Download Management Challenge an exploration of business

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
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Familiarization
Organization
Consider objectives
Consider strategies
Decision-making
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Submit Decisions
Simulate
Analyze Results
Replan
Review
– Discuss & Compare Results
The Situation
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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
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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:
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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
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Marketing Report
Profit Report
Balance Sheet
Key Measures
Other Information
Market Research
Business Research
– Market News (prices & market shares)
– Contract Bids
– Editorial Comments
Observations
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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!