Download presentation
Presentation is loading. Please wait.
1
Management Challenge an exploration of business
This computer simulation give you and the others: an opportunity to manage a “real” business for several simulated years making decisions as part of a small team covering: Marketing Operations Finance your objective, while competing against the other teams, is to make your business a success
2
The Simulation This activity consists of three stages: Preparation
Decision-making Review familiarisation & organisation deciding strategies & objectives submit decisions effect simulated get & review results discuss & compare results
3
The Situation company is a subsidiary
has been operating for several years makes & sells two products (A & B) has a factory that can produce both all costs & prices are in thousands of $ companies are in direct competition You will run this business for several periods, each of which represents one trading year
4
Marketing sales can be influenced through:
product prices promotional expenditures a sales force accounts receivable policy inventory availability the actions of the other teams You decide price & promotion for each product separately. You decide the number in the Sales Force and they sell both products. You decide the time customers will have to pay (debtor days) and this applies to both products.
5
Costs Unit Costs Production Overheads - $3 Depreciation - 10% /year
Product A = $40 Product B = $30 Production Overheads - $3 Depreciation - 10% /year Sales Staff - $25 each/year General Overheads - $2000/year Promotion Costs - decided by you
6
Other Data interest on overdraft - 20% per year
interest earned on cash - 10% per year mandatory dividend - 10% of Equity current capacity units/year capital investment – $20/unit of capacity capacity increases take a year to install
7
Decisions For each product separately price promotion production
And in general sales force new factory capacity accounts receivable days Use the decision form supplied and complete it carefully and legibly and hand to the simulation controlled at the specified times.
8
Results Preliminary Results Company Reports Business Research
demand & inventory for each product operating profit & cash/overdraft Company Reports Income Statement Equity, Assets & Liabilities Financial Ratios Business Research Market News (prices & market shares) Company News
9
Observations it takes time to understand
but the business still must 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!
10
Final Year Result Team Name Sales Revenue Operating Profit Earnings
Total Equity Cash/Overdraft Gross Profit % Operating Profit % Return on Assets Return on Equity Financial Leverage Capacity
11
Final Year - Market Position
Team Name Product A Price Market Share Contribution Product B
12
Cumulative Results Team Name Sales Revenue Operating Profit Earnings
Gross Profit % Operating Profit % Return on Assets Return on Equity Worst Leverage
13
Efficiency Losses Team Name Excess Promotion Sales Losses
Idle Capacity Total Losses Operating Profit Potential Profit
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.