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GLO-BUS Simulation Introduction. Mr Jeff Stambaugh Dillard College of Business/Rm 257A jeff.stambaugh@mwsu.edu. The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill. Built by Stambaugh/2009. Introduction to Glo-Bus Simulation.
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GLO-BUS Simulation Introduction Mr Jeff Stambaugh Dillard College of Business/Rm 257A jeff.stambaugh@mwsu.edu The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Introduction to Glo-Bus Simulation • You have been selected to take over management of a digital camera manufacturer with its factory in Taiwan and worldwide sales • Major part of your effort / grade in this course • This will be fun! The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Objectives • Employ strategic concepts of course (theory into practice) • Practice technical skills acquired in previous courses • Hands-on implementation • Attention to detail (or details) • Performance improvement / measurement The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Big Picture • Profitable business with sales in North America, Latin America, Asia-Pacific, and Europe-Africa • Two major camera lines (entry level and multi-featured) and your company has 3 models of each • Your company has 7 major competitors (the other people in this room) • Simulation is real play—actions of your competitors DO make a huge difference in your performance The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Starting Position • Profitable, well-regarded company with sales in all 4 regions • Sold 800,000 entry-level and 200,000 multi-featured cameras last year • Prior year revenues: $202M • Net earnings: $20M • EPS: $2.00 • Credit Rating: B+ • P/Q: 2.5 • $100M line of credit ($25M currently in use) The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Your Objective • Manage / grow your firm to maximize several measures over 7 rounds • First, build a product customers will buy at a price that makes money for you • Then, refine the market offering to maximize profits • While always being smart about corporate management (dividends, loans, stock purchase / buyback plans) • Grades will mirror actual performance The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Investor Expectations / Scoring Standards • Grow EPS 8% annually first 4 years, then 4% • ROE of 15% or better (17% last year) • B+ or higher credit rating (B+ last year) (Not included in scoring) • Stock price gains of 8% annually first 4 years, then 4% (Opening stock price is 30) (40% of score) • Image rating of 70 or higher (70 last year) • Two equally-weighted standards: how well did you meet investor expectations and how do you compare to your competitors? The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Strategy • There is no “correct” strategy to succeed • Your performance depends on: • A well-crafted strategy • The expertise of you execution • Actions of your competitors (region by region) • Cost-leadership, differentiation, combo, and focus strategies ALL viable The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Basic Simulation Principles • Everything is done via the web (www.glo-bus.com) • You submit decisions for each round • Each round represents 1 year (starts in Year 6) • Computer “competes” your decisions against other corporations • You receive detailed results for each round • Seven total rounds in this class (plus one scheduled practice round) The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Mechanics • Your team inputs decisions from your corporate lobby page • EXCEL-based … doesn’t run on Mac version • Last set of saved decisions is what computer will run • Run occurs automatically at deadline • Results are available within an hour of deadline • Getting started … register at www.glo-bus.com • Have your company registration code and credit card handy ($35) The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
What Kinds of Decisions Are Involved? • Product design / features (10 decisions) • Pricing and marketing (15 decisions) • Manufacturing ops and HR practices (15 decisions) • Corporate finance (4 decisions) • CSR (6 decisions—influences image rating) • Special order bids (100,000 EL cameras—price only) • Lots of on-screen help to help with the decisions • NO quarterly adjustments • Key Notes: • Your factory is all JIT • You build camera’s one quarter before they’re sold • Production percentage by quarter: 20-20-40-20 The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Where To Begin? • Learn the simulation • Read the student guide • Practice run 19 Feb (computer lab 335) • On-line quiz must be taken before class on Feb 26th • Form a vision and strategy for your company • Your BHAG and goals • What will be your basic strategy (Chap 5 stuff) The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Where To Begin (2) ? • Recognize Key Tasks • Admin: keep copies of everything • Competitor Intel / Strategy: quarterly snapshots, study for trends, strategic adjustments • Product design: features, R&D, # of models • Marketing: retailer mgt, tech support, advertising, warranties, pricing, promotions • Production: how many to produce, worker compensation, training, hiring / firing (# of PATs), # of workstations, overtime, outsourcing • Financial: performance targets, loans, dividends, stock sales / buybacks The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Big Picture Words of Wisdom • Many successful paths (if done right) • Have a coherent strategy and competitive approach • You can’t be the premium AND lowest cost product • Know what you are changing (this is not an exercise in EXCEL … it’s strategy)—you may just strive for industry average (+ / -) in some areas • This is a competition … know what your competitors are doing and react accordingly! • Keep trying … turn-arounds happen frequently The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Biggest Words of Wisdom • If you make money, the stats will take care of themselves • Build cheapest camera possible for your target P/Q • Strive for low labor costs / camera • Be careful of intentionally cutting number of retailers • Know how to measure your strategy’s effectiveness and be ready to adapt • Ignorance of competitors = defeat (probably)! The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
Biggest Words of Wisdom • Learn from your performance • Stop what isn’t working … do more of what is! • Don’t change too many things at once • Making money is the main course (sales / costs) -- corporate decisions are the dessert! • You will feel uncomfortable and unprepared … just like real life! The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009
How I Will Help You Learn • You can ask me questions at any time … more than anything I will try to focus your thinking • Practice round and out-brief (19 & 24 Feb) • You can ask me questions at any time … more than anything I will try to focus your thinking • Interim Board of Directors meeting • Informal • You can ask me questions at any time • Board of Directors presentation at end of semester • Demonstrate that you learned … hard to do if you don’t know how you “learned” The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity... Churchill Built by Stambaugh/2009