Management Experience an exploration of tactical management

1
Management Experiencean 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

2
The Simulation

• The simulation consists of three stages
• Preparation
• Decision-making
• Review
• Preparation
• Familiarization
• Organization
• Consider objectives
• Consider strategies
• Decision-making
• Submit Decisions
• Simulate
• Analyse Results
• Replan
• Review
• Discuss Compare Results

3
The Situation

• 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
• all costs prices are a universal currency
• You will run this business for several periods,
  each of which represents one trading quarter

4
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

5
Operations

• Current Capacity 24,000 units/quarter
• Current Production 22,610 units/quarter
• Up to 30 overtime is possible
• Additional capacity costs 250 AUs 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

6
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

7
Decisions

• Each quarter these decisions are made
• 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.

8
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
• Marketing Report
• Profit Report
• Balance Sheet
• Key Measures
• Other Information
• Market Research
• Business Research
• Market News (prices market shares)
• Contract Bids
• Editorial Comments

9
Observations

• 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!