NextOne Manual 200

Manual

Version: 2.00 Copyright 2012 Simenco. All rights reserved. www.simenco.com

Manual nextOne

Table of Contents1 Your Challenge 1.1 1.2 1.3 2 3 Introduction ..................................................................................... 3 How will performance be assessed? ...................................................... 4 How to manage our company? ............................................................. 5 6

Our Company 2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.4.5

History ............................................................................................ 6 Product ............................................................................................ 6 Market ............................................................................................. 6 Organization ..................................................................................... 7 Headquarters Marketing & Sales Research & Development Production Division Human Resources 7 7 8 8 9 10

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Playing the simulation 3.1 3.2 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.3

Log in ............................................................................................ 10 Navigating nextOne ......................................................................... 10 Taskbar Navigating Navigating Navigating Navigating Navigating the the the the the home screen Office screen Inbox screen Ranking screen Info screen 10 11 12 14 14 14

Go to another period ........................................................................ 15 16

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Reference Guide 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.1.8 4.2

Decisions ....................................................................................... 16 Marketing & Sales Research & Development Purchasing Production Logistics Human Resources Finance Market Research 16 17 17 18 18 18 19 19

Results .......................................................................................... 20 Benchmark Indicator Income Statement Balance Sheet Cash Flow Account Financial Information Personnel Information Material Information Finished Products Information Machine Capacity Information Marketing Information Distribution Center Information 20 21 21 22 22 24 24 25 25 26 26

4.2.1 4.2.2 4.2.3 4.2.4 4.2.5 4.2.6 4.2.7 4.2.8 4.2.9 4.2.10 4.2.11

Copyri ght 2012 Simenco. All ri ghts reserved.

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Manual nextOne

11.1

Your ChallengeIntroductionI would like to congratulate you with your appointment as a member of the management team at nextOne. As you may know, nextOnes performance in the last period did not meet expectations. And our recently issued ambition statement to become market leader coincided with the dismissal of the (now previous) management team. To contribute to our objective your team will face some tough and challenging, but possibly rewarding, decisions in the years to come. We have confidence in your knowledge and skills to be effective in a demanding environment. Some colleagues have made a management summary with all the vital information regarding nextOnes activities, so you can start immediately. Good luck,

Douglas D. Davis Chairman of the Board PS. I hope we will have some time in the near future to get to know each other a little bit better. But let me be clear: the tone of that meeting depends completely on your performance.


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1.2

How will performance be assessed?You will have to manage nextOne as a profit center. Every member has a specific role in the management team and depending on your role you will be assessed by the following factors: Role Responsible for Weight absolute 100% 100% 25% 20% 5% 25% 15% 10% 25% 10% 15% 25% 15% 10%

CEO (Chief Executive Officer) = Overall performance

CFO (Chief Financial Officer) Net profit of the last 2 periods Solvency

CCO (Chief Commercial Officer) Overall market share Customer satisfaction

COO (Chief Operations Officer) Production & Stock costs Availability of products

CHRO (Chief Human Resource Officer) Personnel morale Profit per employee

All these factors are combined in the total (CEO) score, where every factor is weighted by the stakeholders according to its importance (i.e. net profit has a weight of 20%, personnel morale 15%). Each role also gets a score (a weighted sum of the underlying factors). So if you are not the best performing team, you can still be the best performing CHRO. How do we calculate the Benchmark Indicator? Benchmarking is used to compare performance of competing companies. The benchmark indicator reflects the value your shareholders put on your company. These shareholders will take a close look at all disciplines: finance, operations, marketing and human resources. For every discipline, your performance will be rated from 0 - 10 compared to the other companies in the industry (10 being thumbs up!). The better your results are, compared to the competitors, the higher the benchmark grade. The calculation is made up of two formulas: 1) the average of the results per area, and 2) the standard deviation of the results, where we assume that the results are distributed normally. The best performer on one of the benchmark variables will get the highest grade on that variable. And the bigger the standard deviation of the results, the bigger the differences between the highest score and the lowest score. Although this calculation is not an exact zero sum-game, the concept is comparable. When one team will gain points, another team must lose points.


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1.3

How to manage our company?The following routine will help you to make translate your strategy into conscious decisions. Step 1 Estimate Sales You can estimate market sales for the coming period, by using the information of the archives and the market research (if applied for). But dont forget that your marketing decisions will also have an influence on market demand. Step 2 Ship Orders Based on the products in stock for each market, which can be found in the results screen, you can calculate the number of products necessary to ship to every market to meet the market demand you estimated in step 1. Step 3 Produce Products The results area contains a record of the factory's finished product stock level left over from last period. Together with the shipping orders already decided in step 2, these stock levels determine the minimum production level needed. Step 4 - Purchase Materials The production decision (step 3) will demand materials to be present. You can find the necessary materials and the ratio needed for every product in the Reference Guide. The total quantity of materials needed can now be calculated when you include an estimation of the percentage of waste. The Taipei results state the materials in stock. Based on this stock and the calculated materials requirement, the purchase quantity of every material can be calculated. All other decision areas are linked to this routine. Marketing & Sales and R&D decisions will influence market demand, and thus sales. Production capacity may be limited by human resource capacity. Profit or loss will determine financial decisions. Competition can influence personnel morale. Incidents may obstruct purchase orders etc.


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22.1

Our CompanyHistorynextOne is an independent business group of Pronto Telecom. Pronto was founded a great number of years ago by Henry Hobs. Mister Hobs had the unique talent to combine his extensive knowledge of communication technology with a natural feel for commerce. Again and again he has been able to introduce products that became leaders in their markets. We started out manufacturing telephones and faxes, and they have made a big contribution to Prontos growth and success. Because both are now low-tech products, the competition became very fierce, margins declined and we faced financial problems. During a far-reaching reorganization it was decided to start-up nextOne and focus on a new and innovative product, namely PDAs / smartphones. We have some years of experience is this market, but we already see that competition is making similar products. It is now your responsibility of defining our policy for the coming years and youll be expected to carve out a healthy position in a fiercely competitive environment.

2.2

ProductWe make personal digital assistants / smartphones. These are small handheld computers that mainly focus on communication tasks. Applications as mobile telephony, e-mail and Internet are combined with an organizer, games and music. People not only need the help of computers at home or office, but also need to manage and do their work outdoor. That is why notebook computers, handheld PCs, PDAs and smartphones become more popular.

2.3

MarketSmartphones / PDAs are on the market for a number of years already, but in the upcoming years we will have to compete with several other firms. Analysts believe that the PDA / smartphone market will continue to grow over the next years and that competition will become fiercer. They also anticipate that the market could be quite attractive if the right product is made available at the right price. But there are still a lot of uncertainties. Will competition lead to a price war between the major players? Could new technologies boost market growth without decreasing margins? And what about differences between regions? The market is divided into separate geographical regions, in which consumers have similar needs and purchasing behavior:

Region North America Europe Oceania Latin America Asia Africa

Population 512,000,000 729,000,000 32,000,000 371,000,000 3,913,000,000 891,000,000

Average income per household US$ 35,138 US$ 18,097 US$ 21,348 US$ 7,333 US$ 4,684 US$ 1,779


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2.4

OrganizationnextOne Company has become a true multinational, with branches all over the world, different marketing strategies for different markets, different logistical challenges, different human resource management in different continents etc. Our company is overseen by Headquarters in San Francisco, and is divided into Marketing & Sales, Research & Development and Production. Purchasing, production and shipping is all done from Taipei. Marketing & Sales activities are coordinated per market, while R&D is done by teams in Seattle, Amsterdam and New Delhi.

2.4.1

Headquarters Company headquarters (where you will reside) takes care of corporate strategy, management and support, administration and finance. Especially strategy will need your attention: are we going to enter the Latin American market, are we going to sponsor international events? At all levels and divisions there is management and support staff. They all are the responsibility of HQ, as well as finance (loans and debtor periods) and market research. You can buy the following market research: Market Research; shows the current total market size in units and a forecast for the growth of the market. Besides this, prices, warranty periods, marketing budgets and market shares (based on units sold) are shown when purchased. R&D Research; shows the R&D budgets and the total number of R&D FTE for all competitors in the industry. Company Research; shows the Net Profit (in millions US$) for all competitors in the industry. Personnel Research; shows the total number of FTE in each company in the industry, the average salaries and benefit budgets per location plus the secondary benefit preferences per office. Customer Research; shows the popularity of marketing messages and media usage per sales market.

2.4.2

Marketing & Sales Marketing activities are coordinated per market, but they are not identical to the regions. Three Marketing divisions cover five geographical regions.

Marketing Division San Francisco Amsterdam

Geographical Region North America (NA) Europe, Middle East and Africa (EMEA) Asia-Oceania

Hong Kong

In order to strengthen your market performance you should decide on the following decisions per market: price setting warranty level in months marketing campaign


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The delicate balance of product, price and service 'features' determines the demand for the product in every market. We are not active on the Latin American market. You, as management, can decide to do so. If you want to enter this market you have to select YES in the box behind the text Enter Latin American Market?. You can take this decision in San Francisco.

When entering this market you have the option to organize an introduction event. In the period after you decide to enter the market a new decision screen is available (Sao Paulo). In this screen you have to decide how many personnel you want to hire, what your marketing budget and marketing message is, etc. You also have to determine what your sales price will be in Latin America. The minimum price you can enter is $ 250. 2.4.3 Research & Development Research & Development is a crucial discipline. nextOne will have to be improved during its lifetime, to suit the changing needs of consumers. The R&D department conducts research into the following areas: Packaging & Design: research and design of both the packaging and the body of nextOne. Durability: the materials used for the casing and packaging of nextOne (mainly plastics) and the internal electronics of the system. Operating system: speed, adaptability, platform stability, ease of use and upgrade options. Software: the quality of user applications and compatibility. Hardware.

The R&D management team in Seattle coordinates the workload and divides it among the three research centers, each with its own specialization. All of the centers can work in any area of research, but projects undertaken in their specialization will be more efficient and effective. Team A in Seattle is specialized in the research of new packaging and the durability of materials. Team B in Amsterdam specializes in the development of new hardware and software. Team C in New Delhi is strong in operating system research. 2.4.4 Production Division Purchasing, production and shipping are all done in our Taipei office in Taiwan. For the production of nextOne three different materials are needed: raw materials (mainly plastics) for the casing and packaging, several semi-manufactured components (mainly connectors and conductors) that are combined into a motherboard and a processor, delivered by a supplier. These materials can be bought from different suppliers, each with different prices and quality level. You buy these materials on the market and / or close a contract with a


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supplier. Each choice can have (dis)advantages. Material quality heavily influences the quality of the end product. Supplier Supply International Kwe Kwa Supply IKFD Fangi Mat Nobel Materials Quality and Price Level Average Low High Average High

The production division uses machines to process certain parts of the production routine. The production division can buy these machines for long-term use or lease them short-term. The products are shipped from the production facility to Distribution Centers on every continent. They are then distributed to the clients from these DCs. 2.4.5 Human Resources For every discipline in the company, you need to determine an appropriate FTE level, the average salary level, a training and benefits budget and the distribution of the budget over specific benefits. Bear in mind that satisfied employees will work more conscientiously for the company resulting in better, quicker, and more efficiently running company processes. How you can satisfy employees can be different per region.


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Manual nextOne

33.1

Playing the simulationLog inYour login credentials will be provided by the game facilitators. When logged in you see the next screen:

To enter the simulation you click Go to nextOne. In this screen you can also change your settings and password.

3.23.2.1

Navigating nextOneTaskbar The taskbar is visible in every screen of nextOne. By clicking on one of the buttons on the taskbar you go to the office, inbox, ranking, info or settings screen. To return to the home screen click on the nextOne logo on the left side of the taskbar.

On the right side of the taskbar you can see your team name, your own name, which period is active and how many periods there are in total.


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Manual nextOne

3.2.2

Navigating the home screen

Globe On the home screen you can turn the globe around to view the different locations of nextOne. Just click on the right / left side of the globe to turn right / left and click on the top / bottom of the globe to go up / down. Location information When you click on a location, information about this location is showed in the information box under the globe (on the right). Ranking In the ranking box the overall ranking is showed. From all the teams you play this simulation with you can see the top four. In the column next to that you can see the overall performance of your own team and that of the teams above and below you. Graphs The four graphs on the home screen give you a quick impression (per period) of some key indicators. The indicators shown are: Net Profit, Revenue, Personnel Morale and Availability of Products. Settings In the settings screen you can change the teamname.


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Manual nextOne

3.2.3

Navigating the Office screen

The office screen is divided in two columns. The left column shows the results and in the right column you have to enter your decisions. Results The results column shows the result of nextOne for a certain period. The following results pages are available: Benchmark 1 results page per location Market Research (when selected in the decisions column in the previous period) Financial Information Income Statement Balance Sheet Cash Flow

You can change the results page by selecting the page in the dropdown box on the right. You can change the period by selecting the period in the dropdown box on the left. You can export an overview of all the results by clicking on the Excel button next to the select period box. Once you click, you are asked whether you want to open of save the Excel file with all your results. This Excel button is only available on the Benchmark page.


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Decisions Playing the game is making decisions. In the decisions column the decisions are shown that are taken last period. One period equals one quarter. For all decisions, you have to enter the new value and not the mutation with respect to the previous period.

When for example (see picture above) you want to increase the number of Marketing & Sales Personnel in the coming period from 200 FTE to 225 FTE you enter 225. The effect is that in the next period you will have 225 FTE. So 25 extra FTE are hired. If you had entered 25 you would have fired 175 FTE! Saving your decisions Important: On every decision page you will find a save button. You have to save every time you change one or more decisions (per location). You can save your changes as much as you like. The last save is the one used. Please be sure that if you work on more than one computer you and your team members save the correct decisions. If you change one or more decisions on a certain page and you decide to go to another page without saving, a warning appears. When you do not want to save your changes you click OK. When you do want to save your changes you click CANCEL or ANNULEREN. You will return to the current page and you can still save your decisions. You can make decisions for all the locations of nextOne. You can change locations in the decision column by selecting the correct location in the dropdown box.


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Manual nextOne

3.2.4

Navigating the Inbox screen

Every period you will get e-mails. You can find them in the inbox screen. When you click on the subject text of an email, you can read the email in the underlying box. In the left column of your inbox you can switch periods. So you can always go back and read emails of previous periods. 3.2.5 Navigating the Ranking screen

In the ranking screen you can check your overall / industry / cumulative score (if applicable) ranking. In the left column you can select for which period and function you want to see the ranking of your team (function ranking not visible in period 1). The CEO ranking equals the overall total score of your team. Your functional scores are equal to the functional scores visible on the benchmark page in the office screen. In this ranking screen you can see for example how the other CCOs are doing. 3.2.6 Navigating the Info screen In the Info screen you will find nextOne specific documents (nextOne documents) and if applicable some specific documents (other documents).


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3.3

Go to another periodnextOne is played for several periods. For each period you have a certain amount of time. The deadline for a certain period is given to you in advance. You must see to it that you have saved all your decisions before this deadline. Decisions you save after the deadline are not used. After a deadline the simulation is closed for a moment. The computer needs some time to calculate the effects of all the decisions taken. When you try to open the simulation during calculations you will get a message that the simulation is closed. When the calculations are done the simulation is opened again. If you still see the results of the previous period press F5 to refresh your internet browser or log in again.


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44.14.1.1 Price

Reference GuideDecisionsMarketing & Sales The sales price (in US$) per product. The maximum price change per period is 10%. When you decide to enter the Latin American market you can set your own introduction price (the minimum is $ 250) in the following period. In a next period your maximum price change is + or 10%. The warranty period (in months) for the products sold. Increasing the warranty period has a positive influence on customer satisfaction, but also results in higher warranty costs, especially when you sell a low quality product. A choice can be made between several message and media types. For each message and media you have to decide whether you want no, minimum, average or maximum exposure. Messages: Media TV Ads Newspapers Ads Internet banners Reseller Market Manager Magazines Billboard Sponsored links (search engines) Trendy product Technological most advanced (in the market) Environmental Theme Business oriented Lowest price (in the market)

Warranty Period

Marketing Campaign

Event marketing (global)

A choice can be made between several events. Events: Soccer World Cup billboards Soccer World Cup sponsor Soccer UEFA Champions league billboards Formula 1 team sponsor Formula 1 billboards Golf PGA tour billboards Tour de France shirt sponsor


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4.1.2 R&D Budget

Research & Development In addition to the R&D personnel on the location, the company can allocate budget to support the R&D efforts. The company can decide the focus of the R&D efforts of the location involved. The different R&D areas are: packaging research durability research operating systems research software research hardware research

R&D Focus

4.1.3 Materials

Purchasing Purchase quantities and suppliers need to be defined for every material involved in the production process. You can decide to buy the material with or without a contract. If you buy the material with a contract you have to decide for how many periods you want a contract and what quantity the supplier should deliver you each period during the duration of the contract. When you have a contract you can not change it. After your contract is expired you can get a new contract. If you have a contract you can still buy (extra) materials without a contract (on the market). The material need per product depends on the normal need per product and the percentage of waste. The normal need per product is: Plastics: 32 units per products Connectors: 18 units per products Processors: 2 units per products

Due to wastage, the real usage can differ from these standards. The suppliers of materials only deliver in specific batch sizes: Plastics: 1,000 units Connectors: 500 units Processors: 10 units

The materials purchase decision must be given in units of materials needed, not the number of batches needed. The original order can be adjusted by the supplier because of this. The purchase price (your price) is calculated immediately if you click on the calculator in the screen. Maximum order quantity per period (Contract) Each supplier has capacity limits and therefore a maximum order quantity. See table below. If you order more units than the supplier can deliver, your decision will be adjusted. Supplier Supply International Kwe Kwa Supply IKFD Plastics 44000000 48000000 40000000 Connectors 27500000 30000000 25000000 Processors 2750000 3000000 2500000


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Fangi Mat Nobel Materials Buy Additional Capacity

44000000 40000000

27500000 25000000

2750000 2500000

This amount of extra capacity will be installed at the beginning of the next period. The purchase price per capacity is US$ 1,440. One unit of machine capacity can make 10 products per period. Because of technical depreciation the total amount of machine capacity decreases with 4% per period. The supplier of the machine capacity can only deliver in batches of 500 with a maximum of 200,000 machines. The original order can be adjusted by the supplier because of this.

Lease Additional Capacity

This amount of extra capacity will be installed immediately but only temporarily (for one period). The lease price per capacity per period is US$ 1,960. The lease costs are included in the Overhead Costs. One unit of machine capacity can make 10 products per period. The supplier of the machine capacity can only deliver in batches of 250 with a maximum of 200,000 machines. The original order can be adjusted by the supplier because of this.

4.1.4

Production The desired production level. Whether this production order is met, depends on availability of production personnel, raw materials and machines.

Production Level

4.1.5 Shipping Information

Logistics The desired shipping quantities between the factory and DCs. The costs associated with shipping are:

Taipei Factory to...

Fixed costs

Variable costs per product shipped US$ 5 US$ 9 US$ 2 US$ 7

... North America DC ... EMEA DC ... Asia - Oceania DC ... Latin America DC

US$ 386,543 US$ 363,521 US$ 154,321 US$ 397,532

4.1.6

Human Resources The desired personnel level in FTE (Full Time Equivalent = 48 hours). Personnel are automatically hired to replace personnel that leave the company voluntarily. The hiring and firing costs for personnel differ per region / per function and are based on a percentage of the quarterly salary level. Office ... San Francisco ... Seattle ... Amsterdam Hiring costs 20-40% 40% 25-50% Firing costs 40% 40% 75%

Personnel Level


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... Taipei ... Hong Kong ... New Delhi ... Sao Paulo Average Salary Level

5% 10% 10% 20%

10% 10% 10% 20%

The average salary level per period/quarter. The minimum salary level per location (per period/quarter) is: US$ 2,500 San Francisco US$ 5,000 Amsterdam US$ 2,500 Seattle US$ 1,000 New Delhi US$ 1,000 Hong Kong US$ 1,500 Sao Paulo US$ 1,500 Taipei The intended decision will be adjusted when your input is below the minimum salary level.

Average Benefits Budget

The benefits budget will be used for additional personnel benefits for this location. The amount (in US$) is allocated per person. The benefits budget can be used for the following benefits. For each benefit you must decide whether you want this benefit to be available and if so at what level (minimum, medium, maximum): Healthcare Employee stock Child care Vacation days Free Beverages

Average Training Budget

The average training budget (in $US) per FTE per period/quarter. Training impacts the morale and productivity of your employees.

4.1.7

Finance The amount of additional loan required. The amount of your loan you want to repay to your bank voluntarily. You have to pay a penalty of 5% for this extra installment, which is also shown in the results screen. The amount of your mortgage you want to repay to your bank besides regular interest payments. Maximum installment of 20% of the total mortgage (US$ 345,000,000) per period. Number of weeks new customers get to pay for their product. Increasing the debtor period positively influences customer satisfaction but may harm your cash position because you receive their money later.

Additional Loan Repayment of the loan

Repayment of the mortgage

Debtor Period for new customers

4.1.8 Research

Market Research Different researches can be bought: R&D Research (price US$ 600,000) Information about the R&D budget, R&D personnel numbers and average tech level of competitors. Also includes highest tech levels in the industry (per feature).


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Company Research (price US$ 950,000): Information about net profits of competitors.

Personnel Research (price US$ 1,000,000): Information about total number of employees of competitors, plus average salary level, benefits and training budget and personnel level per location. Also includes employee preferences towards specific benefits.

Marketing & Customer Research (price US$ 2,000,000): Region specific information about advertising effectiveness in different media (TV, Newspaper ads, etc.) and preference for different marketing messages (trendy, business, etc.).

Market Research (prices in table in US$): Region specific information about competitor marketing budgets, competitor prices & warranty, current market size & growth predictions and market shares of competitors. Example: The market research Size & Growth of the North American market costs US$ 250,000 Marketing Budget Price & Warranty $1,400,000 Size & Growth $250,000 Market Shares $110,000

North America EMEA Asia & Oceania Latin America

$650,000

$500,000 $750,000

$1,000,000 $1,200,000

$150,000 $200,000

$90,000 $100,000

$650,000

$1,100,000

$220,000

$100,000

4.24.2.1 Net Profit Solvency

ResultsBenchmark Indicator A measure of the net profit of the last two periods. A measure of the Total Equity as a percentage of Total Liability. A measure of the employee satisfaction with the company's performance and HR policy. A measure of the (net) profit divided by the number of employees (FTE). A measure of all the production and stock costs made for making smartphones. A measure of the availability of products in the regional DCs. A mismatch between potential sales and the supply of products results in a lower score. A measure of the number of products sold by your company as a percentage of all the products sold in the industry. A measure of the customers' satisfaction with the company's products and services.

Personnel Morale

Profit per employee Production & Stock costs Availability of products Market Share

Customer Satisfaction


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4.2.2

Income Statement The proceeds from sales. Revenue is calculated by multiplying the number of products sold with the sales price per product. The total materials costs of the products sold are computed by multiplying the number of products sold with the average cost price of the product. The turnover, salary and benefits costs of the production personnel involved. The total Marketing and Sales costs for every market plus market research. The Total Marketing and Sales Costs for a specific market contains the Marketing & Sales budget and the M&S Personnel Costs. The total Research & Development costs for all locations. The Total R&D Costs for a specific location contains the R&D budget and the R&D Personnel Costs. The total of the Material Stock Costs, the Factory Stock Costs and all Distribution Center Stock Costs. The shipment costs are based on the real number of products shipped, the fixed shipping costs and the variable shipping costs per product shipped. The costs of replacing faulty products during the promised warranty period.

Total Revenues

Material Costs Sales

Production Personnel Costs Total M&S Costs

Total R&D Costs

Total Stock Costs

Total Shipments Costs Total Warranty Costs Total Depreciation Costs Total Overhead Costs

The economic depreciation costs of buildings (1%) and machine capacity (5%). The total personnel costs for Management & Support and additional overhead costs. Additional overhead costs are influenced by the size of the company. Overhead costs include the lease costs for machines. The Interest Costs for the loans and overdraft facilities or the interest payments paid to your company because of a positive Cash Balance. The Taxation rate is a fixed rate (35%) of the Profit Before Taxation.

Interest

Taxation

4.2.3 Buildings

Balance Sheet The value of the buildings and the inventory is calculated by decreasing the value of the previous period with the economic depreciation (1%). The value of the machine capacity comprises of the value of the machine capacity of the previous period plus the value of the purchased machine capacity reduced with the economic depreciation (5%). The book value of the material stock is calculated by multiplying the average purchase price with the end stock quantity of all the materials. The value of products which are not ready yet. The product stock comprises of the product stock in the production facility and the product stock in the distribution centers. The value of the stock is computed by multiplying the average material costs per product by the amount of stock. Accounts Receivable consists of the portion of the customers that have not paid yet. The liquid assets available at the bank at the end of the current period. This balance is calculated in the Cash Flow Account. The nominal value of the company stock.

Machines

Material Stock

Work In Progress Product Stock

Accounts Receivable

Cash

Shares Capital


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Retained Earnings

The cumulative profits retained in the previous periods and the current period, corrected for write-offs on assets. The balance value loans at the end of the previous period, plus Additional Loans, minus Payments. The balance value Mortgage Loan at the end of the previous period minus installment payments. A mortgage loan is a loan, which is secured with the property of the borrower. The Accounts Payable consists of bills the company has not yet paid, based on credit facilities by suppliers.

Loans

Mortgage

Accounts Payable

4.2.4

Cash Flow Account The total of the depreciation cost of buildings and machine capacity. The Depreciation Costs are costs, but not real expenses, i.e. these costs are not really paid. These costs should not be included in the Cash Flow Account. The Depreciation Costs are already included in the Total Costs entry in the Cash Flow Account, which is deducted from the cash position. This is compensated by adding the Depreciation Costs to the cash balance. Investments in Liabilities comprise of the investments in Long Term Loans and Accounts Payable on the Balance Sheet. When these entries on the Balance Sheet are higher compared to the previous period, cash has flowed in and this entry on the Cash Flow account is positive. When the entries on the Balance Sheet are lower, cash is used to re-pay loans or accounts payable, so cash flows out and this entry on the Cash Flow Account is negative. The total of all costs from the Income Statement. The Material Costs Sales are excluded, because, like Depreciation Costs, these are costs, but not expenses. The amount of money that is spent on the different materials is deducted from the Cash and Bank Balance. The investment in assets comprise of the investments in Machine Capacity, Accounts Receivable and Work In Progress on the Balance Sheet. When these entries on the Balance Sheet are higher compared to the previous period, cash has flowed out to invest and this entry in the Cash Flow account is positive. When the entries in the Balance Sheet are lower, cash has flowed in because of divesting and this entry in the Cash Flow Account is negative. Cash at the end of the current period. When cash is negative, your company used the overdraft facilities with the bank. When positive, the balance represents the amount of money in your accounts. End Cash= Cash Begin + Total Revenues + Depreciation Costs + Investments in Liabilities - Total Costs - Materials Purchased - Investments in Assets - Taxation & Interest Payments

Total Depreciation Costs

Investments in Liabilities

Total Costs

Materials Purchased

Investments in Assets

Cash

4.2.5

Financial Information The accepted decision of the credit period you allow customers in number of weeks. The minimum period is 1 week, the maximum is 13 weeks. Customers are more satisfied when given more time to pay, but it negatively

Debtor Period new customers


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impacts your cash position too. Actual Debtor Period The Actual Debtor Period can differ from the intended period (the decision), because of customers that do not pay their bills within the desired debtor period. This can be caused by low personnel morale and/or lack of personnel in the Management & Support department in San Francisco, who call after sales and collect bills. The average creditor period creditors give to your company is 4 weeks. The Actual Creditor Period can differ from this average, because of personnel morale or lack of personnel in your headquarter. The personnel costs for Management & Support: turnover costs, salary costs and benefits costs. Additional overhead costs are determined by the size of the company.

Actual Creditor Period

Man. Sup. Personnel Costs Additional Overhead Costs Depreciation Machines

The economic depreciation of machine capacity is determined by the depreciation percentage (5% per period) and the capacity value at the beginning of the period, plus the value of the capacity delivered and installed. The economic depreciation for buildings and inventory is determined by the depreciation percentage (1% per period) and the value of buildings and inventory at the beginning of the period. Balance at the end of the period. End Balance = Start Balance + Additional Loans - Payments The accepted loan decision. The original decision can be adjusted because of the limits on loans. The amount of your loan you decided to repay to your bank voluntarily.

Depreciation Buildings

Balance Current Period Additional Loan

Repayment of the loan Repayment of the mortgage Compulsory payment percentage Compulsory payments Loans Basic Interest Rate

The amount of your mortgage you decided to repay voluntarily.

The % of your loan you have to repay to your bank. If this % is 0 there are no compulsory payments. The amount you had to repay to your bank.

The total loan at the end of the period. The interest rate applicable to the Loans. If you borrow more the interest rate will go up. The interest payments for the Mortgage Loans. Payments = Mortgage x interest rate. The interest payments for the Loans.

Interest Payments Mortgage Loans Interest Payments Loans Interest Payments Cash

The payments caused by using the overdraft facilities or the interest payments paid to your company because of a positive Cash Balance. When this entry is positive, your company paid the bank interest. When this entry is negative, the bank paid your company interest. The payments are calculated by confronting the balance of last period with the interest rate. The Gross Margin as percentage of Total Revenues. The Earning Before Interest and Taxation as percentage of Total Revenues. A measure of the Total Equity as a percentage of Total Liability.

Gross Margin EBIT Solvency


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4.2.6

Personnel Information Total number of personnel in FTE (Full Time Equivalent = 48 hours) for the whole company. Personnel morale for the whole company.

Total Personnel Level Morale Companywide Turnover Companywide Company Personnel Costs

Turnover rate (%) for the whole company.

Total personnel costs for the whole company. Company Personnel Costs = Production Personnel Costs + Management & Support Personnel Costs + Personnel Costs for all R&D locations + Personnel Costs for all Marketing & Sales locations The personnel level decision. This level of personnel needs to be available during the whole period. If the personnel level decision for the current period is higher than the one from the last period, the difference between the two is hired automatically at the beginning of this period. During the period, a number of employees leave the company voluntarily. The employees leaving will be replaced automatically by the location manager.

Personnel Level

Personnel Hired

Personnel Fired

If the personnel level decision for the current period is lower than the one from the previous period, the difference between the two is fired automatically at the beginning of this period. The number of personnel hired or fired determines the total turnover costs. Per every personnel type working on the location involved, the following costs are included: turnover costs, salary costs, training costs and benefits costs. The morale for the location, rated from 1 to 10 (10 being superb). The voluntarily turnover rate depends on the commitment of the personnel and the location. The accepted quarterly salary decision for this location. The original decision can be adjusted because of the minimum average salary level. The benefits budget per period per employee at the location involved.

Turnover Costs Personnel Costs

Personnel Morale Personnel Turnover

Average Salary Level Average Benefits Budget Average Training Budget

The training budget per period per employee at the location involved.

4.2.7 Stock Begin

Material Information Number of materials in stock at the beginning of the period. Equals the End Stock of the previous period. Number of materials purchased on the market. Materials can only be bought in batches of a certain size. The original order can be adjusted by the supplier because of this. Number of materials purchased based on a contract. Materials can only be bought in batches of a certain size. The original order can be adjusted by the supplier because of this.

Purchased - market

Purchased - contract


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Used

The number of materials used in this period depends on the number of products produced and the number of units of material used per product. The materials needs per product depend on the normal need per product and the percentage of waste.

Stock End

The materials in stock at the end of the period. Stock End = Stock Begin + Purchased - Used

Average Purchase Price Average Stock Quality Wastage

The weighted average purchase price depends on the value of the stock present before purchasing and the purchase price for the current period. The average stock quality depends on the quality of the stock still available from the previous period and the purchase quality in this period. The percentage of waste depends on the quality of the material and the morale of the personnel working in the production process. The number of periods left until the contract ends.

Remaining contract periods

4.2.8 Stock Begin

Finished Products Information Number of products in stock at the beginning of the period. Equals the End Stock of the previous period. Number of products produced. The original production order decision can be adjusted, because of material, capacity or personnel shortage. The total number of products shipped to the Distribution Centers. Number of products in stock at the end of the period. The average quality of the total stock depends on the production quality, material quality, personnel motivation and the quality of products still in stock from previous periods. The average material costs per product depend on the material costs needed for the current production and the material costs used for the products still in stock from previous periods. The material costs per product for the current production = materials needed per product * average purchase price materials The average material costs per product = (material costs current production * production + average material costs previous period * stock begin) / (production + stock begin)

Produced

Shipped to DCs Stock End Average Product Quality

Average Material Costs per Product

Factory Stock Costs

The factory stock costs depend on the number of products in stock during the period.

4.2.9

Machine Capacity Information Number of machine capacity available at the beginning of the period.

Machine Capacity Begin Ordered & Installed

Number of machine capacity ordered in the last period and installed in this period. A decision accepted from the previous period. Number of machine capacity unavailable for production purposes due to maintenance. Number of machine capacity leased this period. The number of capacity leased will be automatically dispatched of at the end of the period. A

Unavailable due to Maintenance


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Machine Capacity Leased Available for Production Technical Depreciation

maximum of 200,000 machines can be leased per period.

Number of machine capacity available for production purposes. Available = Begin + Installed - Maintenance + Leased Because of intensive usage, machine capacity tends to decrease during time. The technical depreciation of the machines is a fixed 4% per period of the permanent capacity (begin capacity plus installed, not the leased capacity). Number of capacity at the end of the period. End = Begin + Installed Technical Depreciation The accepted machine purchase decision. These machines will be installed at the beginning of the next period. The supplier of the machine capacity can only deliver in batches of 500 with a maximum of 200,000 per period. The original order can be adjusted by the supplier because of this.

Machine Capacity End Ordered for Next Period

Capacity Usage Ratio

The usage rate for used machine capacity as a percentage of the available machine capacity.

4.2.10

Marketing Information Number of products sold and shipped to customers. Accepted Product Price. The original decision can be adjusted because of the maximum price change per period is 10%. The revenue for this market as a percentage of total revenue.

Products Sold Product Price

% of Company Revenues Missed Sales

The number of missed sales stated for every market represents the missed opportunities to sell products. If other companies have missed sales these sales are divided among the companies that do not have missed sales and still have enough stock and marketing & sales FTE to sell extra smartphones (above their normal potential sales).

Total M&S Costs (incl. M&S Personnel Costs) Total R&D Costs (incl. R&D Personnel Costs) Warranty Costs

The Total Marketing and Sales Costs for a specific market contains the Marketing & Sales budget and the M&S Personnel Costs.

The Total R&D Costs for a specific location contains the R&D budget and the R&D Personnel Costs.

Costs of replacements of faulty products during the promised warranty period. Total costs of all chosen events this period.

Total Event costs

4.2.11 Stock Begin Received Stock End

Distribution Center Information Number of products in stock at the beginning of the period. Number of products received from the factory in Taipei. Number of products in stock at the end of the period. The DC stock costs depend on the number of products in stock during the period.

DC Stock Costs


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Transcript of NextOne Manual 200