Distribution Challenge an exploration of business This computer simulation gives you and the others: an opportunity to manage a “real” business for several.

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Presentation transcript:

Distribution Challenge an exploration of business This computer simulation gives you and the others: an opportunity to manage a “real” business for several simulated quarters making decisions as part of a small team covering: –Marketing –Operations –Finance your objective, while competing against the other teams, is to make your business a success

The Simulation The simulation consists of three stages: Preparation –Familiarisation –Organisation –Consider objectives –Consider strategies Decision-making –Submit Decisions –Simulate –Analyse Results –Replan Review –Discuss & Compare Results

The Situation a subsidiary currently operating sells three product ranges –Domestic –Fashion –Contract has transportation prices and costs in a universal currency (the Account Unit – AU) You will run this business for several periods, each of which represents one trading quarter

Marketing Sales are influenced by –price (mark-up) –selling effort –transportation availability –inventory availability –the actions of the other teams You decide mark-up for each product range separately. Selling Effort and Transportation affect product ranges.

Cost Data Transportation – 500 AUs per unit/quarter Other Expenses – 7000 AUs per quarter Selling Effort – decided by you RangeDiscount LevelDiscount Staples40,000 AUs5% Fashion15,000 AUs20% Big Ticket20,000 AUs10% Discounts

Other Data Prompt Payment Discount - up to 5% Interest on Overdrafts – 20%/year Interest earned on Cash – 12%/year Mandatory Payment to Parent –75% of Operational Income – plus 4% of Total Equity

Decisions For each range separately Percent Mark-up Gross Purchases And in general Selling Effort Transportation Creditor Days Use the decision form supplied and complete it carefully and legibly and hand to the simulation controller at the specified times.

Results Results are returned to you in three stages: Preliminary Results –demand at cost & ending inventory –Sales, operating profit, cash and overdraft Full Results –Purchases & sales –Profit & Loss –Balance Sheet –Key Measures Business Research –Market News (prices & market shares) –Company Reports –Company News

Observations it takes time to understand but the business still has to be run therefore your decisions will not be perfect time will be a constraint by the end you should (just) be in charge of your business your business skills will be challenged remember the purpose is to learn! (rather than just to win!) so, take time to reflect & review and have fun!