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Micromatic Simulation Team and Solo Versions

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Title: Micromatic Simulation Team and Solo Versions


1
Micromatic Simulation Team and Solo Versions
2
Introduction
  • Simulate the workings of a small manufacturing
    business
  • Each team (? in total) will play against each
    other
  • Computer just process each companies individual
    decisions
  • Administrator (me) acts as owner, banker and
    industry regulator, union negotiator, etc.

3
Goals
  • Understand the importance of a business and
    strategic plan to guide business decisions
  • Understand the relationship between the three
    main financial statements
  • Understand the relationship between marketing,
    operations and finance
  • Understand the operational issues of production,
    inventory, plant and labor force

4
How to approach the simulation
  • Management is a balance of art (intuition) and
    science (analysis of facts) combined with group
    dynamics
  • To Succeed you should
  • Manage your time efficiently (stay focused)
  • Manage your business do not guess at your
    decisions

5
To Succeed you should
  • Learn from your failures
  • Decision rules are the same for every round
  • Must learn to capitalize of success and recover
    from mistakes
  • Do not worry if a little confused at start
  • you will quickly move up the learning curve
  • Simulation requires applying your knowledge not
    just listening as in lectures (fundamental shift)

6
Four Functions of Management
Planning
Controlling
Organizing
Leading
7
The Manager as a Planner
  • Must develop the Vision
  • Mission Statement Statement of Goals
    Strategies
  • Who are the customers, what are their needs and
    how will gain competitive advantage
  • What are your corporate values

Low price / High volume
Premium price / Low volume
8
The Manager as a Planner
  • In the Simulation you are responsible for the
    planning in five main areas
  • Marketing
  • Production
  • Finance
  • Sales Forecasting
  • Management Dilemmas

9
Marketing Production Finance Sales -
Dilemmas
  • Marketing Decisions
  • Pricing
  • Price sensitive marketplace unless enticed by
    stronger marketing efforts (oligopoly)
  • Promotion
  • Local newspaper advertising, trade publications,
    ad message, salesreps, WWW promotion, product
    features and quality
  • Market Research
  • Can buy Market Research Information (9 types)
  • Price, local newspaper advertising, trade
    publications, quality, WWW, salespersons,
    product features, units sold, all by Company,
    Future Sales Potential

10
Marketing Production Finance Sales -
Dilemmas
  • Production Decisions
  • Ordering Raw Material (order carrying cost)
  • Product Research and Development
  • of Units to Produce
  • Must have raw material, plant capacity of
    workers
  • of production workers to hire, fire or layoff
  • Begin with 54 workers can add overtime
  • Amount of production capacity to buy or sell
  • to invest in Training
  • Improve productivity

11
Marketing Production Finance Sales -
Dilemmas
  • Finance Decisions
  • Short Term Loans (Line of Credit)
  • Finance current operations
  • Long term Bonds (mortgages)
  • Finance expansion of plant capacity
  • Short Term investment deposits or withdrawals
  • Can invest excess cash into stable conservative
    short term securities

12
Marketing Production Finance Sales -
Dilemmas
  • Sales Forecast Decisions
  • Based your quarterly sales forecast on your
    current and future mix of pricing, advertising
    investment in product quality
  • Use this forecast to set production parameters
    but no guarantee you will reach these forecasts
  • If you misjudge your competitor's actions you
    will not make the forecast
  • Added complication is you do not know what the
    economy will do.

13
Marketing Production Finance Sales -
Dilemmas
  • Management Dilemmas
  • Periodically will introduce various management
    dilemmas
  • Range from employee theft to union relations to
    substance abuse
  • There is no right answer in these dilemmas
  • Responses to the dilemmas will result in
    different consequences
  • Consequences can effect worker productivity,
    sales, cost of raw materials or interest rates

14
The Manager as an Organizer
  • Must develop the Organizational Hierarchy
  • Organizational Chart
  • List of duties responsibilities for each
    position
  • Staff the position
  • Remember the dual role (student -gt friendship)
    and (manager -gt work)
  • Teams that have an established chain of command
    do better than the herd
  • Herds tend to take narrow view and focus only on
    a single issue
  • Organized groups (specialized functions) tend to
    keep broader focus and are much more efficient

15
The Manager as a Leader
  • Must decide how to influence and motivate members
  • Goal Setting
  • Balance of individuals goal and organizational
    goal
  • Will you have management hierarchy or team
    approach?
  • How will you manage your company?
  • How will you balance the workload?
  • Your peers will evaluate your leadership ability
    in both a public and confidential manner
  • How will you motivate under performing members?

16
The Manager as a Controller
  • Must deal with issues of control
  • Must establish a reporting system
  • Must develop performance standards
  • Must monitor key performance parameters and take
    corrective steps if necessary
  • Must know the breakeven points for the
    manufactured product

17
The Business Environment
  • All companies start from identical point
  • All companies manufacture identical products
  • Manufacturing process consists of forming raw
    material (components) into finished consumer
    product
  • Produce a commodity gt No customer or brand
    loyalty gt you must earn each quarters sales

18
Company publicly held
  • Company is in start-up position only one
    quarters (Quarter 0) info is available
  • John Emily Anderscott developed business but as
    limited partners not allowed to perform any
    management duties
  • You will deliver reports to the board of
    directors
  • Initially no difference exists between you and
    your competitors products
  • This will change as you modify promotion,
    pricing, and product improvements

19
The Simulation Environment
  • Each decision period is 3 months (1 quarter)
  • Teams make approximately 50 - 100 decisions per
    Qtr
  • Three stages
  • Forecasting Stage
  • Test what-if and modify decisions until have
    best case
  • Processing Stage
  • Administrator accesses decisions of ALL companies
    to determine market share allocations and
    individual company profitability
  • Results Stage
  • Teams analyze actual versus forecasted
    performance. Use this analysis to forecast next
    quarter.

20
To Do
  • Read in detail the summary and study the
    decisions and reports and get familiar with the
    software.
  • Decide on Company name, organizational structure,
    individual job titles and responsibilities.
  • Begin to develop a mission statement strategy,
    areas of responsibility, and duties

21
My Role
  • I will be your
  • Banker
  • Board of Directors
  • Regulatory Advisor
  • Union President
  • And other roles as necessary

22
As Administrator I Can Control
  • Economic variables (industry demand, costs, and
    weightings of performance variables)
  • Introduction of management dilemmas
  • The amount and availability of loans and
    mortgages
  • Frequency and Amount of fines (lost passwords,
    late submissions, failure to get proper prior
    approvals, etc.)
  • Introduce External Substitute products. If
    everybody takes a low promotion strategy I can
    introduce external substitutes which creates a
    loss of demand for ALL companies.

23
Marking Scheme
  • Variety of methods to assign marks
  • Team performance
  • The Strategic Plan (See Assignment 1)
  • Industry Analysis paper (See Assignment 2)
  • Presentation of Company strategy performance
    (last week of classes)
  • Team assignments (log book, periodic reports,
    etc.)
  • Joint Peer evaluation and division of points
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