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Business simulation and its challenges are reflected in this report. “Sports Direct International” company has been chosen to reflect the operational challenges and the process to overcome these challenges is discussed in this report. The main aim of this report is to determine the operational challenges in the retail industry with its pestle analysis.
In the context of business simulation, the company “Sports Direct International” have been selected for the report. As per the view of Aithal and Aithal (2019), the company operates in the country UK with its headquarters in Shirebrook. It is one of the leading companies which is engaged in selling sports equipment within the country. As it is a retail firm it also sells other accessories related to men and women, dresses, and sports fashion. The mission of the company is to provide dynamic ranges of products from different iconic brands. As opined by Akyazi et al. (2020), the company aspire to be an international market segment where they are stated as a leader in dealing with sports equipment, lifestyle, and luxury items apparel. Members of the sports company get a 20% discount on the purchase and their reviews for the company are stated in an average position.
The revenue of the company is decreased by 1.9% in the last two years because of the pandemic. As per the author Boss and Larmer (2018), the sports and gross retail revenue of the firm have shown an increase of 0.3% in previous years. The financial position of the firm is at the average position this is because its operational cost decreased by 35.17 pence in the year 2019 due to huge sales (sportsdirect.com, 2022). However, the firm generates revenues from selling goods but its operating values are in decreasing position.
There are basically five types of operational challenges that are faced by organisations while doing trade. As stated by Brock et al. (2019), the challenges are a weak system, work fatigue, waste, dependency on clients and balancing the growth and quality. The business operation usually causes leads in the revenue generation process. In my opinion, this is where these operational challenges are inbounded with the work streams of my company. Risks regarding cyber security can cost millions to the owner of the firm if the operational issues are not rectified on time. In my opinion, the issues must be controlled in the initial process of the simulation company. These kinds of firms imitate all the business functions of the existing companies in a respective sector.
Figure 1: Operational challenges
All the business and financial functions are followed that are reflected in the real business world. I have observed that the “real-world business process, system, organization, competing firms or an entire supply chain over time”. As per the author Cortez and Johnston (2020), these simulation firms need to carry out the business function as per the existing market scenario. Moreover, I think the operational challenges must be avoided by the new firm as they can be led to huge losses. The operational issues can be reduced or mitigated by edifying the problem at the initial stages. As mentioned by Dhar et al. (2022), after that, the firm should create a plan to scan the issues from their origin and then the obstacles can be removed to achieve the success of the organisational goals. As per my opinion, the solutions to the operational issues are effective for the simulation company.
The above-mentioned operational issue can be increased if the proper management of the resources is not adopted by their owners. Business waste can be increased if the costs are more than the earnings. As per the view of Jelonek et al. (2022), as per a survey around 29% of the new ventures or starts up fail due to mismanagement of business resources. I have also seen that the business incorporates more investments than required at the same time. This shows the negative aspects of the small and medium-scale organisations. In my opinion, the extracts from the theoretical knowledge and principles must be applied in real-world examples of business simulations. Balancing the quality production as well as the growth is a critical process, if the quality is maintained then the costs will be increased if growth and expansion are the mission of the firm then the quality of the product has to be decreased.
There are various learning opportunities that are offered by business simulations in which the theoretical approaches to carrying out the business operations are discussed. In my opinion, the learning opportunities can bring beneficial results from the business setup. As opined by Dogru and Keskin (2020), learning methods can bring theoretical pieces of knowledge regarding organisational principles and rules. It helps in increasing the student engagement and up-gradation of skills and knowledge regarding the business world. During the learning process, I have observed many changes that can help the owner to reduce the risks segment along with business dynamics. As narrated by Fabeil et al. (2020), it has been seen that due to frequent changes in the market and customer demand many firms incur a loss. Through this, I think that the learning opportunities must be incorporated into the business simulation process.
There are other benefits to the learning process by simulation of businesses that are related to the acceleration learning methods. According to Fernandez (2018), if the owner has knowledge regarding risk management and reality imitations, it can result in proper business flow in the company. Through this, the learners can also get accurate knowledge that how to face these crucial situations with theoretical-practical skills. I have also observed that the outcomes of the learning modes enhance the owner's capability to run the business in a highly competitive market. As stated by Helo and Hao (2021), the owner must use the learning modes or techniques to showcase the effective learning modules to the business learners. These learning methods or techniques include Basic financial knowledge, advertisement skills, and interpersonal and forecasting skills.
Learning concepts in an innovative way resembles the best opportunities for business simulations. This is because harbouring by developing practical skills simultaneously enhances the capability of the learner. As per the author Journeault (2021), the learning by doing concept is one largely accepted in the firm which initiates the real-life world. In my opinion, the complex process of simulation can be eased by applying the correct methods of lemmings.
Pestle analysis is done to evaluate the company's external factors and positions that may bring beneficial results to the company or can hinder the trade flow. As opined by Lim et al. (2020), the external factors that influence the companies are “Political, Economic, Sociological, Technological, Legal and Environmental”. For this, the company “Sports Direct International” is evaluated with its external factors which influence the business market of the UK.
Political factors (P)
? 19% corporate tax is applicable in the country
? Huge tax rates and incentives collected
Economical factor (E)
? Government intervention in the retail business
? For the current financial year, the revenue of the firm is valued at 362.53 crores (ecommercedb.com, 2022).
Social factor (S)
? Education level encourages the entrepreneurs in the retail segment
? Cultural aspects and working environment are good
Technological factor (T)
? Company has newly adopted a content management named “DNN Evoq Content”
? Implemented new technology to hence the quality sportswear
Legal factor (L)
? Company follows employment laws and act (ncdrc.nic.in, 2022)
? It also follows “consumer protection act 1986”
Environmental factor (E)
? Minimise the wastage od non-renewable resources
? “Environmental Impact Assessment Law (PD 1586)” is been followed by the firm (ecommercedb.com, 2022).
Table 1: Pestle analysis
As the company operates in a retail segment in the country, where political interference is more compared to other developed countries. As per the view of Limani et al. (2019), the business simulation in the country has a huge scope as it has one of the largest retail markets that have global expansion for many organisations. Systematic risks in the government and political segment may hinder the business simulation princess but the owner needs to access its learning modules to opt for extra costs or charges. The UK has a huge military invasion in the country that affects the retail industry, by this, the simulation gets affected to a great extent.
Economical factor shows the business position in the competitive market. In the context of the company Sports Direct International, its financial position is stated as normal. As mentioned by Sabri et al. (2020), the revenue for the company in the current year is valued at 362.53 crores GBP, which is less than the previous year. The sports organisation must oversee all the invasions that can hinder the business process and tries to settle for bilateral trade. The infrastructure for the sports retail industry is not well organised.
Social behaviour with the customers of the company is good. As per the reviews, the company's beliefs and behaviour show how much they follow the trends and demands of their customers (Santoro et al. 2018). While making the sports equipment they ascertain the current values and demands of their customers then they continue with the accepted models. The annual growth of the population is 0.6%, which is viable information for future business expansion and growth. It serves the message to use quality products from the reputed company and pass the social message to reduce waste.
The company recently used the product “DNN Evoq Content: for Content Management, where sales and promotions are made by placing effective content on the offline and online platforms. As per the author Choi et al. (2022), for their customers, they have launched the “Intuit QuickBooks” Online app to maintain proper and useful relations with their online customers. These technological advances have made the firm incur more earnings than its competitors. Advanced and innovative technologies made good quality products which create demands in the competitive markets.
The legal factor for the firm where the acts and laws are stated in brief. The company follows the employment and consumers act to comply with accurate management for their employers. The above-mentioned laws and acts show the effective legal environment where charging and fraudulent activities are not entertained by the users of the market in a company. As per the view of Wamba-Taguimdje et al. (2020), simulation companies must adopt these norms for the smooth flow of business and trade. E1Act is also followed in the country to minimise the waste of natural resources. As the company indulge in making shoes and sports accessories, the use of animal skin and textures must be punishable under these acts.
Implementing sustainable management in the production sector implies the environment assessment law mentioned in PD 1586. Before entering into a new market segment, the company should check the Weather, laws, Climate change, “Laws regulating environment pollution” and waste management. As per the view of Chen et al. (2021), Attitude toward the production and packaging segment must be checked as if they are using renewable substances or not. As the company involved in making the sports equipment the raw materials that are required must be taken with the permission of the authorities. Effective environmental standards impact profitability for the business concern, therefore before implementing the sources the owner must review all the external factors.
Based on the above context it can be stated that for simulation of new business in the country the UK has a huge scope. From the pestle analysis, it can be seen that the firm can get beneficial support from the existing market dimensions. The sports company has expatiated features in all over the country by supplying a good quality product at a reasonable rate. However, due to a few mismanagements and competitors, the sales were dropped down in the last few years. Operational challenges with its solutions and its learning segments reflect fruitful results to the amalgamation of the new simulation company.
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