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Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Learning Objectives (Cont’d.)
NLR’s Research Flight Simulator
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Notable Quotable
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
The Scenario (Cont’d.)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Strategic Options
There is wide strategic latitude in staking out a market
position and striving for good performance … There’s
no built-in bias that favors any one strategy:
Companies can pursue a competitive advantage keyed to
low-cost/low-price
top-of-the-line camera quality and performance
more value for the money (“good products at low prices”)
Companies can have a strategy aimed at being the clear
market leader in (a) entry-level cameras or (b) multi-featured
cameras or (c) both
Companies can focus on one or two geographic regions or
strive for geographic balance or even global dominance
Companies can pursue essentially the same strategy
worldwide or craft slightly or very different strategies for the
Europe-Africa, Asia-Pacific, Latin America, and North America
markets
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Strategic Options (Cont’d.)
No One Strategy Is “Best”:
Most any well-conceived, well-executed competitive approach
can succeed, provided it is not overpowered by the strategies
of competitors or defeated by too many copycat strategies
that dilute its effectiveness
Strategies that deliver the best performance depend on the
strength and interplay of the strategies employed by rival
companies
… there is no mystery “silver bullet” decision combination that players
are challenged to discover!
Results depend on your analysis, planning, and decision making
process
Decisions must be consistent and compatible
The most efficient method of organizing is to assign a particular
person or persons to one aspect of your company (function,
product, geography, etc.) … and one person may be assigned as
Chief Financial Officer and/or Chief Information Officer
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Strategic Options (Cont’d.)
Out-competing Rivals Is the Key to Market Success …
Stay on top of changing market and competitive conditions
Try to avoid being outmaneuvered by the actions of rival companies
Make sure your digital cameras are attractively priced and
competitively built and marketed
Just as you are trying to win business away from rival
camera companies, they are actively striving to take
camera sales away from your company
It is the competitive power of your strategy vis-à-vis the
competitive power of rivals’ strategies that is the deciding
factor in determining sales and market shares in each
product-market
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Strategic Options (Cont’d.)
GLO-BUS is all about practicing and
experiencing what it takes to develop
winning strategies in a globally
competitive marketplace:
When the exercise is over, the only things
separating the best-performing company from
those with weaker performances will be the
caliber of the decisions and strategies of the
management teams of the respective companies
It’s an exercise calculated to spur competition
and to get your competitive juices flowing
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Getting Started
How Do You Register?
Step 1: Have your assigned company registration
code handy (this code is used to put you into the
database for this specific course and to certify you
as a co-manager of your assigned industry and
company)
Step 2: Go to www.glo-bus.com
Step 3: Click on the “Student Registration” button
and enter your company registration code in the box
Step 4: Click that you are registering with a prepaid
code that came packaged with the text (or with a
credit card)
Step 5: Complete the personal registration
information (user name, password, etc.)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Getting Started (Cont’d.)
The Corporate Lobby Page:
Each time you log-on to www.glo-bus.com, you are
automatically routed to your company’s “Corporate
Lobby” Web page, the hub from which you will operate
as a co-manager of your assigned company and your
gateway to all GLO-BUS activities with links to:
Decisions and viewing/printing the results
The Participant’s Guide (manual)
The recommended decision procedures
The decision schedule (please verify!)
The two quizzes that are taken online
The 3-year strategic plans
The peer evaluations that are completed online
… and scoreboard, exchange rate adjustments, new interest
rates, upcoming deadlines, messages, co-managers log-ons
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Getting Started (Cont’d.)
Naming Your Company:
At your initial meeting, you and your co-managers
should decide on a name for your company
Your company’s name must begin with the letter
of the alphabet that you have been assigned
Names can be up to 20 characters
To name the company, click on the link at the top of
the Corporate Lobby and enter your company’s full
name in the space provided
All company names are “public” and appear in the
GLO-BUS Statistical Review
Selecta name that you are proud of and reflects the
image you want to project to your customers,
shareholders, and other company stakeholders (Bad
example: “Hoocares”)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Notable Quotable
“ I mage is everything!”
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Getting Started (Cont’d.)
All company co-managers can access the latest decisions
and results from any PC connected to the Internet
The Corporate Lobby screen indicates the last date at
which a co-manager saved decisions to the server and
whether other co-managers are currently logged on
All co-managers can be logged on simultaneously
If another logged-on co-manager clicks on the Save icon
and uploads new decisions to the server, you will be
notified the next time you press the Save icon – you then
have the choice of:
1. overriding the co-manager’s saved decision entries by saving your
decisions to the server; or
2. importing the co-manager’s decisions onto your decision screens
and overriding your own entries
Remember: The last set of decisions saved to the
server are used to process the results!!!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Decisions, Decisions …
You and your co-managers are responsible for the
following decisions each period (entered in the decision
boxes):
Total
Items Entries
Product design and performance (for each camera model) 10 20
Pricing and marketing (for each geographic area) 15 60
+ special order discount bids (begin decision #6, year 11) +7 +7
Entry-level assembly and shipping (for each quarter) 4 16
Multi-function assembly and shipping (for each quarter) 4 16
Annual compensation and quarterly labor force 7 13
Financing company operations (annual equity; quarterly debt
and dividends) 4 10
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Decisions, Decisions (Cont’d.)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Let’s Go To The Demo …
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Product Design
Component costs
Note! decrease 5%/year
Determine
productivity
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Pricing and Marketing
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Determinants of Sales and
Shares
Market growth 8-10% years 6-10; 4-6% thereafter
Your strategic challenge is to craft a competitive strategy
that you believe will produce the desired results when
pitted against the competitive strategies of rival
companies, region by region:
Price (enter zero to withdraw from market)
Performance/quality (P/Q) rating (currently 2½ stars)
Promotions (number, length, amount) provide price discounts
Advertising (enter zero to withdraw from market)
Number of camera models (but can reduce P/Q and productivity)
Size of dealer network (enter zero to withdraw from market)
Warranty period (claims = $50/E-L and $100/M-F)
Technical support (should be constant per camera; enter zero to
withdraw from market)
Image and reputation
P/Q and market share penetration
Tough to change momentum (loyalty results in market share stability)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
"We're pleased to report that competitor envy is running at an
all-time high as well."
{
entry-level cameras)
400 online/region @ $4,000 each
12,000 camera shops/region @ $200 each (quality-sensitive,
preferring multi-feature cameras)
20 “full-line” shops per region carry everything
Markups = 50-100%
Decision to carry = Prior-year shares + P/Q ratings +
Cumulative ad spending + Prior-year promotions
Cannot change in upcoming year
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Assembly and Shipping
Note!
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Compensation and Labor
Note!
Determine
productivity
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
PAT Decisions
Assembly:
Max = 10% more than projected orders
Requires 1Q lead time, with peak in Q3
4-Member Product Assembly Teams:
Each requires 1 workstation
100 workstations/PATs can = 10,000 units/year
Utilized 80 workstations/PATs in year 5, Q4
Productivity increasing to 12,000 units/year
Can add up to 50 workstations/PATs per quarter @ $75K each
Productivity cut 4% per model added; 2% boost per model dropped
Labor Utilization:
Overtime @ time-and-a-half up to 30% max.
Severance for laying off full-timers = 50% base pay per worker
Full-timer = more than 2Q
Additional Costs:
Outsourcing = $25/camera (for labor)
Handling & shipping = $3/camera
Import duties = $5/E-L; $10/M-F
Depreciation = 4%/year
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Financing
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Financing (Cont’d.)
Collection of receivables = Last Q’s sales + 2Qs for unsold inventories
Emergency Loan: Automatic draw on (and repay of) $100 million credit
line if necessary to cover cash outflows
Outstanding loans = $25 million
Pay for components, interest, taxes, and dividends in following Q
Dividends should = 2-5% stock price and < 75% EPS
Beginning equity = Common stock + Additional capital + Retained
earnings = $99.9 mill.:
10 mill. shares outstanding; can issue 5 mill. share max per year; can
repurchase 50% per year but cannot drop below 7.5 mill.
Total equity cannot drop below $50 mill.
Stock repurchase if price ≥ $10
Credit Rating (based on 4Qs):
D/E Ratio ≈ .10 to .33
Times-interest-earned (annual operating profit/annual interest) ≈ 2 to 10
Debt payback (≈ 3 years)
Credit used (≈ 5-15%)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Decisions Printout
Compare
to results
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
A Battle of Strategies
Following each year’s decisions, you’ll be provided with
“Competitive Intelligence” reports containing
information of the actions rivals took to capture the
sales and market shares they got
Note: All industry members get identical reports
Armed with this information, you will be in pretty good
position to figure out some of the strategic moves they
are likely to make in the upcoming decision period
Analyze your opponents thoroughly and develop a
game plan to defeat them …
scout their strategies
judge what they will do next
and come up with a competitive strategy of your own aimed
at “defeating” their strategies and boosting your company’s
performance
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Global Retail Sales
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Benchmarking Data
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Financials (Cont’d.)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Quarterly Snapshot
Note!
Compare competitive
efforts for any rival
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Strategic Groups
Key rivals
Niche players
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Company Analysis
Note!
Counter potential
moves of key rivals
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Company Analysis (Cont’d.)
Note!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Production Costs
Note!
Totals and
Monitor per/camera
costs
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Virtuous/Vicious Cycle
Marketing
Image Mix
P/Q
Volume Retailers
R&D
Components Share
Price
Productive
Equity
+ Debt Profits
Revenues
Costs
PATs
Gears must mesh or it will be a grind!
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Course Grade
50% of final grade:
10 points for 2 Quizzes
10 points for Team Reflections (cumulative) that apply
the course materials to the simulation and are the bases
for your decisions
10 points for Company Performance (2 measures)
10 points for 3-Year Strategic Plans (Decisions #4-
6/Years 9-11 and #7-9/Years 12-14)
10 points for Group Presentation and Final Report
Adjusted by Self Evaluation and Peer Evaluations
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Course Grade (Cont’d.)
The Two Quizzes:
There are 2 “open book” 20 multiple-choice question quizzes
built into the simulation, taken online and scored immediately
upon completion
5 pts – Quiz 1 (45-minute time limit) covers the Participant’s
Guide – its purpose is to spur you to read and absorb how
things work in preparation for managing your company
Average Score = 84
5 pts – Quiz 2 (75-minute time limit) covers the Company
Operating Reports and certain information in the GLO-BUS
Statistical Review – its purpose is to check to see if you
understand the numbers and how they are calculated
Quiz 2 Average Score = 64
Click on the links for the quizzes on your “Corporate Lobby”
Web page for more information
The three sample questions for each quiz give you an idea of
what to expect
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Course Grade (Cont’d.)
Company Performance:
Board members and investors have annual performance
targets for the company, each weighted equally
Yr 5 Yr 11 Yr 14
1. Grow EPS at least 8% annually
}
through Year 10 and at least 4%
EPS= $2.00 ≥$3.16 ≥$3.56
Grow
annually thereafter
2. Grow stock price about 8%
Stock= $30 ≥$45.85≥$51.57
annually through Year 10 and
about 4% annually thereafter
}
ROE= 17.5% ≥15% ≥15%
Maintain
3. Maintain ROE of 15% or more
annually
4. Maintain a B+ or higher credit Credit= B+ ≥B+ ≥B+
rating
5. Maintain an “image rating” of 70 Image= 70 ≥70 ≥70
or higher
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Notable Quotable
Investors’ Best-In
Confidence Industry
(5 pts.) (5 pts.)
EPS = 20%
ROE = 20% … or, about 1 point for
Credit Rating = 20% each possible cell
Stock Price = 20% towards final grade
Image Rating = 20%
•High Score (average overall score of all first place teams at simulation end)=102
•Average Score (average overall score of all teams at simulation end)=78
•Low Score (average overall score of all last place teams at simulation end)=51
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Performance Scoreboard
Expectations:
≥100 = excellent
90-99 = very good
80-89 = good
70-79 = fair
<70 = sub-par
Best-in-industry:
Scaled on 100
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Scoreboard (Cont’d.)
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Scoreboard (Cont’d.)
The winner is not
who is ahead the
longest, only who is
in front at the end
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Notable Quotable
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Course Grade (Cont’d.)
Peer Evaluations:
At the end of the exercise, you will be asked to
complete a 12-question evaluation of each of
your co-managers and a self- evaluation of your
own performance
Used to make final individual adjustments
These are completed online and can be
reviewed by clicking on the Peer Evaluation Link
on your Corporate Lobby Web page
Are for your instructor only and are completely
confidential … Please complete them in an
honest and professional manner
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Some Procedures
Follow the “Suggested Decision Procedures”
See the link on your Corporate Lobby Web page
Decision Schedule link on your Corporate Lobby Web
page has dates and deadlines for the decisions
The decision deadlines are strictly enforced since the
results are processed automatically on the GLO-BUS servers
immediately following the deadline
The results of each decision will be available online
one hour following the decision deadline (and usually
15 minutes)
You will be notified via e-mail as soon as the results
are ready
At that point you can log-on, see what happened, and
proceed with the next decision
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Schedule
Decision Deadline For Saving Entries
Practice Decision 1 - Practice Year 6 30-Jan-08 7:00 pm
Practice Decision 2 - Practice Year 7 6-Feb-08 7:00 pm
Quiz 1 6-Feb-08 9:00 pm
End of Practice Period (Data reset to Year 6
and practice results are no longer available) 7-Feb-08 11:59 pm
Note: See GLO-BUS
Decision 1 - Year 6 13-Feb-08 7:00 pm
Decision 2 - Year 7 20-Feb-08 7:00 pm
schedule for precise
Decision 3 - Year 8 27-Feb-08 7:00 pm deadlines for all simulation
Quiz 2 27-Feb-08 9:00 pm activities; please notify
3-Year Strategic Plan 5-Mar-08 7:00 pm instructor of any
Decision 4 - Year 9 5-Mar-08 7:00 pm
discrepancies
Decision 5 - Year 10 12-Mar-08 7:00 pm
Decision 6 - Year 11 19-Mar-08 7:00 pm
3-Year Strategic Plan 2-Apr-08 7:00 pm
Decision 7 - Year 12 2-Apr-08 7:00 pm
Decision 8 - Year 13 9-Apr-08 7:00 pm
Decision 9 - Year 14 16-Apr-08 7:00 pm
End-of-Game Peer Evaluations Available 23-Apr-08 6:00 pm
Decision 10 - Year 15 23-Apr-08 7:00 pm
Company Presentations 30-Apr-08 6:00 pm
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Tips for Success
Use the practice decision to become fully
acquainted with the menus and functionality built
into the screens
Make full use of all the “Help/More Info” sections
Be professional!
Run the company in a serious manner:
Practice making business decisions, learn to craft winning
strategies in a competitive market, and take responsibility for
the results of your actions
Don’t be imprudent, highly risky, or un-businesslike (that
would get you fired in a real company):
Who shoots from the hip almost always shoots themselves in
the foot
Don’t be a daring adventurer out to win some variant of a
videogame by making wild decisions and testing the limits of the
simulation
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Tips for Success (Cont’d.)
Lessons Learned from the Past
Do know the business Don’t be “all things to all people”
… benchmark rivals and self or you will be “stuck in the
Do agree on a long-term middle”
strategy and stick to it … being average is mediocre
... be internally consistent Don’t follow others
Do craft “customer value” … watch the competition to
make rapid adjustments
… build the needed
infrastructure and develop the Don’t treat projections as
business model to support your promises
strategy … use to examine small changes
Do invest early and often Don’t try to “game (or blame)
… initial decisions are critical but the system”
watch out for dead ends … evaluate the feasibility and
Do create effective decision risks of sustaining your strategy
making process Don’t panic or make radical
… organization and complete moves
member involvement … be patient but persistent
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Notable Quotable
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Questions?
Please eliminate the “middle man”!
Use the “help/more info.” screens
Contact GLO-BUS Technical Support
Team:
Send a message, submit a request, or ask a
question at http://www.glo-
bus.com/feedback.html
Phone (205) 348-8923
Ben A. Kahn / Paul Miesing “GLO-BUS” BADM 510-70 Strategic Management MCLA / U Albany
Dedicated to the Memory of My Son, Solomon Sharone Cyrus Jochnowitz-Kahn
University of Rochester, Class of 2010