Business Enterprise
Student Guide
This is your chance to make your mark in the virtual business world! The game is designed to help
you apply the knowledge and skills taught in your business classes, focusing specifically on skills
associated with marketing, sales, production, competition and finance.
The Business Game is designed to be played within a school lesson consisting of around
45minutes. Depending on number of uses you may progress through a lot quicker.
This stage has been designed to allow you to get
familiar with the interfaces, such as the PDA, PC and
plasma screen within the game.
When you click on the plasma screen you will see
icons under each graphic with either a check mark or
a cross indicating that you have visited the icon.
Once you have visited each one you are ready to
progress to the next stage.
Remember that in order to progress from one stage to the next, you need to return to the
appropriate interface of the plasma screen and click on the relevant button.
If I skip the intro how do I start the game?
Go to the plasma screen and you will be shown the product life cycle, which you need to
follow. Click Stage 1 for an introduction to your interface.
This stage requires you to review the market research results for the five different product ideas from
which you then have to select one product to make.
There is no one correct choice. If you look at the
market research you will see that customers want
different things from different products.
The higher the manufacturing cost, the higher the
price will need to be.
Once you have clicked on the ‘CONFIRM PRODUCT & GO TO STAGE 3’ button your selection can no
longer be changed. If you haven’t clicked this button, you can change your choice. Your current
choice is displayed by way of a small check mark that is visible on top of that particular product icon.
Similar to the previous stage, you need to carry out research to discover the benefits of
each
sales channel. The choices are between using a sales agent, distributor or by trading
directly. In the Sales Channels folder, you are given a brief overview of the differences
between the three options and the information specific to each choice.
There is no one correct choice. Each channel
type is different. If you look at the detailed
information about each choice (displayed in
the dark blue box) you can compare the
choices.
You have now chosen a product and decided how you will sell it. Your next task is to decide its price,
quality, and set your sales & marketing budget.
To do these tasks you must use the laptop clicking on the MIS icon (Management information System)and
then ‘Marketing’ (from the grey navigation bar).
You can select a price between £5 and £395. You can see
your competitors prices to help your decision
Setting your price high will maximize the profit that you can
make from each unit sale; however if it is too expensive,
customers will buy from your competitors instead, and you may find that you did not earn enough
money to break even. Consider how much you will spend on sales & marketing and your product
costs, which are determined by the ‘Product Quality’ level when setting pricing. Also look at your
competitors’ pricing levels for clues.
You can select the ‘Select SM Budget’ navigation option to access the screen from which you can set
your sales & marketing budget.
S&M is shorthand for Sales and Marketing Budget.
Logically the more you spend on S&M the more customers will know about and desire to
purchase your product. You don’t, however, want to spend too much; otherwise you will
reduce your net profit (or maybe even not make a profit!). As with pricing, consider what
your competitors are doing and decide whether you need to spend more or less than they
are.
You can use this screen to determine the percentage rating of the main features of each product. For
example ‘style’ is a feature for alloy wheels.
You are free to change the percentage rating of each from 0% to 100%. The effect of increasing this is
that the product becomes more attractive to customers, but the trade-off is that the product costs more
to produce.
It is important that you realise that if you do not at least match the market research findings, the level of
demand for your product will be severely affected.
A simple way is to think about how good
the product features are, such as, how
well it is made, how well it is designed and
how durable It is.
Market share is the percentage of market
segment that is being serviced by a company.
Another useful screen for you at this stage is
the ‘Product Positioning’ screen (see the figure
below).
This graph allows you to compare the
‘positioning’ of your product in relation to your
competitors. If your product is shown to the
left of competitors’, then that means that your
product quality is lower than your competitors’
is. If your product is shown below your
competitors’, then that is because your product
is cheaper than your competitors’.
First you need to consider the market
research findings. If this indicates that
customers rate a particular feature very
highly and you don’t provide this, then
demand for your product will fall. The
more that you exceed customer needs the
higher the demand will be, however the
higher the quality rating the more the
product costs you to make.
Use the ‘Competition Data’ screen (also in
the MIS) to see how your competitors’
product quality levels compare with your
own.
This is your decision, you need to place the
product in the market as you feel
appropriate. A good basis for your decision
is looking at the market research results in
the product quality screen.
This stage is where you actually produce and sell their product.
Several new screens are now available to you, all of which are found in the PC MIS screens. These can be
accessed by clicking on the ‘Financials’ and ‘Production’ navigation options in the grey navigation bar as
shown below.
At first you can access the Sales Charts and Cash Flow screens. These both use graphs that display the
number of unit sales over time and the current level of cash over time. These graphs are updated at the
end of every month.
After the first month of trading has been completed, another screen called ‘Financial Performance’
becomes available. This shows a simplified financial
statement which details sales revenues, gross profit, overheads
and net profitability on a monthly and overall time basis
The production screen shows you the overall level of demand for your product in the present month.
It also details the current production capacity, stock levels and the current surplus or shortfall.
You can adjust Production Capacity by adding or removing production lines (maximum is three) and/or
adjusting the level of staff overtime (maximum is 50%).
In this game, production costs mean the cost
of the raw materials and components.
Production costs increase as production
increases (from overtime increases or by
adding new production lines) and/or if you
increase the product quality.
These are the cost of running your
production lines. Each one has a monthly
cost and the total of these (if you are
using more than one) is added up to be
the Production Costs.
These are the costs of storing products that you cannot yet sell. Keeping stock costs you money so it
is advisable to try to match production to demand as closely as you possibly can.
Gross profit per unit indicates the difference between the cost of producing each product and the
price at which you sell it. This is different to Net Profit which also takes into account overhead
costs such as your sales and marketing expenditure, office, and administration costs.
It is the volume of products that can
be generated by a production plant in
a certain time period by using current
resources available.
Surplus refers to a quantity produced that is
much larger than needed. Shortfall is a
quantity produced that is less than expected.
Competitive is not the same as ‘cheaper’.
It is a term which indicates how well (or
not) your product compares in the market
place. Your product can be much more
cheaper than your competitors’ products,
however customers will only choose to
buy your product if the quality is good
Throughout the game you will be sent messages from various stakeholders. These messages will tell provide
you with information about competitors’ price change, or game advice such as how to use the game speed
controls.
Remember that you can access these emails at any time from your PDA (on your desktop)
and that you can also get advice from various people by using your video phone.
From time to time, and depending upon how well you are doing, you will receive various accolades and
awards. These are displayed in the ‘Desk File’ which is accessible by clicking on the leather and paper files
on the desk in the main office interface.
Accountant
Agent
Budget
Bankrupt
Capacity
Cash
Cash Flow
Certificate of
Incorporation
A person who is skilled in the practice of accounting or who is in charge of public or
private accounts. An accountant is responsible for reporting financial results for a
company in accordance with government and regulatory authority rules.
An individual who is authorized to act on behalf of another to conduct, for example,
selling. The agent does not assume any financial risk in transaction as a dealer
would.
An itemized forecast of a company's income and expenses expected for some
period in the future.
A company that has been declared insolvent by a court and is relieved from the
payment of all debts after the surrender of all assets to a court-appointed trustee.
A company or economy's ability to produce goods and services.
Currency and coins on hand, bank balances, and negotiable money orders and
cheques.
A measure of a company's financial health. Equals cash receipts minus payments
over a given period of time.
A certificate issued by the state in which the company will be registered, which
certifies that a company is registered and has a unique company number.
Company
Competitive
Competitor
Customer Care
Demand
Direct Costs
Distribution
Distributor
Demographic
Market Size
Enterprise
Entrepreneur
Forecast
Any entity engaging in business, such as a proprietorship, partnership, or
corporation.
Being competitive, in the context of the Business Game is about matching or,
if you can, beating your competitors on price and/or product quality in order to
secure the desired level of demand.
Competitors are other companies that sell products that are similar to yours and,
because of this similarity, customers may choose to buy from them instead of your
company.
The process of ensuring that your potential and actual customers are satisfied with
the way in which you provide them with information, sell them your product,
support them and deal with any problems that may arise.
The quantifiable amount of potential customers for your product.
The costs that your company incurs in producing the products and getting them to
customers, distributors or retail outlets. This may include some sales costs if that
sales activity is directly attributable to individual orders.
The mechanism by which a company gets its products to customers.
A company which sells and delivers merchandise to retail stores or acts as an
intermediary in business.
Socioeconomic groups, characterized by age, income, sex, education, occupation,
etc., that comprise a market niche.
The overall size of a market measured in financial terms or in numbers of unit sales.
A business or commercial venture. Can also apply to a ‘social enterprise’ where the
profits from the activities of the organization are used for social good rather than
personal gain.
People who undertake the risks of production in order to make a profit.
An attempt to predict the future performance of a business, usually by looking at
figures or by undertaking market research.
Gross Profit
Investors
Market Knowledge
Market Research
Market Share
Market Size
Mentor
Net Profit
Overheads
Overtime
Price
Production Costs
Revenues
Sales Channel
This is sales revenues minus the cost of sales (see Direct Costs).
Investors buy shares (equity) in a company on the basis that they believe the
company will grow and increase in value so that their equity is worth more and so
that they can earn regular income from dividends.
The degree to which an individual or a company knows and understands the
marketplace into which they are seeking to sell. This might be a sector-based
marketplace (e.g. the market for DVD players) or a geographic market such as, for
example, France.
Research that is conducted in order to understand the dynamics of a particular
market and includes information such as customer demographics, economic and
political factors.
The percentage of an overall market that one company has (based on revenues or
unit sales volumes).
The overall size of a market measured in financial terms or in numbers of unit sales.
A person whose experience, skills and qualifications mean that they are able to
advise a company, owner or manager on a range of issues such as sales and
finance.
Calculated as gross profit minus overheads. May be quoted inclusive or exclusive or
corporation tax.
The company’s costs that are not directly related to the cost of production.
Hours of work undertaken above the standard working hours.
The amount of money for which goods and services are bought and sold.
A cost directly attributable to the manufacturing of a product. This is the opposite of
indirect cost.
The money received from the sale of output.
The route or method by which a company sells its products or services into a
particular marketplace. An example is the use of distributors.
Sales Strategy
Sales Commission
Sales & Marketing
Sales Revenues
Shortfall
Start Up
Storage Costs
Surplus
Trading
Training
Turnover
The long-term action plan for achieving the company’s sales objectives (as
expressed in the sales forecasts).
A fee that is paid to an external company, sales person or internal sales person.
Commissions are usually paid for generating sales leads and/or for securing sales
orders and are usually based on a percentage of the order value.
The processes relating to identifying and communicating with potential customers
(marketing) and with securing orders from these customers (sales).
The money that is received from the sale of products or services to customers.
The difference between the required level of production to fulfil customer orders
and what is actually produced, if the latter is lower than the former.
A new enterprise that (typically) has yet to achieve significant customer orders and
which may not yet have a finished product or service that it is able to sell.
The costs associated with physically storing products that have not yet been sold or
which are scheduled to be shipped to customers.
The difference between the required level of production to fulfil customer orders
and what is actually produced, if the former is lower than the latter.
The process of providing a product or service which is intended for sale to
customers in order to derive sales revenues and to generate profits.
The process of developing staff in order that they are better able to carry out their
current or future duties.
Generally refers to the amount of sales revenue in a given period, such as $1 million
in the last year.