MGMT 300, Semester 2 2012
Team Guide
The Collective
Welcome to MikesBikes!
Whatever your strategy may be, if your firm is aiming to be successful, there is one essential
focus you and your team must adopt as you begin your journey:
Commitment to learning will bring success
However it must be done right. Daudelin (1996), Kolb (1976) and Weick et al. (2005) all
elaborate on effective ways to learn and make sense of events both negative and positive
that occur in organizational situations, and furthermore how one can translate the
knowledge accrued into useable and practical tools for improvement. Throughout the
simulation you will be faced with situations that will provide opportunities to expand your
knowledge on the fundamentals of business, and it is the firm that best reflects, analyses,
and takes hold of these learning opportunities that should come out on top.
Specific Must Do’s:
1) You need to read the Quickstart Guide and Players Manual at least. You think you
may not need to, but the sooner you have a basic understanding of the simulation,
the sooner your firm can begin to think about strategy for approaching the coming
rollovers.
2) You must be aware that you are in a team, and in all probability, a diverse one.
Behold, every person in the team will not reason or understand things the way you
do and you need to be mindful of this so that in your deliberations, unnecessary
conflict can be avoided or mitigated. Awareness of diversity is particularly important
because miscommunication can be one of the greatest barriers to reaching consensus
(Payne, 2012), and can further take precious time in order to reconcile.
3) Be prepared for ambiguity and conflict. According to each individual members’
goals and visions, situations may arise where your understanding is questioned.
Furthermore, after certain rollovers for example, the results may cause
disappointment, confusion, and in some cases animosity, not only towards yourself,
but to others. You as a member of the team therefore need to be committed - to the
team, to supporting each other in reaching your goals, and most of all, to yourself as you will only get out what you put in. Be open, honest and positive about your
aspirations from the beginning so that a strong foundation is created and
understanding between members can be fostered that will lead to collaborative
judgement.
4) You need to be aware that whatever your role is - whether it is manager of HR, R&D
or CEO, working with numbers/ratios is inevitable. For instance, the HR manager
must have an accurate understanding of how many employees are needed for each
rollover in order to produce the planned production. Similarly, R&D must be
mindful of the ratio between new project expenditure, prime cost goals, and the
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balancing between the two that is needed in order for the project to not only be
successful but increase efficiencies. If working with numbers bothers you, don’t
stress. Find someone who can help you understand things better, every week you
should be pushing yourself towards learning something new.
Your Role: What matters?
CEO:
Perhaps the biggest issue you will be facing right now is answering the question of how you
should be, or how you should act, so that what you do and create can most effectively and
efficiently help your firm to reach its collective goal for the simulation, whether it is winning
overall or simply operating a rock-solid, steady profit-making business. The major problem
with becoming a CEO however is that it is nearly an undefined role, and this could be due to
a number of reasons such as the prevalence of personal attributes, and/or dissimilar
conditions that stem from the surrounding environments which both impact the way a CEO
operates. Drawing from this however, perhaps the most impacting themes to learn from and
take into the simulation are these very two factors - Personal consideration (or selfawareness), and Environmental consideration (both internal and external to the business).
In this instance, personal consideration refers to the fact that, as a manager and leader of
people, you must know yourself individually. Seemingly cliché, it is incredibly important
first and foremost to recognise your own personal attributes, characteristics, and personality
eccentricities, as these are what will govern how you respond and act towards others and
the situations that will arise as the simulation progresses. However no matter what, you as a
figurehead need to firstly be honest and open, not only with yourself but with the team as
well, as this will create an environment where members feel comfortable contributing their
thoughts and opinions. As a winning team, something that worked well and built a
significant amount of trust in the beginning was the way the initial meeting was utilised.
The focus was not on making decisions, but getting to know each other, discovering each
other’s goals, skills, passions, and to an extent cultural differences and characteristics, with
the aim being that if we were to succeed in whatever path we chose, we would firstly need
to develop a team-wide understanding so that effective communication and willingness to
collaborate and contribute would be enabled. Management is a personal engagement (Kedia
et al, 1999; Bartlett et al, 2003), and as a CEO, it is who you are, what you know, what you
strive for, and what your strengths and weaknesses as a student and individual are that will
determine how you run your team. Therefore, remember to be yourself, with the aim of
personal development. Always try to be better, learn from your peers, from feedback, from
the simulation, from relevant readings, and those experienced in the coordination and
running of MikesBikes.
Environmental consideration in this instance refers to the necessity for the CEO to have a
general (not necessarily specific) understanding of all things - in terms of internal
operations, external competitive and industry behaviours and tendencies, and the
opportunities and effects these dynamics present. It is necessary that as a CEO, you provide
general and strategic insight for a team that has focused roles whilst fostering an integrative
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environment. It is how well you can analyse and integrate this insight, along with the insight
provided by each member that will determine the steps your firm takes towards achieving
its goal. Tidd & Bessant (2010) talk about the importance of analysing all opportunities, and
that because of core rigidities - the limits placed on a firm’s ability to see opportunities
clearly because of pre-defined pathways - it is easy to overlook the value these peripheral
opportunities can create. It is therefore imperative that you and your teammates not only
begin to build capabilities that enable the identification of opportunities, but also adopt the
flexibility needed to prepare and carry out effective exploitation of them. A prime example
is the analysis of and preparation for possible takeovers. Takeovers involve huge amounts of
analysis, preparation and balanced planning between both firms involved, however if done
correctly, such ventures have the potential to provide significant gains in SHV for your
company.
Overall, taking on a fostering role that helps to strategically develop and integrate each
department whilst utilising everyone’s knowledge to create and pursue team objectives has
worked very well. In essence, it is about forming and leading a resilient team, one which is
strong and cohesive whilst flexible and level-headed. As Gratton & Erickson (2007), and
Tichy (2002) explain, although technical mastery is needed, even more so is the ability to
work with and manage people. Complemented by strong leadership qualities such as
honesty, determination, and humility (Collins, 2005), this is a personal framework that can
lead to overall success.
CFO:
As a Financial Officer your primary job is to focus on the finance tab, this gives you control
over Investor Relations, Dividend Payments and the issuing or repurchasing/repaying of
equity and debt. Investor relations deal with the stakeholders’ ability to understand the
company. Thus it not only increases awareness of your financial statements to your
shareholders but also increases general awareness to potential shareholders - similar to the
issuing of brochures, or the introduction of a company website. Remember that around 80%
of Investor Relations effects is also carried over to the next year so you can maintain
awareness at consistently lower amounts over time. Paying dividends increases SHV, and
interest shareholders make from the dividends they receive also increase SHV which is
understood by this formula:
SHV - Share pricing = Dividends paid + Interest made on those Dividends + Awareness of
Company (Investor Relations).
With the formula above you can see that dividends affect SHV both directly and indirectly
in that the interest the shareholders make from dividends also increase SHV. Lastly and
most importantly is the company’s ability to finance its endeavours by issuing shares, or
increasing long-term debt. This is one area to be mindful of as this particular segment of
Mikes Bikes was detrimental to our team because our Share Capital entered a deficit of over
$30,000,000. The rule that applied to our competition of having an amount of shares between
2,040,000 and 1,960,000 created a problem as large share repurchases had to occur to get the
team back within the limit. This mistake showed the team that to succeed one must strive to
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understand the laws surrounding the simulation before decisions are made and to analyse
the benefits/risks of debt and equity funding.
A CFO needs to communicate the results of his findings effectively. This is because you will
find yourself the initiator of debate as your role demands that you try to control the
proposed expenditures that arise from your counterparts. Thus, budgeting marketing,
manufacturing, and R&D expenditures may make you the bane of the team, but if you can
communicate succinctly and in a productive manner, the team will acknowledge your
findings and you will solidify your role in the team (Edmondson, Bohmer, & Pisano, 2001).
Finally, without prior Accounting and Finance knowledge Deegan and Samkin (2011) come
to the rescue, with their knowledge on understanding financial statements, which will also
help you get an inkling as to what your team’s competitors will do next through their
Financial Statements. For instance: Increases in plant purchases, increases in long term debt
and share capital and also changes in their SHV. I also recommend the book ‘Cost
Accounting’ which helps with the internal accounting - budgets, resource allocations etc. - of
an organisation (Horngren et al. 2012). These two tools helped our team significantly when
confusion was met in both the understanding of the financial statements and individual
insight into each role. Thus the quicker you can understand the numbers, the faster your
firm can realise efficiencies.
Marketing Manager
Rogers (2001) states that if a firm stands a chance of developing a winning strategy they
need to take the time to research their markets. The marketing director’s main objective is to
find the most effective way to raise awareness and attractiveness of products and bring in
revenues through pricing methods and effective advertising. It is extremely important to
research the relevant markets and understand each segment’s preferences in order to gain
the best results. A good way to gain this knowledge aside from reading the players manual
is by using the help button within Mikes Bikes’, specifically the areas that expose each
market segments preferences such as Kids and their reliance on television advertising. There
is extensive information within this area, the more you research the more useful information
you will extract which in turn will help ensure you make spot on predictions.
In order to be successful you need to develop a marketing plan, setting an objective and
communicating it to the rest of the team. This ensures that everybody understands what
goals need to be achieved in order for the marketing strategy to meet firm requirements. It
also gives team members the chance to ask questions about any concerns that may arise. It is
important to note that market tendencies change as the game progresses, therefore you need
to develop a strategy which can adapt to these changes, as they can be very unpredictable. A
good way to develop a basic strategy is by understanding the product lifecycle and adapting
your situation to that lifecycle. The product lifecycle consists of four stages : the introduction
phase, the growth phase, the maturity phase and the decline phase (Levins, 2012).
Researching each phase will provide you with information in regards to how you should
market your product in terms of spend on advertising and public relations, approximate
timing on when the product should be modified, where/when it should be distributed and
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what media channel to use. It is a tool that is very helpful and should be used when trying to
develop a strategy, especially if you are confused on how to approach this area.
An important tip is to take note of what the competitors are doing but not to follow their
lead. You want to think outside the box and differentiate your products which means taking
a different path from the rest (Kim & Mauborgne, 2004).Remember, it is not about how
much funds you put into each product, so do not worry about how much your competitors
are putting into advertising, it is all about how efficient you are with raising awareness. Be
aware that it is easy to accumulate costs in advertising, therefore the more research you do
about each market segment, the more you will understand their needs and how much
should be invested in each market to reach optimal costs/sales ratios.
Operations Manager:
Being an operations manager is one of the most central roles, stemming from R&D, working
in conjunction with Marketing and complemented by HR. The essential knowledge here is
to understand the manufacturing capacity usage report. With this knowledge you can
develop your expertise to create the highest performing, most efficient production facility.
One main point that is easy to focus on is idle time. It is easy to notice idle time go up/down
in the beginning of the simulation, but don’t panic. Idle time is firstly affected by factory and
employee capacity. For example, if a factory can produce 1,000 units per year but they only
need to make 700 because of sales predictions, leftover are 300 units worth of idle capacity.
Note that this is not the only factor; if you have too many employees they may finish the
production requirements early and this would also lead to idle time with staff not producing
anything. This leads on to planned production. Planned production is something that you
can adjust to strategically utilise your manufacturing capacity. When planned production
and employee/manufacturing SCU are perfect then it is possible to reach 0% idle time. This
is also the cheapest way to reduce idle time. Another means of reducing idle time is working
with HR to reduce employees, but be careful, firing employees has a negative effect on
worker morale and is regarded by your shareholders as a means of making up for inefficient
decisions previously made.
Being an operations manager you must work with marketing to get their expertise on
planned production. They will develop an in-depth understanding of how the market
functions and how to obtain ideal results, for example how many bikes your company needs
to sell in order to make profits. Then you must look at the new products or modifications on
existing products from R&D (if you have any) and see how they would do in the market. A
prediction of how many products you think you would sell needs to collectively be
calculated to find an accurate planned production number for each bike.
Another aspect that needs to be looked at is breakdown and set up times. These are easily
dealt with by injecting money. Make sure you do not spend too much though because to
reach 100% production time the benefits to costs at this point are negative. You can
furthermore increase batch size to decrease set up time also.
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Lastly there is the issue of quality, affected by the fields of ‘quality systems technology’ and
inspection rates. You must work with R&D and Marketing to see what kind of bikes you
need. You do not want to spend a lot on quality when most of your bikes are low quality
bikes, and vice versa.
HR Manager:
The Human Resources manager has two specific jobs within this simulation, to actively
promote effective and positive team work and to develop an understanding of the HR
function within MikesBikes.
When it comes to team meetings it is highly important to have an ‘agenda’ which all team
members have read and agreed to follow. Having an agenda encourages the team to come to
meetings well prepared with department results, decisions and any other relevant
information. Having required expectations for each meeting ensures members remain
committed to what is expected of them and arrive ready to start discussions. This also
promotes efficient and effective team meetings, as it is rather easy to fall into the trap of
discussing irrelevant matters or getting hung up on issues that are simply a waste of your
team’s time. An ideal agenda could include a personal discussion (feelings, ideas etc),
departmental reports, strategic discussion and lastly decision entries and confirmation this
has been done. Meetings contain deep, thought provoking discussions, therefore taking a
break is vital to ensure members do not lose focus, become fatigued and thus nonproductive.
Communication is key to a HR Manager therefore it works to the teams benefit to emphasise
this from the beginning and ensure members feel comfortable engaging in open discussions.
Along with the CEO, HR should ensure their employees feel they can voice their opinions
and enter into constructive conversation, this eliminates the tendency to simply ‘sit back and
say nothing’. Having great communication in a team builds relationships and specifically
trust, both of which allow teams to function smoothly. Although the simulation requires
hard work it is highly important to make sure your team is having fun, as time passes by
ideally you want to be friends as well as ‘department managers’. Focus on communication
right from the start and your team meetings will be more likely to function without any
hitches. (Food / baked goods present at meetings also adds value).
Within the simulation, an HR manager must keep record of how skilled and motivated staff
are (Workforce SCU capabilities) and use this to calculate needed workforce size. Whilst
doing this keep in mind training hours and how this contributes to employee capabilities. A
quick tip would be to try to avoid firing staff! In regards to salary, this should ideally be
increased each year in relation to the industry benchmark, your workers need to be
motivated to perform at optimal levels and you should be focused on keeping staff turnover
and idle time very low. Working closely with Operations and Marketing is vital in terms of
planned production, the required amount of SCU needed for the rollover, idle time and
quality ratings.
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Research and Development Manager
R&D projects are essentially the seeds of a company’s success. Awareness of market
segments, consumer demands, and subsequent trends is vital. Being aware, an R&D
manager must implement projects in accordance to the team’s agreed strategy (i.e. high vs
low cost bikes, all markets vs niche market) but also in reconciliation to where the market
segments are moving. The first important report to consider is the perceptual map. For this,
you must keep in mind how many projects to implement in each market. It is best to situate
bikes close to the center of the demand circle as that is where the majority of customers are
situated in that period. However, you must also take into consideration that demand circles
are like a bell curve, where the apex of the curve is represented by the middle circle (design
and technical specs). Thus, products can also be placed around the outer rings and edges of
the centres of demand as there still remains a significant amount of consumer surplus in
those areas. The second most important report is the project development results (showing
success ratings and prime costs). Success ratings should preferably be 100% before you
launch or modify a project. If it’s under, it means your estimated expenditure or prime costs
were not realisable. Keep in mind that technical specifications will always cost more than
design/style to implement in a bike. The trial run should give you a rough estimate on how
much particular bikes should cost. In relation to prime costs and SCU required to produce
each product, it decreases each year as you spend more on development, although this is
dependent on the level of specifications your products have.
Some further pointers to be mindful of: In relation to the perceptual map be weary of over
concentration in markets. This is because projects - both competitor’s projects and your own,
may overlap and thus cannibalise product sales. Secondly in relation to project development
results, remember that prime costs and expenditure are directly linked, so when you
increase expenditure it decreases prime costs proportionally. In contrast, when you spend
less on expenditures, the prime costs may not reduce as much. Therefore, be very careful in
how much you set prime costs to as success ratings can be heavily affected if not done right.
Final remark:
In conclusion, remember that this is a simulation of the real world, and that because it is
easy to get caught up in the turbulence of in-class rivalry, you must always remain levelheaded, positive, and realistic when approaching the activity. Whatever your focus or
strategy may be, make sure that it is well-balanced in its inception and realisation, is
calculated, and neither too risky nor too cautious (Weick, 1996). Examination of real world
scenarios will definitely help in your team’s attempt at making effective decisions, even if
things have not gone to plan.
Good Luck! And remember, continual learning is what is required for success (Gregerson et
al., 1998).
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Total word count: 3,961
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