This strategy and management simulation is based on a realistic business situation.
A number of virtual companies, represented by the teams taking part, compete against one another within a common business environment in making and selling a small range of desirable consumer products.
The aim is to manage your company during the challenge so that, at the end, your company is best placed to face the future (see below).
A complex computer model simulates -
- the interactions of the various parts of each company
- the competitive relationships between the companies
- and the effects of economic patterns and world events.
The Global Management Challenge is demanding. You will have to work under pressure, handling many disparate factors - some at a broad level and others requiring attention to detail. It will, almost certainly, provoke argument but, by taking part, you will probably have great fun, gain a strong sense of satisfaction and learn quite a lot about teamworking and, not least, managing a business.
The task facing your team is to take charge of one of these simulated companies and manage it as if it were a real live business. This manual explains how to take part.
It explains the organisation of the simulation, what your team has to do, how your company works, and how it relates to the other team companies. It has four parts:
- This Introduction.
- The business environment, which explains the internal functions of each company and interactions between the companies and the market.
- Your management report, which explains the contents of the computer output.
- The decision form, which explains how you should prepare your decisions.
The company, which you have to manage, is fairly complex. Therefore, the second and third parts of the manual explain the structure of your company in some detail. It describes the four main management functions of Marketing, Operations, Personnel and Finance, and emphasises the interactions between them.
One of the main aims of this simulation is to illustrate these interactions and to demonstrate that the best way of achieving a proper balance is by teamwork, good organisation, and effective communication.
You, however, must decide on the precise organisation of your team.
There is no constraint on what technical aids you may use. If you wish to write your own spreadsheet models, you will find detailed definitions in the third part of the manual.
How it works
You control your company through two documents:
- The quarterly Management Report, shows how your company has performed in the period just completed, and provides information about the next period.
- The Decision Form, allows you to input decisions that will affect the way your company will operate in the next period and beyond.
So that you know exactly what is happening, this manual describes the way in which your company works in great detail. The broad structure of the simulation is, however, simple.
Your investment performance reflects the value of your company to its investors. This is not just the market valuation of your company but includes the value of any dividends paid to, or any shares repurchased from, your investors less the cost of any new shares issued to them.
You should, therefore, choose an appropriate company strategy for achieving this goal.
So that you can make some preliminary assessment of how things work, you are given a brief history of your company covering a period immediately before the simulation starts, together with the decisions which generated these results. You may find it helpful to refer to the history when reading this manual. The histories are identical for all the companies taking part, so that all companies start from exactly the same position.
After reviewing this recent history, and having decided what you want to do, complete your first decision form and submit it for processing, in accordance with the published timetable. In return you will receive a management report which tells you what has happened to your company as a result of the decisions you have taken. Use this information to improve your knowledge of the workings of your company and of the market. Then make the next set of decisions ... and so on to the end of the simulation.
Before reading the rest of this manual, you should understand some important general points:
- External factors such as market trends, interest rates and labour availability, are set before the simulation begins. They will not be changed arbitrarily during the simulation.
- Many relationships in the simulation are purely arithmetic (e.g. financial statements), but others are of a kind which cannot be derived exactly, even in real life (e.g. how many orders are you likely to receive and what is the effect of training going to be?).
- Some companies have been known to make large losses. Even so, you will never be declared bankrupt. Allowing companies to continue with massive borrowings, which might not be tolerated in real life, enables all teams taking part to reach the end.
- The simulation proceeds in steps of one quarter of a calendar year.
Before the simulation begins, you will be told how many quarters there are
and given a timetable detailing when your decisions must be sent in
for processing, and when you should expect the resulting management report.
A quarter is defined as twelve working weeks.
Once you have submitted your decisions for the next quarter they cannot be revised.
- You receive management reports, and submit decision forms in the imaginary instant of time between the end of one quarter and the next. For clarity, quarters in the past, and in the future, are strictly defined in relation to this imaginary instant of time, and all references to them in this manual will be in these terms:
Last quarter has just finished (and to which the most recent management report refers).
Quarter before last: the quarter before 'last quarter'.
Next quarter is just about to start (i.e. to which the current decision form applies).
Quarter after next: the quarter immediately following 'next quarter'.
How to use this manual
To help you make effective use of this manual, it not only has a relevant, clickable contents list (on the left) but, in addition, there are numerous hyperlinked cross-references in the text. These should enable you to explore fully any aspect of it.
- There are links from each decision that is mentioned in the general text, to the appropriate section of the decision form.
- A clickable image of the Decision Form links each decision that you can make for your company to the relevant part of the manual. You can use it as an index.
- A series of tables contain details of cost and other parameters. During the simulation, these numbers are fixed, unless they are over-ridden by an announcement in the business report section of your management report.
- You can obtain further guidance on key problems to help you with your decision making. These notes are more concerned with general principles rather than detail.
- Finally, you can read more important, or technical, detail about some of the concepts by clicking on "more" at the end of a section. For example -