Computer Manufacturing Briefing 2014

© 2014 Tycoon Systems Inc

Business Simulation Game

Computer Manufacturing


The Business Simulation Game

• Advanced online business simulation -

operating in “Real-Time” on the web

• Lasts for 2 - 3 simulated years

= 8 or 12 business quarters

• Objectives

Start and manage a new corporation

: Invest in a number of computer-based industries

: Compete with all other teams to

- maximize your firm’s value

- maximize your share price


Industry Structure - Personal Computers

• Vertical Supply Chain Effects ….

• Downstream Costs depend on Upstream competition

Components ManufacturersMotherboards, Cases, Keyboards, Power Supplies,

Memory, Operating Systems …

Systems ManufacturersDesktops, Laptops, Netbooks, Workstations, Servers

Computer RetailersComputer Stores, B2B Distributors, E-Retailers

X No cost synergy !

X No cost synergy !

© 2014 Tycoon Systems Inc 4

Investment Options availableWhere will you compete ?

USA ? Europe ? Asia Pacific ?

Components

Systems

Retail


Strategic PositioningHow will you compete ?


Strategic PositioningA Sustainable Strategy


Strategic PositioningStrategic Positioning Decisions in the simulation

• Balance of Service, Quality, Innovation, Personnel policies, Warranties

• Relative to your price level and other offerings in the market

What are you trying to offer your customers ?

High quality, innovative products at good prices ?

Or lower quality, but still adequate product at lower prices ?

Increasing spending increases costs, but also impacts demand


Product Life Cycles Effect on demand, pricing and profitability

• Introduction – lower profitability, lower volumes

• Growth – profits improve, invest in extra capacity, grow market share

• Maturity – maintain profits, adjust pricing, “harvest”

• Decline – Lower profits and prices, “relaunch”, or liquidate


Economies of Scale Effect on market share, pricing and profitability

• Higher market share builds price leadership

• Building capacity builds market share, reduces average costs


Supply Levels and Market CrowdingEffect on pricing and profitability

• As firms build capacity, total market supply increases

• If supply approaches 100%, average market pricing reduces

• Watch for supply increases – invest in unsaturated markets first


Accounting basicsThe Income Statement – Activity

Revenue

Cost of Good Sold

Gross Profit

Sales General & Admin Costs

Operating profit

Interest

Taxes

Net Profit

less

=

less

=

less

less

=

100

65

35

15

20

5

6

9

What happens if you raise prices ?

What happens if you increase advertising ?


LIABILITIES (Things You Owe)

Short Term Loans

Payables

Total Current Liabilities

Long Term Loans

Shareholder Equity

LIABILITIES + EQUITY

Accounting basicsThe Balance Sheet – the balances, simplified

ASSETS (Things You Own)

Cash

Receivables

Inventory

Total Current Assets

Total Fixed Assets

(equipment)

TOTAL ASSETS

10

25

35

25

40

100

AGAIN - What happens if you raise prices ?

What happens if you increase advertising ?

5

30

25

60

40

100


Investment ProcessSupply Levels, Product Maturity and Competitor Activity

A. Check Supply Level :

Is the market saturating ?

B. Check Product Maturity :

Can higher prices be supported ?

C. Check Competitor presence :

What pricing pressure might exist ?


Invest !Invest in a variety of

industrial markets.

Investigate options and

choose

$60M equity capital plus

debt to invest = $132M

Think “leverage” ! How

much debt can you take ?

How much capital is

available to you ?

Hint: Larger companies

tend to dominate the

markets and control pricingProducts available to you may differ from this illustration


Manage !Find data at various levels

within system

Check the product

detail information -

Price Level

Price Adjustment

Market Share

Product Maturity

Supply Level

Number of competitors

Inventory levels

etc


Compete !Track competition

using all available

information screens

Data is either updated

manually or according

to a timed schedule –

eg

7 minutes = 1 quarter

of simulated trading.

Every quarter you

may alter your

strategic positioning

(Service, Quality,

R&D, HR, Warranties)


Check your position !Where are you in the

competitive world ?

Check your position in the

“Real Time Scores”

Wide range of

Competitive

information available

eg,

Check Contribution

Margin against competition.

What do you do about this ?

You have a limited time

between each screen refresh if

running in automatic mode


Extra note : Takeover OpportunitiesAfter Q4 :

You have the opportunity to take over a Virtual Competitor

You should only attempt this if :

a. You have enough budget

b. It makes strategic sense for your company

You may be better off growing “organically” – or maybe acquisition works …


General Terms and Conditions for use of simulations owned by Tycoon Systems Inc.• Tycoon Systems will allow use of its online simulations (“TS Service”) to users under the following general terms and conditions.

• TS Services include, but are not limited to, access for selected individuals to Tycoon’s business simulation systems, business games and web-based software, for use in executive education programs and on-line business competitions, on payment of access fees as specified in an agreed Scope of Services.

• These General Terms and Conditions will form an integral part of any agreement to supply such services.

• Where a supply of TS Services involves access to Tycoon Systems’ webservers and websites then, the terms and conditions as specified on the websites are deemed to have been read and understood and agreed prior to using such TS Services. A current example is available for inspection at http://www.industrymasters.com/termsofuse.html

• Tycoon develops online, webserver based simulation games, which reside on their own secure webservers, and are under their control at all times. It is not possible to install these games on any other servers – for example, on clients’ own web servers. Clients may access our simulations and games via standard, widely-used web browsers such as Internet Explorer, Firefox etc from anywhere in the world by using a standard URL which we will supply.

• Intellectual-Property Ownership and Use: No proprietary software is required to be physically installed on clients’ systems, and no ownership of software is transferred to clients. All Intellectual Property Rights of any business simulation, except Pre-existing Materials from clients, shall remain exclusively with Tycoon.

• Any Tycoon Systems simulation that is based on real-world events is only representational and not an accurate depiction of real-world events. Users should under no circumstances seek to imitate any game experience in real life.

• Privacy Considerations: In order to take advantage of the full capabilities of the simulation and to receive e-mailed information and announcements, Tycoon may require information about the users. Any communications made through the simulation may be monitored by Tycoon's personnel, with the consent of the client. We respect the users privacy and we will, of course, endeavour to take care of any information supplied to us. We reserve the right to use "cookies," which are small computer files we would thereby transfer to your computer's hard drive to allow us to monitor website usage. The users have the ability to accept or decline cookies, but if users choose to decline cookies, performance of the simulation might be adversely affected.

• No Warranty: The simulation, including any content or information contained within it and any linked website, is provided "as is" and "as available." TO THE FULLEST EXTENT PERMITTED BY LAW, Tycoon EXPRESSLY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

• Limitation of Liability: Tycoon shall have no liability for the deletion of any communications or information collected, maintained or transmitted by the simulation or the failure to store any information, including personalized settings.

• Jurisdiction and Choice of Law: All claims regarding the simulation shall be governed according to the laws of the State of Delaware, United States of America, without regard to its conflicts of law principles. Any claim or action arising under this agreement shall be subject to the exclusive jurisdiction of courts in Delaware, United States of America.

• Complete Agreement: This agreement constitutes the entire agreement between the User and Tycoon with respect of use of simulations owned by Tycoon Systems Inc.. If any provision of this agreement is found to be unenforceable, the other provisions shall still remain in full force and effect.

http://www.industrymasters.com/termsofuse.html

Computer Manufacturing Briefing 2014

Education

Transcript of Computer Manufacturing Briefing 2014