Micromatic Simulation Team and Solo Versions

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Micromatic Simulation Team and Solo Versions
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Introduction

• Simulate the workings of a small manufacturing
  business
• Each team (? in total) will play against each
  other
• Computer just process each companies individual
  decisions
• Administrator (me) acts as owner, banker and
  industry regulator, union negotiator, etc.

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Goals

• Understand the importance of a business and
  strategic plan to guide business decisions
• Understand the relationship between the three
  main financial statements
• Understand the relationship between marketing,
  operations and finance
• Understand the operational issues of production,
  inventory, plant and labor force

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How to approach the simulation

• Management is a balance of art (intuition) and
  science (analysis of facts) combined with group
  dynamics
• To Succeed you should
• Manage your time efficiently (stay focused)
• Manage your business do not guess at your
  decisions

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To Succeed you should

• Learn from your failures
• Decision rules are the same for every round
• Must learn to capitalize of success and recover
  from mistakes
• Do not worry if a little confused at start
• you will quickly move up the learning curve
• Simulation requires applying your knowledge not
  just listening as in lectures (fundamental shift)

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Four Functions of Management
Planning
Controlling
Organizing
Leading
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The Manager as a Planner

• Must develop the Vision
• Mission Statement Statement of Goals
  Strategies
• Who are the customers, what are their needs and
  how will gain competitive advantage
• What are your corporate values

Low price / High volume
Premium price / Low volume
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The Manager as a Planner

• In the Simulation you are responsible for the
  planning in five main areas
• Marketing
• Production
• Finance
• Sales Forecasting
• Management Dilemmas

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Marketing Production Finance Sales -
Dilemmas

• Marketing Decisions
• Pricing
• Price sensitive marketplace unless enticed by
  stronger marketing efforts (oligopoly)
• Promotion
• Local newspaper advertising, trade publications,
  ad message, salesreps, WWW promotion, product
  features and quality
• Market Research
• Can buy Market Research Information (9 types)
• Price, local newspaper advertising, trade
  publications, quality, WWW, salespersons,
  product features, units sold, all by Company,
  Future Sales Potential

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Marketing Production Finance Sales -
Dilemmas

• Production Decisions
• Ordering Raw Material (order carrying cost)
• Product Research and Development
• of Units to Produce
• Must have raw material, plant capacity of
  workers
• of production workers to hire, fire or layoff
• Begin with 54 workers can add overtime
• Amount of production capacity to buy or sell
• to invest in Training
• Improve productivity

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Marketing Production Finance Sales -
Dilemmas

• Finance Decisions
• Short Term Loans (Line of Credit)
• Finance current operations
• Long term Bonds (mortgages)
• Finance expansion of plant capacity
• Short Term investment deposits or withdrawals
• Can invest excess cash into stable conservative
  short term securities

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Marketing Production Finance Sales -
Dilemmas

• Sales Forecast Decisions
• Based your quarterly sales forecast on your
  current and future mix of pricing, advertising
  investment in product quality
• Use this forecast to set production parameters
  but no guarantee you will reach these forecasts
• If you misjudge your competitor's actions you
  will not make the forecast
• Added complication is you do not know what the
  economy will do.

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Marketing Production Finance Sales -
Dilemmas

• Management Dilemmas
• Periodically will introduce various management
  dilemmas
• Range from employee theft to union relations to
  substance abuse
• There is no right answer in these dilemmas
• Responses to the dilemmas will result in
  different consequences
• Consequences can effect worker productivity,
  sales, cost of raw materials or interest rates

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The Manager as an Organizer

• Must develop the Organizational Hierarchy
• Organizational Chart
• List of duties responsibilities for each
  position
• Staff the position
• Remember the dual role (student -gt friendship)
  and (manager -gt work)
• Teams that have an established chain of command
  do better than the herd
• Herds tend to take narrow view and focus only on
  a single issue
• Organized groups (specialized functions) tend to
  keep broader focus and are much more efficient

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The Manager as a Leader

• Must decide how to influence and motivate members
• Goal Setting
• Balance of individuals goal and organizational
  goal
• Will you have management hierarchy or team
  approach?
• How will you manage your company?
• How will you balance the workload?
• Your peers will evaluate your leadership ability
  in both a public and confidential manner
• How will you motivate under performing members?

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The Manager as a Controller

• Must deal with issues of control
• Must establish a reporting system
• Must develop performance standards
• Must monitor key performance parameters and take
  corrective steps if necessary
• Must know the breakeven points for the
  manufactured product

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The Business Environment

• All companies start from identical point
• All companies manufacture identical products
• Manufacturing process consists of forming raw
  material (components) into finished consumer
  product
• Produce a commodity gt No customer or brand
  loyalty gt you must earn each quarters sales

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Company publicly held

• Company is in start-up position only one
  quarters (Quarter 0) info is available
• John Emily Anderscott developed business but as
  limited partners not allowed to perform any
  management duties
• You will deliver reports to the board of
  directors
• Initially no difference exists between you and
  your competitors products
• This will change as you modify promotion,
  pricing, and product improvements

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The Simulation Environment

• Each decision period is 3 months (1 quarter)
• Teams make approximately 50 - 100 decisions per
  Qtr
• Three stages
• Forecasting Stage
• Test what-if and modify decisions until have
  best case
• Processing Stage
• Administrator accesses decisions of ALL companies
  to determine market share allocations and
  individual company profitability
• Results Stage
• Teams analyze actual versus forecasted
  performance. Use this analysis to forecast next
  quarter.

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To Do

• Read in detail the summary and study the
  decisions and reports and get familiar with the
  software.
• Decide on Company name, organizational structure,
  individual job titles and responsibilities.
• Begin to develop a mission statement strategy,
  areas of responsibility, and duties

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My Role

• I will be your
• Banker
• Board of Directors
• Regulatory Advisor
• Union President
• And other roles as necessary

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As Administrator I Can Control

• Economic variables (industry demand, costs, and
  weightings of performance variables)
• Introduction of management dilemmas
• The amount and availability of loans and
  mortgages
• Frequency and Amount of fines (lost passwords,
  late submissions, failure to get proper prior
  approvals, etc.)
• Introduce External Substitute products. If
  everybody takes a low promotion strategy I can
  introduce external substitutes which creates a
  loss of demand for ALL companies.

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Marking Scheme

• Variety of methods to assign marks
• Team performance
• The Strategic Plan (See Assignment 1)
• Industry Analysis paper (See Assignment 2)
• Presentation of Company strategy performance
  (last week of classes)
• Team assignments (log book, periodic reports,
  etc.)
• Joint Peer evaluation and division of points