computer simulation game: business policy game rules & procedures mgmt 497
TRANSCRIPT
Computer Simulation Game:
Business Policy Game Rules & Procedures
MGMT 497
Total Enterprise SimulationAn international simulation
Finance dimension
Marketing dimension
Operations dimension
HRM integrated throughout
An International Simulation
Merica, a North American country
Choice of second countryMerica – Domestic competition
Nystok – Eastern European
Pandau – Southeast Asian
Sereno – Latin American
International ConfigurationSeparate economies
Separate demand structures
Currency transfers via exchange rates
Finance DecisionsFinancial planning
Financial decisions
Financial Planning
Project expenses and revenues
Budget capital expenditures
Manage financial structure of the firm
Finance Decisions
Short-term bank loans
Bond sales & repurchases
Stock sales & repurchases
Dividend payouts
Certificate of deposit investments
Finance Decisions
Marketing Dimension
Product management
Sales office management
Product Management
Price by area
Advertising by area
Product introduction
Marketing research
Product quality
Product features
Market segments
Price & Advertising by area
Sales Office Management
Sales forecasting
Product ordering
Sales force managementHire, fire, transfer
Salary
Commission
Closing and opening offices
Salespeople Management
Production Dimension
Production scheduling
Production capacity
Resource development
Production Scheduling
Straight time
Overtime
Second shift
Production Scheduling
Production Capacity
New lines – 1 quarter to complete
New plant addition – 2 quarters
New plant – 3 quarters
Temporary layoff
Long-term deactivation
Close & sell plant
Production Capacity
Resource Development
Product development
Employee training
Production Capacity
Strategic Plan
Mission
Objectives
Strategy
Planning Support
Spreadsheet templates
Report Viewer
All reports since the competition began available
View reports on screenPrint individual reports
SimulationRun simulation
Rerun simulation
Simulation Headquarters
Management Department, ST 717
Grad assistants who run the game can be found there on decision days (Monday & Thursday) from 9 a.m. to 6 p.m.
World Numbers
Each MGMT 497 section is a separately run simulation world
Each team is a company competing against other companies in this world
Do NOT forget your world and team number for the next 10 weeks!
Company Products
Simulated world: consumer durable.
Two Year Plan and Final Reports: DO NOT need to choose a product.
Assume, for purposes of your plan, that everyone else in your world is selling the same product: your direct competitors.
Criteria Weighting Factors
Game performance is graded based on ROA, ROE, MS ($, not units), SP, UPC, TNI
Weighting factors indicate how your team prioritizes these objectives
Allows your team to influence how you will be graded
Preliminary: trial run, may be changed
Final: set in concrete; basis for grade
Quarterly Decisions
Each team submits its decision drive for each decision
Each decision is for one quarter (4 decisions per year)
The game runs for 4 years (Years 3 – 6), or 16 quarterly decisions
Geographic Home Areas
Area 1: Eastern Merica – Teams 1 and 4
Area 2: Southern Merica – Teams 2 and 5
Area 3: Western Merica – Teams 3 and 6
Area 4: Nystok/Pandau/Sereno – all teams have international sales offices; none have headquarters or plants here
GAME PROCEDURESDecision drive
Each team receives a Decision drive during the first week of classes.Each team will input their quarterly decision ONLY on the Decision drive provided by the instructor: copies will NOT be accepted.Input decisions using the Players Program available on the bpg website
Get the Players ProgramBPG website software.bpgsim.bizhttp://www.eskimo.com/~bpgGo to Players AreaSCROLL DOWN to get 6th editionDownload copy of the manual, if you wishDownload the Players Program onto your PC or laptop
User name = playerPassword = swb30oss
Install the program
BPG Game Site
BPG Tutorial
HelpContents
BPG Help• Main Menu• Decision Variables• Frequently Asked Questions• Player’s Program• Glossary
QuickStart Manual
Player’s Manual
?
Quick Start Menu
Player’s Program MenuFile
Save reports
DecisionsNew decision setOpen decision set
ReportsViewPrintGraph
Buttons for frequently used items
Materials
Player’s Program (English, Portuguese, Spanish)
Player’s Program TutorialPlayer’s Manual*Quick Start Manual
*PDF Files
Pay the Simulation Licensing Fee
On the bpg website, use a credit card to pay the $100 licensing fee for your team
Make sure you input the correct World # and Team #
• Send the license to [email protected]• Provide your own email address for
confirmation of the credit card transaction
Decision Inputs
• SetUp: make sure you set to the correct drive (e.g., a: drive, g: drive—however this is labeled for your flash drive in your computer)
• Copy decision forms from Appendix
• Help function
• Note market research is from menu
• Warning: New Decision vs. Change Decision
Decisions
• New decisions*
• Change previously entered decisions*
*Context –sensitive help
Decision Input Form
Decision Outputs
• See Appendix C for 2 year history and sample outputs
• Market research is not instant: will be printed out with your results
• Level playing field
• Industry rankings clear with each output
The Game Will Not be Rerun!!
• Get Your Inputs Correct the First Time!!
• [HINT: If you really want to FAIL Mgmt 497, change your team’s decision before turning it in.]
Print TWO Copies of Your Decision Inputs
One copy for your records.
One copy turned in in case your drive has a virus.
Decisions are Due by 1:00 P.M. Monday and Thursday
If your decision drive is not received on time, your previous quarter’s
decision will be used
Bring Your Photo ID!
• I.D. is required for turning in and picking up the decision drive: this is for your own protection!
• Pick up time: 5 p.m.
Trial Decision
Be wild and wacky. Lose millions of dollars if you wish. And be sure to
try out all the decision fields, so you know how they work.
Corporate Charter
• Turn in your company name to the simulation grad assistants
• Turn in a list of all your company executives with phone numbers with the first Game Decision—just in case!
Hope you will enjoy the Hope you will enjoy the Business Policy Game!Business Policy Game!
Some SuggestionsSome Suggestions for for
Playing the Business Game Playing the Business Game
Product PricingProduct Pricing
Remember that your company’s Market Share will be evaluated based on dollar sales, not on unit sales: Too much under-pricing is not a wise strategy to gain market share. Sales revenue data (in $000s) are given in Report F2.
Keep track of any change in operating profit margin: Monitor production costs and operating expenses closely. Account for possible general cost inflation (as indicated by CPI). Adjust production costs for different models, different features and
different quality levels when introducing a new product model (see Report E).
Note that the better the margin is, the more money the company will be able to get from every dollar of sales to invest in growth, fund strategic plans, repay debt, buy back stocks, or distribute dividends to shareholders.
Emergency Bank LoansEmergency Bank Loans
Emergency borrowing will lead to: An immediate downgrade of the company’s credit rating and thus a
sharp rise in borrowing costs.
Additional disincentive effects: Causing some salespersons to leave the company. Causing consumer demand to fall.
As with standard bank loans, emergency loans will be automatically repaid from your bank account on the first day of the following quarter. Interest is charged, at a high premium rate, during the quarter when the loan is outstanding.
R&D Funding for Product DevelopmentR&D Funding for Product Development
The payoffs from R&D spending can take time to show up: Much of the R&D spending may have little immediate payoffs, but it
improves the prospect of significant payoffs in the future.
The law of diminishing returns still apply: Beyond a certain amount, large increases in R&D funds will not lead to
any substantial reduction in time for developing a new product.
Any large cut in the R&D budget will have a negative morale effect on the R&D department, causing some of its best people to leave. Skilled researchers are hard to find and cannot easily be replaced once
they leave the company. Due to lack of funds, many existing projects can be halted. Even a new
product model which is close to release can be scrapped. The company should avoid large swings in R&D funding. Hence, steady
funding of R&D efforts is important.
Temporary Layoffs and Line DeactivationTemporary Layoffs and Line Deactivation
Increase operating expenses in the corresponding quarter Temporary Layoffs – They will result in a charge for each quarter a
production line is idle and on standby. Deactivating Lines – They will lead to a one-time charge (costing almost
twice as much as the per-quarter charge for temporary layoffs). Deactivated lines can be reactivated later but with an additional charge.
Negative morale effects on productivity Lower productivity will result in higher per-unit product costs.
Less units to spread the fixed overhead costs over The average cost per unit will rise with decreased production.
To be sure, keeping extra production lines just to avoid a higher UPC will not be good if the unsold surplus units are piling up with no quick turnaround in sight.
Introduction of a New Product ModelIntroduction of a New Product Model
Confirm the availability of a new product model. Check either the Industry Report (Report F2) and the Operating
Information Report (Report E) from the latest quarter.
Enter the new model number on the decision form for the current quarter (indicate also the quality and features levels you want for your product in each market area).
During the current quarter, your company will produce the new model but still sell the old model out of the inventory on hand. If the old inventory is depleted, some customer orders will be met using
the new model. Any unsold units of the old model will be liquidated at the end of the
current quarter.
All the inventory available next quarter will be of the new model. The new product model will officially be introduced and sold in the next quarter.
Product Model and SalesProduct Model and Sales
A new product model may not always be successful: There is at least an 80% chance that the new model will succeed and
raise sales. There is up to a 20% chance that the new model will not do well and will
actually cause a decrease in sales.
Even when two companies sell products with the same model number and same product characteristics, their products will not be perceived as identical products by consumers: This means the product brand matters for consumers. Being the first to enter a specific market or sell a new product allows a
company to acquire superior brand recognition and customer loyalty, thus giving the company some extra advantages to stay on top.
Reading the Industry ReportReading the Industry Report
When reading the Industry Report (Report F), you can see some quarterly data for all the companies in your industry. Some of the ratio numbers reported can help you evaluate the relative profitability and efficiency of the different companies.
Reported in the Report Financial Ratios
Income to Assets Ratio = Return On Asset
Income to Equity Ratio = Return on Equity
Income to Sales Ratio = Net Profit Margin
Sales to Assets Ratio = Asset Turnover
Bonds to Equity Ratio = Debt to Equity Ratio
Hope you will enjoy the Hope you will enjoy the Business Policy Game!Business Policy Game!