Business Simulation User Guide
Sustainability
Business Simulation
Produced by
Tycoon Systems Inc
These notes assume that you are in the Sustainability Business Simulation website, that you have registered as a user
and you have logged in using the username and password that has been assigned to you
TM
Copyright © 2012 Tycoon Systems Inc
-
page 1
Multi/Single Guide – October 2012
The Sustainability Business Simulation
The Sustainability Business Simulation
Multi/Single User System Guide
Produced by Tycoon Systems Inc
The Sustainability Business Simulation
Objectives and Background
This simulation offers insights into the management of global corporations using
sustainable business practices, including the “Sustainable Value Framework”
developed by Stuart Hart, Johnson School of Management, Cornell University
You will take over a large, global automobile manufacturer. Your objective - to
build sales, improve profitability and to maximise shareholder value.
At the same time you will be tasked to control total carbon emissions from your
business operations, in a tightening regulatory environment. Failure to limit
“fleet” CO2 emissions will result in large financial penalties being applied to your
company´s profits, leading to a reduction in company value.
You also need to develop Sustainable Value for your business, and make certain
balanced, strategic investments which have various beneficial impacts. These
include reducing total carbon emissions in your operations, reducing operating
costs or improving consumer demand for your products.
A number of KPIs (Key Performance Indicators) allow you to track improvements
in CO2 Efficiency, Energy Efficiency and Corporate Reputation, in addition to the
more usual business indicators linked to profitability or cash flow.
Your business success is also measured by the Market Value (Market
Capitalisation) of your company, which is directly connected to the profitability
of your business, and operating decisions that you take. The higher your profits,
the higher the market value of your company by the end of the simulation run.
The regulatory environment in the auto manufacturing sector will impose
increasing constraints on decision-making over time, so you will need to manage
your business to conform to these new regulations - yet still make a profit.
The background to these issues are highlighted in two appendices in this guide :
- European Community : recent Clean air regulations for new cars within the
European Community, where new car emissions must be reduced over the
period to 2020 – see Appendix 6
- USA (California example) : similar regulations are being enacted in many
other countries, including the United States, to produce cleaner “tailpipes”
over the years to 2030 – see Appendix 7
This simulation and case study does not directly address issues of global
warming, or the politics of such issues. It deals with the realities of operating a
business where managers obliged to understand and adapt to government
regulations covering carbon emissions and other environmental concerns.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 2
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Index
Item
Introduction
Using the Multi/Single Simulation Model
The Automobile Manufacturing Business
Carbon Accounting
Future Business Scenario & Case Study
Managing for Sustainable Value
Current Business Position
Your Corporation
Navigating the Simulation
Managing Operations
Supply and Demand
Operating decisions
Growth through Acquisition
Issuing New Capital : Shares Issues and Buyback
Other Business Indicators and reports
Real Time Scores
Appendices :
1. Data on product expansion opportunities
2. Opening Financial Statements for your company
3. Sustainable Value Framework – Stuart Hart Model
4. Note : Economies of Scale and Scope
5. Note : Supply Levels and Pricing
6. Note : Market Dominance
7. Note : EC policy relating on Carbon Emissions
8. Note : California's Clean Cars Law
9. Business Terms
10. Simulation : terms of Use
Page
2
4
5
5
6
7
10
10
11
13
14
15
19
22
22
24
27
28
30
34
35
36
37
40
42
45
The GreenCar Business Simulation is an advanced management training tool – a dynamic, interactive simulation which emulates
real business issues. This simulation is a browser-based business simulation, which runs on high speed servers in the USA and
Europe, which can deliver results instantaneously and simultaneously to participants all over the world.
IndustryMasters® is a registered trademark of Tycoon Systems, Inc.
TM
We Make Business Fun
TM
Copyright © 2012 Tycoon Systems Inc
-
page 3
Multi/Single Guide – October 2012
The Sustainability Business Simulation
USING THE MULTI/SINGLE USER SIMULATION MODEL – COMPETITION FORMAT
Access : In the “Multi/Single User Simulation” format, individuals can log into
our servers from anywhere in the world, 24/7
Virtual Competitors : In this system, we have created several Virtual Intelligent
Players (VIPs) who will compete with you – programmed players who can spot
strategic gaps in the system which you may have overlooked. They may – or may
not –invest in such opportunities; but they will definitely provide some extra
competition for you that you have to deal with.
“PARTICIPATE”
Before you can use this simulation, you MUST “Participate” by clicking this button (see below, left).
If you do not click “Participate”, you will be left out of the simulation, and cannot make any decisions.
All players in the session must click “Participate” before the instructor can start the simulation running
RUNNING TIME : We will run the simulation over 5 days, at the rate of one simulated “business year” per day.
Within each day, you will be able to move the simulation forward on your own by a maximum of 4 business
quarters for that “year”. To do this you need to click on the “Next Quarter” button shown above right.
You therefore have 4 sets of quarterly decisions to make each day. After each quarter, the system will send
you updated information about your company, and you can review your new business positions.
Your system will open up 4 additional quarters per day. When the system arrives at Quarter 20 (of 20), the
simulation will stop. Your last simulation decisions will be made when the screen shows “Quarter 19 of 20”.
This is because the results displayed and the labels shown are for the immediate previous quarter
All decisions made by any player in each period will have to be made within these time intervals.
You can exit the simulation at any time by clicking “Leave Simulation”. The simulation will store your
decisions automatically – you can return at any time.
Working in Teams: if you are working with a team, all team members can log into the same account with the
same passwords etc. All team members can make the same decisions and access the same controls. Care
must be taken to ensure teams have some level of discipline, so that they do not act against each other.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 4
Multi/Single Guide – October 2012
The Sustainability Business Simulation
The Automobile Manufacturing Business
You will participate in a dynamic business environment, where you take over a company which manufactures, and
sells a range of conventional gasoline cars. You will compete against 3 virtual competitors, but will be able to
compare your performance against other teams, who will manage the same simulated business in “parallel worlds”
You will need to manage your business by focusing on three major areas :
1. Operating the main business levers such as price, marketing, production, inventory, and operating efficiencies
to make sure you achieve the best performance.
2. Keep a close eye on carbon emissions – your profitability could be severely impacted if you do not manage to
stay with government guidelines. See carbon accounting, below, and appendices 6 & 7 for more information.
3. Build a Sustainable Business through investing in various projects, which have beneficial environmental and
long term, structural effects. Benefits include improved control over carbon emissions, operating cost
reductions to further improve your profitability, increased demand for your products leading to top line
growth, and boosting your corporate reputation. Investors will value your commitment to these projects,
and your company’s Market Capitalisation will increase as a result.
The best business performance will come from managing your business operations well, manufacture with
low or no carbon penalties - through balancing output of low carbon emission models, along with carbon
reduction investments - and working through the sustainable value framework investments you are offered.
Carbon Accounting
The government now requires all car manufacturers to manage their operations to an optimum level of carbon
emissions. An average level of carbon across the whole corporation is assessed, and if this exceeds government
requirements then financial penalties are applied – effectively a company-wide fine on excess carbon production.
Those companies which manage their operations within government guidelines benefit from higher net incomes after
carbon charging – this benefit feeds through into an increased stock prices and market capitalisation.
At the start of the simulation period, the INITIAL maximum level of carbon production is 120g / km per car sold. This
is applied as an average to the whole of a company’s production output. If a company exceeds this level (on average)
within a certain accounting period, then an excess penalty or “premium” is charged against that company’s profits.
The INITIAL penalty rate is $90 for each g/km in excess of the recommended limit, per car sold. The penalty rate will
increase over time as the government brings in new regulations. Investment choices in the simulation will determine
carbon outputs. In the gasoline car market in which you operate, emissions range from 80 g/km to 160 g/km per car
Calculation Example :
a. A company sells 10,000 cars per quarter : government emissions allowance for the company is 120 g/km/car
b. Assume Actual output of 125 g/km per car : excess of 5 g/km per car assessed, at rate of $90 / g/km per car
c. Penalty = 10,000 cars x 5g excess carbon x $90 per gm per car = $4.5m
d. The company’s EBIT is reduced by $4.5m for that quarter
e. Allowable carbon emissions are expected to be reduced by the government in future years to lower levels.
f. See Appendices 6 and 7 for details on European and other government regulations in the real world
TM
Copyright © 2012 Tycoon Systems Inc
-
page 5
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Future Business Scenario
Increases in energy prices are forecast to be between 2% and
8% per year, so gas prices and other costs are expected to
continue to rise. This Inflation in energy and raw material prices
over the next 4-5 years is expected to favour the newer hybrid
technologies, as consumers switch from conventional cars.
Government has defined new emission levels for auto makers.
The maximum CO2 emission levels (allowances) which have
been set by the government for the next few years are shown
in the first chart at right – these are entered into law, and all
manufacturers must comply or pay heavy penalties.
The penalties for excess CO2 emissions will rise over the next
few years, as shown on the chart below right
Allowance, CO2 g/km
100
80
60
2018
2019
2020
2021
2022
Penalty - $ / gm / km / car
200
150
100
Producers can also offset the carbon charges with investments
in various carbon reducing strategies
50
2018
2019
2020
2021
2022
The Case Study
This simulation has an underlying
case study / event scenario
reflecting the development of
carbon related regulation.
Events will occur, and changes will be made to your environment along the timeline that you are operating your
simulated business - as outlined in the “Future Business Scenario” panel above. You will be notified through a series of
onscreen messages at the top of your screen, as shown here. Stay alert for these messages.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 6
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Managing for Sustainable Value
The third theme of this business simulation focuses on the work of Stuart Hart on Sustainable Value
This work shows how global corporations
can lead in addressing major
environmental issues, at the same time
as creating profitable, long term and
sustainable business strategies.
See Appendix 3 for more detail.
His “Sustainable Value Portfolio”
approach offers a template for managers
to help them create truly sustainable
corporate value though their strategy
development process. In the simulation
we present this approach – where we
“identify four dimensions of
Sustainable Value Network : Stuart Hart (2005) Capitalism at the Crossroads (Wharton School Publishing)
sustainability strategy with different
linkages to firm performance and value creation” [Hart]. These four dimensions are
. Pollution Prevention - minimizing waste and emissions from current facilities and operations
. Product Stewardship - engaging stakeholders and managing the full life cycle of today’s products
. Clean Technology - developing and deploying “next-generation” clean technologies
. Base of the Pyramid - co-creating new businesses to serve the unmet needs of the poor and underserved
Throughout the simulation, you will be expected to invest in certain solutions which address these elements in turn.
By resolving various highlighted issues, you will receive certain financial and other benefits. You will move from
resolving issues in Pollution Prevention, to Product Stewardship; from Clean Technology to Base of the Pyramid
activities.
As the simulation starts, you will find the following investment decisions which you should consider. These decisions
focus on the first part of the Sustainable Value Framework, shown above – ie Pollution Prevention.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 7
Multi/Single Guide – October 2012
The Sustainability Business Simulation
The special “Sustainability Budget” is a subset of your overall capital investment budget, designed to focus only on
sustainability projects. The Sustainability Budget is calculated on a quarterly basis in the simulation, and is increased
by 12% of your quarterly Net Income. So : as your profits improve, so you Sustainability budget will increase. If you
make operating losses, the Sustainability Budget is not reduced.
If you wish to invest in any of these projects, then click on the “OK” button. For each project, you will see the
investment required and the specific operational benefit you will receive. These are :
Pollution
Prevention
Pollution Prevention
Invest $160m
CO2 -3%
ISO 14001
Invest $80m
CO2 -2%
Waste Reduction
Invest $140m
Invest CO2 -2%
Resource Productivity
Invest $160m
Material Cost -2%
Design for Environment
Invest $280m
CO2 -4%
Stakeholder Management
Monthly Cost $2m
Cust.Satisfaction +5%
Life Cycle Management
Invest $120m
Material Cost -2%
Transparency
Monthly Cost $1.6m
Demand +3%
Eco-Effectiveness
Investment: $120m
CO2 -3%
Fuel Cell
Investment: $240m
CO2 -4%
Cradle to Cradle
Investment: $290m
Material Cost -2%
Systems Thinking
Monthly Costs: $2.4m
CO2 -4%
Base of the pyramid
Investment: $440m
Demand +8%
Clean Energy
Investment: $580m
Material Cost -4%
Sustainable Development
Investment: $360m
Demand +5%
Inclusive Capitalism
Monthly Costs: $8m
Cust.Satisfaction +10%
Product
Stewardship
Clean
Technology
Base of the
Pyramid
As can be seen from the table above, some projects require a capital investment, others need increased monthly
expenses. Some reduce CO2 emissions, others reduce costs, or increase demand, or improve customer satisfaction
(and so increase demand).
You will need to invest in phases – you have to complete the Pollution Prevention investments before you can see the
investments related to Product Stewardship, and so on.
Each individual investment has additional benefits which help you achieve your corporate objectives.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 8
Multi/Single Guide – October 2012
The Sustainability Business Simulation
These include an overall reduction in CO2 emissions, where stated. This means that your overall CO2 emissions can be
reduced below the government allowances, thereby avoiding penalties. Your CO2 efficiency is tracked as part of the
KPI panel on the left side of the screen
A further benefit will be that of Cost Reduction, where these investments offer reduced Materials Cost. This
reduction is tracked as a KPI shown as Energy Efficiency.
Finally, a new KPI called Corporate Reputation will increase when specific investments are made. These strength of
these impacts are :
Small Impact :
Pollution Prevention, ISO 14001, Waste Reduction, Systems Thinking
Strong impact :
Stakeholder Management, Transparency, Clean Energy
Very strong impact : Inclusive Capitalism
All investments have a positive impact on your Market Capitalisation – a 2.5% increase on stock value results
whenever you invest in one of these projects. This is a reflection of investors appreciation of your progressive
strategic positioning : in addition you get real cost benefits from carbon reduction and material cost savings.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 9
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Current Business Position
All competitors in your market have the similar starting positions when you enter the simulation: the same balance
sheets, product ranges and sales data. The opening position is summarised here, and the opening financial position is
shown in Appendix xxxx.
You have three major competitors – Nippon Cars, US Cars and Euro Cars. Each competitor has one car model in each
of the business segments shown in the table below. Every company has a share capital of $10 Bn, a market value of
$65 Bn, revenue of $20 Bn per quarter and an opening market share at 25% of the market.
Car Model
Revenue
per month
Profit
Contribution, pm
Your Company
Sales Price /car
Sales – cars
per month
CO2
g/km
Mini
$129m
$27.1m
$14,300
9,000
80 g/km
Small
$195m
$41.0m
$16,250
12,000
95 g/km
Compact
$434m
$102.0m
$24,120
18,000
110 g/km
Midsize
$474m
$107.0m
$30,820
15,379
130 g/km
Luxury
$353m
$80.7m
$60,300
5,846
160 g/km
Recently your competitors have published new selling prices, and their product ranges have aged faster than yours.
Market rumours have indicated that various companies intend to re-launch and rejuvenate their product ranges in
the coming months. They may also increase capacity in an attempt to achieve cost leadership.
The market is extremely dynamic, with growth mainly dependent on the decisions of all the companies involved in
the market. Any competitive pressures that develop will be a result of the combined actions of all the competitors in
the simulation
Your competitors are “Virtual Intelligent Players” (VIPs) – pre-programmed players which analyse opportunities in the
market in light of the decisions that you have made, and then will act according to their predefined policies. As such,
each simulation run will be different, as these competitors react to changes in your changing decisions. There are no
other companies competing with you, outside of this group. You can track your performance against this group of
competitors – you will also be able to see how you compare against other teams in the simulation session
Your Corporation
You take over a company that has an investment budget of just over $13.1 billion available – to be used to enhance
your automobile production facilities and make other capital commitments. This $13.1 billion is your capital
investment budget - the amount you can invest into new facilities, not an operating budget (the amount available for
daily and weekly operating decisions).
The Capital Investment Budget is a mix of Shareholder Equity Capital and Loan Capital (Debt) – not only cash. This will
change as you make investment and other operating decisions. Your cash position will also vary as you make these
decisions, and the system will give you additional loans should you need them (for example, if you make losses).
TM
Copyright © 2012 Tycoon Systems Inc
-
page 10
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Your
Corporation
5 production
Units
Revenue 2017
Net Income
Cash
Market Cap
$
$
$
$
20.0 Bn
3.2 Bn
4.5 Bn
65.4 Bn
CO2 Emissions limit 120 g/km
CO2 Emissions actual 112.46 g/km
CO2 Penalty paid last qtr = $0 M
You do not need to make decisions regarding any additional loans needed – these are automatically calculated for
you (if your credit rating is acceptable). Your company’s credit rating may fall or rise depending on the amount of
debt you have to take to support your company’s activities.
Taking debt is essential to allow for your expansion, but a very large level of debt may see your credit rating fall from
the AAA score you start with. If you start to make good profits from your operations, then your credit rating will
improve back towards AAA. In this simulation your credit rating is determined by your ability to pay interest on any
loans that are outstanding (interest coverage)
The Market Valuation (Market Cap) of your company is a function of profitability – based on a Price/Earnings ratio
calculation. If you make good operating profits then your Market Valuation will rise. If you make losses then your
Market Value will fall. The initial Market Value of your corporation is $1 billion, with no upper limit as you proceed.
If you manage your business badly, then your market value and stock price may fall to very low levels. If you continue
to lose money, then you could be forced into bankruptcy, where your assets are liquidated and you have to leave the
management of the business.
You will have access to many financial reports and charts, which will show how you are performing, and indicate
possible courses of action. A full Income Statement, Balance Sheet and Cash Flow is published for every business
quarter, so you can track your financial performance in detail (see Appendix 2)
To manage the business effectively, you must understand how to navigate in the simulation:
NAVIGATING THE SIMULATION SCREENS (next page)
1. REAL TIME SCORES = COMPETITORS – a list of competitors,
share prices, basic financial data about them
2. COMPANY PAGE - click here to return to your own company
page at any time
3. COMPANY & ECONOMIC SUMMARY DATA
Market Capitalisation, investment budget
4. “NEXT QUARTER” : Click to move simulation to next
business quarter
5. KPI : Key Performance Indicators – ratios and important data
about your company performance
6. CLICK FOR OVERVIEW OF INDUSTRY SECTOR and PRODUCT
DATA
7. COMPANY SUMMARY – Your Market Value, investment
budget, equity capital, credit rating and emissions data
8. SUMMARY DATA GAUGES
TM
9. TAKEOVER & FINANCIAL PLANNING SECTION –displays
some financial data & cash position – allows share issue
and buy-back
10. TAKEOVER AND ACQUISITION PANEL – becomes active
after 16 months. Take over a virtual competitor.
11. CORPORATE CONTROLS – Show all details for all products
that you are invested in. Shows sales revenues, profit
margins, sales and marketing data; competitor
information; expansion possibilities, production output
decisions and other data.
12. SUSTAINABILITY – The Sustainable Value Framework of
Stuart Hart
13. SUSTAINABILITY INVESTMENTS and SPECIAL
SUSTAINABILITY BUDGET – Options offered here will
change as your business develops
14. CHARTS AND ACCOUNTING : Financial data about your
company including Balance Sheet, Income Statement,
Cash Flow and Corporate Ratios
Copyright © 2012 Tycoon Systems Inc
-
page 11
Multi/Single Guide – October 2012
The Sustainability Business Simulation
TM
Copyright © 2012 Tycoon Systems Inc
-
page 12
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Managing Operations
You need to make a number of decisions as you take over this business – in the early stages, it is difficult to assess the
value of each market - or your likely success - as you only have limited competitor information. But you have to make
valid business decisions – ones that you (or your team) can live with.
a. Review your existing operations and product range. You have five models in your range – where you are
running one production lines/business units for each model. Your first task is to assess your current market
and business position, think about new investment opportunities, and make some early decisions about the
direction you wish your company to go.
b. Review Competition : Assess your competitors’ positions, product ranges, pricing and marketing policies –
with the limited information available to you
c. Expansion : You may be able to expand (upsize), one or more of your production lines, where you may
benefit from increased economies of scale, with lower costs of production. There is no construction delay
applied to the building of new production facilities – your output will increase in the next quarter. You may
also be able to issue shares, buy back shares or possibly acquiring a competitor.
d. Operating Decisions : Set Prices: you may not know how to set these initially, because of limited competitor
information. But we have suggested some mid-range prices – you could keep to these, or adjust in line with
your overall strategic positioning. You will also need to adjust Marketing Budgets, and decide on monthly
production output for each model
e. Carbon Management and Sustainable Budget Investments : See the later section on sustainability
investments
Drivers of profitability
Good profitability will results from having good selling prices, lower cost prices and lower overhead cost levels which
are appropriate for the business you have developed. It will also depend on how you develop a solid portfolio of
businesses - where you have a good market position which can be defended, and where you can be sustainable
against attack from your competitors. As your market valuation is a function of profits, you will need to understand
how effective selling prices and costs prices vary with competition and overall demand.
The main issues you should be aware of :
a. Supply and Demand Balance in each product/market sector – how do average selling prices in each market
vary with the level of supply in that market ? How does maturity and the Product Life Cycle affect demand ?
What is the impact of market crowding, of concentrated or of fragmented markets ?
b. Pricing and Marketing : optimise sales volumes with pricing which fits your chosen strategy. Price, marketing
and production must be balanced. If your company are consistently out of inventory, are your prices set too
low? Are you spending too much on marketing ?
c. Economies of Scale – how does price vary with the volume produced, or with market share? Can you expand
your production base to capture further scale economies ?
d. Overhead costs – how are central costs spread across increasing volumes ? How does profitability increase
with increasing scale ?
e. Merger and Acquisition activity : what is the impact of market concentration as a result of takeovers ?
TM
Copyright © 2012 Tycoon Systems Inc
-
page 13
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Supply and Demand
The Supply Level concept shown on the chart below indicates the current level of participation by all companies in
each sector of the market. To access this chart, click on the words “SECTOR : AUTOMOTIVE” in the left column of the
screen. Other information shown here for each product : the number of competitors currently operating in each
sector, typical investment levels required, and the life cycle maturity of products in that market.
Supply Levels (above): This chart shows the current supply level in each business market – ie what is the percentage
of current demand that is met by current suppliers who are in the market.
Markets with low supply levels are more attractive - as they have fewer competitors – more competitors could
mean lower average market prices in more saturated markets.
Read the section “Supply Levels and Market Pricing” later in this guide for more information
TM
Copyright © 2012 Tycoon Systems Inc
-
page 14
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Initial Investment (above): How much do you need to invest in each business to operate one business unit ? As you
expand in the future, you may wish to invest in multiple units for certain products – each one will require the
investment shown to purchase the plant, distribution and operating infrastructure.
Below these charts, you will see the range of products available to you – click on “View Details” to see more
information. You are also show the number of existing competitors in this particular market, and the effect of adding
one more business unit to the supply situation.
“Supply Level +1x” = “what is the supply level vs. current demand, after you add 1 extra business unit to the market”
This screen gives you detailed information about each business unit – how much you need to invest, product and life
cycle information, supply level data, market pricing etc.
We will return to this detail when we discuss expansion opportunities later in this guide.
Operating decisions
In your main operating screen, you can adjust several business parameters. Click on the small menu tabs next to
each product picture to review additional panels : Sales, Marketing, Competitors , Expansion, Planning, roduction
a. SELLING PRICE DECISION
TM
Copyright © 2012 Tycoon Systems Inc
-
page 15
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Moving the slider shown (blue button) to the left or to the right will reduce or increased your offered price to the
market. This will be your advertised price that customers can choose to accept or reject. It may not be the final
price you will sell at – this is also determined by supply and demand imbalances in the marketplace. Review the
section on Market Pricing later in this document.
o High prices may increase profit margins (note profit contribution and contribution margin), but may also
discourage sales and lead to higher levels of unsold inventories – this may give financial stress to your
company.
o Lower prices may increase sales volumes, leading to a higher market share, but could also lead to lower
profit margins and possible operating losses.
o If you are running consistently low in inventory, you may be losing sales through “out-of-stocks” – think
about raising prices or cutting marketing spending. If you have excess inventory, cut prices somewhat or
increase marketing.
Other information shown –small charts on revenues to date, profits and sales history for this business unit.
b. MARKETING SPEND DECISION
Change and set a marketing budget to promote your products – a larger marketing budget will encourage higher
sales, but will also depend on other actions you take. You will need to manage inventory levels – too much money
tied up in stock means you will come under financial and cash flow pressure. Too little and you could be losing
sales to competitors, as your customers will not be able to able to buy your products
c. COMPETITORS information will be shown as you start to compete with other firms, including Market share in a
particular sector, Selling Prices set by each competitor and their Manufactured Cost per unit for that model.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 16
Multi/Single Guide – October 2012
The Sustainability Business Simulation
d. EXPANSION of your facilities will be offered to you in the simulation, depending on various factors:
You must have funds available to expand with – either from your initial capital, from loans, from operating profits
retained in the business, or from capital raised by selling new shares. If you have spent all your available budget,
or are making serious losses, you may not be able to expand because of shortage of funds.
If the supply level forecasted - as a result of any expansion - is expected to exceed certain high levels, you will not
be allowed to expand. Excessive expansion and saturation of markets is discouraged, as it could lead to very low
prices, low profitability and/or bankruptcy.
If your product sector is not yet mature, and is still in introduction or growth stages, expansion is discouraged to
avoid over-commitment.
And if you have a poor credit rating, you will not be allowed to expand and put your business at further risk.
Credit rating in this simulation is a function of interest coverage – your ability to repay loans and credits from
operating profits. Higher profits, relative to interest charges, will improve credit standing.
When you expand production capacity for any product in your business portfolio, your cash balance will be
reduced by the amount shown as “Initial Investment” or “Required Budget”. This will be taken out of your
available investment budget. The equipment and other operating assets required to run this business unit will be
added to your financial statements. There is no construction delay - you will be able to produce cars for sale as
soon as you agree to expand.
Once you have made this investment decision, it is a permanent action – there is no possibility to reverse it,
except by liquidating or downsizing the business at a later stage, at a cost – see below
TM
Copyright © 2012 Tycoon Systems Inc
-
page 17
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Expansion through acquisition: The option to buy (acquire) other competitors will become available after 12
months of operations, and represents an opportunity to expand quickly, if other companies fit with your
company strategy and portfolio. When you acquire a company, you will absorb all its product lines into your
existing ranges. Acquisition may not be the best solution for all players, and may not be available to you if you
have insufficient capital to spend.
e. PLANNING: Shows the Cost, Revenues and Contribution for each car model – plus revenues and cash
contributions in the past quarter made by that model. You should review this to discover where you are making
or losing money.
f.
PRODUCTION OUTPUT DECISION
How many cars do you want to produce – for each model in your range – to match your sales plan ?.
A number of factors should be considered. What is your market share in the latest quarter? Do you currently
have an excess of inventory? Are you running with very low inventory levels? What is your pricing policy? What is
your marketing spend? Are you positioning for volume growth or for premium priced products, sold in low
TM
Copyright © 2012 Tycoon Systems Inc
-
page 18
Multi/Single Guide – October 2012
The Sustainability Business Simulation
volumes, or operating as a value provider on high volumes? What are your competitors currently doing? What
are they expected to do next?
The production planning decision will be the result of all of these – and other – considerations. Planning to build
too many cars may result in excessive inventory, which may have to be disposed of at much lower prices in the
future. Planning to build too few cars may lead to lost sales, with customers moving to buy cars from your
competitors instead.
g. PRODUCT LIFE CYCLE (PLC) and PRODUCT RE-LAUNCH
Each car has a specific product life cycle, where demand, pricing and profitability will vary depending on maturity.
See Appendix 1 for details of the PLC for each car. You will also see the current PLC stage that your products are
in, from your operations screens.
Characteristics of each stage are:
Introduction : low sales, low profitability
Growth : fast growing sales, higher
profitability, high demand , high prices
Maturity: sales have peaked, strong cash
flow profitability, flattening demand
Decline: sales decline, average achieved
prices fall, demand falls, profitability falls.
When your product range starts to age, and
starts to fall into the decline stage, you will be
given the opportunity to “relaunch” the product.
Effectively you will restyle, reengineer and
redevelop product features, effectively creating a new appealing, product. The investment you need to make is
shown on the Relaunch button in the Marketing Tab. The PLC stage is reset to “low maturity”, which allows
increased sales, increased profits and a new life for your range of cars
Any decisions you take on any of these operating tabs will be reported in the following business quarter – you will not
see an immediate impact to your financial or business position reported on the screen as you make these changes.
Growth through Acquisition
One way to speed your growth is to acquire another company in the market place. There has been a large amount
written about the value and pricing of acquisitions.
You should consider buying a company if there are some likely synergies between your operations and those of the
target. Synergies (cost sharing, cost savings) in this simulation occur mainly as a result of scale economies –
spreading overhead costs across a larger volume of operations.
There is no guarantee of success in post-acquisition merger activity. You will have to work hard to integrate the new
operations into your own.
You will be offered the opportunity to bid for a competitor after 4 quarters (12 months). If you have sufficient funds
available, then this offer will be made in the “Takeover” panel onscreen. If you do not have an investment budget
TM
Copyright © 2012 Tycoon Systems Inc
-
page 19
Multi/Single Guide – October 2012
The Sustainability Business Simulation
available at that time – because you have invested everything in other projects, or have been making operating
losses, then this option will not be available to you. The takeover bidding process takes effect immediately - as soon
as you bid to buy a company, your bid will be accepted.
Be careful that you really want to do this – the bid is not reversible
At Quarter 4 of 20, a screen like this will appear:
If you do not have funds available to bid, then “Make Bid” buttons are not visible - the bids are announced, but you
have no opportunity (or buttons) to make an offer.
The suggested bid prices (shown on the bid buttons) are calculated from the target company’s equity price, plus a bid
premium – an amount added by the market to reflect additional, future business prospects. The price will vary
depending on the financial strength and success of that company. Businesses which are not performing well will be
cheaper to buy – companies with good performance and share prices will appear more expensive.
In the Single User simulation version, once you have made a bid this is immediately accepted. The result (and price) of
the takeover will be announced via the news ticker at the top of the screen, and below the Takeover panel. All the
acquired company’s assets, liabilities and products are added to those of your company.
The Acquiring Company will pay the amount of its bid from its cash balances and investment budget, and will
combine all assets and liabilities of the purchased company into its financial statements (consolidation). All products
TM
Copyright © 2012 Tycoon Systems Inc
-
page 20
Multi/Single Guide – October 2012
The Sustainability Business Simulation
and business units from the target company are also combined with the acquiring company’s operations, increasing
scale economies where possible. In other words if your company already had a “1x” operation in – for example –
hybrid cars, and you acquired a company which also had a 1x operation: your updated operations would be sized at
2x. An example of post-acquisition balance sheet impact is shown below, along with relevant coprrate ratios.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 21
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Issuing New Capital : Shares Issues and Buyback
Companies can issue new shares – or offer to buy them back from the market. If you require more money to expand,
or to acquire a competitor, this may be an option you should consider. The price of the shares for issue or buyback
will depend on the current market price of the shares – if you issue shares, you will receive this value, less a broker
fee. It makes sense to issue shares when your share price is high – and buy them back when the price is low, or when
you have excess cash and nowhere to invest it When you issue shares, the number of shares “outstanding” increases
(reducing the price per share somewhat – “dilution”).
To issue or buy back shares, go to the Financial Planning module in the middle of your screen (when available)
Click on the “Issue New Shares” or “Buy Back” buttons several times to receive / spend multiple amounts of cash
Other Business Indicators and reports
Corporate Dashboard
At the top of your screen, a summary of your business performance
Indicators include
-
your company’s current market value (Market Cap), and the direction and rate of change in the last month;
-
the current investment budget available to you, your share capital and corporate credit rating (a function of
interest cover, based on your ability to service the total debt that you have borrowed).
TM
Copyright © 2012 Tycoon Systems Inc
-
page 22
Multi/Single Guide – October 2012
The Sustainability Business Simulation
-
Also shown are calculation details on the average level of carbon dioxide your car fleet is emitting, with the
penalties (premiums) that are being charged to your quarterly income statement.
-
Gauges show Revenue Growth, Profit Margin (EBIT), Debt Ratio (the amount of loans you have) and CO2
Premium paid as a percentage of total revenues. The grey “needle” is your performance; the white marker is the
group benchmark (group average for all competitors in your simulation round). A result in the green section
would be considered good performance; a result in the red section would be considered poor performance, one
in the yellow section is average performance.
Key Performance Indicators KPIs are shown on the left of your screen, and
updated automatically as the simulation proceeds. These are key numbers
which help you to manage your business. These KPIs are based on your latest
monthly data, so may not tie up with the quarterly data in the accounting
section.
In this simulation, the tracking KPIs are :
-
Sales Volume (number of cars sold)
Total Market Share %
Return on Sales %
Average number of Days of Inventory, across all products at month end
CO2 Efficiency %
Energy Efficiency %
Corporate Reputation %
The meaning of these are discussed in the earlier section on Sustainability
Colour code :
Red = worst performance in the reporting period
Green = best performance
Grey = other performance.
In addition, you can get an immediate update on your KPI performance compared to other teams
TM
Copyright © 2012 Tycoon Systems Inc
-
page 23
Multi/Single Guide – October 2012
The Sustainability Business Simulation
REAL TIME SCORES
The REAL TIME SCORES button (left hand column) takes you to the “Real Time Scores” section, where you can see the
leader table at any time. This is updated every quarter, and shows a summary table listing Company name (with the
number of business invested), their Strategic Positioning summary, Credit Rating and Debt Ratio, Sales Revenues,
Profit Margin (EBIT %), Share Capital, CO2 emissions and your company’s Market Value (with direction of latest move)
The Market Cap chart above shows the evolution of market valuation for your company and the current leaders. The
valuation is derived as a function of Earnings (profits).
TM
Copyright © 2012 Tycoon Systems Inc
-
page 24
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Other data can be found on Individual Product pages :
Each product summary page reports on Competitor Position and activity in that product.
The following example table and chart shows revenues, market share, selling and costs prices, and other data for two
competitors in the Compact Conventional Market:
The following chart shows profit margins of all competitors in the Compact Conventional segment.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 25
Multi/Single Guide – October 2012
The Sustainability Business Simulation
At the bottom of your main company screen are further buttons, which take you to a series of financial charts (“View
Charts”) : these automatically update each quarter.
Balance Sheet, Income Statement and Cash Flow statements are also available – click the button labelled “View
Accounting” at the bottom of your screen.
The opening financial data screens for your company are shown in Appendix 2
Decision logging :
In each product summary page, you will see a list of actions from any company operating in that product-market.
View this detail to better understand competitive activity
TM
Copyright © 2012 Tycoon Systems Inc
-
page 26
Appendix 1 : Data on product expansion opportunities
Initial
Investment
$M
Prod’n
Capacity
cars/mth
PLC months
CO2
Emissions
g/km
Proposed
Sales
Price, $
Est.
Revenue
/ Month
$M
# Staff
planned
per unit
Supply
Level
Forecast
%
Mini
1,663
9,000
24
80
13,750
124
7,500
87
Small
2,520
12,000
24
95
15,625
188
11,000
69
Compact
5,443
18,000
30
110
22,500
405
24,000
67
Mid-Size
6,182
16,000
36
130
28,750
460
27,500
75
4,536
6,000
36
160
56,250
338
20,000
104
Luxury
TM
Copyright © 2012 Tycoon Systems Inc
-
page 27
Appendix 2 : OPENING SCREENS : FINANCIAL & OTHER DATA FOR YOUR COMPANY
TM
Copyright © 2012 Tycoon Systems Inc
-
page 28
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Opening Financial Statements for year ending 31 December 2017
TM
Copyright © 2012 Tycoon Systems Inc
-
page 29
Appendix 3 : Sustainable Value Framework
http://www.stuartlhart.com/ Material in this section © 2011 Stuart L. Hart
Sustainable Value Framework
Over the past decade, Stuart Hart has developed, along
with colleague Mark Milstein, a sustainable value
framework that directly links the societal challenges of
global sustainability to the creation of shareholder value by
the firm.
The framework shows how the global challenges associated
with sustainability - viewed through the appropriate
business lens - can help identify strategies and practices
that contribute to a more sustainable world while
simultaneously driving shareholder value. This "win-win"
approach is defined as the creation of "sustainable value"
by the firm.
There are four core dimensions of sustainability strategy with different linkages to firm performance and value creation:




Pollution Prevention: minimizing waste and emissions from current facilities and operations;
Product Stewardship: engaging stakeholders and managing the full life cycle of today’s products;
Clean Technology: developing and deploying “next-generation” clean technologies; and
Base of the Pyramid: co-creating new businesses to serve the unmet needs of the poor and underserved.
Taken together as a portfolio, these strategies and practices hold the potential to:




reduce cost and risk (pollution prevention);
enhance reputation and legitimacy (product stewardship);
accelerate innovation and repositioning (clean technology); and
crystallize growth path and trajectory (base of the pyramid)
— all of which are crucial to the creation of shareholder value. The challenge for the firm is to decide which actions and initiatives
to pursue, and how best to manage them.
The Sustainable Value Portfolio
Companies can begin by taking stock of each component through what Stuart Hart calls their sustainable value portfolio. This
simple diagnostic tool can help any company or business determine whether its strategy has the potential to truly create
sustainable value.
Programs in pollution prevention and product stewardship are well institutionalized within most corporations today, and have
saved hundreds of millions of dollars over the past decade. US-based companies have been especially focused on the efficiency
gains and cost savings associated with pollution prevention. Highly publicized crises — like those of Monsanto and Nike that
failed to successfully engage the views of stakeholders — have also caused growing numbers of firms to explore strategies for
product stewardship.
European companies have been particularly active in engaging in stakeholder dialogue, extending producer responsibility for
products, and adopting more inclusive forms of corporate governance.
Research and consulting experience, however, suggests that few firms seem to recognize — let alone exploit — the full range of
sustainable business opportunities available. Most companies focus their time and attention primarily on the bottom half of the
matrix (short-term solutions tied to existing products and stakeholder groups). Focusing on incremental improvements to
existing products and businesses is an important step, but it neglects the vast opportunities associated with clean technology,
and the largely underserved markets at the base of the economic pyramid.
Indeed, addressing the full range of sustainability challenges can help to create shareholder value, and may represent one of the
most under-appreciated avenues for profitable growth in the future.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 30
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Stuart L. Hart, a leading
authority on the implications of
environment and poverty for
business strategy. A few years
ago, he defined the concept of
sustainable value; his work
includes over 70 academic
papers and several books.
Blog: Voice of the Planet
Stuart L. Hart Strategies for Sustainable Value
About Stuart Hart
A sustainable world is one in which humans - indeed, all life forms - can flourish indefinitely. This means reversing the widening
gap between rich and poor, and halting the rampant loss of natural capital and biodiversity worldwide. A sustainable enterprise,
then, is one that grows and profits by moving us more rapidly in this direction.
Stuart L. Hart is the Samuel C. Johnson Chair in Sustainable Global Enterprise and Professor of Management at Cornell
University's Johnson School of Management.
Attaining global sustainability through this new breed of enterprise calls for
transformational change in corporate vision and strategy. To address this
challenge, companies must learn how to open up to the world: strategies
need to take into account the entire human community of 6.6 billion, as
well as the host of other species with which we share the planet.
To realize the vision of sustainable enterprise, a new set of guiding principles are needed. That's why [Stuart Hart is] the Founder
and President of Enterprise for a Sustainable World, a think tank and non-profit, dedicated to tackling the world’s most pressing
social and environmental problems through a new, more inclusive form of commerce: sustainable enterprise.
The "pillars of sustainable enterprise" are built on principles that support the institutional change required for a truly sustainable
world. Three are of particular importance:
 Shatter the Trade-Off
 Think Like a Disrupter, and
 Build Native Capability.
Material in this section © 2011 Stuart L. Hart
TM
Copyright © 2012 Tycoon Systems Inc
-
page 31
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Shatter the Trade-Off
Since the time of the industrial revolution, firms have engaged in what might be described as a "take, make, waste" organizing
paradigm: Natural resources have been extracted as cheap raw materials; displaced farmers and rural migrants have been
exploited for their cheap labor; and local environments have been degraded into cheap waste sinks. This "take-make-waste"
pattern continues to this day.
Command-and-control regulation seemed like a necessary and appropriate counter to this prevailing mindset: Corporations
should "pay" for the negative consequences associated with their operations. Paradoxically, this "end-of-pipe" approach has
resulted in what [he calls] the "Great Trade-Off Illusion" — the belief that firms must sacrifice financial performance to meet
social and environmental expectations.
Truth be told, there is no inherent conflict between financial and societal performance. In fact "sustainability" represents the
biggest business opportunity in the history of capitalism! Realizing this opportunity means consciously seeking to overthrow the
tyranny of the "trade-off" mentality.
Consider the following: In the 1970s, US manufacturers firmly believed that higher quality products meant higher costs. The entry
of Japanese producers practicing a new form of "quality management," however, effectively shattered this trade-off. We now
know that high quality and low cost can be mutually reinforcing.
In the 1980s, corporations still firmly believed that "it didn't pay to be green." The logic of "pollution prevention," however,
shattered this trade-off. By the 1990s, it was clear that pollution prevention "paid" by reducing cost and risk, and the concept of
"eco-efficiency" was born.
Today, the air is still thick with the language of "trade-off:" "You can't do business with the poor without aid;" and "clean
technology is not yet economically viable without government subsidy." If history teaches us anything, it should be clear that
accepting such orthodoxies is simply lazy thinking; it leads to competitive oblivion.
Smart strategists are now focusing on these "trade-offs" and finding ways to "shatter" them. As colleague, the late C.K. Prahalad,
and he would say, the fortune may well be at the "bottom of the pyramid!" Seizing the sustainability opportunity thus means
learning to revel in contradiction, reconcile opposites, and embrace paradox.
Think Like a Disrupter
As we enter the new century, the “dark satanic mills” of the Industrial Revolution are giving way to a new generation of
technologies that promise to change dramatically the societal, economic, and environmental landscapes. The information
economy powered by the microchip has already begun to revolutionize society by democratizing access to information,
empowering workers and communities, and increasing productivity.
Incremental “eco-efficiency” improvements to current technologies will no longer be sufficient: In the coming years, bioscience;
nanotechnology; new materials; wireless IT; renewable energy; distributed generation; and point-of-use water will dramatically
reduce the size of the human footprint on the planet, and make obsolete many of today’s energy- and material-intensive
incumbents.
Perhaps even more important, given their small scale and distributed nature, such “sustainable” technologies hold the potential
to: creatively destroy existing hierarchies; bypass corrupt governments and regimes; and usher in an entirely new age of
capitalism that brings widely distributed benefits to the entire human community.
Given that clean technologies are almost always “disruptive” to large incumbent businesses, seizing the sustainability opportunity
means learning to think — and act — like a disrupter. It means launching small-scale experiments and growing them from the
bottom-up, rather than continued dependence on large-scale solutions imposed from the top-down.
As colleague Clay Christensen and he suggest, the base of the pyramid may turn out to be the ideal place to incubate the “clean”
technologies of tomorrow. And taking the “great leap” to the base of the pyramid means turning the time tested business models
and routines designed to serve established markets on their heads.
Material in this section © 2011 Stuart L. Hart
TM
Copyright © 2012 Tycoon Systems Inc
-
page 32
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Build Native Capability
Today’s corporations are being challenged to rethink global strategies in which “one-size-fits-all” products are made for the global
market using world-scale production facilities and supply chains. Even so-called “locally responsive” strategies are often little
more than pre-existing solutions tailored to “fit” local markets.
Technologies are transferred from corporate labs and applied in unfamiliar cultural and environmental settings; unmet needs in
new markets are identified through demographic data. The result is still-born products and inappropriate business models that
fail to effectively address real needs.
To realize the sustainability opportunity, companies must develop a new mindset that enables them to develop fully
contextualized solutions to real problems in ways that respect local culture and natural diversity. This means engaging in “deep
dialogue” with local communities to co-create businesses that are truly “embedded” in the local context.
Building this new capability means suspending traditional assumptions regarding business development. It requires putting down
the corporate “hammer,” and actually experiencing life in poor and underserved communities in a spirit of humility and mutual
learning. It requires forging relationships built on trust, understanding, and respect — from which new possibilities for locally
embedded businesses can emerge that create value for all partners involved.
As colleague Erik Simanis and he suggest, companies must come to view the poor and underserved as partners and colleagues,
rather than clients and consumers. This mindset shift requires the development of a new, “native capability” to complement
competencies in global efficiency, local responsiveness, and learning-transfer that most corporations already possess.
BOOKS by Stuart Hart
His best-selling book, Capitalism
at the Crossroads, published in
2005, was selected by
Cambridge University as one of
the 50 top books on
sustainability of all-time; the
third edition of the book was
published in 2010.
With Ted London, he is the
author of a newly released book
entitled Next Generation
Business Strategies for the Base
of the Pyramid
Articles by Stuart Hart
Beyond Greening: Strategies for
a Sustainable World won the
McKinsey Award for Best Article
in the Harvard Business Review
for 1997 and helped launch the
movement for corporate
sustainability.
With C.K. Prahalad, he wrote the
pathbreaking article: The Fortune
at the Bottom of the Pyramid
which provided the first
articulation of how business
could profitably serve the needs
of the four billion poor in the
developing world.
The Great Leap: Driving Innovation from the Base of the Pyramid
By Stuart L. Hart and Clayton Christensen, Sloan Management Review
A Natural-Resource-Based View of the Firm
By Stuart L. Hart, Academy of Management Review
To read more, go to http://www.stuartlhart.com/
TM
Copyright © 2012 Tycoon Systems Inc
Material in this section © 2011 Stuart L. Hart
-
page 33
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 4 : ADDITIONAL STRATEGY and MARKETING ISSUES
Economies of Scale and Scope
With increasing volumes of production or sales of a product or a range of products, central overheads and other
costs start to spread across a larger base. The cost of production per unit, or the cost of delivery per unit, will
therefore start to come down.
If you can build market share and generate extra sales from the same cost base, then the average cost per unit will
continue to decrease, and profitability will rise.
This is called Economy of Scale – unit costs will reduce to a level where the overhead part of your cost structure is
relatively small compared to the direct, variable costs of manufacturing, delivery or service. The cost reduction per
unit is not a “straight line” relationship, which will forever decline - more of an exponential curve which reaches an
optimum operational cost level.
Market share-driven cost reduction is a major factor in creating profitable operations in a many businesses in the
world today
Cost sharing benefits are also evident when you increase a range of products that can share the same operational
expense base – such as a common sales force, a customer service center, or a logistics system. This is referred to as
the “economies of scope”
Additional cost reductions may occur as a result of “experience” or “learning” – sometimes these cost benefits are
shared across industries (“industry learning”) as techniques and knowledge get passed around, or staff move
between companies.
A company that is striving to become a cost leader in its industry will focus heavily on driving costs down, including
the application of economies of scale and experience curves.
A key driver in this simulation is relative cost advantage, because of the high fixed cost / high fixed asset investment
nature of the industry. You can improve your cost advantage with greater market shares
TM
Copyright © 2012 Tycoon Systems Inc
-
page 34
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 5 : ADDITIONAL STRATEGY and MARKETING ISSUES
Supply Levels and Pricing - Market Crowding & Fragmented Markets
In each product-market, providers individually decide to invest in extra facilities, in
order to satisfy the demand for the services they offer. Overall industry demand is a
function of the size of the economy, and the rate of growth of this economy is related
to the investment decisions of all the competitors in the simulation.
The demand for individual product-services is also related to the size of the economy, as well as to adjusting
factors such as pricing, price changes and value propositions.
The degree to which the market for each product is currently satisfied is referred to as :
“Supply Level” : the percentage of current demand that is satisfied by current providers.
As players expand and continue to invest in new facilities, the supply of product available to customers will
increase – so the supply level goes up. Each new investment decision leads to the establishment of an extra
business unit with a fixed capacity – the capacity increase is referred to as “1x”, “2x”, etc.
Additionally, if you have invested in retail operations (selected simulations only), the supply is directly linked to
the inventory available for sale in all players’ warehouses. This means that if many players are purchasing larger
amounts of inventory (which may remain unsold) then the perceived overall market supply ratio will rise,
thereby depressing average market prices
If new competitors enter a segment with new investments, the market becomes even more crowded – and
supply levels also increase. When supply levels rise well above 70%, the market average price level will start to
decline – customers will have a wider range of competing products to choose from, and will start to bargain for
lower prices. Providers then need to start making attractive marketing offers to maintain or grow their sales
volumes
A Supply Level of over 100% leads to much
lower profit margins in the industry – even
driving some providers into losses.
You should be aware of Supply Levels in all
the market segments where you are
operating. As you and your competitors
make investment and inventory purchase
decisions, the supply level will change
quickly – this will affect your ability to raise
or even maintain high prices.
Your competitive position is closely linked
to Supply Levels in your markets.
Wherever possible, try to invest in and promote businesses where Supply Levels are relatively low, to give you a
better chance of survival - and also of higher profitability.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 35
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 6 : ADDITIONAL STRATEGY and MARKETING ISSUES
Market Dominance
As you invest in new product lines and associated warehousing, you will increase the Supply Level for that product,
but also increase the market share available to you.
In this simulated market, investment in
products and facilities increases the scale of
your operations, and can also reward you
with a larger share of the market. Other
factors, such as pricing and marketing spend,
will also have an effect on your demand and
market share, but the scale of your
operations is a major factor. To grow market
share then, it is important to continue to
invest in new product lines and warehousing
units
Because of the effect of scale economies,
profitability is closely linked to higher market
shares, and the market will also reward you
with slightly higher prices – in effect you become a price leader, not a price follower.
At some point, continued investment in extra product and facilities in a particular market will increase the Supply
Level to unsustainable levels; pricing comes under pressure, the industry has excess capacity and prices may fall. At
this point, market share is less important as losses could mount up
Synergy is important ….
By concentrating your efforts in one sector at a time, you will spread overhead cost efficiently, so reducing unit cost
to the lowest levels. Or at least try to limit the number of sectors you invest and trade in. You could develop a
significant cost advantage over your competitors in this way – there are other factors which also affect this.
Investing in too many sectors can be a way to lose your competitive advantage
Additional Investments are important … up to a point !
You can choose to invest in a number of operating enhancements for your corporation. These investments can offer
some significant costs savings and develop additional demand for your products.
You may not have sufficient budget to invest in them all – so choose wisely. These are substantial investments, and
when the cost is spread over a large enough business then these could add a lot to your financial performance. If you
have a smaller business – perhaps because you are at an early stage, or maybe you have underinvested – then these
additional investments might be too large a burden for you. Invest wisely, and you can make a big difference in this
area. Balance your product investment and these additional investments for maximum impact
If you have any products which are losing significant amounts of money, then you may be offered the option to
“liquidate” those product lines.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 36
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 7 : Government policy relating to Carbon Emissions in automobiles
Many countries are enacting clean air legislation. The example quoted here is for academic study purposes only and
does not necessarily represent the views of the case study writer or of Tycoon Systems Inc.
European Community Policy
The text of this page, at http://ec.europa.eu/clima/policies/transport/vehicles/cars/index_en.htm is reproduced here
© European Union, 1995-2012. Reuse is authorised, provided the source is acknowledged.
Reducing CO2 emissions from passenger cars




Policy
Documentation
Studies
FAQ
Cars are responsible for around 12% of total EU emissions of carbon dioxide (CO2), the main greenhouse gas.
European Union legislation adopted in 2009 sets mandatory emission reduction targets for new cars. This legislation is the
cornerstone of the EU's strategy to improve the fuel economy of new cars sold on the European market. The law is similar to that
for new vans.
Under the Cars Regulation, the fleet average to be achieved by all new cars is 130 grams of CO2 per kilometre (g/km) by 2015 –
with the target phased in from 2012 - and 95g/km by 2020. The regulation is currently undergoing amendment in order to
implement the 2020 target. The 2015 and 2020 targets represent reductions of 18% and 40% respectively compared with the
2007 fleet average of 158.7g/km. In terms of fuel consumption, the 2015 target is approximately equivalent to 5.6 litres per 100
km (l/100 km) of petrol or 4.9 l/100 km of diesel. The 2020 target equates to approximately 4.1 l/100 km of petrol or 3.6 l/100 km
of diesel.
Key elements of the legislation are as follows:
Limit value curve
Emission limits are set according to the mass of vehicle, using a limit value curve. The curve is set in such a way that a fleet
average of 130 grams of CO2 per kilometre is achieved by 2015. The limit value curve means that heavier cars are allowed higher
emissions than lighter cars while preserving the overall fleet average. Only the fleet average is regulated, so manufacturers are
still able to make vehicles with emissions above the limit value curve provided these are balanced by vehicles below the curve.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 37
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Phasing-in of requirements
The EU fleet average target of 130g CO2 per km will be phased in between 2012 and 2015. In 2012, an average of 65% of each
manufacturer's newly registered cars must comply with the limit value curve set by the legislation. This will rise to 75% in 2013,
80% in 2014, and 100% from 2015 onwards.
Penalty payments for excess emissions
If the average CO2 emissions of a manufacturer's fleet exceed its limit value in any year from 2012, the manufacturer has to pay
an excess emissions premium for each car registered. This premium amounts to €5 for the first g/km of exceedance, €15 for the
second g/km, €25 for the third g/km, and €95 for each subsequent g/km. From 2019, the cost will be €95 from the first gram of
exceedance onwards.
Long-term target
A further emission reduction to 95g CO2/km is specified for the year 2020. Following a thorough review of the target's feasibility,
in July 2012 the Commission proposed legislation setting out the modalities of how this target is to be reached. The proposal
requires approval by the European Parliament and Council to become law. For a summary see the section 'Implementation of the
2020 target' below.
Eco-innovations
Under the test procedure used for vehicle type approval, certain innovative technologies cannot demonstrate their CO2-reducing
effects when being type approved. Manufacturers can be granted emission credits equivalent to a maximum emissions saving of
7g/km per year for their fleet if they equip vehicles with innovative technologies, based on independently verified data.
Super credits
The cars Regulation gives manufacturers additional incentives to produce vehicles with extremely low emissions (below 50g/km).
Each low-emitting car will be counted as 3.5 vehicles in 2012 and 2013, 2.5 in 2014, 1.5 vehicles in 2015 and then 1 vehicle from
2016 onwards. This approach will help manufacturers further reduce the average emissions of their new car fleet.
Pools acting jointly
Manufacturers can group together to form a pool which can act jointly in meeting the emissions target. In forming a pool,
manufacturers must respect the rules of competition law and the information that they exchange should be limited to average
specific emissions of CO2, their specific emissions targets, and their total number of vehicles registered.
Targets for smaller manufacturers
Independent manufacturers which sell fewer than 10,000 vehicles per year and which cannot or do not wish to join a pool can
propose their own emissions reduction target which is subject to approval by the Commission. The Commission decides on the
basis of a set of agreed criteria which include the manufacturer's emissions reduction potential.
Manufacturers selling between 10,000 and 300,000 cars per year can apply for a fixed target of a 25% reduction from their 2007
average emissions.
Special purpose vehicles, such as vehicles built to accommodate wheelchair access, are excluded from the scope of the
legislation.
Monitoring of emissions
The Commission has set out rules on the data required to monitor the CO2 emissions of new cars. Monitoring reports can be
found under the Documentation tab above.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 38
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Implementation of the 2020 target
The Commission's legislative proposal for implementing the 95 g/km target includes the following provisions:
All manufacturers would be required to achieve the same level of reduction - 27% - from the 2015 target;
The target would continue to be set on the basis of a vehicle's mass;
Eco-innovations would continue to apply once the new test procedure for vehicle type approval is in place;
Super-credits with a multiplier of 1.3 would apply in 2020-2023 for vehicles emitting less than 35 g/km; this benefit would be
limited to a maximum of 20 000 cars per manufacturer over the period;
The excess emissions premium would remain at €95 per g/km from the first gram of exceedance;
Small-volume manufacturers would be given greater flexibility regarding when they can apply for their own reduction target;
The smallest manufacturers, producing fewer than 500 cars per year, would be exempted from meeting the target;
Niche manufacturers would receive a new target for 2020 of a 45% reduction from their 2007 level;
The regulation would be reviewed by end-2014 in order to set reduction targets for post-2020.
Update notice : 11 July 2012
More CO2 emission cuts from cars and vans: a win for the climate, consumers, innovation and jobs
The European Commission today put forward proposals to implement targets that will further considerably reduce carbon dioxide
(CO2) emissions from new cars and light commercial vehicles (vans) by 2020.
Connie Hedegaard, EU Commissioner for Climate Action, said:
“With our proposals we are not only protecting the climate and saving consumers money. We are also boosting innovation
and competitiveness in the automotive sector. And we will create substantial numbers of jobs as a result. This is a clear winwin situation for everyone. This is one more important step towards a competitive, low-carbon economy. More CO2
reductions beyond 2020 need to be prepared and these will be considered in consultation with stakeholders”
The proposals will cut average emissions from new cars to 95 grams of CO2 per km (g CO2/km) in 2020 from 135.7g in 2011 and a
mandatory target of 130g in 2015. Emissions from vans will be reduced to 147g CO2/km in 2020 from 181.4g in 2010 (the latest
year for which figures are available) and a mandatory target of 175g in 2017.
The mandatory targets for 2020 are already envisaged in existing legislation but are subject to implementation. Following
thorough technical and economic analysis by the Commission, the Regulations proposed today establish the modalities by which
the targets would be achieved. Read more:
 Video: Commissioner Connie Hedegaard on the proposals
 IP/12/771: Further CO2 emission reductions from cars and vans: a win-win for the climate, consumers, innovation and jobs
 MEMO/12/548: Questions and Answers on the proposals to reduce CO2 emissions from cars and vans further by 2020
 Reducing CO2 emissions from cars
 Reducing CO2 emissions from vans
TM
Copyright © 2012 Tycoon Systems Inc
-
page 39
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 8 : Government action in other countries : California example
Many countries are enacting clean air and clean car legislation. The example outlined below is for academic study
purposes only, and does not necessarily represent the views of the case study writer or of Tycoon Systems Inc.
California's Clean Cars Law
Reproduced from http://www.edf.org/transportation/policy/california-clean-cars-law Used by permission.
Copyright © 2011 Environmental Defense Fund. The original material is available at http://www.edf.org/oceans.
Renewed hope for protective tailpipe standards to cut global warming pollution
Updates on clean car progress - In June 2009, EPA granted California's long-standing request for a Clean Air Act waiver,
immediately clearing the way for vehicle emissions standards to cut global warming pollution in California and 13 other states. In
2011, rather than face a patchwork quilt of different state regulations, automakers agreed to a stricter federal standard. Read
below to learn how this progress was made, starting with California's 2002 Clean Cars Law.
A history of legal battles
In 2002, California passed the Clean Cars Law, the nation's first binding limits on global warming pollution from tailpipes. The
state's cars are responsible for almost one third of its global warming pollution. Cutting tailpipe pollution is essential to meet the
requirements set under California's global warming law, AB32, the nation's first statewide cap on greenhouse gas emissions,
passed in 2006.
Thirteen states have since followed California's lead and adopted the Clean Cars standards: Arizona, Connecticut, Maine,
Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington. In
2004, the auto industry filed lawsuits in California and three other states to derail the law.
A series of court victories in 2007 — including a landmark Supreme Court ruling affirming EPA’s power to address global warming
pollution under the Clean Air Act — paved the way for putting the Clean Cars Law into effect.
EPA prevents state from setting more rigorous standards
But one hurdle remains. California may set more rigorous clean air standards than federal requirements, once the U.S.
Environmental Protection Agency grants it a waiver to do so. In a surprising denial of both science and the law, EPA rejected the
state's request for a waiver. Before this denial, EPA had consistently and repeatedly granted California’s requests.
Environmental Defense Fund joined a coalition of states and environmental groups to challenge EPA's decision, and legal action is
pending in the U.S. Court of Appeals in Washington, D.C. The Obama administration and the new Congress offer a great
opportunity to change course on climate, to grant California’s request and to enforce the Supreme Court ruling. In a November
2008 speech, President Barack Obama promised a "new chapter" on climate change — starting with a national cap-and-trade
system.
Governor sends letter urging Obama to back waiver
On Jan. 21, 2009, California's Republican Governor Arnold Schwarzenegger formally asked President Barack Obama to
"immediately reconsider" the Bush administration's denial of California's Clean Car program to cut global warming pollution. In a
letter calling the 2008 denial by the Bush administration's EPA "fundamentally flawed," Governor Schwarzenegger said that
approving California's landmark program "will not only reduce these emissions, but will also save drivers money and reduce our
nation's dependence on imported oil."
Details: What the Clean Cars Law does
California estimates that the Clean Cars program will reduce overall greenhouse gas emission from passenger cars by:
18 percent in 2020 and
27 percent cut in 2030.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 40
Multi/Single Guide – October 2012
The Sustainability Business Simulation
The regulations do not call for radical vehicle changes. They are designed instead to tap technologies, methods, and cleaner fuels
available now to reduce emissions of four chief greenhouse gases (GHG) contributing to global warming: carbon dioxide,
methane, nitrous oxide, and hydrofluorocarbons.
The standards apply to new motor vehicles and require declining fleetwide average emissions. California is the only state that
can set its own motor vehicle emission standards, though other states may follow once it has done so. To carry out the program,
California must (a) set standards at least as stringent as federal ones and (b) receive a waiver from the EPA.
Other states adopt law, promising more pollution cuts
Because the Clean Air Act allows states to follow California's low emissions vehicle (LEV) program, many states have opted to
adopt the Clean Cars law. Such widespread adoption strengthens the law's potential to combat climate change. So far, 13 states
have adopted the California standards, and several others are considering doing so. All together, these states represent almost
half the U.S. population. States in bold have already adopted the standards.
Arizona
New Jersey
California
New Mexico
Colorado
New York
Connecticut
North Carolina
Florida
Oregon
Iowa
Pennsylvania
Maine
Rhode Island
Maryland
Utah
Massachusetts
Vermont
Washington
Clean Cars Law wins a series of court victories
Supreme Court: EPA can grant California a waiver
On April 2, 2007, the first major victory in this fight came when the U.S. Supreme Court ruled against the automaker's main
arguments, holding that greenhouse gases are a pollutant, that the EPA has the power to regulate them under existing law, and
that greenhouse gas emission standards under the Clean Air Act are not preempted by the federal fuel economy law.
Vermont judge rules for Clean Cars, clears way for waiver
Though the carmakers initially sued in a federal court in California, they also filed suits in Vermont, New Mexico and Rhode
Island. On September 12, 2007, U.S. District Judge William K. Sessions became the first federal district court judge to rule and
Judge Sessions rejected all of the carmakers' and dealers' challenges. He ruled that carmakers can safely meet new clean car
standards. The ruling also held that motor vehicle greenhouse gas emission standards are not preempted by federal fuel
economy standards. Carmakers are appealing. (More on the Vermont ruling.)
Carmakers' suit to overrule California law dismissed
In 2007, a federal judge in California dismissed a 2004 lawsuit filed by 21 of the world's major automakers against the state.
But their reasoning assumed that the tailpipe cleanup would come from fuel efficiency alone, when in fact other adjustments,
such as switching to cleaner fuels and mitigating air conditioning emissions, can reduce global warming pollution from cars. The
federal judge rebuked the auto industry's efforts to block the Clean Cars law. (Get details on the ruling.)
TM
Copyright © 2012 Tycoon Systems Inc
-
page 41
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 9 : BUSINESS TERMS
Annual Report
An official quarterly or annual financial document published by a public company, showing Income Statement, Balance Sheet
and Cash Flow Statement.
Balance Sheet
Quantitative summary of the financial position of a company at a specific point in time, including assets, liabilities and net
worth. The first part of a balance sheet shows all the productive assets a company owns, and the second part shows all the
financing methods (such as liabilities and shareholders’ equity). The term balance sheet is derived from the simple purpose of
detailing where the money came from, and where it is now. The balance sheet equation is fundamentally:
Capital + Liabilities (where the money came from) = Assets (where the money is now).
Hence the term double entry - for every change on one side of the balance sheet, there must be a corresponding change on
the other side - it must always balance.
Capital Invested
Money (borrowed or owned) invested in a company's operations. Calculated by: Total Assets less Excess Cash minus noninterest-bearing liabilities. The sum of a corporation’s long-term debt, stock and retained earnings. Also called invested capital.
Cash
Currency and coins on hand, bank balances, and negotiable money orders and checks.
Cash Flow
Cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for
depreciation, depletion, and amortization.
Cash Flow Statement
One of the three essential reporting statements for any company. The Cash Flow statement provides a third perspective
alongside the Income Statement and Balance Sheet. The Cash Flow statement shows the movement and availability of cash
through and to the business over a given period. The availability of cash in a company that is necessary to meet payments to
suppliers, staff and other creditors is essential for any business to survive, and so the reliable forecasting and reporting of cash
movement and availability is crucial.
Corporate Social Responsibility (CSR)
Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns into their
business operations and in their interaction with their stakeholders (employees, customers, shareholders, investors, local
communities, government), on a voluntary basis.
Cost of Goods Sold (COGS)
The directly attributable costs of products or services sold, (usually materials, labour, and direct production costs). Sales less
COGS = Gross Profit. Also called Cost of Sales, or Cost of Services and Goods Sold
Credit Rating
A published ranking, based on detailed financial analysis by a credit rating agency, of one’s financial history and forecasts,
specifically as it relates to one’s ability to meet debt obligations. The highest rating is usually AAA, and the lowest is D. Banks
use this information to decide whether to approve a credit.
Current Assets
A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable
securities, prepaid expenses, & other assets that could be converted to cash in less than one year. A company’s creditors will
often be interested in how much that company has in current assets, since these assets are easily liquidated in case the
company goes bankrupt. Current assets are important to most companies as a source of funds for day-to-day operations.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 42
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Debt
A liability or obligation in the form of bonds, loan notes, or mortgages, owed to another person or persons and required to be
paid by a specified date (maturity).
Debt Ratio
Debt capital divided by total capital. This will tell you how much the company relies on debt to finance assets. When
calculating this ratio, it is conventional to consider both current and non-current debt. In general, the lower the company’s
reliance on debt for asset formation, the less risky the company is since excessive debt can lead to a very heavy interest and
principal repayment burden.
EBIT
Earnings Before Interest and Tax. A financial measure defined as revenues less cost of goods sold and selling, general, and
administrative expenses. In other words, operating and non-operating profit before the deduction of interest and income
taxes.
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation. A financial measure where the Depreciation charge on Fixed
assets and Amortisation on financial and other assets are deducted from EBIT. Often called “cash flow profit”
Equity
Ownership interest in a corporation in the form of common stock or preferred stock. It is the risk-bearing part of the
company’s capital and contrasts with debt capital has priority over shareholders if the company becomes insolvent and its
assets are distributed.
Gross Profit and Gross Profit Margin
Gross Profit = Pre-tax net sales minus cost of sales. Also called gross income.
Gross Profit Margin = Gross profit divided by sales, expressed as a percentage.
Interest Cost
The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the
principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. Here,
interest per year divided by principal amount, expressed as a percentage.
Interest Rate
A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the
principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result
of inflation and Central Bank policies.
Interest Coverage the ratio of the amount of interest due on bank and similar loans in a specific period, compared with the
earnings of a company. In other words, how times will profits cover the interest payments. A high number indicates high
creditworthiness, a low number indicates higher risk of default on loan and interest payments due.
Long-Term Assets
On a balance sheet, the value of a company’s property, equipment and other capital assets expected to be useable for more
than one year, minus depreciation.
Net Income
Sales minus taxes, interest, depreciation, and other expenses. Net Income is one of the most important measures of a
company’s performance, since the pursuit of income is the primary reason companies exist. Sometimes Net Income includes
one-time and extraordinary items, and sometimes it does not. Also called net earnings or bottom line.
Income Statement
An official quarterly or annual financial statement of a public company, showing earnings, expenses, and net profit. The
Income Statement typically shows sales revenues, cost of sales/cost of goods sold, generally a gross profit margin (sometimes
called contribution), fixed overheads and or operating expenses, and then a profit before tax figure (PBT). Basically the Income
Statement shows how well the company has performed in its business activities during a specified period
TM
Copyright © 2012 Tycoon Systems Inc
-
page 43
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Price-Earnings Ratio (PER or P/E)
Indicator of relative value: compares the price per share of a company to the earnings per share (EPS) of that company –
normally in a recent financial period. A high number - compared to other companies in a similar sector - indicates greater
confidence in the future business of that company, and a greater desire by investors to buy shares in that company. Should be
used with caution : the earnings figure used may not be representative of expected performance because of special
circumstances or unusual, one-off events
Return on Equity (ROE)
A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year’s Net
Income divided by Equity, expressed as a percentage. It is used as a general indication of the company’s efficiency; in other
words, how much profit it is able to generate given the resources provided by its stockholders. Investors usually look for
companies with returns on equity that are high and growing.
Return on Investment (ROI)
A measure of a corporation’s profitability, equal to a fiscal years income divided by Long-Term Assets. ROI measures how
effectively the firm uses its capital to generate profit; the higher the ROI, the better
Sales (Revenues)
The final amount of sales, determined by subtracting the amount of sales returns and allowances and sales discount from the
total amount of sales, for a fiscal period.
Inventory (Balance Sheet)
A company’s merchandise, raw materials, and finished and unfinished products which have not yet been sold. There are
various means of valuing these assets, but the most common one is to price all inventory at the cost that it was acquired for, or
its cost of production in the cases of finished goods, or “net realisable value” (what it could fetch in the marketplace),
whichever is lower or more conservative
Taxes
Taxes are compulsory, unrequited payments, in cash or in kind, made by institutional units to government units; they are
described as unrequited because the government provides nothing in return to the individual unit making the payment,
although governments may use the funds raised in taxes to provide goods or services to other units, either individually or
collectively, or to the community as a whole.
Total Assets
The sum of current and long-term assets owned by a person, company, or other entity.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 44
Multi/Single Guide – October 2012
The Sustainability Business Simulation
Appendix 10 : General Terms and Conditions for use of simulations owned by Tycoon Systems Inc.
Tycoon Systems Inc (“Tycoon”) will allow use of its online simulations (“TS Services”) to a User under the following general terms
and conditions.
1) TS Services include, but are not limited to, access for selected individuals to Tycoon’s business simulation systems, business
games and web-based software, for use in executive education programs and on-line business competitions, on payment of
access fees as specified in an agreed Scope of Services.
2) These General Terms and Conditions will form an integral part of any agreement to supply such services.
3) Where a supply of TS Services involves access to Tycoon Systems’ webservers and websites then, the terms and conditions as
specified on the websites are deemed to have been read and understood and agreed prior to using such TS Services. A
current example is available for inspection at http://www.industrymasters.com/termsofuse.html
4) Tycoon develops online, webserver based simulation games, which reside on their own secure webservers, and are under
their control at all times. It is not possible to install these games on any other servers – for example, on clients’ own web
servers. Clients may access our simulations and games via standard, widely-used web browsers such as Internet Explorer,
Firefox etc from anywhere in the world by using a standard URL which we will supply.
5) Intellectual-Property Ownership and Use: No proprietary software is required to be physically installed on clients’ systems,
and no ownership of software is transferred to clients. All Intellectual Property Rights of any business simulation, except Preexisting Materials from clients, shall remain exclusively with Tycoon.
6) Any Tycoon Systems simulation that is based on real-world events is only representational and not an accurate depiction of
real-world events. Users should under no circumstances seek to imitate any game experience in real life.
7) Privacy Considerations: In order to take advantage of the full capabilities of the simulation and to receive e-mailed
information and announcements, Tycoon may require information about the users. Any communications made through the
simulation may be monitored by Tycoon's personnel, with the consent of the client. We respect the users privacy and we will,
of course, endeavour to take care of any information supplied to us. We reserve the right to use "cookies," which are small
computer files we would thereby transfer to your computer's hard drive to allow us to monitor website usage. The users have
the ability to accept or decline cookies, but if users choose to decline cookies, performance of the simulation might be
adversely affected.
8) No Warranty: The simulation, including any content or information contained within it and any linked website, is provided "as
is" and "as available." TO THE FULLEST EXTENT PERMITTED BY LAW, Tycoon EXPRESSLY DISCLAIMS ALL EXPRESS OR IMPLIED
WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
9) Limitation of Liability: Tycoon shall have no liability for the deletion of any communications or information collected,
maintained or transmitted by the simulation or the failure to store any information, including personalized settings.
10) Jurisdiction and Choice of Law: All claims regarding the simulation shall be governed according to the laws of the State of
Delaware, United States of America, without regard to its conflicts of law principles. Any claim or action arising under this
agreement shall be subject to the exclusive jurisdiction of courts in Delaware, United States of America.
11) Complete Agreement: This agreement constitutes the entire agreement between the User and Tycoon with respect of use of
simulations owned by Tycoon Systems Inc. If any provision of this agreement is found to be unenforceable, the other
provisions shall still remain in full force and effect.
TM
Copyright © 2012 Tycoon Systems Inc
-
page 45