1. Case Mobiland NIBS Congress May 2012

2. Case Mobiland  Business simulation  In the KHLeuven business game Str@tvision  Played by students in the 2nd bachelor Business Management – Marketing  In the international week  Business simulation  In the KHLeuven business game Str@tvision  Played by students in the 2nd bachelor Business Management – Marketing  In the international week

3. Case Mobiland  Mobiland = an island (636.000 inhabitants)  students start up their own company  that manufactures and sells smartphones  companies offer a similar product portfolio  Mobiland = an island (636.000 inhabitants)  students start up their own company  that manufactures and sells smartphones  companies offer a similar product portfolio

4. This case is about Production 4 types of SmPh Purchase RM, components Recruiting Employees Inventory control Distribution Store, hypermarket, … Advertising Radio, TV, newspaper Sales 5 target groups Investing PU, building, … Financing Equity, IC, overdraft Budgeting Fin., prod. … plan Accounting Reports, …

5. Market and products Population attaches great importance to mobile communication 4 types of smartphones  BAS: telephony & games  GOO: idem BAS, + photo, video & MP3  ADV: idem GOO, + Wi-fi, Bluetooth, internet (GPRS/EDGE/3G)  GPS: idem ADV, + GPS, GPS-software & Windows Mobile Not necessarily all models on the market! Population attaches great importance to mobile communication 4 types of smartphones  BAS: telephony & games  GOO: idem BAS, + photo, video & MP3  ADV: idem GOO, + Wi-fi, Bluetooth, internet (GPRS/EDGE/3G)  GPS: idem ADV, + GPS, GPS-software & Windows Mobile Not necessarily all models on the market!

6. Target groups  The techies (TEC)  looking for technologically advanced device  between 18 & 36 yr, price not too high (personal use)  The short-callers (SHO)  important: the device should be cheap  new technology is less important  De professionals (PRO)  price is not so important (company buys)  technology is important  The earners (EAR)  price is not really relevant  customer expects (almost) all features  The others (OTH)  technology is not important: only call - texting  Other features not so important, not too expensive  The techies (TEC)  looking for technologically advanced device  between 18 & 36 yr, price not too high (personal use)  The short-callers (SHO)  important: the device should be cheap  new technology is less important  De professionals (PRO)  price is not so important (company buys)  technology is important  The earners (EAR)  price is not really relevant  customer expects (almost) all features  The others (OTH)  technology is not important: only call - texting  Other features not so important, not too expensive Size target group % TEC66.78010,5% SHO208.60832,8% EAR85.86013,5% PRO106.21216,7% OTH168.54026,5% Total:636.000

7. What do students get? 1.Capital: € 1.000.000 cash 2.You can borrow from the Eurobank -Investment credit (building, machinery): limited! -Overdraft: temporary liquidity shortages: unlimited interest (changes from the 2nd round) ) - IC: 5% - OD: 10% - bank account (neg): 15% - bank (pos): + 2,5% 1.Capital: € 1.000.000 cash 2.You can borrow from the Eurobank -Investment credit (building, machinery): limited! -Overdraft: temporary liquidity shortages: unlimited interest (changes from the 2nd round) ) - IC: 5% - OD: 10% - bank account (neg): 15% - bank (pos): + 2,5%

8. What can you buy ? A production unit (PU): € 1.250.000 includes: - one building - 4 machines Every company: at least one PU ! Company has costs:  insurance  overhead costs  maintenance & repairs Maximum capacity of 1 PU: 26.000 devices A production unit (PU): € 1.250.000 includes: - one building - 4 machines Every company: at least one PU ! Company has costs:  insurance  overhead costs  maintenance & repairs Maximum capacity of 1 PU: 26.000 devices

9. Distribution 3 possibilities: 1.A store -min. one min. one seller (specialized) -rent per period: € 150.000 2.A distribution point (in a hypermarkt) -no specialized seller -rent per period: € 50.000 3.Cost of development online sales system -a non-recurrent investment: € 26.000 3 possibilities: 1.A store -min. one min. one seller (specialized) -rent per period: € 150.000 2.A distribution point (in a hypermarkt) -no specialized seller -rent per period: € 50.000 3.Cost of development online sales system -a non-recurrent investment: € 26.000

10. Personnel Commercial€ 40.000 (min. 1, max. 3 per store) Administrative€ 35.000 (min. 1, and min. 1 per group of 3 commercial) Production€ 35.000 (min. 1 per PU) Executive€ 60.000 (min. 1) Commercial€ 40.000 (min. 1, max. 3 per store) Administrative€ 35.000 (min. 1, and min. 1 per group of 3 commercial) Production€ 35.000 (min. 1 per PU) Executive€ 60.000 (min. 1)

11. Advertising 3 media channels 1.TV -MoTv (Mobiland Television): young people -TV1: official government station 2.Newspapers -La Gazetta: popular newspaper -Los Intelectos: quality newspaper 3.Radio -Torro: the only radio station in Mobiland  Attention! Good harmony: advertising - production - sales 3 media channels 1.TV -MoTv (Mobiland Television): young people -TV1: official government station 2.Newspapers -La Gazetta: popular newspaper -Los Intelectos: quality newspaper 3.Radio -Torro: the only radio station in Mobiland  Attention! Good harmony: advertising - production - sales

12. Production For the production of the four models: -> required product components -> Vary by model Comp 1Comp 2Comp 3Comp 4Comp 5Comp 6Comp 7 Basic electronics Screen parts (in front, behind) Internal & ext. connection & earpiece Photo & video & MP3 Wi-fi & Bluetooth Internet GPRS/EDGE/ 3G GPS & software + Windows Mobile BAS1210000 GOO1211000 ADV1211110 GPS1211111

13. Cost of components In EUR Comp 1Comp 2Comp 3Comp 4Comp 5Comp 6Comp 7 Basic electronics Screen parts (in front, behind) Internal & ext. connection & earpiece Photo & video & MP3 Wi-fi & Bluetooth Internet GPRS/EDG E/3G GPS & software + Windows Mobile <2000024.73.34.821.633.716.6106.3 <2300021.82.94.219.129.814.794.0 <2600019.82.63.817.327.013.385.2 <2900018.32.43.616.024.912.378.7 <3200017.32.33.415.123.611.674.4 <3500016.72.23.214.622.811.271.8 > =3500016.32.23.214.322.311.070.3

14. Decisions  During each round the team takes concrete decisions about:  Final pricing for each product model  determine the deployment of staff  determine the number of production units + production volume  Determine the promotional efforts  determine the number stores, distribution points, online sales  determine additional financing needs  Enter the decisions in the 'decision form'  During each round the team takes concrete decisions about:  Final pricing for each product model  determine the deployment of staff  determine the number of production units + production volume  Determine the promotional efforts  determine the number stores, distribution points, online sales  determine additional financing needs  Enter the decisions in the 'decision form'

15. Analysis received results The participants receive:  the actual demand of customers,  actual amount of sales,  comparative data: pricing & margin  price and image positioning,  market share by target group and product model  data on production and inventory,  Results (balance sheet, income statement, cash flow) The participants receive:  the actual demand of customers,  actual amount of sales,  comparative data: pricing & margin  price and image positioning,  market share by target group and product model  data on production and inventory,  Results (balance sheet, income statement, cash flow)

16. Winner  Per market: winning company  Criteria for selection: 'Company health index’ (CHI) CHI = 2.0 RE - 0.8 TD + 1.3 EQ + 1.2 SA + 2.9 OC RE = retained earnings TD = total debt EQ = equity SA = sales OC = operating cash flow  Per market: winning company  Criteria for selection: 'Company health index’ (CHI) CHI = 2.0 RE - 0.8 TD + 1.3 EQ + 1.2 SA + 2.9 OC RE = retained earnings TD = total debt EQ = equity SA = sales OC = operating cash flow

17. Thanks !