Biz Sim

iBizSim: International Business Simulations
iBizSim01: BM 2 P1
User Manual
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
iBizSim01: BM 2 P1
Note: This document has been formatted for double-sided printing.

1 The International Business Simulation iBizSim01
1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17
iBizSim01: BM 2 P1
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1 1 5 5 9 9 10 12 12 13 14 14 15 16 17 18 20
Structure and progression of the International Business Simulation iBizSim01 Tasks and organization of the team Company policy Analysis and evaluation of data - setting up the indices The products The markets The development of demand Conditions of payment Image Production Personnel capacity Machine capacity Timetable for purchase, production and sale of products Costs Financing Exchanging currencies Summary of the effect of influencing factors
Decisions
2.1 2.2 2.3 2.4 2.5 Company decisions Sales decisions Purchasing decisions Production decisions Financial decisions
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22 23 27 28 31
Annexes
3.1 3.2 3.3 Capacity calculation for period 0 Calculation of manufacturing costs in period 0 Determining the change in stock value in period 0
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34 35 36
iBizSim01: BM 2 P1
iBizSim: International Business Simulations PREFACE
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This course is based on the International Business Simulation iBizSim01 of the series iBizSim: International Business Simulations developed by Prof. Dr. Ashok N. Ullal, Professor emeritus, School of International Business, Reutlingen University, Germany. The course is designed to give groups of students working as teams the opportunity to build and implement an international business strategy for a simulated company operating in the world markets. The simulated company is located in Germany, has a production plant initially in Germany, manufactures initially two consumer products and sells these in four markets, Germany, U.S.A., China and India. The course emphasizes strategic planning and controlling and expects the students to use in a very integrated manner their knowledge and experience from all the other business-related courses. In the International Business Simulation iBizSim01 used in this course, the simulated company that you will manage: Purchases Produces Transports Sells raw materials and bought-in goods - invoices are drawn up in Euro goods in the Germany - all costs arising are in Euro the finished goods to the central store and to the sales branches in the various sales markets the products Alesa and Bordo in four markets in which the invoices are drawn up in various currencies
Currencies used Market Currency Germany Euro (EUR) U.S.A. U.S. Dollar (USD) China Chinese Yuan (CNY) India Indian Rupee (INR)
The balance sheet, the profit and loss account, and the financial account will all be drawn up in Euro.

1 The International Business Simulation iBizSim01
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1.1 Structure and progression of the International Business Simulation iBizSim01

Several companies in a particular branch of industry are in competition with each other. They supply the products Alesa and Bordo in different markets that are independent of each other. Each company manufactures the products it supplies, but there exists the possibility of buying in these goods. The products are generalized consumer goods. Hence the simulation is based on the application of general business principles. Specific experience from particular branches of industry is therefore not necessary for taking part in the simulation. The products Alesa and Bordo will be described in detail below. The structure of the production plant, sales and turnover in all markets, stocks of goods and cash, outgoing and incoming payments, i.e. all the information which is necessary for managing the company, will be found in the enclosed Management Report. It shows the economic and operating state of the company at the close of period 0; all the companies have the same opening situation. The simulation is run in chronological periods, every four of which constitute a financial year. At the start of each period, each company makes the decisions that are to apply in this period. The decisions of all the companies are processed in a computer program, and the results of each period are printed out for each company in a Management Report. From this report, each management team can see the consequences of its decisions. The report constitutes the basis of the decisions for the subsequent period. One of the tasks of the companys management team is to analyze the reports and to ascertain the interrelationships, as well as the factors involved, in order to establish a rational basis for subsequent optimal decisions. All decisions have to be made in such a way that the long-term success of the company beyond the conclusion of the simulation is assured.
1.2 Tasks and organization of the team

The amount of information and knowledge necessary for the successful running of a company is continually increasing, and in addition there are inter-sectional problems and projects. This forces the management to delegate important duties to senior colleagues who in turn have to search for joint solutions. In order to reflect this trend adequately, in the International Business Simulation iBizSim01 all business functions are exercised by working groups (= teams). Hence the willingness of every participant to work in a team is necessary. Your team will take over the management of one of the companies competing with each other. In industrial life, decisions are made on which the future success or failure of companies, and hence also of their employees, depend: in the same way, your team will now decide how your company is to be run. The decisions necessary for this will be made at the start of each 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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period. The owners of your company expect you to out-perform the companies that are in competition with you. It is your task to: 1. Improve the market position of the company 2. Achieve a satisfactory level of profitability 3. Ensure the long-term viability of the company In principle, the internal organization and allocation of responsibilities is left to the teams themselves. However, in the interest of effective decision-making in the given time per period, it has proved to be a good idea to allocate specific functions (for example in sales, finances, production) to individual team members. In the areas of responsibility formed in this way, the group could prepare the decisions of the teams for subsequent discussion. Finally, every team must be able to reach a group decision: this means that agreement must first be reached on how the final decisions are to be made (e.g. by unanimous vote or by majority vote). However, you should nevertheless take into account the following points when distributing the tasks: 1. If participants from the same real-life company find themselves in the same team, there is little point in transferring the familiar hierarchical chain of command to the simulation. If a member of the team, in real life in a high position, tries to push through his/her own view in the simulation in the same way as in the real world, and to deny the other team members any chance of developing, then motivation will die, and a major part of the point of participating in the simulation will be lost. 2. Not infrequently, one still encounters a certain friction between e.g. engineers and personnel in the financial departments, between personnel in production and those in sales etc, based on a lack of knowledge of the tasks and problems that other colleagues have to cope with. It might therefore be appropriate to allocate to the members of the teams tasks that are unfamiliar to them from the point of view of their training or activity in their company. If in the simulation, for example, a production engineer takes over the marketing section, whereas a director of sales is responsible for production, then a certain mutual understanding can be developed which will help to overcome friction in the company, a blinkered approach, as well as any departmental empire-building.
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Whatever organization you choose, remember that it is important for every member of the team to be involved as much as possible in reaching the decisions.
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Management Tasks
1. Setting the goals of the company Planning of strategic and operational measures 2. Ensuring the availability of the necessary
Raw materials Bought-in/semifinished goods
Staff capacity
Machinecapacity
Capital
3. Production and/or purchase of a range of certain products e.g
Alpha
Beta
4. Absatz der Erzeugnisse product Supply and sales of the auf unterschiedlichen Mrkten in different Markets
Market 1
Market 2
Market 3
Market 4
5. Analysis of the results

1.3 Company policy
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One of your tasks in taking part in the simulation will be to develop your own ideas and objectives and to carry them through against the interests of the competing companies. After your team, as the new management, has become familiar with the company and what is happening on the market, the owners will expect a clear statement of future long-term company policy. Moreover, they will expect the establishment of measures (strategy), the purpose of which is to achieve the stated objectives. The company is not rigidly bound to the policy established at the start of the simulation: however, any deviations from it need to be discussed and justified in the final discussion. The following summary will provide you with examples of business objectives:
In production:
Optimal stockholding, high degree of utilization of capacity, minimization of costs, an even utilization of capacity, minimal staff turnover.
In finance:
Short-term and long-term profit maximization, low level of debt, self-financing, high yield on capital, distribution of high profits.
In marketing:
Optimal satisfaction of customer demand, favorable image, steady growth, high quality, high market share, and constant ability to supply the goods, high turnover.
In the social sphere:

Contented workforce, continuity of employment even when there are fluctuations in sales, identification of employees with the company. When taking part in the simulation, a discussion of these widely varying objectives and the resultant conflict of objectives must not be omitted, even if the developing competitive ethos of the team means that, as a rule, the easily determinable factors "company profit or "profitability are selected as a measure of success and hence of "ability.
1.4 Analysis and evaluation of data - setting up the indices

The Management Report provided to you showing the opening situation and subsequently printed out at the end of each period provides a wealth of data, and gives each management team an overview of the success and situation of its company. A careful analysis will show whether changes have occurred in the various areas, and if so which changes. It will be advisable to consider what information can be represented by indices/statistics that are particularly meaningful and that should be regularly drawn up. In the analysis and processing of the data, the following points, for example, could be examined:
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1. In which areas of the company do bottlenecks exist? How significant are they? What short-term measures can be taken to optimize utilization, what long-term measures are there to eradicate the bottlenecks? What, therefore, is to be done? 2. Which of the indices appear really fundamental and should thus have particular attention paid to them? 3. Which data should be collected in tabular form over several periods, or extrapolated? 4. Which data are suitable for graphical representation? 5. How is the progression of the curve of the diagrams to be interpreted? 6. What deviations from the planned or expected course of events are discernible? 7. What factors can cause the deviations? 8. How sensitive to these factors is the situation? 9. What effects do price changes have on demand in the markets? 10. What effect does expenditure on communication policy have in the markets? 11. Meaningful information could be supplied by relative figures. They provide relationships in the form of ratios between sets and sub-sets in the same period (e.g. the share of material costs in total costs. The reference of essentially different figures (e.g. difference and/or change in demand in each market). Index figures between essentially similar but chronologically dissimilar figures (e.g. personnel costs in period 1 / personnel costs period 0). As a matter of principle, you are advised to use only the few essential figures as your indices. Particularly in commercial practice, indices cannot be more precise than the base data/figures on which they rest, and the ratio/relationship that exists between them.
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Methodology of Decision-Making
Analysis of the past Evaluation of Management Reports over time Current situation Analysis of results of the current Management Report Purchase of market information Type 1 Type 2 Type 3 Forecast of future developments Collection of future-orientated data
Purchase of market information Type 4
Business situation and trends reported by Game Leaders
Acquisition of management information
Processing of management information Planning of measures, including planning of alternatives if necessary
Purchasing plan
Production plan (Investment and personnel plan)
Sales plan
Finance plan Agreement on and adjustment of individual plans
Cost plan Yield plan
Development of results plan planned profit and loss account, planned balance
DECISION
Analysis of results comparison of actual/planned figures
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The Decision Cycle in the Management Game
Setting out/ adaptation of objectives
Analysing results
Etablishment/ adaptation of strategy
Decision
Obtaining and evaluation of information
Assessing alternatives
Planning measures/ planning alternatives
Development of and agreement on individual plans

1.5 The products
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Your companys sales range comprises the products Alesa and Bordo, which may be produced within your company or be bought in. The products Alesa and Bordo, offered on all four markets, are durable consumer goods. At the start of the simulation, their selling prices and sales figures are identical for all companies. Alesa and Bordo may be characterized as follows:
They are manufactured partly from the same raw materials, partly from different ones, as follows: Each unit of Alesa requires 3 units Aurit and 1 unit Bekat Each unit of Bordo requires 2 units Bekat and 2 units Calot
They are manufactured on the same groups of machines, but require different production times per unit. Both products may be bought in, as finished goods which - thanks to strict quality control measures - are equal in quality to ones own production. There is no competition between Alesa and Bordo as substitutes. Alesa is a product that has been available in the markets for several years and has developed into a main generator of turnover. The well-tried and tested basic concept, which, when it was originally introduced, was considered a major innovation, has been largely retained. From time to time, attempts have been made, by introducing minor improvements and adaptations, to reflect ever more sophisticated requirements - particularly in the markets Germany and U.S.A. - but this has not prevented the interest of potential customers turning to newer products. Bordo is a mature product that corresponds to state-of-the-art technology. Bordo meets the high demands of the discerning consumer with high spending-power. It has earned high praise from consumer test associations and in technical journals etc. Bordo has been available in the markets for several periods and to date has fulfilled all expectations. So far the markets have been only partially opened up, and that to differing degrees.
1.6 The markets

The products Alesa and Bordo are supplied on four geographically separate global markets, Germany, U.S.A., China and India. All companies compete in these markets, but there are no further suppliers. Cooperation between companies is not possible. The markets are different in size and structure. It is up to each company to decide in which markets it wishes to supply its goods. Sales branches have been set up in all markets. They are the pre-requisites for opening up and
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supplying the markets. They fulfill all necessary functions such as processing estimates/offers and orders, after-sales service, customer care, service back-up, storage and dispatch. The transport of products to the various markets causes different costs (see list of parameters). The size of the sales branches in the four markets is determined by the expected demand for Alesa and Bordo: this is fixed by expenditure in one period. The level of expenditure on a sales branch has no effect on the level of demand: it merely affects the capacity to process and deliver customers orders. Please note that in the profit and loss account the costs of maintaining additional stores in the sales branches are not included under the heading Sales branches but are lumped together with the costs of additional stores in the central store under the heading Storage costs for finished goods. The companies attempt to build up long-term business relationships in the markets, a permanent presence on the markets is hence obligatory. The closing down of individual sales branches is not permissible, even when the situation on the market does not allow for costs to be covered on a short-term basis.
1.7 The development of demand

1.7.1 General
In the first periods, the trend of the general economic environment in all markets remains the same. To date, there have been various predictions of the development in subsequent periods. Customer demand for the products of a company is determined by 1. The decisions of the company 2. The decisions of competing companies 3. The general economic environment 4. Factors specific to particular markets 5. The reputation (= image) of the company. The development of Alesa and Bordo in the markets may vary and can be influenced to a considerable degree by the decisions of the companies. Hence, the sales position of the individual companies can and will deviate from the general situation in the overall markets.
1.7.2 Decisions
As at the start of the simulation the products of all the companies are the same, special significance attaches to the companies sales policy decisions. Their aim is to firmly establish the name of the products and of the company in the consciousness of potential customers, to 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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create a competitive advantage for their own products, and last but not least to increase demand and sales at "reasonable" prices. In this, the demand and purchasing decisions of the customers will be determined partly by their experience with the degree to which the different suppliers are able and willing to deliver the right goods at the right time at the right price.
1.7.3 Demand for Alesa and Bordo in the markets

Alesa and Bordo develop differently on the markets. These developments can be influenced considerably by the companies decisions. Hence, the sales situation of the individual companies can, and will, deviate from the general situation on the total markets. Alesa was introduced a long time ago in Germany and not long afterwards in the U.S.A. In both markets Alesa achieved high turnover figures and great success. However, for some time now turnover in Germany has been stagnating, even the U.S.A. has in the meantime reached a high degree of saturation. Market resistance is forecast to grow particularly in Germany. For the coming periods pessimistic forecasts predict a considerable decline in demand in Germany, and with a slight time-lag also in the U.S.A. This trend will gradually accelerate. In this, Alesas situation in Germany is likely to become more critical than in the U.S.A. To begin with, replacement sales will continue but will decline in the long run. In line with declining interest on the part of potential customers, the level of personal preferences for Alesa in these markets must be expected to decline or disappear. This, however, also applies to the comparable products of the competition. Alesa was introduced in China and India at a considerably later date. In these markets, the product can be considered as being in the mature stage. It has been possible to achieve such a level of consumer awareness of Alesa since its introduction that there is a preference for it over similar products of other companies. But this, too, applies to the competition. Bordo, as a technically high-quality product, was initially particularly interesting for Germany and the U.S.A., in which potential customers are particularly receptive to new ideas, as experience shows. The correct application of sales policy instruments has enabled the establishment of a loyal group of regular customers. Competing companies, offering comparable products, have been able to do the same. In Germany and the U.S.A. lower turnover growth rates are expected. On the other hand, Bordo was introduced into China and India only at a later date: higher turnover growth rates can be expected in these markets, as the product is increasingly accepted by customers, leading to higher demand. The forecasts are only valid while the economic situation remains constant, i.e. upswings and downswings will increase or decrease the expected quantities. A continuous observation of the markets and their developments will improve the level of information of the companies.
1.7.4 Effects of inability to deliver

If a company cannot satisfy demand, i.e. if the demand in a specific period and in a specific market exceeds the supply, the following scenarios may develop:
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1. The customers are patient and wait for late delivery at the start of the next period. Non-fulfilled orders are stored and hence increase the orders in hand of the following period. 2. Customers are not prepared to accept delivery delays. They cancel orders in part or in total. 3. The competing companies in proportion to their sales meet the unsatisfied demand. Limited ability to deliver prejudices the image of the company. The damage to the image increases in proportion to the inability to satisfy the demand in that period. It is difficult to win back in subsequent periods those customers who have drifted away as a result of this loss of image.
1.8 Conditions of payment

The conditions of payment provide a basic value date of 90 days for sales in the markets. Turnover figures are indicated in the balances of the pertinent periods as accounts receivable. Such accounts receivable in a foreign currency are converted into Euros at the exchange rate valid in that period. There are two possibilities: 1. If the exchange rates are not forward fixed, the accounts receivable are entered on the assets side at the spot rate. Any exchange rate profits or losses are then indicated in the profit and loss account of the subsequent period. 2. If exchange rates are forward fixed, the accounts receivable must be entered at the forward rate. It is assumed that at the start of the simulation payments from the export markets are made to the companys head office in accordance with the contract, i.e. in the following period. Factoring is possible (see financial decisions).
1.9 Image
The market position of the companies, and thus also buyer behavior, are influenced by, among other things, image. By "image" we mean the sum total of all factors that contribute to the public reputation of a company. Cultivating this reputation can lead to an indirect influencing of customers, and to considerable favorable side-effects on the promotions side. The companies establish standards that - from the point of view of the customers - provide the best performance. By adopting the following measures, companies can encourage the desired favorable attitude of the public: 1. Punctual delivery of goods ordered:
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Punctual delivery is a strong sales argument. It is - rightly - taken for granted by customers. It therefore does not improve the regard in which a company is held. On the other hand, failure to provide punctual delivery damages the companys reputation and worsens its image in proportion to the degree to which demand in the market cannot be met. Damage to image exerts an effect in the following period. 2. Motivation and qualification of personnel involved in marketing: The products are of a high technical standard and hence require explanation and guidance from the sales personnel. This puts the motivation and the qualifications of the sales personnel at a premium. They can be achieved by the training of sales personnel. 3. Continuity of prices: Customers show annoyance with, and lose faith in, companies whose prices are subject to major increases/decreases within one period, or whose prices fluctuate greatly between periods. 4. Improvement of quality: Rising expectations of the customers and the efforts of the competitors require each company to pay increasing attention to quality and to efforts to improve it. At the start of the simulation, all companies enjoy the same image. This factor has the value of 100. It is calculated separately for each market in each period. The image of the companies affects the level of demand for their products: a good image can increase demand; a poor image can result in a major reduction in the demand for the products of a company.
1.10 Production
The production program to be set up based on the means of production comprises the products Alesa and Bordo. These products consist of different raw materials Aurit, Bekat and Calot and are produced in one stage. As far as the financial position permits, it is possible to achieve a balance between demand on the markets and the necessary capacity by: 1. Production for stock 2. Adaptation of working time by introducing overtime (maximum 2 consecutive periods) Introduction/cancellation of a second shift 3. Changing the machine stock by sale or purchase of machines 4. Changing the number of personnel by appointments or dismissals 5. Buying in finished units of Alesa 6. Buying in finished units of Bordo If demand exceeds available supplies of the products, surplus demand occurs with unfavorable consequences for the company. If demand is lower than the supply of products available, 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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stockpiling is inevitable. While this increases the ability to supply products, it also ties up cash. Company policy permits a reduction of capacity to 50 machines and the appropriate number of personnel, but not the shutdown of production.
1.11 Personnel capacity

Every company has a basic provision of personnel (technical and commercial administration, skilled tradesmen, and similar) that is absolutely essential for maintaining the companys operations. Wages and salaries of these employees, whose number is basically determined by capacity, are included in the fixed costs. In addition, the company has available a workforce for production. At the start of the simulation, this workforce is sufficient for the full operation of the machines available. This pool of "productive" labor can be influenced by management decisions and also by other factors. These are in detail: 1. The pool of labor decreases by a certain natural wastage per period (see Management Report) 2. Additional personnel can be hired to maintain the companys productive capacity or in a phase of expansion 3. Companies may reduce the workforce by dismissals If the pool of labor is insufficient to operate the existing machines and to produce the planned quantity of goods, one must reckon with machines standing idle. The production quantity is then reduced by a percentage corresponding to the shortfall of labor. The level of personnel is given in the Management Report. In the event of the introduction of double-shift working, the number of personnel must be doubled to avoid machines standing idle. Trained personnel can be employed in each shift. No employee may work a double shift, as the working day of any one individual employee must not exceed 10 hours including overtime. Managers may arrange a maximum of 2 hours overtime per day. Agreements with the trade unions permit overtime working in two consecutive periods. After that, at least one period must be worked without overtime. Companies can increase the qualifications of their production personnel by expenditure on employees continued training.
1.12 Machine capacity

The number of machines available in any period is shown in the Management Report. The machines are all the same. The capacity of each machine is Per working day (with normal shifts) 8 machine hours

Per working day (with overtime) Per working day (with double shifts) 10 machine hours 16 machine hours
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Each period covers one quarter with 60 working days. The products Alesa and Bordo make different demands on production capacity. In period 0, the production times are For 1 unit of Alesa For 1 unit of Bordo 45 minutes 20 minutes
These production times may be influenced by lean production and by the continued training of production personnel. The variable production costs (without depreciation) are calculated per machine hour and are given in the parameter list. The useful working life of the machines is fixed in the parameter list. The linear depreciation figures are calculated in each period as costs. The companies reinvest in each period the same amount that is calculated as depreciation. This means that depreciation does not exert an effect on the capacity of the companys production departments.
1.13 Timetable for purchase, production and sale of products
Period n
Period n + 1
100 % of the raw material delivered in any period can be processed. Depending on the through-put time, a part of the quantity produced in can be delivered on the markets in the same period.
Ordering of raw materials Delivery of materials
Material stocks
Market 1
Production of goods Market 2 Central store Delivery of bought-in goods Ordering of goods to be bought in
Transport to the branch stores in the markets and possibly delivery to customers
Market 3
100 % of the bought-in goods delivered in one period can be made available for delivery to customers in the same period.
Market 4

1.14 Costs
For the purposes of costing, the costs can be categorized as follows:
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1.14.1 Variable Production Costs

Those costs that depend on the quantity of goods produced. They are designated variable production costs. It is assumed that these costs rise proportionally to the utilization of capacity, i.e. as a rule they remain constant per hour of production and hence per unit of production. The costs per unit will only change as a result of price changes for raw materials, a shortening of the production time per unit, the introduction of overtime or of a second shift, and similar. Into this category fall the costs of: Production materials Production wages Other variable costs (these are largely machine-dependent and are therefore calculated as cost rates per machine hour) The wages for surplus production personnel, i.e. personnel not required in that period, are calculated as fixed costs.
1.14.2 Variable Marketing Costs

Those costs that depend on the quantity of goods transported or sold. They are designated variable marketing costs. Into this category fall Transport costs Variable costs of the sales branches.
1.14.3 Fixed Costs

These are the costs that result from the degree of operational readiness of the company. These costs, dependent on real time (fixed costs), are basically independent of the quantity of goods produced. These costs are not regarded as a single "monolithic block of fixed costs, but rather are subdivided as follows: Product fixed costs, e.g. in the framework of product policy or communication policy Sectional fixed costs. These include fixed costs of production. They amount to a fixed basic sum and, in addition, may depend on the available capacity of personnel and machines. The same applies to the sales branches in the markets. Company fixed costs for technical and commercial administration, sales etc. 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany

1.14.4 Depreciation
Depreciation occupies a special position. When single-shift working prevails, ageing is the dominant cause of loss of value. Hence depreciation figures are fixed costs.
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When there are two shifts, the useful working life is reduced because wear and tear then becomes the major cause (otherwise the useful life would remain the same as in single-shift operation). Depreciation is nonetheless calculated as part of the fixed costs.
1.14.5 Stocks
Goods produced within the company are entered with their variable production costs; bought-in products are entered with their purchase price. In the central store, in which at any one time, old stocks, bought-in products, and newly produced products may be stored, a weighted average value is ascertained. A weighted average value is also calculated for stocks in the sales branches.
1.15 Financing
At the start of period 0, all companies possess the same amount of cash: this can be ascertained both in the framework of the liquidity account and in the final balance. The parameters state the minimum amounts of cash at the end of a period, as well as the maximum amount of indebtedness. All decisions taken by company management affect the financial sphere and lead directly or indirectly to cash in-flows and cash out-flows Directly in the same period: lean production, communication policy, etc Directly in the following period: orders of raw materials, machines, etc Indirectly e.g. by decisions in the framework of price policy In addition, income and expenditure inevitably arise by e.g. re-investment of machine depreciation, withdrawal from banks of fixed-term deposits, etc.
1.15.1 Procurement of funding

The companies have the possibility of procuring financial resources to cover planned expenditure From the sale of manufactured or bought-in products (money owed to the company, i.e. the turnover of a period, is shown in the balance as accounts receivable, these are paid by customers in the following period) From the sale of accounts receivable (factoring) From the sale of used production machines (disinvestments) Reduction of stocks of raw materials and bought-in goods 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany

Interest yield from fixed-term deposits with banks Raising short-term credit (= overdrafts) Raising long-term loans
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1.15.2 Liquidity
In each period, companies must be in a position to meet their payment obligations, i.e. expenditure in any one period must not exceed the available financial means. Ideally, both amounts should be equal. While over-liquidity does no more than reduce profitability, under-liquidity threatens the very existence of the company. Under-liquidity exists when in any one period the financial means are insufficient to cover the planned expenditure. The maximum debt-equity ratio (credit limit) is given in the list of parameters. Within these limits, you decide on the raising of long-term loans, or their level. In addition, any necessary short-term borrowed capital (within the limits of permissible indebtedness) is raised through overdraft facilities and repaid in the following period. Thus the overdraft credit of the liquidity account corresponds to the short-term obligations shown in the balance. Underliquidity exists when the credit limit for covering capital requirements is insufficient. If a company is insolvent, the instructors running the business simulation reserve the right to Wind up the firm, or Grant a special credit to the firm, but only allow it to continue to participate outside the competition. The following considerations must be taken into account in liquidity planning: Taxes due at the end of every period must be paid Any dividends also occur as expenditure at the end of every period. In every period the basis for the calculation of the debt-equity ratio (credit limit) is capital resources (ordinary share capital plus reserves, as adjusted for dividend payouts). At the end of the year in period 4, the basis for the calculation of the debt-equity ratio is capital resources (ordinary share capital plus reserves, as adjusted for dividend payouts and further adjusted for any accumulated losses).
1.16 Exchanging currencies

In the Management Report the data will, at first, appear unfamiliar to you, as they are based on the Euro. This is unusual, but essential, as your companys balance sheet, profit and loss account and financial results will be expressed in Euro. You will hence have to use such exchange rates as: 1 USD has a value of approximately EUR 0.7700 1 CNY has a value of approximately EUR 0.0930 1 INR has a value of approximately EUR 0.0170 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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At the start of each period, you will be notified of the exchange rates that would be applicable for that period.

1.17 Summary of the effect of influencing factors
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Has affect on Factor

Demand Image Throughput time per unit Fixed costs per period Production time per unit Staff turnover Rejection rate
Price policy Communication policy Product policy Total Quality Management Image Payment of dividends Training of sales personnel Continuity of sales prices Punctual delivery Lean management Production technology
Continued training of personnel

2 Decisions
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When the management teams have become familiar with the strengths and weaknesses of the companies, they reach the decisions for the next period. The Simulation Leaders will establish and notify you of a specific date and time for the submission of these decisions. It is absolutely essential to abide by this deadline, as otherwise the decisions of period 0 will be used again. The decisions fall into the following categories:
Company decisions Lean management Payment of dividends
Sales decisions Product policy Price policy - sales price Communication policy - advertising, sales promotion Distribution policy - marketing logistics Training of sales personnel - key accounts Sales branches Transportation Market research
Purchasing decisions Market research Purchase of raw materials Purchase of bought-in goods
Production decisions Planning of production quantities Appointment and dismissal of personnel Purchase or sale of machines Lean production TQM (Total Quality Management) Production technology Continued training of personnel
Financial decisions

Raising and repayment of long-term loans Deposits with banks Export factoring Exchange rate risk management
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2.1 Company decisions

2.1.1 Lean Management
The idea of introducing lean production has long been discussed by the directors of your company. Outmoded practices that have become fossilized in other sections of the company have led to the idea being pursued and to the transfer of lean management techniques to the whole company. Lean management is a management concept that is aimed at the greatest level of efficiency in all sections of the company. Among the major objectives are: Recognition and fulfillment of customers wishes as the primary goal Elimination of superfluous hierarchical levels Encouragement of responsibility of personnel Decentralization, adoption of personnel into the decision making processes (downward shift of responsibility) Greater flexibility through cross-sectional communication and co-operation Faster reaction times to changes in the markets It is not easy to break up existing structures and to change behavior patterns. Yet lean management is not a state, or condition, it is a continuous process of effort to increase the efficiency of the company, even if only in small steps. You too can try to put the ideas of lean management into practice in your company. Expenditure invested in this will achieve: a) A reduction of throughput time of the products, hence also a reduction of stocks, more rapid availability in the markets, and a reduction in the amount of capital tied up. In period 0, 33.33% of the production quantity was available to satisfy the demand in the same period when the following figures applied: throughput time 32 days + + transport and storage time = 8 days = total throughput time 40 days
This figure of 33.33% is calculated as follows: Deliverable part of finished goods = (length of the period total through-put time) / length of the period. Experts feel that, with lean management, the figures could be reduced to throughput time 15 days + + transport and storage time = 8 days = total throughput time 23 days
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This would enable a corresponding increase in the quantity delivered to the markets in any one period. b) A reduction of the cost of fixed overheads Experts are of the opinion that a 25% reduction of these fixed costs is possible.
2.1.2 Payment of dividends

The shareholders expect from the companies a dividend as a commensurate return on their invested capital and their share of the companys success. Dividend payments at the end of each period improve the companys image, but at the same time reduce the companys own capital and credit line. Dividend payments that reduce the companys available capital can lead to critical discussion in public; this in turn can affect the companys reputation.
2.2 Sales decisions

2.2.1 Market research
A market research institute can supply information on the competitor companies and the markets. Prices for the various reports can be seen in the parameter lists. Expenses occur in the period in which the decision is taken, the market research reports are submitted at the end of the same period. In the section "Sales" the following reports can be supplied: Type 1: Selling prices of all companies in all markets; absolute and relative deviations of ones own prices from average prices. Type 2: Expenses relating to sales branches of all companies, total sales of the products of all companies in the markets, market shares of own company. Type 3: Sum total of product advertising of all companies for all products in the markets; market share of own company. Type 4: Development of the general economic climate as well as specific developments in the markets.
2.2.2 Product policy - product management

Characteristics required of a product go beyond the basic use desired by the customer: they also include, for example: Increased functions, simplification, i.e. fewer parts subject to wear and tear, repair-friendliness, Improved design,

Expansion of customer service and extension of guarantee,
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Product variations or innovations in order to differentiate products from those offered by the competition. An integral part of product policy is, in addition to decisions regarding the range/assortment of products (to begin with, Alesa and Bordo), the planning of new products. Expenditure on product policy increases demand in proportion to the degree to which it exceeds that of the competition. Experts are of the opinion that in this way demand can be increased by a maximum of 15%.
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Improved customer service Extended guarantee Environmentally friendly packaging
Basic function = Basic use
Improved durability Fewer parts subject to wear and tear = Repair-friendliness
Attractive design
2.2.3 Pricing policy

Pricing policy attempts to establish a relationship between the selling prices set by a company and the possible quantity of demand. Price is only one - albeit a very important - component in a bundle of possible instruments/measures that can be applied to influence demand. The purchasing decisions of the customers can be influenced considerably by their experience with the overall efficiency of a company (e.g. punctual delivery). If prices are too low, there is a danger of reducing customers willingness to buy, as they could lose faith in the quality of the products. If prices are set too high, particularly if they are not justified by advertising or quality, customers may feel tempted to switch to other, cheaper, competing products. In this sense, the decisions of each individual company, as well as those of the competition, exert an effect on the demand accruing to each company.

2.2.4 Communication policy - advertising, sales promotion
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Communication policy embraces all the measures a company adopts to inform and to convince potential clients in the market of the characteristics of the products - such as technical fields of application, economy, design, etc. They draw attention to the products of a company and serve to distinguish the products from others on the market, and to create preferences. Advertising and sales promotion directly affect the number of orders received by a company - the sum total of all expenditure of all companies influences the overall total demand. The level of expenditure on it determines the quality of communication policy. Expenditure is established separately for each product and for each market. The effect of communication policy is immediate and there is a fading in the following periods. It is therefore spread over the current and subsequent periods (carry-on effect), although the effect steadily declines. The greatest effect arises in the period in which expenditure occurs. The parameter list indicates the degree of loss of effect. Experience so far indicates that an increase of expenditure over and above 8% of the turnover will not lead to any notable further increase.
2.2.5 Distribution policy - marketing logistics

Marketing logistics is understood as the sum of activities adopted in order to be able to supply or deliver the right goods in the right quantities to the right place.
2.2.5.1 Quantities to be transported

At the start of each period, the companies decide which quantities of products are to be transported from the central store to the branch stores. From the central store The stocks available there at the start of each period, plus Part of the products produced in the same period (the proportion of the products available in each period for transportation and sale is dependent on the production time and through-put time), plus The bought-in goods delivered in the same period may be dispatched and delivered to customers in the markets together with the quantities available in the branch stores. If the transport decisions of the companies exceed the available quantities, the planned level of transport quantities to the markets are reduced proportionately. An exchange of stocks between the markets is not possible due to the distances involved. Return of stocks to the central store is not permitted. The costs arising from transportation of goods from the central store to the branch stores are debited in the profit and loss account of the same period. The transport costs per product and market shown in the list of parameters are applicable to small quantities. In all markets bulk transport is possible, which - depending on the quantities
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of all products transported to this market - result in discounts (see list of parameters). The discounts are included in the accounts of the same period.
2.2.5.2 Sales branches

The costs (expenses) of maintaining sales branches are divided into a basic sum (fixed costs) and a variable sum that must be increased when demand is rising in order to be able to fulfill completely all tasks, from the acceptance of orders to final delivery. When demand is declining, reducing expenditure can reduce a sales branch in size. Hence the expenditure on sales branches represents the capacity of the sales branches to deliver the orders. In the case of markets that have not been fully opened up, it is clear that fixed costs will represent a larger proportion than in those markets that have been supplied for some time. The fixed costs of the sales branches in the individual markets are given in the list of parameters. The effect of expenditure on reduction or increase in size of the sales branches arises in the same period. Expenditure on the sales branches may be reduced to the level of the fixed costs: however, a step as radical as this no longer enables orders to be received and processed. Minimum planned expenditure = (planned sales for Alesa + planned sales for Bordo) x variable costs + fixed costs
2.2.5.3 Training of sales personnel - key accounts

Technical expertise and motivation of the sales personnel of ones company can be improved by training in the qualities and possible fields of application of the products, as well as the required sales techniques. Detailed technical advice and counseling improve the regard in which the company is held (= image). You might also think of the training of particularly competent personnel responsible exclusively for looking after key accounts (key customers) and for the solution of their problems. These members of the personnel would be specialists in, for example, negotiating, financing, foreign exchange transactions, risk management, customs law and preference law, export calculation and export marketing. Additionally, they would be totally familiar with the mentality and customs of foreign customers. The effect of sales personnel training on a companys image depends on how far the training is superior/inferior to that of the competition. Changes in image of up to a maximum of 10% seem possible.
2.3 Purchasing decisions

2.3.1 Market research
Prices and available quantities of raw materials and bought-in goods can change independently of the general economic situation and other factors. The higher the share of material costs in manufacturing costs of the products is, the more advisable it is to keep a close eye on the purchasing markets.
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By acquiring market research reports, the companies can gain information on any trends in good enough time to include such changes in their decisions. Without market research, the companies will only be informed of changes once they have already taken place.
2.3.2 Purchase of raw material

The level of production per period depends on, among other things, sufficient stocks in hand and/or prompts ordering of materials. If stock in hand plus materials ordered are not sufficient for planned production, then machines will be idle. The purchase of raw materials entails a delivery period of one period. The material is paid for on delivery. Prices for materials are given in the list of parameters. Raw material can also be purchased through a rush, or urgent, order. Material ordered in this way can be made available in the same period. Of course, costs for rush orders are higher than in the case of normal orders (see list of parameters). Surcharges for rush orders are entered in the value of stocks.
2.3.3 Purchase of bought-in goods

To relieve pressure on their own production plant, companies can buy in finished Alesa and Bordo. They are stored in the central store. The goods ordered have a delivery period of one period and the payment is on delivery. Quantities available on the market are, as a rule, sufficient to supply the companies. Delivery prices are shown in the list of parameters.
2.4 Production decisions

2.4.1 Planning of production quantities
In each period the companies establish the planned production quantities of the products, these quantities are limited by the capacity available in that period. To adapt production capacity to demand, the introduction of overtime is permissible. Management expressly orders overtime, and the planned amount expressed in machine hours is entered in the decisions sheet. The decision is valid for one period, and is effective directly. No more than 2 machine hours of overtime are allowed in any one working day. Overtime working leads to an increase in production wages: the increase is the overtime surcharge (see list of parameters). It also increases the variable production costs (among other things through necessary overtime working in auxiliary sections) but does not affect the depreciation per period as the latter is regarded as determined by ageing (see list of parameters). Overtime must not be introduced for more than two consecutive periods. After that, at least one period must be without overtime. The introduction of a second shift is possible, too, but only for the whole production section, not just individual machines: this doubles production capacity but then requires the hiring
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and induction of a corresponding number of new workers. Shift work and overtime working are not permitted at the same time. The introduction of the second shift requires one period of preparation, hence it cannot begin until the period after the one in which the decision to introduce it has been taken. Double-shift production immediately increases: Production wages by the extra payment for shift work, The fixed costs of the section and the company, The depreciation per period, as the useful working life is shortened. Cancellation shift work takes effect immediately. However, the increased fixed costs remain for the whole period as a result of residual costs.
2.4.2
Appointment and dismissal of personnel
Appointments are possible at the commencement of each period. Newly appointed personnel undergo induction/training in the first three months (= 1 period) of their employment, receiving full pay while they do so, but during this time they do not contribute to output. The appointment of a new employee requires a fixed sum (see parameter list) for such expenses as job advertisement, interview, and similar. It is also possible for employees to hand in their notice, or be given their notice, in each period. Dismissals take effect one period after notice has been given. Employees who have been given notice of dismissal remain fully available to the companies during the period of notice. They are dismissed at the start of the next period, i.e. they can no longer be actually employed in the period when their dismissal becomes effective. For social reasons, they receive severance pay on leaving the company (see list of parameters). Companies that frequently dismiss personnel must take into account that, as a result of the resultant poor reputation of the company, job advertisements in future periods will not attract sufficient applicants.
2.4.3 Sale and purchase of machines

Purchase of machines may take place in any period, in order to expand production capacity. Only whole machines can be purchased. Machines ordered have a delivery/installation time of one period. Payment is made on delivery. All companies can reduce their production capacity and hence the fixed assets by selling production plant. Proceeds from the sale of machines are usually lower than the book value (see list of parameters). The decision to sell machines has a direct effect, i.e. The capacity of machines sold is no longer available in that period 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany

The proceeds are calculated as income in the same period The profit and loss account is debited with any loss in the same period.
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2.4.4 Lean Production 2.4.4.1 Total Quality Management (TQM)

It is no longer sufficient to regard quality as the fulfillment of minimum standards, as todays commercial world is characterized by ever increasing competitive expectations. Today, "quality" is seen as an all-embracing concept. It includes products and personnel, but also all the companys procedures from planning and draft projects, production, through to marketing and distribution. In traditional quality control, errors arising at the planning stage are not discovered until it is too late: but the later the discovery, the more expensive it is to rectify the error. A modern all-embracing system of quality control has the aim of Recognizing errors at the earliest possible stage, or - even better Not letting them occur at all. Expenditure on TQM (e.g. the formation of quality circles, quality system certification, and so on) enables you to Reduce the rejection rate of faulty products (which can not be re-used) and Improve the image of your company. Optimists expect that an increase of image of up to 15% can be achieved by these measures.
2.4.4.2 Production technology

Through investment in superior technology, but particularly through rigorous structuring of logistic process improved flow of information utilization of value analysis, kanban, etc a continuous process of improvement can be achieved. On the basis of exhaustive analyses, experts are of the opinion that a considerable cost-reduction potential can be realized in production. Specifically, such measures can bring about a reduction of the production time per unit, up to a maximum of 20%.
2.4.4.3 Continued training of personnel

TQM and lean production presuppose qualified and motivated personnel. The latter must be willing to work in semi-autonomous groups, to accept changing work demands, and to take on responsibility. They then enable the dismantling of superfluous levels of hierarchies. Programs for the continued training of the work force represent expenditure that results in A reduction of the fixed costs in production 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany

A reduction of staff turnover and non-reusable rejects A shorter production time per unit.
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It is doubtful whether expenditure in this direction of more than 4,000 Euro per person/period is sensible.
2.5 Financial decisions

2.5.1 Raising short-term and long-term loans
Within certain limits, companies can obtain short-term and long-term loans. The sum total of indebtedness must not exceed a certain proportion of the companys own capital. Short-term loans (overdrafts) do not have to be specifically applied for. Long-term loans, on the other hand, do have to be applied for. The sum applied for is available in the same period. The rate of interest for long-term loans is, as a rule, more favorable than for overdrafts. Long-term loans are not subject to a time limit. Long-term loans may be paid back in part or in total. To do either, it is necessary to enter in the decision sheet the notice to repay the debt(s). Redemption takes place in the following period.
2.5.2 Fixed-term deposits with banks

If a company does not wish to use all available funds in any one period, it can make its financial surplus available to the money market and invest it on an interest-bearing basis (see parameter list). These deposits are invested in the same period, in which the decision to do so is taken. This investment is always on a short-term basis for two periods.
2.5.3 Export factoring

It is possible to arrange for the collection of all accounts receivable from customers in all markets through the services of a factoring company. Thus, return on turnover in the period of sale immediately becomes income. The fees (including interest and del credere) are given in the list of parameters. The account in the markets is paid at the forward rate of the pertinent period.
2.5.4 Exchange rate fixing

Sales activities in the markets are conducted in foreign currencies. The forward and spot rates for the pertinent period will be notified to you. The forward rate is the rate at which 90-day forward buying can be conducted. This means that the companies have the following alternatives: I. At the conclusion of the sales contracts (e.g. in period n) the foreign exchange due to be received by the companies 90 days later (period n+1) can be sold at the forward rate. The proceeds from such a transaction are received by the 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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companies at the fixed rate of period n. Currency transactions of this nature give the companies a certain protection against exchange rate risk, but the commission, brokerage etc involved cost some 0.5% of the amount receivable. In this, it is assumed that the payment will be made in accordance with the provisions of the sales contract, i.e. on the agreed date. II.If no forward buying transaction is conducted, receipts of foreign currency paid by customers in the period n+1 will be converted at the then valid spot rate. The spot rate of the period n+1 can, and as a rule will, deviate from both the spot rate of period n as well as the forward rate of period n+1. Depending on whether the spot rate of period n+1 is higher or lower, exchange rate losses or profits will accrue to the companies.

3 Annexes
Capacity calculation Calculation of manufacturing costs Determining the change in stock value
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Please note that these sample calculations are given to you only to show you the method of calculation and may not represent the actual values of any period.

3.1 Capacity calculation for period 0
Capacity available Number of machines available Working hours / day Working days / period Total capacity available 175 machines 8 hours 60 days 84,000 machine hours
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Fully trained workers available Machine allocation
350 workers 2 workers / machine
Capacity required Production quantity Alesa Bordo Production time Alesa Bordo 96,000 units 36,000 units 45 minutes / unit 20 minutes / unit
Capacity required
Alesa Bordo
72,000 machine hours 12,000 machine hours 84,000 machine hours
Total capacity required
Machines required Fully trained workers required
175 machines 350 workers
Capacity surplus/deficit available Machines Workers 175 350 required surplus/deficit 175 350 0 machines 0 workers
The wages of workers who are receiving training, or cannot be productively employed due to poor utilization of capacity are included in the fixed costs.

3.2 Calculation of manufacturing costs in period 0
Alesa Production quantity Production time Capacity required Total capacity required 96,000 45 72,000 Bordo 36,000 20 12,000 Total units minutes / unit machine hours 84,000 machine hours
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Machines required Fully trained workers required Production wage Total production wages Effective production wage
175 machines 350 workers 16.00 EUR / hour 2,688,000.00 EUR 32.00 EUR / hour
Raw materials required / unit Aurit Bekat Calot
Alesa 3 1
Bordo units 2 units 2 units
Cost 12.00 EUR / unit 24.00 EUR / unit 25.00 EUR / unit
Cost of raw materials Aurit Bekat Calot Total cost of raw materials
Alesa 36.00 24.00 0.00 60.00
Bordo 0.00 EUR / unit 48.00 EUR / unit 50.00 EUR / unit 98.00 EUR / unit
Other variable production costs
40.00 EUR / hour
Production costs Production wages Raw material Other variable production costs Production costs before rejects Rejection rate Production costs after rejects
Alesa 24.00 60.00 30.00 114.00 5.00% 120.00
Bordo 10.67 EUR / unit 98.00 EUR / unit 13.33 EUR / unit 122.00 EUR / unit 10.00% 135.56 EUR / unit

3.3 Determining the change in stock value in period 0
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Stock changes occur if within a period the value of the product quantities either produced or bought in does not correspond to the value of the product quantities sold. This is the normal case. In this, there are the following possibilities: Stock increases, i.e. the value of the product quantities produced or bought in exceeds the value of the quantities sold. Stock increases are considered as proceeds. Stock decreases, i.e. the value of the product quantities produced or bought in is lower than the value of the goods sold. Stock decreases are counted as expenditure. As far as products actually produced by the company are concerned, only the variable production costs are included. The fixed costs as well as all sales costs are calculated as expenditure in the period in which they arise. At the beginning of period 0 the value of the finished goods in the central store and in the branch stores is: Alesa Bordo EUR 120.00 per unit EUR 134.00 per unit

3.3.1 In the central store
Alesa Quantity units Initial stock Delivery from production Delivery of bought-in goods Total stock Stock value / unit Transferred to branch stores Final stock Change in stock 94,000 62,200 -2,800 156,200 120.00 120.00 120.00 11,280,000.00 7,464,000.00 -336,000.00 65,000 91,200 Value EUR / unit 120.00 120.00 Total value EUR 7,800,000.00 10,944,000.00 0.00 18,744,000.00
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Bordo
Quantity units
Value EUR / unit 134.00 135.56
Total value EUR 3,484,000.00 4,392,144.00 0.00
Initial stock Delivery from production Delivery of bought-in goods Total stock Stock value / unit Transferred to branch stores Final stock Change in stock
26,000 32,400
58,400 134.87 31,500 26,900 900 134.87 134.87
7,876,144.00
4,248,405.00 3,628,003.00 144,003.00

3.3.2 In the branch stores
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Branch store Germany

Quantity units Value EUR / unit 120.00 120.00 Total value EUR 240,000.00 4,200,000.00 4,440,000.00 120.00 36,000 1,000 -1,000 120.00 120.00 4,320,000.00 120,000.00 -120,000.00
Alesa
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
2,000 35,000 37,000
Bordo
Quantity units
Total value EUR 201,000.00 1,888,180.00 2,089,180.00
1,500 14,000 15,500
134.79 15,000 500 -1,000 134.79 134.79 2,021,850.00 67,395.00 -133,605.00
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Branch store U.S.A.

Quantity units Value EUR / unit 120.00 120.00 Total value EUR 180,000.00 2,760,000.00 2,940,000.00 120.00 24,000 500 -1,000 120.00 120.00 2,880,000.00 60,000.00 -120,000.00
Alesa
1,500 23,000 24,500
Bordo
Quantity units
Total value EUR 214,400.00 1,213,830.00 1,428,230.00
1,600 9,000 10,600
134.74 10,000 600 -1,000 134.74 134.74 1,347,400.00 80,844.00 -133,556.00
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Branch store China

Quantity units Value EUR / unit 120.00 120.00 Total value EUR 180,000.00 2,040,000.00 2,220,000.00 120.00 18,000 500 -1,000 120.00 120.00 2,160,000.00 60,000.00 -120,000.00
Alesa
1,500 17,000 18,500
Bordo
Quantity units
Total value EUR 268,000.00 472,045.00 740,045.00
2,000 3,500 5,500
134.55 5,000 500 -1,500 134.55 134.55 672,750.00 67,275.00 -200,725.00
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Branch store India

Quantity units Value EUR / unit 120.00 120.00 Total value EUR 360,000.00 2,280,000.00 2,640,000.00 120.00 21,000 1,000 -2,000 120.00 120.00 2,520,000.00 120,000.00 -240,000.00
Alesa
3,000 19,000 22,000
Bordo
Quantity units
Total value EUR 375,200.00 674,350.00 1,049,550.00
2,800 5,000 7,800
134.56 7,500 300 -2,500 134.56 134.56 1,009,200.00 40,368.00 -334,832.00

3.3.3 Stock changes
Alesa Central store Branch store Germany Branch store U.S.A. Branch store China Branch store India Total -336,000.00 -120,000.00 -120,000.00 -120,000.00 -240,000.00 -936,000.00 Bordo 144,003.00 -133,605.00 -133,556.00 -200,725.00 -334,832.00 -658,715.00 Total -191,997.00 EUR -253,605.00 EUR -253,556.00 EUR -320,725.00 EUR -574,832.00 EUR -1,594,715.00 EUR
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iBizSim: International Business Simulations

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iBizSim: International Business Simulations

iBizSim: International Business Simulations

iBizSim: International Business Simulations PREFACE

iBizSim: International Business Simulations

1.1 Structure and progression of the International Business Simulation iBizSim01

1.2 Tasks and organization of the team

iBizSim: International Business Simulations

iBizSim: International Business Simulations

iBizSim: International Business Simulations

Raw materials Bought-in/semifinished goods

3. Production and/or purchase of a range of certain products e.g

5. Analysis of the results

iBizSim: International Business Simulations

In the social sphere:

1.4 Analysis and evaluation of data - setting up the indices

iBizSim: International Business Simulations

iBizSim: International Business Simulations

Purchase of market information Type 4

Business situation and trends reported by Game Leaders

Acquisition of management information

Processing of management information Planning of measures, including planning of alternatives if necessary

Production plan (Investment and personnel plan)

Finance plan Agreement on and adjustment of individual plans

Cost plan Yield plan

Analysis of results comparison of actual/planned figures

iBizSim: International Business Simulations

The Decision Cycle in the Management Game

Setting out/ adaptation of objectives

Etablishment/ adaptation of strategy

Obtaining and evaluation of information

Planning measures/ planning alternatives

Development of and agreement on individual plans

iBizSim: International Business Simulations

1.6 The markets

iBizSim: International Business Simulations

1.7 The development of demand

iBizSim: International Business Simulations

1.7.3 Demand for Alesa and Bordo in the markets

1.7.4 Effects of inability to deliver

iBizSim: International Business Simulations

1.8 Conditions of payment

iBizSim: International Business Simulations

iBizSim: International Business Simulations

1.11 Personnel capacity

1.12 Machine capacity

iBizSim: International Business Simulations

1.13 Timetable for purchase, production and sale of products

iBizSim: International Business Simulations

1.14.1 Variable Production Costs

1.14.2 Variable Marketing Costs

1.14.3 Fixed Costs

iBizSim: International Business Simulations

1.15.1 Procurement of funding

iBizSim: International Business Simulations

1.16 Exchanging currencies

iBizSim: International Business Simulations

iBizSim: International Business Simulations

Has affect on Factor

Continued training of personnel

iBizSim: International Business Simulations