THE TACTICAL SERIES
The motif showing a dark band on a light corporate pyramid indicates that these simulations are designed for middle managers to explore the tactical management of business.
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THE TACTICAL SERIESThe motif showing a dark band on a light corporate pyramid indicates that these simulations are designed for middle managers to explore the tactical management of business. |
The Tactical Series are designed to address the management issues involved in running a business at a tactical level. So they emphasise operational management issues, efficiency and control. They may be used:
The tactical management simulations available focus on different levels of management. These are:
KEY LEARNING: Each simulation covers different objectives (as described below).
DURATION: Between a day and a day and a half.
TARGET AUDIENCE: As described, the simulations are designed for different management levels. Together they cover the whole spectrum from trainee to senior manager.
METHOD: After a short briefing the training group is divided into several teams of four. These teams consider the problem facing them and then make decisions for a trading period. These decisions are fed, by the tutor, into a microcomputer that simulates their effect. The results are returned to the teams for their consideration before making the next decision. This decision-making cycle should be repeated for at least six periods. At the end of the simulation phase the teams reunite to discuss and compare results.
A Management Experience and PROFESS may be used with between two and eight teams. UMIX may be run with any number of teams of four.
AVAILABILITY: Because of the complexity of these simulations, they are usually run on a fully tutored basis.
MANAGEMENT EXPERIENCE is designed for middle to senior management. It involves them making the best use of manufacturing resources, measuring economic performance, forecasting and control. The simulation is supported by a comprehensive set of background notes and a Tutor Support System. The market situation - highly seasonal domestic, rapidly growing export and contracts - makes the participants task more difficult. As do the (optional) differing inflation scenarios.
BUSINESS OBJECTIVES & MEASURES
The simulation focuses on the tactical management of a manufacturing business with decisions covering product pricing and promotion, deciding capacity, factory staffing and overtime and long term loans. Teams are free to decide objectives and measures and, so, can decide whether to maximise profitability or growth or minimise risk. Then they must decide strategy in terms of market sector focus, factory loading and capacity and cash flow. Besides corporate measures (such as Return on Assets), the simulation measures capacity utilisation, output per worker, etc. and produces a full factory cost variance report (see below).
FINANCIAL MANAGEMENT
Initially, participants take over a company that is inadequately profitable with relatively high fixed costs, operating close to full capacity. They must determine where they can improve and maintain efficient operation and effectively grow profits. While doing this they must maintain cash flow and liquidity. Although their purpose is to turn the company around participants will find this difficult.
MARKETING - PRICING & PROMOTION
The simulation involves selling a product into a domestic and export markets and bidding, against the other teams for contract business. Sales in the domestic and export markets are influenced by price and promotion. Contracts are awarded based on price alone. Each market differs in terms of potential, growth and current penetration.
PRODUCT MIX & CONTRIBUTION
The costs of serving each market differ and, an optional report, is available treating each market on a profit or investment centred basis. When setting product mix policy, teams must consider profit levels, cash flow and risk.
COSTING & ECONOMICS
A set of optional worksheets allow teams to build a full set of financial accounts and analyse product costs. When making decisions teams must take into break-even, prices and promotional sensitivities and the economics of increasing capacity, capacity utilisation and overtime working. With an erratic, seasonal sales, inflation and factory productivity effects, economic analysis is realistically difficult.
VARIANCE ANALYSIS
The simulation has a full variance analysis pack that identifies the effect of inflation, productivity, asset age, material premiums etc.. So, it allows a detailed separation of the effect of controllable and uncontrollable factors on costs.
OPERATIONAL CONTROL & FORECASTING
Market growth and seasonality, the uncertainty associated with contracts makes operational control especially difficult. Coupled with maximising capacity use, minimising overtime and high bank interest means that lack of control and poor forecasting reflects in adverse cost variances and low profitability.
TEAM WORKING
With participants working in small teams, they have the opportunity to share experience and knowledge, present and promote different viewpoints, and develop their people skills.
(BUSINESS PRESENTATION)
Optionally, at the end of the simulation, teams can be asked for make a formal board presentation covering objectives, strategies, process, the future (of the simulated business) and learning.
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PROFESS is designed to replicate the issues facing management of a professional services company. Although originally designed for Barclays Life, PROFESS is suitable for a wide range of professional services companies (computer and business services, software developers and design companies etc.) Participants are involved in the regional management of several sales areas each employing several "advisers" and selling several products. The region is served by an administrative centre and decisions cover staffing, training, product changes and promotion.
TACTICAL REGIONAL MANAGEMENT
With decisions covering hiring "advisers" and clerical support, training, updating services and promotion, the simulation concentrates on the tactical management issues concerned with running a region consisting of several sales areas, selling several services (products) and a central administration centre.
DECIDING & MEETING CLIENT NEEDS
Participants must manage a process that begins with deciding client needs, suggesting a suitable service, obtaining a formal proposal (prepared by the centralised administration centre) and closing the sale.
With success determined by meeting client needs, participants are concerned with ensuring advisers are available and with adequate skills, proposals are processed expeditiously, services are suitable and adequately promoted.
FINANCIAL PERFORMANCE
To maximise revenue and profits, participants must meet client needs in the most efficient manner. This will involve measuring the costs and contribution of the advisers, the sales areas, the administration centre and individual services. (Optionally, analysis can be on an Activity Based Costing basis.)
ANALYSIS & DIAGNOSIS
Besides using the standard business reports, participants must interpret "comments from staff" and decide what additional information and reports they require to make sensible decisions. (The qualitative feedback facility is especially useful to stimulate discussion for participants who are not very numerate. And, a comprehensive reporting package, means that most requests for information can be provided.)
DECISION MAKING
Besides to optional ongoing decisions covering staffing levels, training, product updating and promotion, teams can be faced with additional decisions (that cover changing the administration centre, opening new sales areas, launching and deleting services). Like the real world, participants must make decisions with inadequate and incomplete information. Decisions that they have to live with and that will not be optimum. However, they will do so in a safe and coached environment.
HANDLING UNCERTAINTY & MARKET DYNAMICS
With some random demand variation, changing product attractiveness and service levels, participants must develop and implement a resilient business policy. Further, they must separate out the effect of their decisions from these uncertainties and dynamics. (However, to help the tutor, the simulator produces a tutor's audit and team commentaries.)
CONTROLLING & FORECASTING
Implicit to the process of tactical management, teams must set up adequate processes to control costs, meet client needs and forecast the results of their actions. (To help the tutor, the simulator provides a list of each team's strengths and weaknesses and measures efficiency losses (cost overruns and sales losses).)
TEAM WORKING
With participants working in small teams, they have the opportunity to share experience and knowledge and present and promote different viewpoints.
(BUSINESS PRESENTATION)
Optionally, at the end of the simulation, teams can be asked for make a formal board presentation covering objectives, strategies, process, the future (of the simulated business) and learning.
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UMIX is designed for management trainees and junior management. It shows them the dynamics of information, material and cash flows. An unusual feature of this simulation is that participants are, individually, responsible for functional areas - making their own decisions and receiving their own reports. This means that participants have to integrate their knowledge and, as appropriate, share information. While they do this they must maintain the performance of their own function.
BUSINESS ORGANISATIONS
The business simulated is a typical manufacturing company with four main functions: Production, Purchasing, Sales and Finance. It manufactures a range of small cement mixers designed for the Do It Yourself and small building company. The range of three types of cement mixer are sold through retail outlets. It has two manufacturing stages - fabrication and assembly. Each type of cement mixer requires a different set of materials and components that must be purchased. The company is a small one without any financial or market leverage.
TACTICAL MANAGEMENT
The decisions made by the participants concentrate on the short term, tactical management of the UMIX company rather than the external, long term strategy. So, each decision period represents one month's trading. The Production Manager's decisions cover shift working, fabrication and assembly targets and priorities and output forecasts. The Purchasing Manager's decisions cover materials and component purchase amounts and schedules. The Sales Manager's decisions cover pricing, advanced warning of price increases and the delivery lead times. The Finance Manager's decisions cover scheduling payment to suppliers and prompt payment discounts.
FUNCTIONAL RESPONSIBILITIES
Each manager is responsible for operating their own function and receives their own set of reports showing how they operated. The Production Manager's reports cover actual output, labour and overhead costs, standard hours used and efficiencies. The Purchasing Manager's reports cover receipts and open orders for materials and components and inventories for materials, components, fabrications and finished product. The Sales Manager's reports cover units shipped, orders received and future load. The Finance Manger's reports cover payments and cash receipts, costs, changes in the bank account, receivables and payables. All functions are informed of profits or loss.
INTERACTION BETWEEN FUNCTIONS
Each manager in operating his or her function must consider interactions with the other functions. As the individual functional managers are separated, this exploration is not straight forward and requires thought and good time management. The decisions (describe above) were especially chosen so as to emphasise inter-functional interactions.
PROFIT AND CASH FLOW INTERACTION
Each function impacts profit and cash flow in different ways and only receive limited information about the total picture.
REPORTING & INFORMATION FLOW
To operate each functional manage must decide what information to provide to the other functions and what information he or she needs.
TEAM WORKING
Optionally, so as to emphasise inter-functional rivalry, the tutor may set up a reward scheme based on individual functional performance. However, the profit and loss statement and information flows can be used to emphasise team working and optimising corporate rather than functional success.
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