A. G. Kefalas, The University of Georgia1 ENSIM: A Management Simulation Case With Environmental Constraints

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3 Mission Statement n The overall mission and challenge to the participants in to run a PROFITABLE & ENVIRONMENTALLY SOUND COMPANY

A. G. Kefalas, The University of Georgia4 Relationship of.....

A. G. Kefalas, The University of Georgia5 It is never too late ! Or is it ?

A. G. Kefalas, The University of Georgia6 Brief History of Human Concern for the Physical Environment n The Age of Environmental Awareness: The Romantic Sixties n The Age of Institutionalization: The Legislative Seventies n The Age of Contemplation & Analysis: The Sobering Eighties n The Age of Action: The Ecopreneuring Nineties

A. G. Kefalas, The University of Georgia7 Corporate Strategies to Institutionalize Environmental Concern n Addition of the environmental concern into the corporate code of ethics n Restructuring the corporate hierarchy by adding a new environmental unit n Restructuring the corporate resources allocation model

A. G. Kefalas, The University of Georgia8 Business Objectives & Goals n Profitability as the most important goal: Profit = Revenue - Costs + n Survival is the most important business objective n Business enterprise which consistently shows a loss is socially undesirable

A. G. Kefalas, The University of Georgia9 Strategies to Accomplish Goal n Growth Strategy : Focus on Revenues increase R n Efficiency Strategy: Focus on Costs decrease C n Organic Strategy: Focus on Revenues increase R Focus on Costs decrease C

A. G. Kefalas, The University of Georgia10 The Basics of a Wealth-Creating System

A. G. Kefalas, The University of Georgia11 Long-Term Goal n Increase the Entreprise’s Value Networth = Total Assets - Total Liabilities = Equity MAX

A. G. Kefalas, The University of Georgia12 A Competitive Simulation Situation n Four teams of managers operate competitive companies, trying market and production strategies, etc. The computer, furnished with a model of the complete industry and market, feeds back information to the managers and also keeps score.

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A. G. Kefalas, The University of Georgia14 The Way to the Market

A. G. Kefalas, The University of Georgia15 Operating Decisions for each Product n Unit Sale Price n The dealer’s margin n Marketing effort expenditure n Research and development expenditure n Production volume n Raw material order

A. G. Kefalas, The University of Georgia16 Operating Decisions for the Firm (1) n Expenditure to purchase competitor information n Labor relations expenditure n Management training and development expenditure n Air pollution abatement expenditure n Water pollution abatement expenditure n Expenditure for new plant and equipment

A. G. Kefalas, The University of Georgia17 Operating Decisions for the Firm (2) n Bank loan request n Bank loan payment in excess of the minimum payment n Bank notes (purchased or redeemed) n Blocks of bonds offered for sale n Par value of bonds bought back n Dividend declaration

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A. G. Kefalas, The University of Georgia19 Strategic Plan n Vision n Mission n Goals or ObjectivesWHAT? n StrategiesHOW? n JustificationWHY?

A. G. Kefalas, The University of Georgia20 Monthly Decisions n Category One: Operations and Productions n Category Two: Research and Training n Category Three: Marketing n Category Four: Investment and Finance n Category Five: Ecology

A. G. Kefalas, The University of Georgia21 Category One: Operations a) Productive Capacity b) Production Volume c) Controlling Plant Capacity d) Expenditure for new Plant Equipment e) Finished Goods f) Raw Materials g) Raw Materials Order

A. G. Kefalas, The University of Georgia22 Category Two: Research and Training a) Labor Relations b) Labor Relations Expenditure c) Product Research and Development (R&D) d) R&D Expenditure e) Managerial Efficiency f) Expenditures for Management Training and Development

A. G. Kefalas, The University of Georgia23 Category Three: Marketing (1) a) Determination of Market Demand b) PM = f(Price, Dealer Margin, R&D, Advertisement, Economic Index) c) Industry-Price d) Firm-Price of Product

A. G. Kefalas, The University of Georgia24 Category Three: Marketing (2) e) Dealer’s Margin f) Dealer’s Margin for E and Marketing Expenditure for Q g) Marketing Effort h) Marketing Expenditure for Q and E

A. G. Kefalas, The University of Georgia25 Acquiring Competitor Information a) Information in Participant’s Summary: n Price of each Product n Dividend declaration n Stock price n Earnings per share n Air and water pollution fines n Days shutdown for excessive pollution n Duration of any labor strike b) Expenditure for Acquiring Competitor Information

A. G. Kefalas, The University of Georgia26 Category Four: Investment and Finance (1) a) Liabilities b) Bank Loans and Bank Notes c) Bank Loan Requested and Excess Loan Payment d) Bank Notes Purchased

A. G. Kefalas, The University of Georgia27 Category Four: Investment and Finance (2) e) Bonds f) Expenditure for new Plant and Equipment g) Blocks of Bonds Offered for Sale and Par Value of Bonds Repurchased [One Block = 250 Bonds] h) Dividend Declaration

A. G. Kefalas, The University of Georgia28 Category Five: Ecology a) Pollution b) Air Pollution c) Expenditure for Air Pollution Abatement d) Water Pollution e) Expenditure for Water Pollution Abatement

A. G. Kefalas, The University of Georgia29 Return on Investment

A. G. Kefalas, The University of Georgia30 Financial Ratios

A. G. Kefalas, The University of Georgia31 Asset Productivity