Practice firm

Practice firm is a simulated company set up by educational institutions to provide students with hands-on experience in a realistic business environment. It is also known as a virtual enterprise or virtual business.

Overview

A practice firm is a simulated business that operates in a network of similar firms around the world. It replicates all the functions and operations of a real business, from purchasing and selling to accounting and marketing. The main objective of a practice firm is to provide students with practical business skills and knowledge, preparing them for the real business world.

History

The concept of the practice firm originated in Germany in the 1950s. It was initially used in vocational training programs to provide students with practical experience in business operations. The concept has since spread worldwide and is now used in various educational settings, including high schools, colleges, and universities.

Operations

In a practice firm, students take on different roles such as CEO, marketing manager, sales manager, and accountant. They perform all the tasks that are typically done in a real business, such as developing business plans, conducting market research, managing finances, and negotiating with suppliers and customers. All transactions are carried out in a simulated environment, using virtual money.

Benefits

The main benefit of a practice firm is that it provides students with practical experience in a safe and controlled environment. It allows them to apply the theoretical knowledge they have learned in class to real-life business situations. It also helps them develop important skills such as problem-solving, decision-making, teamwork, and communication.

Criticisms

Despite its benefits, the practice firm concept has been criticized for its lack of realism. Some critics argue that because the firm operates in a simulated environment, it does not fully prepare students for the challenges and uncertainties of the real business world.

See also

• Business simulation
• Experiential learning
• Vocational education