The strategy business simulation for High Technology Companies.
TECHNIQUE was developed for Philips BV to replicate the strategic issues facing a company manufacturing high-technology products - products than combine electronics and mechanical components with embedded software. Unusually, perhaps, uniquely, this business simulation incorporates the opportunity for creative advantage.
DURATION: Two days
TARGET AUDIENCE: This business simulation is for middle to senior management.
METHOD: After a short briefing your training group is divided into several teams of four to five learners. Your learners 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 learners 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 learners reunite to discuss and compare results.
The simulation may be used with between two and eight teams.
AVAILABILITY: Because of the complexity of this simulation, it is run on a fully tutored basis.
FEES: For up to four teams of 5 participants the fee inclusive of tutoring and simulation hire is £3150, $5250 or €4000. Travel and accomodation costs are charged at cost. If the group size is larger than four teams then the simulation will need to be double manned but this extra manpower can be provided by the client.
DECISIONS: Technique's decisions cover:
- market targeting
- pricing & promotion
- product design & mix
- assembly & manufacturing capacity planning
- funding & capital structure
- marketing research
Your learners take over a subsidiary company that is currently operating and selling two products into two markets in competition with up to seven competitors. They have strategic responsibility for product development, marketing, operational capacity and financing.
Reflecting strategic needs, there is no best strategy, rather several strategies can be successful. The success of a team depends on their analysis of opportunities, the development of a strategy that offsets those of the competitors and is implemented in a controlled and proactive manner. Each product is reported as an investment centre and, so allows the business to be treated as a portfolio of Strategic Business Units.
BUSINESS OBJECTIVES & MEASURES
Provided they produce reasonable added value and remain financially viable, your learners have full autonomy. However, as they are expected to keep the parent company informed, they must decide and quantify objectives and measures. So, although they are free to go for growth, maximise profitability or play it safe.
To build their company your learners must build the portfolio of products and markets. In doing so they must identify market gaps and develop products to fit these. Products that will generate adequate profits and strengthen the portfolio in terms of cash flow, capacity use, raw material use and the other products.
PRODUCT DEVELOPMENT STRATEGY
The company's products consist of electronic and mechanical hardware controlled by software. Uniquely, your learners create new products by specifying microprocessor, the amount of memory and the type of mechanism. This combination produces a product with a unique power (processed instructions per second or PIPS) to match market needs. Designs that need to fit market gaps at lowest possible cost. Costs that are influenced by synergy with manufacturing, purchasing and the existing products.
Business performance is measured with a full Profit & Loss Statement, Balance Sheet and key profitability and liquidity ratios. Each product is treated as a separate profit centre and the comprehensive reporting package covers activity based costing, cash flow, cost of capital, product life-cycle information and economic value added.
Besides, deciding the price and advertising for products, your learners must set target inventory levels and decide the size of the sales force. When doing this, they must take into account customers, competition and whether the product's strategic focus is on technological leadership, market creation, growth, profitability, providing cash etc..
Initially, manufacturing consists of assembly only, with your learners buying in microprocessors, memory and mechanisms and, so, is a high variable cost business. However, for some products and markets it may be attractive to set-up a highly automated mechanism manufacturing facility involving major capital investment and significantly increasing fixed costs.
Besides the standard financial and operational reports, your learners must research new products, markets needs and the competition. Research that includes estimating product costs and power, test marketing and reverse engineering competitive products.
With your learners working in small teams, they have the opportunity to share experience and knowledge and present and promote different viewpoints. This is especially important where the your learners are from several functions.
Optionally, at the end of the simulation, your learners can make a formal board presentation covering objectives, strategies, process, the future (of the simulated business) and learning.
Most recent update: 20/10/14
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