S I M U L A T I O N M A N A G E M E N T University of Alaska-Anchorage * College of Business & Public Policy Management Simulation * Semester 1 * 2007.

S I M U L A T I O N M A N A G E M E N T University of Alaska-Anchorage * College of Business & Public Policy Management Simulation * Semester 1 * 2007 Course Intro & Overview

S I M U L A T I O N M A N A G E M E N T Professor Ed Forrest Telephone : –(O)786-4161 –(H) 694-4674 Email : –EdwardF@cbpp.uaa.alaska.eduEdwardF@cbpp.uaa.alaska.edu W3site : http://www.cbpp.uaa.alaska.edu/afef/ http://www.cbpp.uaa.alaska.edu/afef/

S I M U L A T I O N M A N A G E M E N T Course Objective Provide the opportunity to experience running a $100M business …. You Da’ Boss

S I M U L A T I O N M A N A G E M E N T Your Product Line: SENSORS:

S I M U L A T I O N M A N A G E M E N T YOUR JOB Take on key management positions w/in your corporation Make the myriad of intertwined decisions necessary to create, produce & successfully market your products… Take on key management positions w/in your corporation Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…

S I M U L A T I O N M A N A G E M E N T Analyze the consumer, market, company & competitive situation Discern & implement your corp. growth & competitive strategies make & integrateMust make & integrate decisions in & across all functional areas (Marketing, Research & Development, Production, Human Resources and Finance). Analyze the consumer, market, company & competitive situation Discern & implement your corp. growth & competitive strategies make & integrateMust make & integrate decisions in & across all functional areas (Marketing, Research & Development, Production, Human Resources and Finance). YOU…

S I M U L A T I O N M A N A G E M E N T The Simulation… …enables you to observe the impact of your decisions on business performance w/in a competitive market… comprised of others in this class as well as MBA student teams from other universities simultaneously competing around the world.

S I M U L A T I O N M A N A G E M E N T THE CAPSTONE SIMULATION Adopted by major Fortune 500 companies..General Motors, General Electric, Honeywell, Dell, John Deere, Citibank… Most widely used Business – Simulation Program in the World

S I M U L A T I O N M A N A G E M E N T By End of Course You will Have: Conducted a situational analysis of consumers, competitor & market conditions Conducted a situational analysis of consumers, competitor & market conditions Develop & implemented strategies & plans to enhance organizational performance Develop & implemented strategies & plans to enhance organizational performance Selected—according to operant competitive strategy-- appropriate performance assessment measures Selected—according to operant competitive strategy-- appropriate performance assessment measures Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated, implemented & assessed the effectiveness of distinct competitive strategies Formulated, implemented & assessed the effectiveness of distinct competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Conducted a situational analysis of consumers, competitor & market conditions Conducted a situational analysis of consumers, competitor & market conditions Develop & implemented strategies & plans to enhance organizational performance Develop & implemented strategies & plans to enhance organizational performance Selected—according to operant competitive strategy-- appropriate performance assessment measures Selected—according to operant competitive strategy-- appropriate performance assessment measures Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated, implemented & assessed the effectiveness of distinct competitive strategies Formulated, implemented & assessed the effectiveness of distinct competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies

S I M U L A T I O N M A N A G E M E N T You will Compete against 5 other Corporations in class…. Andrews Baldwin Chester Digby Erie Ferris Plus be ranked against-- 100’s of other University teams simultaneously competing around the world…

S I M U L A T I O N M A N A G E M E N T & How –to date-- have we fared in this World-Wide Competition??

S I M U L A T I O N M A N A G E M E N T 04/15/2001 Top Ten Teams, World-Wide, for Round 8 Top Ten Teams, World-Wide, for Round 8 by success measurement There are currently 940 active teams that have played Round 8. For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then 5.0% Asset Turnover less then 8.0 Profit for Round 8 Round 8 - Mean - $ 25,324,003 Top Ten Active Teams Professor School/Course Simid Team Value 1 Dr. Minu Afza College of Business - Bloomsburg University 93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245 2 Mr. Bill Gardner Penn State University -Fayette Campus Contemporary Business Seminar CAP1513 Andrews $ 193,853,427 3 Dawn DeTienne University of Colorado at Boulder Senior Seminar CAP1656 Andrews $ 184,258,599 4 Prof. Howard Feldman University of Portland Managerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390 5 Dr. Ed Forrest University of Alaska Marketing Management CAP1611 Baldwin $ 163,281,864 6 Dr. Eric Wiseman University of Colorado at Boulder Business Senior Seminar CAP1818 Chester $ 157,930,382 7 Dr. Murrow Drury College Strategy and Policy Formulation CAP1838 Erie $ 149,235,238 8 Dr. Pettus Millikin University Business Policy CAP1748 Baldwin $ 147,967,873 9 Doug Mayer Hartwick College Management VII-secA CAP1811 Digby $ 137,339,216 10 Dr. Bruce A. Schooling Point Loma Nazarene University Strategic Management CAP1794 Digby $ 121,289

S I M U L A T I O N M A N A G E M E N T 04/12/2003 Top Ten Teams, World-Wide, for Round 8 For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0 Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: All URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Date/Time: 04/12/2003 10:07:35 eNote:http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Text: Cumulative Profit for Round 8 - Mean - $ 125,355,000 Top Ten Active Teams Professor School/Course Simid Team Value 1 natalie marsh Strayer University Business Policy & Strategic Planning C4779 Baldwin $ 459,411,986 2 John Hall University of Florida Global Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583 3 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Erie $ 382,697,422 4 Peter Stanwick Auburn University Strategic Management C5095 Chester $ 353,185,127 5 John Pearce Villanova University Policy Administration C5033 Ferris $ 348,535,130 6 Gavin Fox Georgia Southern University BUSINESS SIMULATION C5041 Digby $ 343,761,703 7 Shirley Schooley Birmingham-Southern College Strategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002 8 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Ferris $ 339,568,171 9 Edward Forrest University of Alaska Marketing Management C4806 Chester $ 333,620,198 10 Donald Kreps Kutztown University mba capstone C4797 Digby $ 327,188,363

S I M U L A T I O N M A N A G E M E N T 2005 - #1

S I M U L A T I O N M A N A G E M E N T 2006 5 th

S I M U L A T I O N M A N A G E M E N T And 8 th

S I M U L A T I O N M A N A G E M E N T

S I M U L A T I O N M A N A G E M E N T BA694 Management Simulation Spring 2007

S I M U L A T I O N M A N A G E M E N T Tonight- We Will: 1. Step back & take a look at the “Big Picture” 2. Overview simulation logic, logistics, proformas & procedures.. 3. Incorporate & Begin analysis of the “initial” situation…

S I M U L A T I O N M A N A G E M E N T The Big Picture C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

S I M U L A T I O N M A N A G E M E N T C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Step#1- … as delineated on syllabus

S I M U L A T I O N M A N A G E M E N T Company Competitors Economic Analysis (costs, profitability) Company Fit (strengths, weaknesses, resources, culture, goals) Economic Analysis (costs, profitability) Company Fit (strengths, weaknesses, resources, culture, goals) Customers Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Conditions Political Economic Socio-cultural Technological Political Economic Socio-cultural Technological Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions) Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions)

S I M U L A T I O N M A N A G E M E N T SWOT Analysis Identifies: ©South-Western College Publishing S S W W O O T T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External

S I M U L A T I O N M A N A G E M E N T Market Penetration Product Development Market Development PresentNew P R O D U C T New M A R K E T Present Growth Strategies Diversification

S I M U L A T I O N M A N A G E M E N T Competitive Strategies Competitive Strategies

S I M U L A T I O N M A N A G E M E N T Need to Align Your Functional Strategies Cross- Functional Integration & Alignment

S I M U L A T I O N M A N A G E M E N T Only when— All Decisions made by & within all functional areas are in sync w/ one another… Only when— All Decisions made by & within all functional areas are in sync w/ one another… Execute & Achieve your Growth & Competitive Strategy-- MARKETING PRODUCTION FINANC E

S I M U L A T I O N M A N A G E M E N T Measuring your Success

S I M U L A T I O N M A N A G E M E N T 1) Cumulative Profits 2) Market Share 3) ROA 4) ROS 5) ROE 6) Asset Turnover 7) Stock Price 8) Market Capitalization Success Measurements Criteria Definitions Success Measurements Criteria Definitions

S I M U L A T I O N M A N A G E M E N T Moving on--- 1. Step back & take a look at the “Big Picture” 2. Overview simulation logic, logistics, proformas & procedures.. 3. Incorporate & Begin situation analysis…

SHAKE UP IN SENSOR INDUSTRY Management Teams Fired “After poor results, lackluster sales and angry customer reports……….. New dynamic leadership teams needed to take industry into the future!”

S I M U L A T I O N M A N A G E M E N T YOUR HIRED!

S I M U L A T I O N M A N A G E M E N T C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap You are responsible for:

M A N A G E M E N T S I M U L A T I O N Your duties include those of the CEO – … as you set the mission, vision & strategic direction of your company

M A N A G E M E N T S I M U L A T I O N …and serve as manager of every functional domain Marketing Production Finance R&D HR

SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTH Sees the next 8 years as consistent growth. All market segments increase at a nice “clip,” according to market analyst. “I see the entire market growing at around 14% or 15% per year. The High Tech market alone will be growing at a whopping 16%.” I hope those companies out there are ready for that kind of expansion!”

Marketing Manager become one with: Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand

M A N A G E M E N T S I M U L A T I O N You are responsible for: Planning, implementing & controlling your marketing strategy Target & Position ProductPlace Promotion Price

Build customer awareness through promotion Establish a sales force and distribution channels Set price of your products in the marketplace Set Credit Policies AR/AP Set the sales forecast for our products

Marketing also selects media vehicles & message weights AND determines composition of sales/distribution staff..and allocation of their efforts by segment & Brand

Optimal media vehicles for specific market segments TradLoHiPfSZ xx xx xx xx x

M A R K E T I N G M A N A G E M E N T Responsible for: Product Position Product Position Age & Quality Age & Quality New product development New product development R&D Quality Age Prdt Line High High Eight Low Low One < < < SIZE A B Performance

Establish product positioning to meet customer demand Build quality & reliability (MTBF) into products Ensure age of product meets customer demands Create new products

S I M U L A T I O N M A N A G E M E N T Production Set automation levels Set automation levels Buy or sell capacity Buy or sell capacity Schedule production Schedule production Work overtime or automate Work overtime or automate

Establish your workforce complement Buy or sell capacity of product lines Purchase machinery to automate our facilities Schedule production for each line

M A N A G E M E N T S I M U L A T I O N Two GroupsTwo Groups –Assemblers –Technicians Wages Wages Benefits Benefits Recruitment & Training Recruitment & Training Human Resources

S I M U L A T I O N M A N A G E M E N T Finance Acquire Capital Acquire Capital –Issue Stock –Short Term Debt –Issue Long Term Bonds Set Dividend policy Set Dividend policy Retire Long Term Bonds Retire Long Term Bonds Retire Stock Retire Stock

S I M U L A T I O N M A N A G E M E N T And Finally: 1. Step back & take a look at the “Big Picture” 2. Overview simulation logic, logistics, proformas & procedures.. 3. Incorporate & Begin situation analysis…

Situation Analysis Team Member Guide- Chapter 4 Help > Managers Guide > Situation Analysis

S I M U L A T I O N M A N A G E M E N T Situation & SWOT Analysis C onsumer C ompany C ompetitors C onditions Initial Situation Step # 1

Specifically…determine  Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…  How market is segmented; relevant factors that influence consumer demand & purchasing decisions  Your competitors relative market positions..  Macro-E considerations especially technological trends … C onsumer C ompany C ompetitors C onditions

Portfolio Analysis Which Brands should receive more/ less/ no investment-Based on:  Product Position/ Potential  Profitability/ Margins  Market- Growth/Market- Share Matrix Which Brands should receive more/ less/ no investment-Based on:  Product Position/ Potential  Profitability/ Margins  Market- Growth/Market- Share Matrix

Boston Consulting Group’s Growth-Share Matrix High Relative Market Share HighLow LowDOGS CASH COWS Product-Market Growth (%) STARS PROBLEMCHILD 10x 4x 2x 1.5x 1x.5x.2x.1x

Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors Situation Analysis Guides: Margins Working Capital Financial Structure Financial Structure Wealth Creation Productivity Customer Satisfaction Customer Satisfaction Situation Analysis - Resources

Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors

5 4 2 3 1 Performance PERCEPTUAL MAP

Cheaper too-$.50 drop in price/year

PERCEPTUAL MAP Plot the drift of each segment circle as simulation proceeds thru 8 rounds ("Fine Cut" circles have a radius of 2.5 units, "Rough Cut" circles have a radius of 4 units)

 This analysis examines growth of customer demand as simulation proceeds thru 8 rounds.  For this exercise you need the Market Segment Analysis pages (pages 5 - 9) of The Capstone Courier- Round 0  W/in Segment Statistics-Use the Industry Unit Demand - top left corner DEMAND ANALYSIS

Key Demand Consideration: Overall market growing @ ~ 14%/yr “Average” company should/could double - sales in 6 years Key Capacity Consideration:

Demand Analysis 7387 7387 X 1.092=8067 11.7% 16.2% 19.8% 18.3%

CAPACITY ANALYSIS This exercise requires the Production Analysis (page 4) of The Capstone Courier. The analysis asks:  What Would it Cost to Double Capacity;  What Would it Cost to Maximize Automation?

CAPACITY ANALYSIS To successfully manage your company-- need to know the cost of increasing the number-of- units you can manufacture. Need to decide how best to increase output: 1. Increase manufacturing capacity; or 2. Increase automation (which allows you to profitably run a line on overtime ).

CAPACITY ANALYSIS #units * ($4 *( 10 - Current Auto-level)= Cost CostDC= (# unitsDC) * ($6 Floor + $4 autopt *Auto-level) (X 6) 4 $39.6m $43.2m

INTERNAL EXTERNAL S T O W What are the S & W’s w/ respect to your company’s production lines capacities & efficiencies What are the O & T’s w/ respect the nature, direction and magnitude of consumer demand

Your Consumers

Consumer Buying Criteria Determinant Attributes

Strive to meet customers preferences on top two criteria Don’t spend limited resources (time & $) meeting lesser concerns KEY POINT

Traditional customers seek proven products using current technology Low End customers seek old, simple & cheap tech. High End customers seek cutting-edge sensors in both size & performance Performance customers seek advanced tech., w/ high reliability & performance Size customers seek advanced sensors that focus on small size

INTERNAL EXTERNAL S T O W

Evaluation Scheme: AttributePoorFairGood PriceTop1/3Mid1/3Bttm1/3 ReliabilityBttm1/3Mid1/3Top1/3 Age+1yr.6-1yr~.5yrs Position+1.5 units.6-1.5w/in.5 Awarenes s <50%50-80%80%+ Access<50%50-80%80%+ OverallHow RateOn Top 2 Attributes Customer Satisfaction

INTERNAL EXTERNAL S T O W From results… can determine Strengths & Weaknesses of current marketing mix: Product - Product - Positioning; age & quality (reliability)-- Current levels of support w/ respect to: Promotion Promotion Distribution Distribution (accessibility) Pricing - Pricing - policy/competitiveness

December Survey… Compare your results w/ the December Survey… Wherein: <25 = Poor 26-50= Fair 50+ = Good Evaluation results Classifications:

S I M U L A T I O N M A N A G E M E N T 1 st – Reorganize Corp. Mgt. Fire all middle mgt… Select 1 Co- CEO… 1 st – Reorganize Corp. Mgt. Fire all middle mgt… Select 1 Co- CEO… Co- CEO

S I M U L A T I O N M A N A G E M E N T This Week’s Incorporate- register w/ your assigned Capstone: SimID# -- Begin Situation Analysis..

S I M U L A T I O N M A N A G E M E N T Questions ?

S I M U L A T I O N M A N A G E M E N T OK Now… Let’s get to work…

S I M U L A T I O N M A N A G E M E N T University of Alaska-Anchorage * College of Business & Public Policy Management Simulation * Semester 1 * 2007.

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S I M U L A T I O N M A N A G E M E N T University of Alaska-Anchorage * College of Business & Public Policy Management Simulation * Semester 1 * 2007.

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Presentation on theme: "S I M U L A T I O N M A N A G E M E N T University of Alaska-Anchorage * College of Business & Public Policy Management Simulation * Semester 1 * 2007."— Presentation transcript:

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