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Micromatic Simulation Team and Solo Versions. 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

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Micromatic simulation team and solo versions l.jpg

Micromatic Simulation Team and Solo Versions

Mgmt 481

Introduction l.jpg

  • 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.

Mgmt 481

Goals l.jpg

  • 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

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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

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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)

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Four Functions of Management





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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

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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

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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

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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

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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

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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.

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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

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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 -> friendship) and (manager -> 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

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The Manager as a Leader

Must decide how to influence and motivate members

  • Goal Setting

    • Balance of individual’s 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?

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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

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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 => No customer or brand loyalty => you must “earn” each quarters sales

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Company publicly held

  • Company is in start-up position – only one quarter’s (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

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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.

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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

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My Role

  • I will be your

    • Banker

    • Board of Directors

    • Regulatory Advisor

    • Union President

    • And other roles as necessary

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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.

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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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