Information to the event
”Managerial Financial Decisions course”
Prof. ....
http://gc4.cesim.com
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Cesim Global Challenge simulation overview
Prove your strategic
knowledge!
• Plan and execute the
strategy together with your
team members,
•and lead your company
through the simulation
Learn to handle
complexity!
• Real decisions and
market reactions
• Gain insight to:....
Experience, the joy what
strategic improvement
gives you!
•”Noone is perfect, but a
team can be!”
•Compete in teams
•Celebrate your success
Some general info about the course if needed-TO DO: Prof. ......+ you could add the header
and write sg like ”.... GC4 course” and insert the school logo
http://gc4.cesim.com
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Learning goals: familiarize with complex decision making
• Increase participants’
awareness of the
complexity of operating an
international company
• To develop capabilities in
analyzing key
environmental &
organizational variables
• Enhance fact-based
analytical decision-making
and crystallize the financial
implications of business
• Gain practical experiences
in team-work and problem
solving
http://gc4.cesim.com
Concrete
experience
Decision making
Applying new
ideas
Observations &
reflections
Analysis & planning
Results & team-work
Generalising from
the experience
Lectures &
discussion
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Students’ opinions
• ”Our strategy proved to be successful by reaching €38.91 share price by the end. We truly enjoyed
the whole simulation game. Sadly, these few weeks have been short to get deeply to know the game
and form the proper strategy; however we believe that have provided excellent opportunities to get
insight the business life and its decision making processes.” Stratégiánkat végeredményben
sikeresnek mondhatjuk, hiszen 38,91-es részvényárral megnyertük a szimulációt. Összességében
elmondhatjuk, hogy nagyon élveztük a játékot. Sajnos kevésnek bizonyult ez a pár hét a játék
megismeréséhez és a stratégia kialakításához; ugyanakkor úgy gondoljuk, hogy kiváló lehetőséget
adott belepillantani a játék az üzleti életbe és a döntések meghozatalába. (Fehér Anna - Oláh Zsuzsa
- Ostoróczky Boglárka)
• ”I would like to say thanks for the chance to participate and try CESIM. I liked it! It was a hard
work to make decisions; however I hope I could demonstrate the aspects I considered through the
simulation” Szeretném megköszönni a lehetőséget, hogy részt vehettem az órákon és kipróbálhattam a
CESIM-et. Nagyon tetszett! A döntések meghozatala komoly munkát igényelt, és remélem be tudtam
mutatni a döntéshozatali aspektusokat melyeket használtam a szimuláció során. (Engelhardt Márk
József)
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Students’ opinions – cont.
• ”In this game we have learnt quite a lot of useful and important issues that we may utilise in our
future work. It is important to note that we have been part of a truly complex, thorough simulation
game that required concentration from us. We got to know that in business life every small decision
has its consequence for success or failure. We are satisfied about our results, because all of our goals
that we had set in the first round have been fulfilled; we have been market leaders in our European
and Asian markets, whilst our share prices have risen sharply and our operating profit has increased
significantly. However, we are a bit disappointed that we do not have more rounds to see what could
have happened in this interesting and challenging game.” A játék során nagyon sok hasznos és
fontos dolgot tanultunk meg, amelyeket a későbbiek folyamán sikeresen alkalmazhatunk majd saját
munkáinkban. Fontos megemlíteni, hogy egy hihetetlenül összetett, nagyon sok gondolkodást és
odafigyelést igénylő szimulációnak lehettünk a részesei, amelyben megtanultuk azt, hogy az üzleti
életben minden apró döntés hatással van a sikerre és éppúgy a kudarcra egyaránt. A játékban elért
eredményeinkkel elégedettek vagyunk, hiszen az első kör után megfogalmazott céljainkat kivétel
nélkül teljesítettük: piacvezető termékekkel voltunk jelen az európai és az ázsiai piacon is,
mindeközben a részvényáraink magasra szöktek és jelentősen pozitív üzleti eredményt sikerült
produkálnunk. Némi csalódottsággal tölt el minket viszont az, hogy a félév legérdekesebb és
legizgalmasabb vetélkedésében mi lett volna akkor, ha még rendelkezésre áll néhány kör a csapatok
számára. (Kalló Imre – Kapitány Gábor - Lancz Alexandra)
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Cesim Global Challenge, a web-based simulation
•
•
•
General introduction
The simulation is completely webbased. There is no need to install any
separate
applications
and
the
simulation can be accessed from any
computer that has an internet
connection.
The simulation platform allows teammembers to work virtually if they
wish. Each team-member has her/his
own account that enables them to
make decisions and scenarios on their
own and later combine the outcomes
with the other team-members on the
[decision checklist] -page.
The platform also includes a
communications forum that can be
used to communicate within teams and
between all teams in one market.
http://gc4.cesim.com
The Home screen
1. Menu bar
2. Communication with team &
instructor
3. Quick details overall market
situation
4. "Closest deadline“
5. Message forum
6. Team decision log
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The simulation consists of 2 practice and 10 decision rounds
Decisions making flow during the simulation course
The learning process during the rounds
Detailed information:
Readings/Decision Making Guide
•You can modify the decisions for the current round until the deadline for the given round
•If teams have not saved decisions for a round, previous round’s inputs are used
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Simulation case and simulation goal
•
Simulation case:
The team will take over as the new management team of Mobilé Inc, a global mobile
handset manufacturer. The team will be responsible for the company’s strategy, R&D,
marketing, production, logistics, and finance.
The essence of Mobilé Inc is a fast-developing mobile handset market with product
life cycles driven by technological evolution.
•
Simulation goal:
The main objective is to deliver sustainable, profitable growth.
Typically this is measured by a ratio called “cumulative total return to the
shareholders”, which combines share price development and dividends paid to
show the total return to the shareholders.
The teams may try to manipulate their profits, revenues, and market share in the
short run, but share price will punish any short-sighted decisions sooner rather
than later.
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Decision making: 8 fields to be covered
8. Finances and Budgets
-
Treasury management
Dividend policy
Capital structure
Short and long term debt
Financial indicators
Budgets
7. Logistics
- Delivery priorities
- Transfer prices
1. Market conditions
- Read the market outlook
2. Demand
-Total market demand
-Predicted market growth
-Product selection
-Market shares
6. Marketing
3. Production
- For each product and
market
- Product feature decisions
- Pricing decisions
- Promotion investments
- Production capacity
- Capacity allocation
- Outsourcing
5. R&D
4. Investments
- Development of technology
- Development of new features
- Purchasing of licenses for
technology and features
- Estimations of future demand
- Investment in new production plants
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Market Outlook gives rough idea of market developments in each round
1. It is very useful to read the market
outlook before you start to make
decisions. Outlooks contain important
information on possible future
developments and will help you in
anticipating market movements.
2. At the bottom of the page you'll find a
dedicated tab for parameters. These
parameters (costs, exchange rates, tax
rates, etc.) are presented for the
current and the previous round.
Together with the ones that are not
shown here, these parameters define
your business case and you can take
advantage of this information for
example when planning for taxes,
logistics or investments.
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Teams estimate demands for each round
Steps for demand forecasting
1.
Estimating total market growth for each
market area. Market Conditions -page is
useful for making these estimates.
2.
Choose which technology products you sell
in each area.
3.
Estimate market shares for each of these
products in all of the markets. Total market
shares for this and last round can be seen on
the far right side for all three regions.
4.
Check the expected demand in each area.
5.
Crosscheck with projections on planned
infrastructure (Network coverage)
improvements of all four technologies.
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Unit costs and available capacity determine production plan
Steps for production planning
1. Choose which technologies to
produce in each production line and
how much of the production line.
capacity you allocate to each product.
2. Check the unit cost. The scrap%
depends on the maturity of each
technology in production.
3. Decide how much production is
allocated to contract
manufacturers.
•
•
•
Two concepts to keep in mind:
Capacity utilization
Learning curve
70
1,2
65
60
1,15
Unit cost, USD
Cost multiplier
55
1,1
1,05
50
45
40
USA
35
1
ASIA
30
25
0,95
0%
20
20 %
40 %
60 %
80 %
100 %
120 %
5000
10000
15000
20000
25000
30000
Global cumulative production per technology
Capacity utilisation
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Investment in new plants
Steps for investment planning
1. Estimate global demand for the next
two rounds. This year’s demand is
based on the estimates made on the
Demand page.
2. Decide investments into new
production facilities in USA and/or Asia.
They will be available for production
two periods from now and you have to
pay for them one period from now.
3. Check alignment of projected demand
and capacity.
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The marketing mix
Steps for marketing planning
1. First decision you make is to decide the
number of handset features to be offered.
More features cover more of the various
customer preferences, but also cause more
costs.
2. Decide Price and promotion decisions
here.
3. Check your budgeted financial outcome.
4. Crosscheck origin of your products
•
•
•
Features can only be implemented if the
company has invested to its own R&D or
license purchases.
Price elasticity differs between the
markets.
Promotion influences the demand at three
levels: product, market, and global
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Logistics:The team decides delivery priorities and transfer pricing
Steps for logistics planning
1. Choose in which order to satisfy
your demand in the markets. This
decision is only relevant if your
global supply is not enough to fully
satisfy your global demand.
2. Set transfer prices. They make
other business units participate in
R&D and other fixed costs and can
also be used to benefit from
different tax rates between
countries.
3. Check resulting production flow
and cost implications.
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R&D: own development and technology licenses
Steps for R&D planning
1. Decide your own R&D investments
into each technology. You need to keep
in mind that all results from your own
R&D investments are available with a
delay of one period.
2. Decide where to complement own
R&D by buying technology and design
licenses. License purchases make the
technologies and features available
immediately.
3. Check the number of handset features
available in each Technology.
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The financial decision heavily impact company success
Steps for financial planning
1. Here you can make the finance decisions. i.e.,
increase (+)/decrease (-) long term loans,
issue/buy back shares, and pay dividends.
2. Check the capital structure of the company. It
is reasonable to try to keep approximately
equal amounts of debt and equity on the
balance sheet.
3. Transfer funds between different countries, if
needed. Blue bars indicate cash reserves and
green bars indicate local debt.
Cash at the end of the year cannot fall below 2
million USD. If the planned financing is not
sufficient to maintain this requirement, the
system will fill the gap automatically by taking
short-term debt.
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Submitting Team`s Decisions: work efficient as a team
The steps of the succesful Team`s Decision saving process are:
1. Agree on your team`s strategy and the team`s decision saving process.
2. Make decisions on your own according to your team`s strategy.
3. Leave time for submitting the team`s decisions. In the simulation you work together
as a management team of a company. You have to react on given market conditions
in each round. First you make a draft on your own, then you have a look at the
individual proposals of all the team members and agree on a common decision set,
which you submit to Team`s Decisions.
4. You can choose rather one of the team member`s decision sets and click on ”Copy”,
or click on ”Go” under Team`s Decisions and add the team decisions to that profile.
5. After the round deadline the simulation calculates the results based
on the Team`s Decisions. The reports are available under ”Results”.
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The simulation calculates the results once the deadline has passed
Results calculation process and content
After each round the system generates reports that depict the results of each
team in a particular market.
Results consist of:
a.
b.
c.
d.
e.
f.
Summary report with a set of charts
Financial statements; including consolidated P&L and balance sheet, and parent company (USA)
cash flow statement
Financial ratios; including share price info and key financial indicators
Area reports for all areas; including market reports and P&L and balance sheet for each business
area
Production report; including information about the production volumes, contract manufacturing,
production facilities
Cost report; including information about scrap rates and production and logistics costs
Results provide useful information about a team’s own sales, operations, and
finances. In addition, results can be used to benchmark performance with
the competing teams in the same market.
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The website to know more about CESIM
http://www.cesim.com/simulations/cesim-global-challenge-international-businessstrategy-simulation-game/
http://gc4.cesim.com
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