Global Operations

GLOBAL OPERATIONS is a strategy simulation involving developing a world wide presence and product offering. It is the simplest and shortest of the series (duration one day) and so is usable at company conferences and where time is tight.

Participants launch a new product in direct competition with several other teams and set up a factory to produce it. Liquidity will force them to decide between new product development, expanding capacity or build their world coverage.

DECISIONS: Global Operation's decisions cover:

• market targeting
• pricing & promotion
• product development & mix
• capacity planning
• funding
• marketing research

Originally designed in 1981,Global Operations has been in use since then and it was completely revised in 1997 and in 2001 (incorporating our latest design paradigms).

KEY LEARNING: The simulation covers these issues:

• STRATEGIC DEVELOPMENT
• MARKETING OBJECTIVES
• FINANCIAL PERFORMANCE
• PRODUCT & MARKET PORTFOLIOS
• PRICING & PROMOTION STRATEGY
• PRODUCT DEVELOPMENT STRATEGY
• BUSINESS FUNDING
• MARKET & BUSINESS RESEARCH
• FINANCIAL & MARKET RISK
• TEAM WORKING
• BUSINESS PRESENTATION

DURATION: One day.

TARGET AUDIENCE: The simulation is designed to be used by middle and senior management.

METHOD: After a short briefing the training group is divided into several teams of four or five participants. These teams consider the problem facing them and then make a series of decisions that are fed, by the tutor, into a microcomputer that simulates their effect. The results are returned for the team to analyse before making their next decisions. This decision-making cycle is repeated for at least six periods. At the end of the simulation phase the teams reunite to discuss and compare results.

NUMBER OF TEAMS: The simulation may be used with between two and eight teams that compete and interact directly with each other.

AVAILABILITY: This simulation is available off-the-shelf and a comprehensive Trainer's Pack is provided allowing trainers with little or no experience with simulations to run the simulations.

KEY LEARNING

STRATEGIC DEVELOPMENT

Participants take over a start-up company that has just obtained equity capital and has developed a new product that it must launch in competition with up to seven competitors. During the early stages they must husband cash as the expand into the world's markets, lay down production capacity and develop the range of products.

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 market is reported as an investment centre and, so allows the business to be treated as a portfolio of Strategic Business Units.

MARKETING OBJECTIVES

In developing their business, participants must decide which markets to target and, for these the best mix of price, promotion and product. As the portfolio of products and markets develop they must decide which market to grow, which to maintain, which to milk, which to exit etc..

FINANCIAL PERFORMANCE

Business performance is measured with a full Profit & Loss Statement, Balance Sheet and key profitability and liquidity ratios. Each market sector is treated as a separate profit centre and the comprehensive reporting package covers break-even, break-up valuation, cash flow, cost of capital and economic value added.

PRODUCT & MARKET PORTFOLIOS

Throughout the simulation teams must manage the markets they serve and their portfolio of products. This simulator produces reports on competitive dominance, competitive position and world penetration.

PRICING & PROMOTION STRATEGY

Besides, deciding the right price and promotion for the customers in each market, participants must take into account competition and whether the market's strategic focus is on growth, profitability, providing cash etc..

PRODUCT DEVELOPMENT STRATEGY

The development of new products not only must take into account market needs and potentials but, also, funding needs, long term cash flow and the competition.

BUSINESS FUNDING

Development of the business involves a period of expenditure on factory capacity, market and market development. This can lead to liquidity and, possibly, solvency problems. So, teams must manage cash flow and balance sources of funds (equity, term loans and overdrafts) against this. (It is not unusual for one or more teams to over expand.)

MARKET & BUSINESS RESEARCH

Besides decisions directing the operation of the business, participants can obtain wide range of market and business research. Standard research covers competitive position, market potentials, economic trends and market tests. But, additionally, special reports for the tutor allows teams to formulate their own information needs.

FINANCIAL & MARKET RISK

Besides bankruptcy risk, teams face economic and political risk in the markets, the risk of not meeting customer needs and the risk that one, or more competitor will become dominant. To help the trainer evaluate risk, the simulator produces a list of strengths & weaknesses.

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 make a formal board presentation covering objectives, strategies, process, the future (of the simulated business) and learning.

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