Global Business Strategies" by Linda Williams and Lumen
Learning is licensed under CC BY 4.0 and has been modified by
WGU
 "Global Trade Forces" by Linda Williams and Lumen Learning is
licensed under CC BY-SA 4.0 and has been modified by WGU
 "Introduction to Global Business Strategies" by Linda Williams
and Lumen Learning is licensed under CC BY 4.0
Module 3
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Module 3: Understanding the Functions within an Organization

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Module 3: Understanding the Functions within an Organization

Learning Objectives

 Choose your primary and secondary market segments. Design at least one brand for each
target segment. Schedule the opening of the first bike shop.

Identifying a target market segment is a critical step in formulating a marketing strategy that will deliver
value to a firm's customers. A company needs to know who its customers are, and what is important to
them, in order to design products that will deliver their desired benefits. The marketing function of an
organization develops the four P's of the marketing mix—product, price, promotion, and place—for each
target segment.
In the simulation, you will draw upon market research to identify the market segment(s) of bicycle
consumers you will target with your company's brands. Your task will be to design products for those
brands that satisfy the most important benefits to consumers in that segment of the market. You will
also select from a group of four geographic areas where to start your first retail store based on projected
demand and operational costs in each locale.

Module 3

Lesson 4: Product Design

Lesson Introduction

Every organization makes decisions about their product strategy when designing and marketing
products. In the simulation, you will also need to make strategic decisions when designing your product
to deliver benefits to your chosen market segment(s).

Once you have identified what benefits in a bicycle are most important to your target customers, you will
need to determine what components or features of your bicycle design can combine to satisfy those
benefits. Some features will add to a particular benefit satisfaction (a positive correlation), while others
may detract from a benefit (a negative correlation).

In this microsimulation, you will explore the correlation between features (components) and benefits.
You will then use this information to design a bicycle that delivers the benefits desired by a given market
segment.

Screenshot of the microsimulation showing the correspondence between benefits and components.

The features and components of your product design address the benefits your customers look for from
the product.

Screenshot of Product Design Microsim. © 2018 Innovative Learning Solutions Marketplace Simulation,
all rights reserved..

Product Design

This exercise focuses on the idea that customers buy benefits and not product components. You will
learn how to identify both the components that satisfy your target customer's desired benefits and those
that take away from the benefit satisfaction. Then, you will be challenged to design a bicycle that meets
the needs of a given target customer.
If you are unable to view the embedded Marketplace Simulation Tool above, open the simulation in a
new windowopens a new window. Closed captioning is also available when the simulation is opened in a
new window.

Lesson Summary

SummaryTake a moment to review the key points from this lesson.

Identify the key benefits that are important to your target segment. Product design involves discerning
what components or features combine to satisfy those benefits. It also considers what features detract
from a benefit.

Successful brand management requires understanding the desires of the target market and identifying
the right mix of features to deliver the right benefits with the product.

Module 3

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Lesson 5: Apply What You Know

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Lesson 5: Apply What You Know

Lesson Introduction

Now that you have reviewed key concepts around strategic planning, operating in a global marketplace,
and designing products specific to a market segment, your challenge will be to apply these concepts as
you organize your business in the simulation.

In this virtual business world, your company will introduce a new line of carbon fiber bicycles into your
selected markets in New York, Amsterdam, Rio de Janeiro, or Bangalore. As you test the market, each
city represents a different opportunity with a different mix of potential customers between the
recreation, mountain, and speed bike segments.

In the first quarter of the simulation, you will complete the following activities:

Name the company.

Sell 1,500,000 in stock.

Analyze the market survey.

Establish corporate goals and overall business strategy.

Choose your primary and secondary target segments.

Design at least one brand for each selected target segment.

Schedule the opening of the first bike shop.

Set up a production facility.

To get started, you will work your way through the tabs on the left side of the screen in the simulation to
name your company, review marketing research to understand the market potential, and develop your
organizational goals and strategy. In human resources, you will review compensation packages. For
marketing, in this quarter you will develop your initial brands and design bicycle features to deliver
benefits to your market segment.

Based on your strategy and the brands you have designed, you will need to determine your sales channel
strategy for the initial quarters. Since your sales channel to your customers will be through company-
operated bicycle shops, you will need to choose a city and plan the opening of your first shop. Each city
has different costs as well as different potential, so keep in mind your business strategy as you make this
decision.

For manufacturing, you are operating a just-in-time manufacturing facility using 3-D printers. You will
need to evaluate how much fixed capacity (or number of 3-D printers) you will need in the next quarter
when you open your first store. As you make this decision and others about expenditures, review the
accounting and finance tabs to make sure the decisions you make are consistent with the reality of your
firm's financial situation and your cash flow.

Screenshot of the simulation for Q1

Q1 begins with learning about the market opportunity and making simulation decisions for your
company.
Screenshot of Q1. © 2018 Innovative Learning Solutions Marketplace Simulation, all rights reserved.

Learning Check

Quarter 1: Organize the Firm and Set Up Shop

Access the Quarter 1: Organize the Firm and Set Up Shop (opens new tab)opens a new window to check
your understanding.

In this unit, your task is to complete Quarter 1 of the simulation. Click the link to start the simulation and
your Quarter 1 decisions. When you are satisfied with your decisions, submit the quarter, close the
simulation, and return to complete this unit.

Lesson Summary

SummaryTake a moment to review the key points from this lesson.

Congratulations! You have now organized your bicycle business.

In this quarter, you have made key decisions about your business strategy and selected your first test
market. You will continue to build on these decisions in future quarters of the simulation.