ENTREPRENEUR: A Business Simulation in
Retailing
Jerald Smith and Peggy Golden
This business simulation game is a dynamic exercise designed for students
enrolled in courses that feature the concepts in entrepreneurship, business,
and/or retailing. It provides student players with simulated real-world
experience in managing the variables that are encountered in business decision
making. It enables the student to practice various principles in
addition to learning them--a learning by doing approach to education. The
scenario and rules of the simulation can be learned about an hour. An
additional benefit for players of the simulation is they will experience early
in the educational process how many areas of business are interrelated and that
the decision maker must consider how each affects the other. The scenario
described is one concerning the retail clothing industry, a fast- paced
business with hyper-competition.
Note: This simulation is being
converted for the web and is not available at this time. We recommend Biz Sim, a
simulation that we have written as the replacement. Please check it out at the
following website (click on this link): http://home.att.net/%7Esimulations/BizSim.htm If you would like to be a test site for the
new edition, please sent an email to the author, Jerald
Smith.
Click here to access all of
our simulations.
Briefly, the simulation involves the takeover and continuing operation of a retail clothing store. In playing the simulation, students acting as management teams make a variety of decisions that will have an impact on their store's operations. These include the type of merchandise that will be carried. Students may choose between five different clothing product lines: modern, designer, regional/ethic, very contemporary, and professional uniforms. Prices must be established for pants/jeans as well as tops/blouses. The amount of advertising and sales promotion expenditure must be determined and the size of the sales force established. Inventory management is an important element of the simulation and teams must determine the amount of clothing to purchase each decision period. Selecting the appropriate market research study can aid in compiling decision data. A unique feature of the simulation is the inclusion of business environmental and social responsibility incidents that the firm faces in each decision period.
Objectives of the Simulation
- To allow students with different academic interests to make business decisions after considering the multidimensional aspects of the decisions. To provide the opportunity for student interaction in organizational teamwork.
- To allow the student to practice his/her communication, leadership, and interpersonal relations skills.
- To aid in developing logical and rational decision making skills.
- To demonstrate the importance of management information tools.
- To introduce the student to the various environmental, ethical, and social responsibility problems that may occur in a firm and to show the consequences of the decisions that are made.
Brief Overview
The store the team will be operating has a long history in the local community. It has been a family-owned business for many years, selling casual tops and pants for work and recreation. The youngest members of the family have pursued careers in high tech fields and the retiring owners are interested in selling the business to ambitious entrepreneurs who can update the image and carry the business forward. If the line of clothing carried by the store at this time is not the team's preference, the specific line can be changed to any one of five clothing types:
- Specialty clothing of regional or ethnic interest examples: Western, Oriental, Hispanic, European, Soul
- Contemporary line generally found in sportswear section of department stores. Includes jeans, sweaters, etc.
- Designer line with labels and logos displayed on outside of the garment
- Ultra-trendy line including fad clothing and high fashion
- Uniforms for health care and food service professionals; includes a casual line of surgical scrubs
Decisions to be made each decision period
- Purchase Number of Jeans
- Purchase Number of Tops
- Line of Clothing
- Average rice for Pants
- Average Price for Tops
- Advertising Budget
- Promotion Budget
- Number of Part-time sales staff
- Hourly Wage of the Part Time Employees
- Return Policy (7 choices)
- Market Research (various studies available )
- Dividends paid this quarter
- Loan (Borrow or repayment)
- Response to the Incident this quarter
Other Factors and costs teams
will deal with in the simulation
- Fixed Labor Cost
- Payroll Taxes
- Rent and Utilities cost
- Insurance and Telephone Cost
- Interest Expense
- Bank Credit Card Expense
- Fines, license fees, legal costs, etc.
- Marketing research costs
- Shrinkage and spoilage of inventory
- Income Taxes
- Loan Repayment
- Cost of Goods Sold
- Inventory levels
- Shoplifting
- Sales forecasting and use of a business demand index
Quarterly Incidents
Each quarter the teams must enter a response for an incident assigned for the week. An incident is a mini-case requiring thought by the team members. Incidents include start up financing, store location, security equipment, employee problems, kickbacks, bait and switch, purchasing policies, cooperative advertising, community support, and political involvement
Processing Decisions
Student decisions are entered on a computer and financial results are printed for the student teams. Students analyze the financial report which is produced each decision period, decide on a new set of decisions, and enter these. Each decision period is assumed to be one quarter (3 months). The usual method of administering the simulation is to make one set of decisions each week, for a total of from 7 to 12 decisions during the semester. The one-page financial report contains a income and expense statement, balance sheet, cash flow analysis, and other information required to make the next set of decisions. The instructor may enter a weekly news message to all teams if desired.
In order to give participating teams some idea as to how they are doing, the price of their common stock will be published each quarter. Although the company is actually "private" (e.g. the stock does not sell actively on the open market), it will be assumed the stock does have value in the over-the-counter market.
Contact
and ordering information
We hope the instructors using this simulation will continue to send us suggestions. It is our plan to revise the simulation on a regular basis to keep up with the fast-paced changes in business.
The authors have several simulations published and we work on multiple campuses. However, we are never too busy to talk to instructors about the Entrepreneur simulation. No student calls please; students may access the web page for additional information. The best way to reach us is through e-mail, then by telephone. Our web page is another method of communicating with our users. Contact information is shown below.
Jerald's Simulation contacts click> Jerald Smith E-mail: simulations@att.net or : Phone 954-462-5220 (You may leave voice message at this phone number.)
Peggy Golden Simulation Contact Information: Phone 954-762-5220 or click for email> floridapg@yahoo.com
Revised 4-2007 jrs
