Presentation on theme: "The Learning Strategy and Mental Discipline of Marketplace"— Presentation transcript:
1The Learning Strategy and Mental Discipline of Marketplace
2Learning Strategy I listen, I forget. I see, I remember. I do, I understand.Old Chinese Proverb
3Learning StrategyBusiness simulations are a form of combative training where participants pit their business skills against those of formidable opponents under the watchful eye of a training coach.
4When we study one discipline at a time, we are like a bunch of blind people trying to understand what an elephant is.Please tell mewhat it is?It’s a snake.It’s atree trunk.It’s a sheetof rawhide.It’s a steeltube.
5With business simulations, you can crawl all over and under the enterprise to help you to see and understand the whole thing.AccountingMarketingDistributionIt is anenterprise!ProductionFinanceHumanResources
6Team of Experts Helped to Design a Very Realistic Learning Environment Harry Bruce – leadership, governanceJoyce Russell – team work, human resourcesJim Reeve – accounting, profit analysisSarah Gardial & Bob Woodruff – customer valueJim Wansley – financeDominique Garval – business strategyErnie Cadotte – marketingKen Gilbert – production processesIvan Slimak – brand design, quality processesTom Mentzer – supply chain
7Learning Strategy: Learn by Doing Participants learn about all aspects of business by managing a simulated business.The Marketplace scenario follows the lifecycle of a new product and new business.Business decisions are introduced as they become relevant in the evolution of the company.
8Mental Discipline & Business Culture Develop leadership, teamwork and interpersonal skills.Promote better decision making by learning to manage a totally integrated company, including the management of sales outlets, marketing, production, and human and financial resources.Facilitate learning of important business concepts, principles and ways of thinking.
9Mental Discipline & Business Culture Develop strategic planning and execution skills within a rapidly changing environment.Instill a bottom line focus and the simultaneous need to deliver customer value.Crystallize the financial implications of business decisions and how they flow to bottom-line performance.
10Mental Discipline & Business Culture Discover how important it is to use market data and competitive signals to adjust the strategic plan and more tightly focus business tactics.Live and breathe performance-based managementLearn what it takes to start up and manage a new venture.
11Mental Discipline & Business Culture Build confidence through knowledge and experience.
12How is the business simulation conducted? Teams are placed in a new venture scenario - starting up and running a new business.The opposition is played out by competing teams.
13Objective is to profitably capture a dominant market position Business TeamMarketOpponentObjective is to profitably capture a dominant market position
14Business Teams Marketing Finance Distribution Production Each team member assumes a tactical area of responsibility.MarketingFinanceDistributionProductionMarketing ResearchOverall Management
15How conducted?Business team receives information on current situation.Current situation is evaluated, strategy formulated and tactics set in placed.Tactical decisions are fed into the Marketplace simulator, along with decisions of opponents.Results of decisions are fed back to business team.
16How conducted?The business team can acquire information on what is happening in the marketplace:internal operationscustomer reaction to market decisionscompetitor actionsCurrent situation is evaluated, strategy formulated, and tactics set in place.Tactical decisions are again fed into the Marketplace simulator.
17Game ScenarioYou and your business partners have decided to enter the international microcomputer industry.The microcomputer industry is in its introductory stage of the product life cycle.Several other international firms are entering the market at the same time.
18Sales Offices Montreal Paris Toronto Berlin Calgary Rome Vancouver LondonBeijingShanghaiGuangzhoTianjinCuritibaRio de JaneiroSao PauloBelo HorizonteMontrealTorontoCalgaryVancouverNew YorkAtlantaChicagoLos Angeles
19Regional Web Centers for e-Commerce TorontoParisChicagoShanghaiSao Paulo
21Chronology of EventsQ1, organize the team, name the company and contract for a survey of potential customers.Q2, analyze market information, establish strategic direction and set up shop (build plant, design brands and set up a sales offices and/or regional web centers).
22Chronology of EventsQ3, test-market brands, prices, ad copy, media campaigns, sales staffing, and internet tactics. Determine production schedule for each brand.Q4, study end user feedback, competition, operating performance, employee morale, and financial performance and make adjustments in strategy.
23Chronology of EventsQ5, prepare a one-year business plan. Present business plan and financial request to venture capitalists and negotiate equity investment.Q5 – Q8, initiate international roll-out campaign.
24Chronology of EventsEnd of game, prepare Report to the Board regardingsecond year performance,deviations from plan,justification for departures,analysis of current market, andplan for future.
25Equity Financing (Q1-Q4) The initial capitalization is 4,000,000 which is being invested by the executive team in 1,000,000 increments over the first 4 quarters.The executive team owns 100% of the company.Forty thousand shares of stock will be issued to the executive team in exchange for their 4,000,000.The initial stock value is 100 per share.
26Equity Financing (Q5)At the end of the first year of business, the executive team will have the opportunity to request up to 5,000,000 from a venture capitalistThe venture capitalist will expect an outline of the strategic plan for the second year in business, including target markets, sales channel expansion, R&D, plant expansion, quality improvements, etc.
27Debt Financing (Q5 and beyond) The bank will extend a line of credit to the executive team equal to one and a half times the firm's equity position in the previous quarter.The bank is highly risk adverse and will call in your loan in part or whole if your debt capacity declines due to unusual or extended losses.
28Debt Financing (Q5 and beyond) Other financial institutions will also buy long-term notes at 2 points over conventional bank loans. The acceptable debt capacity is two times the firm's equity position in the previous quarter.Long-term debt is for 5 years with little possibility of the financial institution calling in the note due to short-term swings in income.
29Special Financing Needs The bank is intolerant of poor financial management.If a firm ends a quarter with a negative cash position, the bank will contact a loan shark by the name of Guido to obtain an emergency loan to cover the firm's checking account.
30Guido’s Financing Terms Guido requires repayment in the next quarterThe emergency loan interest rate is a sliding scale which begins at 10% per quarter and may go as high as 25% per quarter.For each 100 which Guido places in your checking account, he will take one share of stock in your firm.The issuing of stock to Guido causes a dilution of your stock value and your share of the company.
31BankruptcyA firm is technically bankrupt if its cumulative losses exceed its equity investment.Stated differently, the management has used up all of the equity of the firm when the negative value of the retained earnings exceeds the value of the common stock.
32Performance Evaluation Balanced Scorecard for last four quarters of playBusiness PlanReport to BoardStrategic thinking and analysis in Executive BriefingsHow well company is prepared for the future
33Total Business Performance FinancialperformanceTotal BusinessPerformanceManufacturingproductivityMarketperformanceAssetmanagementMarketingeffectivenessCreationof wealthInvestments in thefirm’s futureHuman resourcemanagement
34Why Use a Balanced Scorecard? It is too easy to get caught up in market share and short-term profits.Long-term viability requires that managers also deliver customer satisfaction and invest in the future.The balanced scorecard measures both the long-term and the short-term.The best managers will be good in all areas measured.
35Mental Discipline of Marketplace conditionsMarketingstrategytacticsassessmentobjectivesperformanceManufacturingHuman resourceFinancialEnvironmentalanalysisBusinessStrategyFeedbackMental Discipline of MarketplacePerformanceAssessment of Business ConditionsBUSINESS LEVELFUNCTIONAL LEVEL