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SimCompanies Simulator Use For An Undergraduate Senior Capstone Course Prepared by: Eric M. Gamble, Ph.D.

Date: April 16, 2020

An online business simulator, in lieu of a widely used online simulation product offered by a major

publishers of university textbooks.

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Table of Contents Overview ....................................................................................................................................................... 3

SimCompanies Overview .............................................................................................................................. 3

Course Objectives for MGMT-4030 .............................................................................................................. 3

Course Objectives Mapped To SimCompanies Capabilities...................................................................... 3

Synthesis of Business Information ........................................................................................................ 4

Implementation of Multi-Year Strategies ................................................................................................. 6

Defending Business Decisions ................................................................................................................... 6

Evaluating Business Decisions ................................................................................................................... 6

Evaluating Social Responsibility ................................................................................................................ 6

Coordinate Multi-Discipline Team-Based Environment ........................................................................... 7

Examine and Synthesize Information from a Dynamic Global Environment ............................................ 7

Game Play ..................................................................................................................................................... 7

Segmented Game Play .............................................................................................................................. 7

Non-segmented Game Play ...................................................................................................................... 8

Chatrooms ................................................................................................................................................. 8

Industries .................................................................................................................................................. 9

The Value Transformation Process ....................................................................................................... 9

Conclusion ................................................................................................................................................... 11

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Overview Due to the cost of a widely used online business simulator, offered by one of the largest publishers of

college textbooks and its requirement that all users must have an individual account, an alternative was

sought and SimCompanies was found (www.simcompanies.com).

SimCompanies Overview SimCompanies, an online multi-industry, business simulation allows users to test their knowledge,

understanding, and ability to implement business strategies in a Massive Multi-Player Environment

(MMPE) that uses principles of economics, business operations, business finance, and aspects of

marketing to grow their entity, resources, and dominance. Players may play for free or be grouped

within an educational group to allow for normative comparisons. The one thing about this simulation

environment, no single individual or handful of players can control or influence the game’s economics.

As of the week ending February 29, 2020, the average number of daily users was more than 4,500 in

time zones all around the world.

Course Objectives for MGMT-4030 Upon satisfactory completion of this course, a student should be able to:

1. Synthesize business information from a variety of internal departments, such as finance,

operations, production, marketing, information technology and human resource management.

2. Formulate and implement a multi-year business strategy after evaluating the internal and external environment of a firm.

3. Defend business decisions using information derived from management assessment tools.

4. Evaluate the impact managerial decisions have on all facets of the firm and shareholder expectations.

5. Evaluate the role and impact of decisions concerning corporate social responsibility.

6. Coordinate successful multi-discipline decision-making in a team-based environment.

7. Examine and synthesize information from multiple markets and execute decisions in a dynamic global environment.

Course Objectives Mapped To SimCompanies Capabilities The three (3) cores of any business are marketing, finance, and operations. These core aspects of any

business are essential because if just one of these core pieces is removed, a business will cease to exist

at some point in the future or never reach perpetual motion. This framework is one of the many

business frameworks Dr. Gamble exposes his students to so they may abstract and synthesis knowledge

and understanding. However, in today’s society, businesses have come to realize that not only the raw

materials used by operations, the capital controlled by finance, and the sales efforts of marketing make

a business successful. It also relies on the use of human capital and corporate knowledge. Hence, two

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(2) major supportive components of thriving businesses are its ability to leverage human resources and

information technology.

Synthesis of Business Information

Marketing Information

SimCompanies do not implement a true marketing component because there are two (2) distinct

marketing groups, “the reals” – other players and “the virtuals” – affectionately referred to as

SimPeople. To entice SimPeople to buy your product, a marketing spend that in turn increases the

number of prospective customers to eventually convert to buying customer is not required. The

SimPeople are purely motivated by price (upon writing this brief the number of SimPeople totaled a

little more 13 million, employed across seven (7) industries, based in more than 69 thousand business

facilities.

Even though traditional marketing techniques are not required for “the virtuals”, players must market

their wares to other players via the Market Exchange or within the Sales Chatroom.

Financial Information

By clicking on the headquarters, a player will be able to view and/or download the following:

• 7-day income and expense summary (view only)

• 7-day cashflow report (view and download)

• 24-hours balance sheet (view only)

• 2-period (24-hours) income statement (view only)

All financial reports can be derived from the transactions captured within the cashflow report. A best

practice for analyzing cashflow is to utilize the pivot feature of a spreadsheet, database, and other big-

data tool.

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Operational Information

Every structure on the players map has particular operational characteristics that must be fed,

controlled, and linked to other aspects of the overall environment, to ultimately deliver a finished

product the generates revenue.

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HR and IT Information

Once a business starts to approach or passes the $1 million dollar mark, aspects of “key personnel”

become very important. Background, attitude, and training are major determinants for their

effectiveness within the business.

Implementation of Multi-Year Strategies In the SimCompanies simulation environment, approximately every two (2) 24-hour days is equivalent to

a 1-year span of time. This is important in two (2) regards; 1) the simulated economic environment can

be in 1 of 3 states on any given day (recession, normal, expansion) and 2) management will age out,

meaning once a virtual manager reaches an age of 62 that manager retires. Therefore, succession

planning is important and must not be overlooked. Doing so can have grave financial consequences for

the business.

Defending Business Decisions This was achieved via course assignments. Student teams were instructed to suggest and coalesce

within their group, which produced a weekly Decision Report. The purpose of this report was to force

students to deliberate among themselves and record both the ideas brought forth and the decision(s) to

be executed for that week.

Evaluating Business Decisions This was achieved via course assignments. Student teams were required to produce a Weekly

Performance Report that communicated what was done (based upon the weekly Decision Report). This

weekly report usually contained information on what resources were used, what revenue was

generated, and the amount of expenditures. Many student teams also used this opportunity to

communicate balance sheet information too.

Evaluating Social Responsibility This aspect was difficult to implement in a meaningful way. However, some players within the

simulation environment “role played” this business strategy. One of the most obvious methods, by

which this was done, were players that focus on providing power to other players, using only solar

power. If more power generation was required, a player would have to eventually upgrade one or more

of their power plants to nuclear. However, some players opt to specifically staying at the solar power

generation level for their plants.

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Coordinate Multi-Discipline Team-Based Environment As demonstrated by the weekly Decision- and Performance Report, student were required to work in a

team-based environment. Their final Performance Report and their final presentation require team

member to “wear a specific hat” within the company.

Examine and Synthesize Information from a Dynamic Global Environment To be successful within this simulator’s environment, student had to digest and synthesize a large

amount of data and information. This, coupled with the fact that students were interacting with people

throughout the world, in different time zones, with differing business communication mannerisms

provided them with a truly international experience.

Game Play

Simulation Length 2-Weeks as Individuals

5-Weeks as Teams

Familiarity and length of game play are two major aspects of students’ engagement, knowledge of, and

understanding of the simulation’s game play. A myriad of business configurations exists as students

grow their businesses. However, all students start at the seem level with the same in-game guidance,

provided by a virtual personal assistant, commonly referred to as PA by other online players.

Two weeks was taken for students to play on their individual accounts, to complete the tutorial, learn to

navigate the environment, and grow their business as large as possible. After the initial two week

period, students were placed in teams of four (4) with responsibilities corresponding to the business’

board member they were responsible for (COO, CFO, CMO, or CTO). These board responsibilities

rotated among the team members on a weekly basis, to ensure all students had exposure and

experiences for each role. Students met as “a Board” a minimum of two (2) times per week to review

performance and make decisions.

The team segment of the simulator play ran for five (5) weeks. This culminated in a team presentation

that closely resembled a publicly traded company’s earnings call. Wherein, each senior executive

reported on successes, mis-steps, and future direction – with all sections related to a common theme.

Segmented Game Play Segmented game play is designed for an educational environment. Within this environment, players are

invited by the group facilitator to join. This facilitator is usually the course instructor. Once a player

accepts the invite, they are identified within the simulation environment as being a member of an

educational group.

This educational group can only be seen by the facilitator, from their system menu. When this menu

option is clicked, the instructor will be able to:

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• View a performance graph

• View a performance table

• Download performance data, by individuals

• View the start and stop dates

• Add credits for a longer simulation windows

• Invite players into the group

Note: Each student account invited to the group has a cost of $2.00 per month.

Non-segmented Game Play The vast majority of the SimCompanies playing environment is comprised of individual player accounts,

currently totaling more than 4,500 active daily users. These players, once they familiarize themselves

with the simulator’s gameplay, will typically identify an industry, a product, or a group of products they

want to use to increase their entity’s corporate value (CV). The primary method CV is increased is via

consistent profit generation. Players can use various enterprise strategies to generate profit, such as;

vertical alignment, horizontal alignment, low-price strategy, focused market strategy, or broad

differentiation strategy, to identify a few. Many players use one strategy and then pivot to another,

which might have been executed because of the identification of a new opportunity or the lack thereof.

Chatrooms Multiple chatrooms exist within the simulation environment. The two major chatrooms, Sales and

Game, are used to promote products a player is looking to sell or buy products and obtain information

on how to do something or game etiquette, respectively. Other chatrooms players have access to are;

Social, Help, Roleplay, German (Game), German (Sale), and French (Game). On some occasions, players

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that primarily use one of the non-English chatrooms will ask questions in the English one. When this

occurs, players might use an online translation tool, such as deepl.com or Google Translate.

Industries SimCompanies provide players with the ability to determine their own industry of focus. Although, all

new players initially start with a farm and a single retail location to start their business execution

strategies, as a contractor. This is done so user can learn how to navigate the environment and learn

where things are located and what they may be used for. This initial learning is accomplished via a

guided tutorial. Once a user has completed their tutorial, an in-game Personal Assistant (PA – in-game

Artificial Intelligence) will continue to guide them through various business decisions, until they reach

Level-10. At which time, The PA will inform the user that they are on their own and should reference

the in-game Encyclopedia to discern more knowledge. The use and appropriate use of Chatrooms will

also assist users in determining business strategies and possible methods of execution.

Overtime, player have the ability grow their CV to Multinational Corporation or even IPO status.

Currently, the highest rank players has a CV of more the 924 million dollars with an IPO status. The

company levels between Contractor and IPO are; Sole Trader, Limited Corporation, Corporation, and

Multinational Corporation.

The Value Transformation Process The products desired and enjoyed by end-consumers typically go through a series of processes that alter

its characteristics and enhances its intrinsic value. As these complete one process state, it might move

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on to another, to again enhance its value, or be sold at its current state, which is of a higher value than

the value of the product’s state entering the transformation process. An example of these various

states, simulated within the online environment, can be demonstrated by looking at the oil refinery

processes.

To refine oil, an oil rig must be used to drill for an abundant well. Finding these wells is completely

random, requiring a player to build and scrap multiple rigs until a well with good abundance is located.

Once an abundant well is drilled, the crude oil must then go to a refinery, where the player decides

which finished product will be produced on this run. For any given production run in a refinery one of

the following finished products may be produced; petrol, diesel, plastic, carbon fiber, or rocket fuel. The

player can then sell the finished products B-2-B direct, B-2-B indirect via the Market Exchange, or via a

retail outlet if the finished product is petrol or diesel and they own a gas station. The remaining

products; plastic, carbon fiber, and rocket fuel are used as inputs in another transformation process to

create other higher value items.

If we look at the finished product of the carbon fiber, this

product does not have a retail outlet. It goes to another level of

value transformation, where it is processed in a factory to

become carbon composite sheets. The carbon composite

sheets are needed to produce fuselages and wings are the

aerospace industry, within the simulator.

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Similarly to carbon fiber and carbon composite sheets,

fuselages and wing do not have a retail outlet. They are

used for the production of sub-orbital 2nd stages, orbital

boosters, jumbo jets, luxury jets, and single engine

airplanes. Even though these products are at the highest

level of the transformation process, at any prior to

producing the highest value product, a player could sell

their inputs to another player. So, if another player did not

have a factory to create carbon composite sheets but had

an aerospace factory, they would seek a supplier of carbon

composites to produce their own fuselages and wings.

Whereby, reducing their finished product cost.

Buildings Available For Value Transformation

Production: Plantation Water Reservoir Power Plant Oil Rig Refinery Shipping Depot Farm Beverage Factory Mine Factory Electronics Factory Fashion Factory Car Factory Propulsion Factory Aerospace Factory Aerospace Electronics Vertical Integration Facility Horizontal Integration Facility Quarry Concrete Plant Construction Factory General Contractor

Retail & Sales: Grocery Store Electronics Store Gas Station Fashion Store Care Dealership Sales Offices Hardware Store

Research: Plant Research Center Physics Laboratory Breeding Laboratory Chemistry Laboratory Software R&D Automotive R&D Fashion & Design Launch Pad

Recreation: Castle Park Lake

Conclusion Use of the SimCompanies online business simulator, in a 4000-level undergraduate business capstone

course, played a vital role in fully meeting 6 of 7 course objectives and partially meeting 1 of 7 course

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objectives. The SimCompanies platform was an excellent tool to use in a classroom setting to

assessment students’ knowledge, understanding, and abilities given a competitive abstracted business

environment. The platform availed itself to have “deep” decision making conversations with students,

because transaction level data is captured for each student and rolled up to an Income Statement,

Balance Sheet, and Cashflow. When implemented in the next course, student will be directed to identify

particular players and deconstruct their business model for replication. By doing this, students will

fundamentally need to build a business plan that will get them from a seller of produce to a business

approaching or surpassing the $1 million corporate value, prior to selling their first apple.