Management Experience an exploration of tactical management This computer simulation gives you and the others: an opportunity to manage a “real” business for several simulated quarters making decisions as part of a small team covering: –Marketing –Operations –Finance your objective, while competing against the other teams, is to operate your business in an efficient way

The Simulation The simulation consists of three stages: Preparation Decision-making Review Preparation –Familiarization –Organization –Consider objectives –Consider strategies Decision-making –Submit Decisions –Simulate –Analyze Results –Replan Review –Discuss & Compare Results

The Situation a subsidiary A high tech product currently operating makes & sells into three markets –Domestic –Export –Contract has production capacity that can be applied to all markets You will run this business for several periods, each of which represents one trading quarter

Marketing Sales into the domestic & export markets are influenced by: –price –promotion –product performance (R & D) –Quality (factory moderness) –inventory availability –the actions of the other teams Contract Sales are based on bid price

Operations Current Capacity – 24,000 units/quarter Current Production – 22,610 units/quarter Up to 30% overtime is possible Additional capacity costs $250 per unit Contracts shipped directly from the factory Domestic & Export sales shipped from warehouses Production net of contract sales are allocated to the two warehouses

Finance The parent company holds shares and provides loan capital It charges a notional interest on shareholding and loans of 10% per year Notional interest is accumulated quarterly but paid at year end Short term loans are provided automatically but long term loans must be agreed as term finance

Decisions Each quarter these decisions are made: –Domestic & Export Price –Domestic & Export Promotion –Contract Bids –Distribution to the Warehouses –Production –Software Improvement –Capital Investment –Term Finance –Market Research Use the decision form supplied and complete it carefully and legibly and hand to the simulation controller at the specified times.

Results Results are returned to you in three stages: Preliminary Results –Unit sales and ending inventory for each market –Total sales income and profit before interest Full Results –Marketing Report –Profit Report –Balance Sheet –Key Measures –Other Information –Market Research Business Research –Market News (prices & market shares) –Contract Bids –Editorial Comments

Observations it takes time to understand but the business still has to be run therefore your decisions will not be perfect time will be a constraint by the end you should (just) be in charge of your business your business skills will be challenged remember the purpose is to learn! (rather than just to win!) so, take time to reflect & review and have fun!