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Game/simulation DescriptionParticipants work in (four to six) teams to produce a written strategy (optional) and a series of specific decisions as the simulation progresses. In this setting, participants must decide: · Which of three products they will manufacture. · In which of three markets they will sell their products. · Number of credit sales days they will offer their customers. · Budgets for advertising and sales representatives. · Investments in R&D, capacity, and efficiency upgrades. · Short and long-term borrowing strategies. · Management of dividends and stock sales/repurchases. · How changing macroeconomic conditions will affect their decisions. The simulation is sophisticated enough that participants cannot easily “game” it by backing out formulas, yet simple enough that they can begin with minimal preparation. The CMS is complex enough to intrigue graduate business students and executives, yet simple enough to allow undergraduates to play and learn from it as well. The participants do not play against the computer, but rather compete against one another, so there is no “correct strategy” for the simulation—any number of well-executed strategies can win. Learning from the Simulation Strategy · The CMS demands of the participants, a total company strategy and implementation. While other simulations may go into a particular aspect of strategy (marketing, operations) in greater detail, the CMS involves integrating all the pieces of a business strategy. As the game progresses, participants must adapt their strategies to the results they generate. · Written strategy reports, usually at the second and final rounds, give instructors an opportunity to examine strategies and rationales, and, if applicable, to associate the reports with class material. · The CMS can also be used contiguously with class materials, allowing the results of each round to generate discussions on debt financing, pricing, forecasting, and so on. Team Building · For instructors who want to focus on team building and leadership issues there are many opportunities with the CMS. o Teams must decide whether they will operate by consensus, democracy, rotating leadership, etc. o Communication and negotiation skills are critical to the simulation, especially when the company’s strategy is not succeeding. o In a semester-long course, the CMS becomes an opportunity for the team to experience some of the phases of team building, and at the instructor’s behest, to participate in related readings and/or exercises. o As with some executive seminars, participants can relate personal assessment tools (Myers-Briggs, FIRO-B, et al) to the workings of the team. Basic Skills · For beginning students, the CMS is an excepetional tool for understanding many of the basic principles of business: accounting, debt financing, pricing, operations, capital expansion, and forecasting. · For advanced students, it is an opportunity to test their understanding in a very thorough and well-modeled simulation. · The presentation to the BOD at the end of the simulation is more than another opportunity for students to practice presentation skills. They must also be accountable to the Board for the results they have generated, and their plans for the future. These presentations can be interesting (and sometimes amusing) for the instructor and students alike. Participation and Results At the start, participants attend a one-hour PowerPoint presentation covering procedures and directions for the CMS. Each team receives a File containing the decision spreadsheet and files for submitting their decisions. Additionally each team receives a written booklet explaining the rules, history of their “company,” the industry, etc. (For situations in which participants do not have their own computers, the simulation can be easily run from disks.) Following a practice round, participants attend a second PowerPoint presentation in which further instructions, troubleshooting etc. are discussed and resolved. Each period (this varies by situation: class; seminar; executive training, etc.), the team electronically submits a decision file via e-mail. Soon after, the participants receive in return: · A tab-delimited text file, showing the results for their team and other teams in their industry including: o Sales and market share for each product, in each market, by team. o Changes in capacity and total average R&D spending o Excess demand (if any) for each product in each market o Basic Income Statement and Balance Sheet information for all teams o Quality and Brand Awareness scores for all teams o Credit rating, stock price, EPS, dividend, book value, and ROE for each team. o Capital market statistics for the next period. · An industry newsletter highlighting the events of the current period. · Full financial statements for their individual team, including: o A review of their decisions from the last period o Balance Sheet, Income Statement, Cash Flow Statement o Lost sales due to “stock outs” (how much they could have sold given more capacity) o Manufacturing and inventory figures. ·
A separate “prn” file which updates the Excel decision sheet
for the next round. ·
A separate excel spreadsheet for game analysis. Participants may submit a brief, written strategy report to the instructor following the second decision, or at the end. Participants may present a final report to the “Board of Directors” (instructor and/or other leaders), based on their initial strategy and its rationale, changes in policy over the course of the game, an assessment of the team’s current position, and lessons learned from the simulation. Winning/Grading/Evaluation Team performance is measured on the basis of two “internal rates of return.” IRR1 is that earned on the cash flows accruing to a stockholder who purchased the stock on the day the team began managing the firm, and sold it at the end of the last (7th) year, including any interim dividends paid. IRR2 (“most improved”), is measured based on the internal rate of return earned on the cash flows accruing to a stockholder who purchased the stock after the results of the third decision are known, and sold it at the end of the last (7th) year, including any interim dividends paid. Variations and Additions The Management Game is currently available in several formats. · Independent, team-based class: As described above, this includes the two introductory classes, a brief strategy paper submitted to the instructor, and a final presentation to the “Board of Directors” but is otherwise conducted without classes or formal meeting times with the participants arranging their own meeting schedules. The instructor is available to the participants during the course of the simulation by e-mail. Usually a 1-1.5 credit course. (This version can work as a kind of distance learning module) · In conjunction with other courses: The CMS serves as an ongoing class exercise that can be used in conjunction with other courses in Entrepreneurship, Business Strategy, Organizational Behavior, General Management, etc. The instructor works with faculty to incorporate the CMS into new or existing courses. Course credit varies. ·
Intensive Executive Seminar:
The CMS can be easily compressed into a brief period for executive
trainings, not-for-profit boards, or business seminars. It is not necessary to
complete seven rounds of the simulation—strategy results are quite clear after
four or five decision sets. In
combination with personal assessment tools and/or executive coaching, the CMS
can be a very powerful teaching tool in this setting. · A separate Investment Game Component to the management game is also available. The Investment Game allows participants to create investment portfolios in companies outside their specific industry—this of course requires enough participants in the CMS to have several industries and would not be appropriate for the compressed time frame of an executive training. Please contact Mr. Tomlinson for more information about this component. Cost: The cost of the simulation depends on the number of participants, which variation of the CMS is being used, and status of computer facilities, etc. Please contact Mr. Tomlinson for complete information.
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