Retail Simulation Lecture 30-Jul-19 [Title of the course] Retail Simulation Lecture Part of the ABW Enterprise Education E-Learning Program For more information http//:www.abw.org.au Copyright © 2014. All rights reserved. Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

30-Jul-19 Situation Analysis [Title of the course] You are about to take over and run a Retail – Consumer Electronics Company Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Situation Analysis You currently lease one store 30-Jul-19 Situation Analysis [Title of the course] You currently lease one store and a virtual online store Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Situation Analysis You can lease another three stores 30-Jul-19 Situation Analysis [Title of the course] You can lease another three stores And can upgrade your virtual online store Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

You sell products in 3 different categories 30-Jul-19 Situation Analysis [Title of the course] You sell products in 3 different categories Category 1 $1 - $99 Category 2 $100 - $999 Category 3 $1,000 - $9,999 Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Situation Analysis You will: be divided into teams. 30-Jul-19 Situation Analysis [Title of the course] You will: be divided into teams. elect a Store Manager. allocate roles in the areas of Marketing, Operations & Finance. The key to success is to work together as a TEAM! Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Situation Analysis The objective of the simulation is to make the best decisions each quarter regarding the marketing, operations and finance of the business, in competition with other businesses in the market. Your challenge now is to run this business successfully over a number of quarterly periods.

The Decision Sheet

Decision Sheet Operations No. of stores (1,2,3,4) 1 Store 1 Store 2 Online med 50 20 Store size (sml,med,lge) 30 Store Quality (low,med,hi) Category 1 Space (%) Category 2 Space (%) Category 3 Space (%) Staff Level (low,med,hi) Staff Training (low,med,hi) Maintenance (low,med,hi)

Decision Sheet Marketing Category 1 Category 2 Category 3 $0 2,600 30-Jul-19 Decision Sheet [Title of the course] Marketing Category 1 Category 2 Category 3 Clearance Price (AUD) $0 Clearance Units Purchase Units 2,600 1,400 200 Purchase Price (AUD) 33 333 3,333 Selling Price AUD 49 499 4,999 Advertising $250 $2,250 $22,500 $50 $500 $5000 No Promotions Specials (Yes/No) Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Decision Sheet Finance Management $25,000 $20,000 $30,000 $15,000 30-Jul-19 Decision Sheet [Title of the course] Finance Credit Facility Employee Bonus (% of profits) Term Deposit Management Bonus (% of profits) No. of Quarters Community Support Management Manager $25,000 Case Study Decision (Yes/No) Operations Dept (3) $20,000 Marketing Dept (4) $30,000 Finance Dept (2) $15,000 Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Product Demand Forecast 30-Jul-19 Product Demand Forecast [Title of the course] Category 1 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 Quarter 1000’s of Units Category 2 Category 3 This shows demand for your products in the market and is revealed quarter by quarter. Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Performance Indicators 30-Jul-19 Performance Indicators [Title of the course] Performance Index 5 After tax profit $ 102,184 Market share % 50 Return on assets % 49 Debt ratio % 67 Return on Equity % 100 Total Assets $ 310,050 Stock Turn 6.8 Revenue per m2 2870 Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

30-Jul-19 Performance Reports [Title of the course] Performance Index – reflects the market value of your business based on evaluating the key performance criteria 0 1 2 3 4 5 6 7 8 400,000 350,000 300,000 250,000 200,000 150,000 100,000 After Tax Profit ($) 0 1 2 3 4 5 6 7 8 17.5 15.0 12.5 10.0 7.5 5.0 2.5 Market Share (%) After Tax Profit – shows the profit after tax has been paid out. The higher, the better. Market Share – shows how much of the market your business has. Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Performance Reports Debt Ratio (%) Return on Equity (%) 30-Jul-19 Performance Reports [Title of the course] 0 1 2 3 4 5 6 7 8 100 90 80 70 60 50 40 Debt Ratio (%) 0 1 2 3 4 5 6 7 8 100 90 80 70 60 50 40 Return on Equity (%) Debt Ratio - shows how much you have borrowed (liabilities) compared with how much the owners (equity) have put in. Return on Equity - shows the business’ after tax profit as a % of shareholders equity. 0 1 2 3 4 5 6 7 8 35 30 25 20 15 10 5 Stockturn 0 1 2 3 4 5 6 7 8 700 600 500 400 300 200 100 Revenue per m2 Stockturn – shows how often stock is sold out in a quarter. Revenue per m2 – is the amount of sales revenue generated for every square metre of selling space. Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Strategy & Planning What is your General Direction? 30-Jul-19 Strategy & Planning [Title of the course] What is your General Direction? Low End Pricing Prices below market due to low operating costs, special buys and tight controls Medium Pricing Prices are set at market level. More attention spent on store hours, location and product assortment High End Pricing Prices are set at above market levels due to posh atmosphere, distinctive products and super customer service Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Sales What if you sold out? Increase purchasing levels & review: 30-Jul-19 Sales [Title of the course] What if you sold out? Increase purchasing levels & review: Selling price Advertising Promotions and Specials Category Space Check Product Demand Forecast Lease another store and: Decide on Store Size, Quality and Category Space Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

What if you have too much stock left over? 30-Jul-19 Sales [Title of the course] What if you have too much stock left over? Decrease Purchasing Levels Have a Clearance Sale Review Selling Price Check number of staff and staff training level Advertise and Promote Check the Product Demand Forecast Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

Revision Remember Fill in all the blanks on the Decisions Sheet 30-Jul-19 Revision [Title of the course] Remember Fill in all the blanks on the Decisions Sheet You can lease up to 4 stores and 1 virtual online store Your purchasing decisions will be influenced by the Product Demand Forecast Find out what your customers want All details are in the manual Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

30-Jul-19 Still not sure…..? [Title of the course] Don’t harass your mentor …… they cannot give you the answers Work together But above all remember to…….. Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.

HAVE FUN EXIT 30-Jul-19 [Title of the course] Copyright © 2004-2005 NameOfTheOrganization. All rights reserved.