Service Challenge an exploration of business

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Title: Service Challenge an exploration of business

1
Service Challengean exploration of business

This computer simulation gives you and the
others
an opportunity to manage a real business for
several simulated years
making decisions as part of a small team
covering
Marketing
Operations
Finance
your objective, while competing against the other
teams, is to make your business a success

2
The Simulation

3
The Situation

The company is a subsidiary
has been operating for several years
provides three services (Level 1, 2 3)
involving two resources (A B)
companies are in direct competition
You will run this business for several periods,
each of which represents one trading year

4
The Services

Level 1 (the best and most recent)
Level 2
Level 3 (most basic and oldest)
Each service is bought by a different group of
customers and there is no interaction between the
groups.
Also, each service makes different use of
resources, has different potential and different
marketing needs.
When selling your service you must ensure you
service existing customers and attract new
customers.
Each customer will purchase several days service
from you each year.

5
Marketing

Your marketing decisions affect the number of
customers who stay with you, the number of new
customers and the amount of service they buy from
you and these are influenced by
prices
promotion
quality of service
resource availability
market trends
the actions of the other teams
The two types of customer (Existing and New) are
influenced differently.

6
Resources

Each service utilises the resources differently
thus
7
Other Resource Data

A unit of resource provides a maximum of 200 days
service each year
Currently there are
Resource A 25 Units
Resource B 30 Units
If resources are short Resource A can be used in
place of Resource B but not visa versa
Depreciation - 20 /year
Resource quality (but not productivity) can be
improved by investment and this investment is
split equally between
Training staff (cost)
Improving assets (capital investment)

8
Financial Data

interest paid on overdrafts - 20 per year
interest paid on loans 16 per year
interest earned on cash - 10 per year
mandatory dividend - 10 of Equity
If Financial Leverage exceeds 50 then the
interest paid may increase substantially
taxation is 50 and paid the following year
general overheads 50,000/year
promotion costs - decided by you

9
Decisions

For each service separately
price
promotion
For each resource separately
number of new resources
investment in Quality Improvement
And in general
new bank loans
Use the decision form supplied and complete it
carefully and legibly and hand to the simulation
controller at the specified times.

10
Results