A note to Olin Executive MBA Class 41…
I know I don’t have to remind you – graduation is only a few weeks away! But before you can don the
brown hood, you have one final project, Global Tycoon, a global strategy simulation. (Hard to imagine
anything other than a competition piquing your interest at this point. )
In a way, Global Tycoon is the entire curriculum in a nutshell – running a multi-national company;
competing as a team against other, capable competitors; managing through complex, ambiguous
situations; and maximizing shareholder return – with strategy being the shell that keeps it all coherent.
After watching 20,000+ MBAs and managers compete in Global Tycoon over the years, I believe the
keys to success are less the cognitive and analytic skills (although there are a lot of numbers to crunch)
and more team leadership skills. Nothing is more real-world than that, and here’s a great chance to
practice those skills one more time among friends before leaving Mother Olin.
Global Tycoon is modeled loosely on the consumer electronics industry. You and your teammates will
get one of seven TV manufacturing companies at an auction, and run it for 10-12 decision cycles, with
each cycle being a quarter of a fiscal year. Your classmates will run the other companies. You can make
TVs using raw materials available from either suppliers or other competitors, and you can sell your TVs
to large retailers, e.g., you are Samsung selling to Best Buy. You can produce and sell in up to four
regions of the world.
Your job is to help make decisions for your team. The decision matrix is very large – nearly five hundred
decisions among all four regions – so I will share with you some tips for preparing when we meet in
class on May 3.
Before class, please read the following introduction to Global Tycoon.
Your assignment is to think about what subset of the functional decisions you would like to make for
your team. You will get more details in class.
See you soon!
~ John Ehlers
olinemba2014@intellisim.com
Copyright © 2014 by IntelliSIM, Ltd. All rights reserved. Not to be reproduced or redistributed without IntelliSIM's permission.
Global Tycoon®
Olin Executive MBA Class 41
Introduction…
In preparation for the May 3 class, please read this document to get a general sense of the scale and scope
of the Global Tycoon simulation. I will provide additional details in class.
I.
II.
III.
IV.
V.
Welcome to Global Tycoon! (<1 page)
The Industry – the markets, products, competitors, and much more (7 pages)
The Functional Roles – decide which roles you can fill for your team (7 pages)
Regional Data – industry characteristics that remain constant throughout the simulation (4 pages)
Comparative Company Data – current data on the seven companies in the industry (5 pages)
The May 3 class marks the beginning of Global Tycoon, and we will begin with a flurry. You will meet with
your teammates to decide on individual roles and decision responsibilities, elect your team CEO, and begin
a comprehensive team assignment, the Pre-simulation Exercise. You will also receive demonstration
software and a comprehensive manual during class.
We want you to continue your individual training until The Competition begins on May 15. Before then,
CEOs must email team Pre-simulation Exercise solutions and bid on companies in an on-line auction.
After your team receives its company, you can set your corporate goals, formulate a strategy, plan your first
moves to implement that strategy … and get ready to dominate your industry!
Good luck in your preparations, and I will see you in class.
Please email me with questions at olinemba2014@intellisim.com. You will receive a reply within 24 hours.
~ John Ehlers, your IntelliSIM facilitator
I.
Welcome to Global Tycoon®
During the next four weeks, you will join a senior management team, buy a virtual company at auction,
train to make expert decisions, set corporate goals and formulate a strategy, all culminating in a
competition with other team-run companies in a complex, somewhat ambiguous and uncertain, global
business environment.
We will run 10-12 decision cycles, with each cycle representing a quarter of a fiscal year. You will make
decisions at the beginning of each quarter based on recent company reports, regional data, the newsletter,
and other resources.
Each quarter, team members make operating decisions using the Global Tycoon software, test their
decisions with trials, upload their decisions to the server and download their teammates’ decisions, run
some more trials, and think strategically, all before the decision deadline. After the deadline passes, you can
take a brief break (you’ve earned it!) while the facilitator processes the quarter.
The facilitator will read all teams’ decisions, invoke various pre-scheduled events, process the quarter, and
post the new results to the server for teams to download. As soon as the facilitator posts the new results, a
new quarter begins.
At the end, we will compare all companies and crown a winner – it’s business, after all. To help others
understand your experience, your team may be asked to give a brief report, as if to your board of directors,
on how well you met your goals.
II.
The Industry
Here is your opportunity to put your business acumen to the test, flex your management muscles, and
dominate your competition!
You and your team will manage your company in a realistic, global business environment that is modeled
on the consumer electronics industry. You must identify, develop, protect, exploit, and reevaluate your
competitive advantages. Macroeconomics, exchange rates, and product life cycles will influence you. Watch
out, competitors are capable and aggressive. Contingency planning for exogenous factors, such as strikes
and natural disasters, can mean the difference between success and failure.
At the outset, each company is quite different from the others, but all have their corporate headquarters, a
factory, a sales office, warehousing, and research facilities in the United States. Most companies have
offshore production, sales, and warehousing facilities, too.
As a management team, you may open and close regional subsidiaries as you wish, but you must keep the
U.S. corporate headquarters. You may buy, sell, and produce in any region where you have operations.
Operating your company will involve making decisions in marketing, production, research and
development, logistics, economic forecasting, and finance, much as you would in your own real-life
business.
In past competitions, firms have made money in many ways. Most firms invest to lower their cost of goods
and increase their margins. Many firms differentiate on quality or customer service to grow their margins.
Nearly all firms invest to gain market share; however, a few firms have chosen only to supply industry
competitors under long-term contracts. The keys to your company's success will depend on you and your
fellow team members.
A. Finished goods
For all competing companies, the principal source of revenue is shipping finished goods to customers and
competitors. The finished goods in demand are:
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•
LED (Hi-def) TVs [LED TVs]
OLED (Tru-def 3D) TVs [OLED TVs]
Companies either can make finished goods in a batch assembly process that combines various raw
materials, or they can buy them from competitors for resale.
The attributes that transfer with the finished goods include cost, quality, and, for OLED TVs, technical
format.
Some finished goods, especially low quality ones, will be defective and require warranty repair.
Product economics is currently only fair at about 50 percent gross margin, industry-wide. Increased
production efficiencies, and economies of scale and scope in marketing, promise significantly improved
financial performance for aggressive management that can 'get it right'.
B. Product markets
A large market currently exists for LED TVs, as shown in the Industry Characteristics report, but demand is
stable or slightly decreasing. However, many other market growth factors have already been identified that
could contribute to substantial LED TV growth.
The OLED TV market, initially smaller, is growing. Long-term market potential for OLED TVs is especially
strong if producers adopt a common, uniform technical format.
Most highly successful companies have a strong commitment to all available product markets, to maximize
volume and flexibility, but not all. In a few cases, companies have leveraged success in a single product to
dominate an entire industry.
C. Regional markets
There are eight markets in Global Tycoon – 2 types of finished goods and 4 regions. Each market will evolve
into a unique arena of competition, based on market size factors and market share factors. Most successful
companies find ways to export competitive advantages to new markets, undermining the long-standing
positions of existing competitors.
The regions and their local currencies are:
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the United States – dollars ($)
the European Union – euros (€)
Japan – yen (¥)
Inflatia – currens (₡)
Worldwide demand is several hundred thousand units per quarter for each type of finished goods. The
largest regional market is the U.S. and the others are somewhat smaller, as shown on the Industry
Characteristics report.
Demand follows a seasonal cycle, peaking at Christmas each year (Quarters 12, 16, 20,) in most regions.
Regional markets grow at different rates, depending on numerous market size factors, some of which
management can control.
Since all companies already sell in the U.S., it is the most competitive. Inflation and interest rates are
moderate there. Far fewer companies sell in the E.U., even though its market is large. Inflation and interest
rates in the E.U. are comparable to the U.S. Other regions are smaller, initially, and quite diverse. The
Macroeconomics report shows recent and forecasted regional economic data.
All regions are closely modeled on conditions that have existed sometime during the past ten years, except
Inflatia which is a fictitious, near-hyperinflationary region with high market growth potential, but many
uncertainties, too. In prior competitions, many companies have perished in Inflatia while chasing fantastic
dreams funded with debt.
During The Competition, quarterly reports and Newsletters will forecast major shifts in regional markets
and economies.
D. Customers
Customers are large retailers of audio equipment – imagine Sears Brand Central, Best Buy, or other
national outlets – who order thousands or tens-of-thousands of units each quarter.
There are up to 12 customers in each region.
Customers only operate locally, so Customer #1 in the U.S. has nothing to do with Customer #1 in the E.U.
or in Japan, except for their demand preference profiles.
Customers place their orders based partly on their sensitivities to these market share factors:
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•
price-sensitive customers are also the least sensitive to finished good quality variations
image-sensitive customers (e.g., advertising and sales rep activities) are also the least sensitive to
finished good price variations
quality-sensitive customers are also the least sensitive to image factor variations
Quarterly seasonality factors vary by region and by customer type.
Some customers pay their accounts more promptly and more consistently than others do.
The regional marketing data gives further details about customers.
E. Production process
The finished good production process is a quarter-long batch assembly process that begins in the current
quarter with raw materials and ends in the following quarter with finished goods that are ready to ship,
either to fill customer orders, to transfer to other subsidiaries, or to sell by contract to competitors.
To produce finished goods successfully, you need three resources in place at the beginning of the batch
process:
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Equipment - production assembly lines, specific to the type of finished goods you want to produce
Raw materials - various combinations, depending on what finished goods you want to produce
Skilled workers - in numbers sufficient to fully staff whatever lines you choose to operate
You can schedule production for an unlimited number of finished goods, but the least of these three
resources will limit what your company can actually produce. Ideally, equipment capacity should limit
production, because you can always buy more raw materials and hire more workers.
Production takes priority over repair, regular time hours take priority over overtime hours, and LED TVs
take priority over OLED TVs for resource allocation.
All finished goods that your company produced, shown as work-in-process [WIP] on your most recent
Inventory report, plus any inventory remaining after shipments in the most recent quarter, are available to
ship in the current quarter. The Inventory Reconciliation report itemizes this information.
Your company's equipment and workforce data appear on the Production report. Raw material inventory
data appear on the Inventory report. The Cost of Goods Produced report itemizes your company's
production-related expenditures.
Standard production costs appear in the regional production data. Standard workforce costs appear in the
regional human resources data.
Worker experience effects and other productivity factors may cause those producing outside the U.S. to
have somewhat higher unit production costs, but this may change over time.
F. Warranty repair
Customers will identify some those finished goods that your company ships to them as defective, and they
will return them over time to the sales office from where they bought them. It is up to you to schedule
repair of defective finished goods in a timely manner, so that your customers remain confident of your
commitment to service after the sale.
Higher finished good actual quality results in fewer warranty repairs.
To repair finished goods, your company needs no equipment capacity since repairs occur off-line, but you
do need:
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•
Raw materials - any raw material may prove defective and require replacement
Skilled workers - any skilled worker is capable of repairing finished goods
You can schedule repair for an unlimited number of defective finished goods, but the lesser of these two
resources will limit what your company can actually repair. Ideally, you will be able to repair everything
that you schedule - both units remaining in the repair queue from previous quarters and units that arrive in
the current quarter, as shown on the Defects report. The Defect report also shows which raw materials are
needed to repair defective finished goods already in the repair queue, and estimates of current repair costs.
Raw materials required for future repairs appear in the regional production data.
Production takes priority over repair for resource allocation, so you will miss repair opportunities if you
run short of either raw materials or skilled workers.
G. Raw materials
Your company needs raw materials (a) to produce finished goods and (b) to repair defective finished goods
returned to you under warranty.
(a) The regional production data shows which raw materials are required to produce each type of
finished goods. Some raw materials are wasted during the process, as shown on your company
Production report.
(b) The regional production data also shows which raw materials typically are required to repair future
returns each type of defective finished goods. The Defects report shows which raw materials are
required to repair units already returned and remaining in the repair queue.
Raw materials have an inherent quality that affects any finished goods that are made with them. Your
company's weighted-average raw material inventory quality is shown on the Inventory report.
You can get raw materials from these sources:
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•
•
Suppliers - available anywhere you have operations, but you must order them
Subsidiaries - anywhere in the world, by contracting to transfer them
Competitors - anywhere in the world, by contracting to buy them
Some suppliers have limited supply as shown on the Raw Materials report, so if your company wants to
order from them, you must also bid competitively. Other suppliers have unlimited supplies.
The Raw Materials report also shows raw material prices and recent backorders, and the regional logistics
data shows the quality of raw material from various suppliers.
H. Suppliers
Suppliers sell raw materials for your company to use to produce finished goods and to repair defective
finished goods returned by customers under warranty.
Your company can order from any supplier in any region where you currently have operations. You can
also buy raw materials from competitors and from subsidiaries by contract, if needed.
Suppliers have many defining characteristics, described more fully below:
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Raw material price
Raw material quality
Quantity of raw materials available
Delivery time horizon
Delivery short-ship percentage
Delivery defect percentage
Volume purchase discounts
Supplier prices vary each quarter, as shown on your company Raw Materials report. For every order your
company places, you pay both a fixed order charge, shown on the regional logistics data, plus the per-unit
price for the quantity delivered. Your company days-payable policy determines how soon after delivery
you pay your suppliers. Suppliers pay for shipping.
Suppliers maintain constant raw material quality over time, as shown on the regional logistics data. The
quality rating is a dimensionless index. Higher quality raw materials make proportionally higher quality
finished goods, all other process quality factors being equal.
Most suppliers offer unlimited quantities each quarter. Those that offer limited quantities, as shown on
your Raw Materials report, decide who gets delivery by bidding.
Rush Suppliers deliver raw materials in time to use for production and repair in the same quarter as
ordered. All other suppliers deliver their raw materials too late to be used in the same quarter as delivery.
As a separate timing issue, Suppliers 1 deliver raw materials one quarter after orders are placed.
All suppliers tend to short-ship orders by a small percentage, as shown on the regional logistics data. Your
company can minimize short-ships by setting a low days-payable policy. Of course, you do not have to pay
for any short-shipped units.
Most suppliers also tend to ship a small percentage of defective raw materials, also shown on the regional
logistics data. Similar to short-ships, your company can minimize defects by setting a low days-payable
policy. Defective raw materials are weeded out at the receiving dock as they enter your facilities, and do not
affect finished good quality or cause warranty defects.
All suppliers offer uniform volume discounts on each raw material order as follows:
•
10% discount on either LED Display assemblies or OLED Display assemblies beginning at 50,000
units, and an additional 2% discount on the entire order for each additional 10,000 units beyond
that, up to a maximum discount of 30%.
•
10% on universal Processor/tuner Board assemblies beginning at 100,000 units, and an additional
2% discount on the entire order for each additional 10,000 units beyond that, up to a maximum
discount of 30%.
Warehousing costs over time may offset some or all of the volume discount savings.
I. Competitors
Existing competitors have widely diverse skills and successes. Some are niche players, while others are
already truly global competitors. Some carry significant debt, while others are generating huge cash
balances. Some excel at personal selling but ignore other market opportunities. Several firms have potential
for high production efficiencies, but they under-invest in related factors like quality control, line
maintenance, or worker wages. Investment in research and development varies widely among firms.
At the outset, all companies do some things well and some things not so well in each functional area. See
section V. Comparative Company Data.
The Competitor Descriptions report in the demonstration software has brief company information.
Finally, the demonstration software also has complete details about each company’s decisions and results.
To be most efficient, follow the preparation hints in the manual and focus your analysis on Quarter 12
reports and graphs, only.
J. Other industry characteristics
Global Tycoon includes many entities, exogenous to competitors, that add to the realistic business
environment:
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Bankers – for financial help in times of need
Government agents – e.g., the Securities and Exchange Commission [SEC], which requires
notification about future debt and equity transactions, and the Internal Revenue Service
Insurance agents – for protection against loss, except people-related loss (strikes and kidnappings)
Judges – for resolving contract disputes between and among competitors
Union representatives – for protecting workers’ rights
Terrorists, arsonists, and thieves – society’s fringe element
Read the Newsletter each quarter for the latest industry information.
K. Regional Data (see also section IV. Regional Data)
While data in the company reports change every quarter, unless reported otherwise in the Newsletter,
these regional data (also shown in section IV) typically remain constant over time:
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Marketing data
Logistics data
Production data
Human resource data
Regional expansion & operations data
All monetary values are expressed in 'real' local monetary units. To calculate the current value from the
‘real’ value, multiply the 'real' amount by the current consumer price index [CPI]. The Quarter 12 CPI is
1.14 in the U.S., 1.15 in the E.U., 1.08 in Japan, and 1.59 in Inflatia.
Click here to download regional data in Excel format (zipped XLSX file).
III.
The Functional Roles
Global Tycoon can be overwhelming. The best way to make sense of the exercise is to choose your roles as
early as possible, and focus your preparation on your role responsibilities. During The Competition, your
teammates will be depending on your expertise in your chosen functional areas.
There are ten functional roles. You and your teammates are responsible for all role responsibilities.
During The Competition, you may find that some roles require more effort than others do. Stay flexible, and
be ready to assist your teammates when they ask for help.
Chief Executive Officer [CEO]
The CEO provides leadership and control for all team members' efforts. As CEO, you will help keep your
company on a path consistent with your corporate strategy.
Although you have no quarterly decision responsibilities, you must make some very important decisions:
Before the Bidding Session deadline, Monday, May 5, 2014 at 9:00pm CT:
• Bidding on companies
Before the Quarter 13 decision deadline, Thursday, May 15, 2014 at 10:30am CT:
• Re-naming the Company
• Selecting Cost Allocation Method
• Setting Evaluation Criteria Weightings
• Setting Product Performance Weighting
• Updating Corporate Strategy
• Updating Organizational Design
Throughout The Competition, you will be responsible for internal control systems, promoting, and
demoting. You may reassign functional decision responsibilities to fellow team members anytime.
Often, CEOs find that they need to arbitrate the divergent interests of functional managers, such as whether
to dedicate limited resources to capital improvements or to daily operations.
As you struggle with the many complex and integrated decisions that your company faces, remember that it
is lonely at the top! The functional managers have all the detailed information, and the CEO's duty is to
solicit that information and facilitate decisions in a way that enables your company to achieve its goals.
Team management questions:
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How do you keep everyone in your company working towards the same goals? How are shifts in
goals determined?
How are decisions made, by action work teams or by specialists? What is the real role each team
member serves, and how can you manage them on several levels?
Who controls the recording and transfer of information? How does your organization learn? Are
your information tools and processes effective enough?
How do the shifting power bases in your company affect its decision-making ability? How can you
control the directions of these shifts?
You should be fully familiar with various strategic analyses:
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•
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Business-level strategy
Competitive strategy
Global strategy
Remember, nothing is static. Current positions are just the starting points for all future activities.
Chief Financial Officer [CFO]
CFOs make decisions about cash management, investments, loans, and internal cash transfers. As CFO, you
must develop and implement policies for common stock and dividend transactions. You should be your
company’s authority on stock pricing, corporate taxes, and the tax implications of transfer pricing.
Typical CFO decisions include:
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•
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Setting Short-term Debt Balance
Issuing Long-term Debt
Retiring Long-term Debt
Investing in Short-term Securities
Transferring Cash to Parent from Subsidiaries
Transferring Cash to Subsidiaries from Parent
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Buying Short-term Insurance
Issuing Preferred Stock
Issuing Common Stock
Repurchasing Common Stock
Issuing Dividends
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Notifying SEC of Long-term Debt Transaction
Notifying SEC of Preferred Stock Transaction
Notifying SEC of Common Stock Transaction
Since all companies' Parent operations are in the U.S., all common stock and preferred stock transactions
are available only in the U.S.
Accounting Manager
The Accounting Manager is responsible for the company’s cash flow. As Accounting Manager, you should
understand the reports detailing the product cost accounting components of work-in-process [WIP]. You
may account for variances between operating budgets and financial statements. Finally, you may have to
interpret the complexities of international accounting and consolidation accounting to team members.
Use the Trial runs during The Competition to forecast cash flow, rather than trying to create your own.
VP-Production
The VP-Production is responsible for meeting multiple objectives: making enough finished goods to fill
customer orders, at good quality levels, and at a reasonably low cost so that the company is profitable.
The VP-Production faces the most complex quantitative decisions, especially in companies that have
multiple regional production facilities making multiple products.
Typical operating decisions include: budgeting for maintenance and quality control, scheduling production
and warranty repairs, and converting lines:
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•
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Investing in Quality Control
Investing in Maintenance
Scheduling production of finished goods, subject to labor, capacity, and material constraints
Scheduling warranty repairs, subject to labor and material constraints, only
Converting Assembly Lines to produce another product
The VP-Production should work closely with the VP-Logistics and the VP-External Relations to assure that
materials are available in time for production, with the Human Resources Manager to assure workers are
ready and able, and with the R & D Manager to maintain competitive technology.
Research & Development Manager
As R&D Manager, you can invest in research & development to lower your cost or to improve your
products. You will have opportunities to evaluate and prepare bids for patents from outside inventors.
R&D facilities are in the U.S. for all companies, so the U.S. operating income usually understates the actual
manufacturing and sales profitability.
R&D is most cost-effective if consistently implemented over time. Through continual R&D, you can achieve
many product improvements, each incrementally improving the quality or lowering the cost of your
products. Any R&D benefits that you receive are permanent.
The R&D Manager typically budgets for quarterly investment in R&D projects. Your company can have only
one cost reduction project and one quality improvement project at a time for each product, for a total of
four concurrent projects. Successful projects end with a benefit; unsuccessful ones continue for another
quarter using the funds already budgeted.
If you invest in R&D for a type of finished goods that you do not yet produce, later, if you choose to begin
production, the accumulated R&D benefits will apply to the new process:
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Productivity R&D lets you produce the same number of finished goods in fewer hours by increasing
your line speed, which usually increases production capacity and lowers average unit cost of
finished goods.
•
Product quality R&D increases the quality of your finished goods. The benefits apply immediately to
all current and future work-in-process [WIP], but not existing finished goods inventory. Increased
quality is an important factor in determining your company's share of customer demand.
Productivity improvements generally take more money to achieve than quality improvements. But the
impact of individual productivity improvements on profits, given other rational policies, tends to be less
than the impact of a quality improvement. You can estimate the relative impacts of productivity and quality
R&D from historical data, but the analysis will be difficult due to limited data and numerous factors.
R&D Manager also typically bids on patents offered by outside inventors.
VP-Marketing
The VP-Marketing has one main objective: getting sufficient customer orders at a profitable price.
The VP-Marketing faces a complex set of decisions involving pricing, advertising, customer focus, product
focus, and sales rep management. For some of these decisions, the VP-Marketing will have market
estimates reports that give accurate, although imprecise, data for all competitors. For others, no competitor
data is given. The impact of these decisions affect not only the company's market share, but they also
contribute to the market size for the entire industry.
Marketing decisions include:
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Investing in Advertising
Setting Finished Goods Selling Price
Focusing Sales Reps on Customers
Focusing Sales Reps on Products
VP-Marketing should also work with the VP-Production to balance capacity with demand, with the VPHuman Resources to manage sales reps, and the VP-Logistics to fill orders and keep customers happy.
Challenges will include forecasting demand and dealing with imprecise competitor information. Good VPMarketing candidates embrace ambiguity!
VP-Logistics
As VP-Logistics, you manage inventory flow – the transfers among regions, from suppliers to your firm, and
from your firm to customers. Tariffs, shipping fees, market demand, production scheduling, and expansion
may influence your decisions.
Common carriers ship raw materials and finished goods. Their rates remain constant throughout The
Competition, unless the Newsletter says otherwise.
Shipping Raw Materials
If you need additional raw materials to use this quarter, you have two or three options, depending on the
region:
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You may bid on Rush raw materials, which are available only in the U.S. and the E.U..
You may transfer raw materials from other regions.
The transfer price is the source region average inventory cost.
You may buy raw materials from competitors by contract.
If you need additional raw materials next quarter, you also can buy supplier 2 raw materials this quarter,
for delivery later this quarter and use next quarter. There is a non-negotiable price per unit, plus the
ordering fee.
If you can wait two quarters until you use them, then you also can buy supplier 1 raw materials this
quarter, for delivery late next quarter and use the following quarter. Like Supplier 2, there is a nonnegotiable price per unit, plus the ordering fee.
Shipping Finished Goods
You cannot ship more finished goods than allowed by your finished good inventory at the end of the most
recent quarter, plus what you produced during the most recent quarter, plus any net changes in finished
goods inventory as a result of current subsidiary transfers and contracts with competitors.
Orders not filled are lost.
If you try to ship more to retail customers than you have in inventory, your shipments will be adjusted, and
you will pay a fine for the confusion. But if you ship fewer units than a customer ordered and you still have
finished goods inventory remaining, you will incur customer ill-will, resulting in fewer orders in the
current quarter and in the near future.
The buyer always pays shipping and tariff charges for finished goods shipments among competitors and
subsidiaries. International shipments incur only region-to-region shipping costs, and not domestic shipping
costs.
Typical VP-Logistics decisions include:
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Ordering Supplier 1 and 2 Raw Materials
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Ordering Rush Raw Materials
Bidding on Rush Raw Materials
Setting Days-payable Policy
Contracting with Subsidiaries
Shipping Finished Goods to Customers
The VP-Logistics should assist the VP-Production by purchasing raw materials for production, the VPMarketing by filling customer orders and managing inventories, and the VP-External Relations by
suggesting amounts to contract with competitors.
VP-Regional Operations
As VP-Regional Operations, you are responsible for identifying expansion opportunities into new regions,
and understanding the timing and cost of building new capacity and entering new markets.
The VP-Regional Operations must understand and differentiate among various important regional
distinctions, including:
• regional marketing distinctions ... Advertisers find that Inflatia offers the biggest bang for the advertising
buck. Extreme advertising policies, both high and low, in the U.S. and Inflatia will have the most extreme
effects. The most rapid response to new advertising is in the E.U., and Inflatia has the longest lingering
effects from past advertising. An experienced sales rep in Japan is likely to gain more orders over a lessexperienced competitor sales rep than in any other region. This effect is slightly less pronounced in the E.U.,
and is least in Inflatia. Customers in Japan pay off their accounts more promptly than in any other region.
• regional raw material sourcing distinctions ... When purchasing Rush raw materials, consider that the
range of defects shipped as part of the order is twice as great in the E.U. compared to the U.S., even though
they both average three percent. The Supplier 2 in Japan short-ship rate is half that of Supplier 2 in other
regions, and on the average ships fewer defects, too. The range of defects shipped by Supplier 2 is greatest
in Inflatia. The long-term trend in Supplier 1 prices is expected to be the most favorable to manufacturers
in Inflatia, and the least favorable in the U.S. The long-term trend in Supplier 2 prices is expected to be the
most favorable in Inflatia, and the least favorable in Japan. The minimum order to get raw material
discounts occurs at a threshold twenty percent lower in Inflatia than in any other region, and the maximum
available discount is ten percent higher! There is initially ten percent greater raw material waste during
production in both the E.U. and Inflatia, compared to the U.S. Japan has twenty percent less waste than the
U.S. These waste rates can be eliminated in all regions by worker experience effects.
• regional production distinctions ... Labor productivity is greatest in Japan and the U.S., with the E.U. close
behind. Inflatia workers are considerably less productive, but improving due to better public education
throughout the region. Japan laborers work the longest hours, and the E.U. laborers the shortest. With
overtime, the gap widens even more. See Regional Human Resources Distinctions, below. Long-term
maintenance programs are the most effective, but optimal levels vary by region. Maintenance benefits last
the longest in Japan, and the shortest in Inflatia. In the E.U., low quality control is the least detrimental of
any region, and spending for full line maintenance is fairly high. Inflatia is the opposite – no maintenance
can be catastrophic, but a little maintenance goes a long way. Fixed and variable overhead expenses are
currently ten percent higher in the E.U. than in the U.S., and about one-third lower in Inflatia. Fixed
overhead in Japan is higher than in the U.S., and the variable overhead is comparable.
• regional human resources distinctions ... In Japan, corporate relationships are more important, such as
the relationships among management and both production workers and sales reps, among a firm and its
suppliers and customers, and among a firm and its competitors. See Regional Production and Marketing
Distinctions, above, for other related effects. A reasonable sales rep pay policy in Japan results in more
productive sales reps, compared to those who are improperly paid, than in any other region. These effects
are less in the E.U. and Inflatia. Minimum wage is the highest in the E.U., Japan is next highest, then the U.S.,
and finally, by a wide margin, Inflatia. Worker attrition is usually one-third in Japan what it is in the U.S.,
Inflatia is slightly higher than the U.S., and the E.U. is slightly lower. When you hire experienced workers in
Japan, only about 25 percent come from other firms, compared to 50 percent in the E.U. and Inflatia, and 75
percent in the U.S. In Japan, a drop in worker wages, or firing a significant portion of the work force, lowers
worker morale more than in any other region.
• regional expansion distinctions ...Inflatia has the lowest barriers to entry in the form of startup costs, and
Japan has the highest. Operations in the E.U. have higher general and administrative expenses than other
regions, especially compared to Inflatia, which is very low. New production line construction costs are the
highest in the E.U. and the lowest in Inflatia. Warehousing and storage costs are lowest in Inflatia, and
highest in the E.U. In Japan, renting warehouse capacity is a more attractive option to building warehouses
than in other regions.
Typical VP-Regional Operations decisions include:
•
•
•
•
Opening Subsidiary Operations
Closing Subsidiary Operations
Building Warehouse Capacity
Building Assembly Lines, both Rush and Regular construction
The VP-Regional Operations works closely with the CEO to determine how best to grow the company and
where to locate strategic assets, and with all managers who are impacted by expansion decisions.
VP-Human Resources
The Human Resources Manager is responsible for hiring, firing, paying, and training your company's
factory workers and sales reps. Because of language barriers, human resources can only be deployed in the
region where they are hired.
Factory workers
Each company has a different size workforce to staff lines and repair defective finished goods.
All factory workers are unionized. You are bound by collective bargaining agreements that span the entire
industry, covering minimum wage, benefit package, limited hours per quarter, and possibly strike
negotiations.
If you need workers immediately, you can hire a limited number of skilled workers. If you can wait one
quarter for the new hires to operate lines or repair warranty goods, you can hire unskilled workers as
apprentices.
Sales reps
Each company has a different size sales force to call on customers.
If you need sales reps immediately, you can hire a limited number of experienced reps to call on customers
immediately. If you can wait one quarter while they serve their apprenticeship, you can hire an unlimited
number of inexperienced reps.
Typical VP-Human Resources decisions include:
•
•
•
•
•
•
Hiring Inexperienced Sales Reps
Hiring Experienced Sales Reps
Firing Sales Reps
Training Sales Reps
Paying Sales Rep Salaries
Paying Sales Rep Commissions
•
•
•
•
•
Hiring Unskilled Factory Workers
Hiring Skilled Factory Workers
Firing Factory Workers
Training Factory Workers
Paying Factory Worker Wages
Employees are your company's most important resource, so treat them well and avoid high attrition.
VP-External Relations
The VP-External Relations is responsible for negotiating contracts with competitors.
Your company can buy or sell raw materials, finished goods, production lines, warehouse space, and
technical formats by contract. Often, long-term strategic alliances evolve from short-term mutual
agreements. Contract negotiations may prove critical to your company’s success.
When contracting, be sure to include penalty clauses to discourage both contracting parties from reneging
on the deal. You should record these in writing and archive them in case litigation ensues.
You may not sell finished goods at a price that is less than the seller's average unit cost (dumping). You may
price other assets at whatever price the two contracting parties agree.
Finished goods received from competitors are available to ship to customers in the same quarter. Similarly,
raw materials received from competitors are available for use in production in the same quarter.
Production lines and warehouse space are available immediately for the buyer to use. The physical facility
is all that transfers, and that workers and inventory remain with the seller.
You may not both buy an asset from a competitor and sell that same asset to another competitor in the
same quarter. Timing problems during contract fulfillment prevent this.
In Closing …
So that is it for the pre-reading, except for the regional data and Quarter 12 comparative company data that
follows, but we’ve only scratched the surface. When we get together in class, we will fill in the details so
that you can prepare fully for your decision-making responsibilities during The Competition.
IV.
Regional Data – Global Tycoon® Marketing Data Sheet
Customer Descriptions
Customer Type
Customer Number
Consistency of account payment
Demand Sensitivities
Price sensitivity
Quality sensitivity
Image sensitivity*
A
1 to 4
Low
B
5 to 8
Medium
C
9 to 12
High
High
Low
Medium
Low
Medium
High
Medium
High
Low
* Image sensitive customers respond highly to advertising and sales rep activities.
U.S.
E.U.
Japan
Inflatia
87%
102%
115%
96%
92%
111%
103%
94%
88%
92%
116%
104%
92%
108%
120%
80%
92%
108%
110%
90%
84%
96%
112%
108%
95%
103%
112%
90%
101%
113%
102%
88%
96%
98%
104%
102%
66%
64%
68%
-65%
62%
65%
64%
61%
62%
62%
--
62%
61%
66%
-67%
69%
--70%
71%
70%
--
65%
64%
68%
-65%
64%
--62%
----
Medium
Medium
Large
-Small
Large
Large
Small
Small
Large
Small
--
Small
Medium
Small
-Large
Small
--Large
Small
Large
--
Medium
Medium
Large
-Small
Large
--Medium
----
Seasonal Demand Factors (percent of average quarterly demand)
Customer Type A [1 through 4]
Season 1† multiplier
88%
Season 2 multiplier
111%
Season 3 multiplier
117%
Season 4 multiplier
84%
Customer Type B [5 through 8]
Season 1 multiplier
82%
Season 2 multiplier
108%
Season 3 multiplier
130%
Season 4 multiplier
80%
Customer Type C [9 through 12]
Season 1 multiplier
90%
Season 2 multiplier
103%
Season 3 multiplier
122%
Season 4 multiplier
85%
†
Season 1 occurs in Quarters 13, 17, 21, 25, …
Average Accounts-receivable Paid by Customers Each Quarter
Customer 1
70%
Customer 2
70%
Customer 3
66%
Customer 4
62%
Customer 5
62%
Customer 6
65%
Customer 7
65%
Customer 8
65%
Customer 9
62%
Customer 10
60%
Customer 11
62%
Customer 12
62%
Relative Customer Sizes
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
Customer 6
Customer 7
Customer 8
Customer 9
Customer 10
Customer 11
Customer 12
Medium
Small
Medium
Medium
Small
Small
Large
Large
Large
Large
Large
Small
Global Tycoon® Logistics Data Sheet
Warehousing Costs per Cubic Foot
New warehouse construction cost
Quarterly cost, owned space
Quarterly cost, rented space
U.S.
$8.00
$0.90
$2.00
E.U.
€7.10
€0.80
€1.80
Japan
¥1100
¥120
¥260
Inflatia
₡25.00
₡2.50
₡6.00
Warehousing Space Requirements per Unit
Raw Materials
LED Display (cubic feet)
2
Processor/tuner Board (cubic feet)
1
OLED Display (cubic feet)
1.5
Finished Goods
LED TV (cubic feet)
3
OLED TV (cubic feet)
2
U.S.
Raw Material Supplier Quality
Supplier 1
LED Display
Processor/tuner Board
OLED Display
Supplier 2
LED Display
Processor/tuner Board
OLED Display
Rush Supplier
LED Display
Processor/tuner Board
OLED Display
E.U.
Japan
150
97
202
147
103
205
151
97
206
149
98
192
172
114
221
168
114
230
157
113
214
165
106
222
130
94
182
140
93
175
n/a
n/a
n/a
n/a
n/a
n/a
Raw Material Supplier Reliability (maximum, varies with days-payable policy)
Defect percentage, Supplier 1
0%
0%
0%
Defect percentage, Supplier 2
3%
3%
2%
Defect percentage, Rush supplier
3%
3%
n/a
Short-ship percentage, Supplier 1
3%
3%
3%
Short-ship percentage, Supplier 2
5%
5%
5%
Short-ship percentage, Rush supplier
7%
7%
n/a
Supplier Volume Discounts
Minimum Order for Discount
LED and OLED Displays
Processor/tuner Boards
Order change for next disc’t
Discount increment
Maximum discount
Inflatia
50,000
100,000
10,000
2.00%
30%
50,000
100,000
10,000
2.00%
30%
50,000
100,000
10,000
2.00%
30%
0%
3%
n/a
3%
5%
n/a
40,000
80,000
10,000
2.00%
33%
Raw Material Ordering Costs
Fixed charge per order
U.S.
E.U.
Japan
Inflatia
$20,000
€17,600
¥2,860,000
₡60,000
¥200
¥300
¥200
₡2.30
₡3.30
₡2.30
¥520
¥720
¥200
¥600
₡16.00
₡6.00
₡20.00
₡2.00
¥260
¥360
¥100
¥300
₡8.00
₡3.00
₡10.00
₡1.00
¥400
¥550
¥150
¥450
₡12.00
₡4.50
₡15.00
₡1.50
€22
€30
¥2,000
¥2,800
₡22.50
₡30.00
€15
€13
€25
€25
¥2,600
¥3,600
¥1,000
¥3,000
₡80
₡30
₡100
₡25
€12
€10
€20
€20
¥2,100
¥2,900
¥800
¥2,400
₡64
₡24
₡80
₡20
Raw Materials Tariff and Shipping Costs, per Unit
Import Tariffs
LED Display, to [column]
$1.00
€1.75
Processor/tuner, to [column]
$2.00
€2.75
OLED Display, to [column]
$1.00
€1.75
Domestic and Overseas Shipping Costs, LED Display
From U.S. to [column]
$2.00
€3.00
From E.U. to [column]
$4.00
€1.75
From Japan to [column]
$6.00
€5.00
From Inflatia to [column]
$6.50
€5.00
Domestic and Overseas Shipping Costs, Processor/tuner Board
From U.S. to [column]
$1.00
€1.50
From E.U. to [column]
$2.00
€0.88
From Japan to [column]
$3.00
€2.50
From Inflatia to [column]
$3.30
€2.50
Domestic and Overseas Shipping Costs, OLED Display
From U.S. to [column]
$1.50
€2.25
From E.U. to [column]
$3.00
€1.33
From Japan to [column]
$4.50
€3.75
From Inflatia to [column]
$5.00
€3.75
Finished Goods Tariff and Shipping Costs, per Unit
Import Tariffs
LED TV, to [column]
$10
OLED TV, to [column]
$14
Domestic and Overseas Shipping Costs, LED TV
From U.S. to [column]
$15
From E.U. to [column]
$20
From Japan to [column]
$30
From Inflatia to [column]
$33
Domestic and Overseas Shipping Costs, LED TV
From U.S. to [column]
$12
From E.U. to [column]
$16
From Japan to [column]
$24
From Inflatia to [column]
$26
Note - Monetary values change as CPI changes. Values shown are for CPI = 1.
Global Tycoon® Production Data Sheet
U.S.
E.U.
Japan
Inflatia
500
20%
420
10%
600
25%
550
20%
1
1
1
1
1
1
35%
25%
20%
15%
5%
100%
45%
25%
15%
10%
5%
100%
30%
25%
20%
15%
10%
100%
10 hours
56%
8 hours
50%
24 hours
47%
€2,200,000
¥370,000,000
₡6,750,000
€28
€31
¥4,200
¥4,600
₡85
₡90
€10
€25
¥1,400
¥3,500
₡35
₡90
€75,000
€225,000
¥10,500,000
¥31,500,000
₡500,000
₡1,500,000
Assembly Line Construction and Conversion Data
Regular Construction Cost
Stage 1 (first quarter)
$6,000,000
Stage 2 (second quarter)
$2,000,000
Rush line construction cost
$16,000,000
Convert line to other product
$2,000,000
Shutdown hours for converting line
280
€5,300,000
€1,770,000
€14,154,000
€1,770,000
310
¥800,000,000
¥265,000,000
¥2,130,000,000
¥264,000,000
270
₡18,000,000
₡6,000,000
₡48,000,000
₡6,000,000
550
Technical Format Conversion Costs (DVD only)
OLED TV production lines, per line
$500,000
OLED TV inventory, per FG unit
$50
Shutdown hours to convert line or inventory
0
€500,000
€50
0
¥50,000,000
¥5,000
0
₡1,500,000
₡150
0
Allowable Worker Data
Regular quarterly hours
Allowable overtime percentage
Raw Material Requirements to Produce One Finished Good
Number of display assemblies*
1
Number of processor-tuner assemblies*
1
* does not include waste rate
Future Returns of Defective Finished Goods, for Warranty Repair
Percentage returning next quarter
35%
Percentage returning in 2 quarters
25%
Percentage returning in 3 quarters
20%
Percentage returning in 4 quarters
15%
Percentage returning in 5 quarters
5%
Total to be returned
100%
Warranty Repair Requirements
Hours required to repair unit
Repairs requiring drive assemblies
7 hours
52%
Fixed and Variable Production Overhead Costs
Fixed production overhead
$2,500,000
Variable production overhead
Per LED TV
$32
Per OLED TV
$35
Quality Control and Maintenance Guidelines
Quality Control, per unit produced
Minimum effective
$10
Maximum effective
$25
Maintenance, per line*
Minimum effective
$100,000
Maximum effective
$300,000
* Includes all lines that are active, idle, and under-construction
Note - Monetary values change as CPI changes. Values shown are for CPI = 1.
Global Tycoon® Human Resource and Regional Operations Data Sheet
U.S.
Sales Rep Hiring, Firing, and Training Costs
Experienced Reps
Hiring cost per rep
$30,000
Hiring limit, per company, per quarter
1,000
Training cost per rep
$9,500
Training hours required per rep
0
Maximum training benefit, quarters
4
Inexperienced reps
Hiring cost per rep
$10,000
Hiring limit, per company, per quarter
unlimited
Firing severance cost per rep
$10,000
E.U.
Japan
Inflatia
€26,550
1,000
€8,360
0
4
¥3,560,000
1,000
¥1,358,500
0
4
₡9,000
1,000
₡28,500
0
4
€8,850
unlimited
€8,850
¥1,190,000
unlimited
¥1,190,000
₡3,000
unlimited
₡3,000
Production Worker Hiring, Firing, and Training Costs
Skilled Workers
Hiring cost per worker
$10,000
Hiring limit, per company, per quarter
1,000
Training cost per worker
$5,000
Training hours required per worker
100
Unskilled Workers
Hiring cost per worker
$1,000
Hiring limit, per company, per quarter
unlimited
Firing severance cost per worker
$2,500
Legal minimum hourly wage
$5.25
Hourly benefits, % of wage
40%
Overtime pay premium
50%
€8,850
1,150
€3,872
105
¥1,200,000
875
¥181,967
110
₡15,000
3,500
₡4,294
85
€885
unlimited
€2,210
€4.00
55%
40%
¥130,000
unlimited
¥430,000
¥600.00
45%
35%
₡1,500
unlimited
₡7,500
₡4.75
65%
70%
Start-up Capitalization and Organizational Expense
New region, start-up capitalization
n/a
Initial organizational expense
n/a
€13,300,000
€745,000
¥2,800,000,000
¥168,000,000
₡30,000,000
₡2,000,000
Quarterly General & Administrative Expenses
Sales-only (no lines)
$1,000,000
Sales and production – 1 line
$2,000,000
Sales and production – 4 lines
$3,000,000
Sales and production – 100+ lines
$4,000,000
€1,000,000
€2,000,000
€3,000,000
€4,000,000
¥133,000,000
¥266,000,000
¥400,000,000
¥533,000,000
₡2,400,000
₡4,800,000
₡7,200,000
₡9,600,000
€10,000
50% to 200%
¥144,000
50% to 200%
₡30,000
50% to 200%
3%
3%
3%
3%
+2%
5%
2% to 7%
0%
+2%
5%
+2%
5%
+2%
5%
Error Fees
First Errors report error, per category
Premium for continual errors
$10,000
50% to 200%
Securities and Exchange Commission Fees
Change-fee, % transaction value change
Investment Banking Fees
Emergency ST debt, interest premium
LTD early-retirement, % transaction value
Stock transaction, % transaction value
Dividend transaction
Regional Tax Rates
Corporate income tax rate
34%
42%
53%
45%
Dividend tax, shareholder distributions
10%
---Dividend tax, cash transfers to Parent*
-10%
10%
10%
* U.S. offers Foreign Tax Credit on some cash transfers from subsidiaries to Parent. See ‘Corporate Taxes’ in the manual for details.
Note - Monetary values change as CPI changes. Values shown are for CPI = 1.
V.
Comparative Company Data at the End of Quarter 12 (Excel CSV format)
COMPARATIVE FINANCIAL DATA
(all values in $1,000,000, not all accounts shown)
United States (Parent) Balance Sheets
Cash equivalents
Accounts Receivable
Total Inventory
Total Current Assets
Net Property Plant & Equip.
Total Assets
Total Current Liabilities
Total Liabilities
Common Equity
Retained Earnings
Total Equity
Comp#1
33
16
28
77
21
103
Comp#2
13
6
7
27
4
133
Comp#3
0
7
15
22
8
123
Comp#4
14
9
17
40
8
88
Comp#5
6
7
16
28
8
103
Comp#6
0
13
16
31
8
180
Comp#7
0
15
58
72
5
146
4
4
1
1
27
27
1
1
2
2
42
42
70
70
150
-51
99
109
15
132
131
-34
96
136
-32
86
113
-27
101
177
-43
137
122
-24
76
United States (Parent) Income Statements
Sales revenue
Cost of Goods Sold [COGS]
Gross Margin
Expenses & Amortizations
EBIT
Net Income for Common Stock
Operational Cash Flow
Comp#1
40
-20
20
-21
Comp#2
18
-11
7
-10
Comp#3
20
-11
9
-14
Comp#4
24
-12
12
-17
Comp#5
21
-11
11
-20
Comp#6
34
-17
18
-15
Comp#7
40
-30
10
-15
-1
-1
1
-3
-3
1
-5
-5
-1
-5
-5
-6
-9
-9
-15
2
0
13
-5
-6
-4
Comp#1
33
16
28
77
21
103
Comp#2
78
18
24
120
17
136
Comp#3
19
18
73
110
18
128
Comp#4
30
16
28
74
13
89
Comp#5
41
14
35
90
16
106
Comp#6
101
33
41
175
17
196
Comp#7
0
18
63
81
13
97
4
4
5
5
32
32
2
2
5
5
58
58
21
21
150
-51
99
109
23
132
131
-35
96
136
-50
86
113
-12
101
177
-40
137
122
-46
76
Comp#1
40
-20
20
-21
Comp#2
47
-24
23
-20
Comp#3
53
-26
27
-25
Comp#4
41
-21
20
-26
Comp#5
47
-23
23
-39
Comp#6
96
-38
59
-31
Comp#7
48
-28
20
-23
-1
-1
1
3
1
2
2
-2
0
-7
-7
-5
-15
-15
-14
28
12
14
-4
-4
-3
Consolidated Balance Sheets
Cash equivalents
Accounts Receivable
Total Inventory
Total Current Assets
Net Property Plant & Equip.
Total Assets
Total Current Liabilities
Total Liabilities
Common Equity
Retained Earnings
Total Equity
Consolidated Income Statements
Sales revenue
Cost of Goods Sold [COGS]
Gross Margin
Expenses & Amortizations
EBIT
Net Income for Common Stock
Operational Cash Flow
COMPARATIVE MARKETING DATA
Comp#1
Number of Sales Representatives
US
166
EU
-JA
-IN
--
Comp#2
Comp#3
Comp#4
Comp#5
Comp#6
Comp#7
66
72
---
145
-136
--
206
--81
254
300
---
111
-209
--
166
--72
17.9
16.3
---
23.1
-16.5
--
27
--17.6
24.2
30.6
---
26.1
-17.4
--
16.5
--14.4
37,039
----
31,302
28,571
---
25,112
-3,350,265
--
28,091
--87,626
28,322
23,066
---
28,253
-3,436,269
--
27,679
--92,143
Product Focus, LED TV % / OLED TV %
US
100/0
EU
-JA
-IN
--
100/0
100/0
---
100/0
-100/0
--
50/50
--50/50
50/50
50/50
---
100/0
-50/50
--
100/0
--100/0
135
180
---
214
-182
--
180
--163
186
208
---
180
-148
--
202
--210
0
0
---
0
-0
--
236
--234
225
258
---
0
-278
--
0
--0
1,266
1,161
---
913
-131,018
--
1,084
--3,086
1,118
1,061
---
1,123
-196,272
--
971
--2,778
0
0
---
0
-0
--
1,063
--3,086
1,169
1,067
---
0
-198,255
--
0
--0
11
23
---
20
-23
--
16
--35
17
51
---
19
-19
--
27
--40
0
0
---
0
-0
--
32
--67
34
84
---
0
-43
--
0
--0
Sales Rep Experience (quarters-equivalent)
US
18.1
EU
-JA
-IN
-Sales Rep Compensation
US (in $s)
EU (in €s)
JA (in ¥s)
IN (in Çs)
LED (Hi-def) TV Perceived Quality
US
193
EU
-JA
-IN
-OLED (Tru-def) TV Perceived Quality
US
0
EU
-JA
-IN
-LED (Hi-def) TV Price (CPI adjusted)
US (in $s)
864
EU (in €s)
-JA (in ¥s)
-IN (in Çs)
-OLED (Tru-def) TV Price (CPI adjusted)
US (in $s)
0
EU (in €s)
-JA (in ¥s)
-IN (in Çs)
-LED (Hi-def) TV Orders (in 1,000s)
US
44
EU
-JA
-IN
-OLED (Tru-def) TV Orders (in 1,000s)
US
0
EU
-JA
-IN
--
COMPARATIVE PRODUCTION DATA
Comp#1
Comp#2
Comp#3
Comp#4
Comp#5
Comp#6
Comp#7
11.75
12.24
---
16.59
-2,260
--
19.36
--15.75
13.83
14.53
---
16.23
-2,067
--
19.5
--22.12
43
----
7
18
---
20
-25
--
10
--7
8
8
---
17
-11
--
10
--23
LED TV Finished Goods (in 1,000s)
US
EU
JA
IN
0
----
0
0
---
0
-63
--
0
--0
0
0
---
3
-0
--
60
--0
OLED TV WIP (in 1,000s)
US
EU
JA
IN
0
----
0
0
---
0
-0
--
11
--8
9
9
---
0
-12
--
0
--0
OLED TV Finished Goods (in 1,000s)
US
EU
JA
IN
0
----
0
0
---
0
-0
--
0
--0
0
0
---
0
-0
--
0
--0
Completed LED (Hi-def) TV Assembly Lines
US
5
EU
-JA
-IN
--
1
3
---
2
-2
--
1
--1
1
1
---
2
-1
--
1
--3
Completed OLED (Tru-def) TV Assembly Lines
US
0
EU
-JA
-IN
--
0
0
---
0
-0
--
1
--1
1
1
---
0
-1
--
0
--0
LED TV Line Speed (units/hour/line)
US
17.9
EU
-JA
-IN
--
13.7
14.9
---
20.3
-22.2
--
20.6
--13.3
17.1
20.4
---
17.3
-19.2
--
20.2
--14.7
OLED TV Line Speed (units/hour/line)
US
16.6
EU
-JA
-IN
--
14.2
15.5
---
20.5
-22
--
22
--14.2
17.8
21.2
---
19
-20.9
--
20.2
--14.6
Wages and Benefits (per hour, CPI adjusted)
US ($)
14.52
EU (€)
-JA (¥)
-IN (Ç)
-LED TV WIP (in 1,000s)
US
EU
JA
IN
COMPARATIVE STOCK OUT DATA
Minimum Raw Material Level in Quarter 12
Comp#1
Comp#2
Comp#3
Comp#4
Comp#5
Comp#6
Comp#7
US
LED Displays
Processor/tuners
OLED Displays
15,007
90,276
0
6,917
4,262
0
2,432
16,439
0
14,061
31,900
19,909
7,787
15,069
5,423
3,913
19,676
0
10,423
21,721
0
EU
LED Displays
Processor/tuners
OLED Displays
----
29,751
39,559
0
----
----
2,792
28,248
5,073
----
----
JA
LED Displays
Processor/tuners
OLED Displays
----
----
7,552
46,304
0
----
----
6,190
26,279
12,792
----
IN
LED Displays
Processor/tuners
OLED Displays
----
----
----
11,055
4,079
10,621
----
----
9,951
50,991
0
Expected Raw Material Surplus in Quarter 13 (based on Quarter 12 usage rates)
Comp#1
Comp#2
Comp#3
Comp#4
Comp#5
Comp#6
Comp#7
US
LED Displays
Processor/tuners
OLED Displays
60,992
42,316
0
69
8,628
0
34,172
14,974
0
2,677
7,711
6,014
2,182
9,686
11,814
25,605
3,182
0
-690
9,901
0
EU
LED Displays
Processor/tuners
OLED Displays
----
8,714
18,455
0
----
----
12,204
8,432
12,981
----
----
JA
LED Displays
Processor/tuners
OLED Displays
----
----
35,667
17,574
0
----
----
9,214
1,229
4,177
----
IN
LED Displays
Processor/tuners
OLED Displays
----
----
----
2,917
25,429
784
----
----
33,057
24,828
0
MICRO THEORY versus STRATEGIC POSITIONING
(all monetary amounts expressed in local currency)
Orders /
Capacity
Actual
Price
Micro
Price Move
Price /
Quality
Value
(8=Best)
0.813
1.304
0.83
1.272
1.689
0.903
2.193
987
1,445.96
1,042.90
1,238.33
1,276.67
1,281.91
1,108.63
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
5.117
8.102
4.878
6.491
6.475
6.607
5.49
7
2
8
4
5
3
6
2.439
3.172
1,213.52
1,335.32
Increase
Increase
5.152
5.668
8
7
European Union
LED TVs
Europe's Best
BiCont'l Products
OLED TVs
BiContinental Products
1.098
5.366
1,337.15
1,222.13
Increase
Increase
6.865
5.888
7
8
8.593
1,228.95
Increase
4.756
8
Japan
LED TVs
Internat'l Amalg.
Pacifica Hi-Fi
OLED TVs
Pacifica Hi-Fi
0.698
1.303
141,635
212,177
Decrease
Increase
777.109
1,185.49
8
7
2.723
214,321
Increase
771.899
8
Inflatia
LED TVs
BraZZy Musica
Rhythm Systems
OLED TVs
BraZZy Musica
3.949
1.363
4,900.11
4,410.70
Increase
Increase
26.696
21.05
7
8
7.188
4,900.11
Increase
20.921
8
United States
LED TVs
Compact Products
Europe's Best
Internat'l Amalg.
BraZZy Musica
BiCont'l Products
Pacifica Hi-Fi
Rhythm Systems
OLED TVs
BraZZy Musica
BiCont'l Products
MINIMUM ALLOWABLE BIDS, all values in $
Company Number and Name
1. Compact Products
2. Europe's Best
3. Internat'l Amalg.
4. BraZZy Musica
5. BiCont'l Products
6. Pacifica Hi-Fi
7. Rhythm Systems
Book Value
Debt
Minimum Bid
Min. Bid + 7%
99,438,662
131,857,126
96,143,407
86,494,105
100,874,604
137,119,227
65,526,699
0
0
23,794,787
0
0
39,963,323
6,299,944
99,438,662
131,857,126
96,143,407
86,494,105
100,874,604
137,119,228
65,526,699
106,399,368
141,087,125
102,873,446
92,548,693
107,935,827
146,717,574
70,113,568