AIMA Bizlab – Learner Manual 

Business Strategy Simulation 

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 Table of Contents

1 INDUSTRY CONDITIONS .................................................................................................................................... 5

1.1 COMPANY DEPARTMENTS ...................................................................................................................................................... 5
1.2 COMPANY SUCCESS .................................................................................................................................................................. 5
2 INDUSTRY CONDITIONS .................................................................................................................................... 6
2.1 BUYING CRITERIA .................................................................................................................................................................... 6
2.1.1 Price ........................................................................................................................................................................................... 6
2.1.2 Product Specifications ....................................................................................................................................................... 6
2.1.3 Branding .................................................................................................................................................................................. 7
2.2 BUYING CRITERIA BY SEGMENT ............................................................................................................................................ 7
2.3 STOCK OUTS AND SELLER’S MARKET .................................................................................................................................. 7
3 MANAGING YOUR COMPANY ............................................................................................................................ 8
3.1 PRODUCT DESIGN ..................................................................................................................................................................... 8
3.1.1 Price ........................................................................................................................................................................................... 9
3.1.2 Inventing Smartphones .................................................................................................................................................... 9
3.2 MARKETING MIX......................................................................................................................................................................10

3.2.1 Target Segment .................................................................................................................................................................. 10

3.2.2 Promotion and Advertising Budgets ........................................................................................................................ 10
3.2.3 Sales and Distribution ..................................................................................................................................................... 11
3.3 OPERATIONS ...........................................................................................................................................................................12
3.3.1 production planning ‐ Sales Forecasting ................................................................................................................ 12
3.3.2 Plant Expansion ................................................................................................................................................................. 13
3.4 MANPOWER .............................................................................................................................................................................14
3.4.1 Total Workforce ................................................................................................................................................................. 14
3.4.2 Training and innovation Budget ................................................................................................................................ 14
3.5 FINANCES .................................................................................................................................................................................15

3.5.1 Financial planning ‐ Debt .............................................................................................................................................. 15

3.5.2 financial planning ‐ equity ............................................................................................................................................ 15
3.5.3 Emergency Loans .............................................................................................................................................................. 16
3.6 SPECIAL PROJECTS..................................................................................................................................................................16
4 MOVING TO NEXT QUARTER .......................................................................................................................... 17
4.1 SENSITIVITY ANALYSIS ..........................................................................................................................................................17
4.1.1 break even: Income vs sales forecast ........................................................................................................................ 18
4.1.2 break even: cash flow vs sales forecast ................................................................................................................... 18
4.2 GENERATING RESULTS – RUNNING SIMULATION .............................................................................................................19

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 5 DASHBOARD ‐ BALANCED SCORECARD ...................................................................................................... 21
6 REPORTS AND ANALYTICS .............................................................................................................................. 23
6.1 MARKET ECONOMY .................................................................................................................................................................24

6.2 MARKET SHARE .......................................................................................................................................................................25

6.3 BENCHMARKING REPORT .....................................................................................................................................................26

6.4 SALES ANALYSIS REPORT ......................................................................................................................................................27

6.5 FINANCIAL STATEMENTS REPORT .....................................................................................................................................28

6.6 R&D REPORT ..........................................................................................................................................................................29

7 FINAL GUIDELINES – DO’S AND DON’T’S ..................................................................................................... 30

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 Table of Figures
Figure 1 Planning Screen ........................................................................................................................................................................................... 8
Figure 2 Product Design Screen.............................................................................................................................................................................. 9
Figure 3 Marketing Mix 1........................................................................................................................................................................................ 11
Figure 4 Marketing Mix 2........................................................................................................................................................................................ 12
Figure 5 Operations Screen – Production Planning .................................................................................................................................... 13
Figure 6 Operations Screen - Capacity Planning .......................................................................................................................................... 14
Figure 7 Manpower planning................................................................................................................................................................................ 15
Figure 8 Finance Screen .......................................................................................................................................................................................... 16
Figure 9 Special Projects Screen .......................................................................................................................................................................... 17
Figure 10 Sensitivity Analysis Screen ............................................................................................................................................................... 19
Figure 11 Run Simulation ....................................................................................................................................................................................... 20
Figure 12 Dashboard Screen 1 ............................................................................................................................................................................. 21
Figure 13 Dashboard Screen 2 ............................................................................................................................................................................. 22
Figure 14 Analysis Screen ...................................................................................................................................................................................... 23
Figure 15 Market Economy Report Screen ..................................................................................................................................................... 24
Figure 16 Market Share Report Screen ............................................................................................................................................................ 25
Figure 17 Benchmarking Report Screen .......................................................................................................................................................... 26
Figure 18 Sales Analysis Report Screen ........................................................................................................................................................... 27
Figure 19 Financial Statements Screen ............................................................................................................................................................ 28
Figure 20 R&D Report Screen ............................................................................................................................................................................... 29

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 1 INDUSTRY CONDITIONS

Congratulations, you are now in charge of a smartphone manufacturing company. Your firm is one of the
players in an industry where all competitors currently operate with similar products. However, the
industry has entered a high growth phase and competition would henceforth be intense.

Although last quarter’s financial results were decent, your products are getting old, your marketing efforts
are falling short, your production lines need revamping and your financial management is almost
nonexistent.

Competition in the high growth era means you can no longer ignore these issues. If you do, competitors
with better products and/ or lower prices will take your market share.

1.1 COMPANY DEPARTMENTS

You have six main departments or functional areas as explained below:

PRODUCT DESIGN

Product design is not a department per se but a group of people from other functional areas including
marketing, research, finance and operations. People in product design are responsible for creating new
products as well as deciding on updated specs and pricing for existing products.

MARKETING

Your Marketing Department prices and promotes your products. It interacts with your customers via its
sales force and distribution system.

OPERATIONS

Your Operations Department determines how many units will be manufactured during the quarter. It is
also responsible for capacity augmentation.

FINANCE

Your Finance Department makes sure your company has the resources it needs to run through the quarter.
The department can raise money via long term loan or by issuing shares.

HUMAN RESOURCES

HR department looks after employee recruitment (or layoffs), innovation as well as training.

SPECIAL PROJECTS

The Special Projects department is responsible for conducting special project initiatives geared towards
(1) increasing sales, (2) minimizing the cost or (3) enhancing the product features

1.2 COMPANY SUCCESS

The board of directors, shareholders and other stakeholders expect you to make the company a market
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 leader. Successful managers will:
• Analyze the market and its competing products;
• Create and execute a strategy; and
• Coordinate company activities.
Best of luck in running a profitable and sustainable company!

2 INDUSTRY CONDITIONS

The information reported in various market research reports will help you understand your customers.

Your customers fall into different groups which are represented by market segments. A market segment is
a group of customers that has similar needs. The segments are named as:

CONSERVATIVES:

 Look for entry level smartphones

 Prefer specs that satisfy their minimum needs
 Large segment in terms of number of unit sales
 High annual segment growth rate

VALUE-SEEKERS:

 Demand better features with higher storage

 Typically prefer larger screen size
 Paying capacity higher than conservatives
 Lesser number of unit sales compared to the first segment

AFFLUENTS:

 High emphasis on product quality

 Typically go for high end displays without compromising performance
 Willingness to spend is more if the product is great

2.1 BUYING CRITERIA

Customers within each market segment employ different standards as they evaluate products. They
consider three buying criteria: Price, Product specifications and Branding.

2.1.1 PRICE
Each segment has different price expectations. One segment might want inexpensive products while
another, seeking advanced technology, might be willing to pay higher prices.

2.1.2 PRODUCT SPECIFICATIONS

Each product has 4 important technical specs:
a)Memory – RAM of the device in GB.
b)Camera – Camera resolution in mega pixels (mp)
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 c) Storage – Storage space in GB.
d)Screen Size – Size of the screen in inches.
Rest of the device features are designed around these key specs.

2.1.3 BRANDING
Consumers prefer better known and trusted brands although they are not averse to try a new
brand/product. Especially in case of repeat customers, loyalty might just be the factor that tilts the scale in
favor of a particular brands. This makes it all the more important for firms to provide nothing but the best
product experience to their customers.

2.2 BUYING CRITERIA BY SEGMENT

Buyers in each segment place a different emphasis upon the three buying criteria. For example, some
customers are more interested in price, while others are more interested in size of the device.
Specs and price criteria change every quarter as new technology comes to market. Your customers want
perfection, but it is impractical to have “perfect” products. In many cases you will have to settle for “great”
products, but the better the products, the higher the costs. Your task is to give customers great products
while still making a profit. Your competitors face the same dilemma.
Marketers speak of “the 4 P’s” – price, product, promotion and place. Price and product are found in the
buying criteria. Together they present a price-value relationship. Your promotion budget builds
“awareness,” the number of customers who know about your product before sourcing. Your sales budget
(place) builds “accessibility,” the ease with which customers can work with you after they begin sourcing.
To the 4 P’s we can add one additional element– availability. Availability addresses inventory shortages.

2.3 STOCK OUTS AND SELLER’S MARKET

What happens when a product generates high demand but runs out of inventory (stocks out)? The company
loses sales as customers turn to its competitors. This can happen in any month. The Sales Analysis Report
can help you diagnose stock outs and their impacts.
Usually, a product with a low inferior features and/or higher price has low sales. However, if a segment’s
demand exceeds the supply of products available for sale, a seller’s market emerges. In a seller’s market,
customers will accept products perceived to provide low value as long as they fall within their budget and
spec expectations.
How can you be sure of a seller’s market? You can’t, unless you are certain that industry capacity cannot
meet demand for the segment. In that case, even poor products will stock out as customers search for
anything that will meet their needs.
Consider the question, “What happens to price if every competitor has just enough capacity to meet demand
from its customers?”

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 3 MANAGING YOUR COMPANY

It’s time to unlock the doors and turn on the lights. Welcome to your company. Remember, entering
decisions is the easy part, determining what decisions to enter requires some thought.
Every company starts the simulation with three products. You have a common assembly line for all
products. Products can be terminated or added. Your company must have at least one product and cannot
have more than five. Your decisions, made on the first day of every quarter, are carried out by your
employees throughout the period.
To take the decisions for your company, you would need to select the “Planning” page from the left menu.
The decisions are categorized under different sections based on the different functional departments.

Figure 1 Planning Screen

3.1 PRODUCT DESIGN

Each company has 3 brands to begin with. Creating a brand strategy involves making a plan for all the brand
specific functional aspects. Customers’ expectation evolves depending upon the available products in the
market and technological advancements. Companies need to upgrade the features to satisfy their needs.
This affects material costs. The more advanced the specs, the higher the cost.
In the product design page, the specifications of each product can be chosen from the dropdown menu of
options. More options get unlocked in subsequent quarters depending on the success of certain R&D
projects. For more details on this, refer section 3.6 Special Proejcts
Note: The unsold units of the old product are reworked to match the new specifications.
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 Figure 2 Product Design Screen

3.1.1 PRICE
Each segment has a specific budget for the product. But there is no concrete research data to determine the
exact range of budget. However, companies have access to reports that reveal the specs of competing
products, their price points and sales. This gives a fair idea of the price sensitivity of the customers. The
closer the price is to their budget, higher are the chances of making a sale (assuming rest of the factors
remain the same).
The price of the brands has to be entered in front of MRP text. The entered price is in Rs. ‘000.

3.1.2 INVENTING SMARTPHONES

New products are assigned a name, specs and price. Of course, these specifications should conform to the
criteria of the intended market segment. Since the technology is already available with the company,
the assembly line is capable of churning the new product immediately once the specs are frozen.
This option is available from quarter 3.

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 3.2 MARKETING MIX

3.2.1 TARGET SEGMENT

Company needs to specify the target segment for each product. It could select any one from the three
consumer segments mentioned earlier. All the advertisement and promotion budgets of the brand would
be specifically channeled to reach the selected target segment.

3.2.2 PROMOTION AND ADVERTISING BUDGETS

Promotion and advertising budgets affect product appeal.

ADVERTISING

Each product’s advertising budget determines its level of awareness. A product’s awareness percentage
reflects the number of customers who know about the product. An awareness of 50% indicates half of the
potential customers know it exists. From one quarter to the next, some of those who knew about a product
forget about it. Therefore, advertisement is an ongoing expense.
Your advertisement budget is automatically optimized to reach the maximum number of people. It is also
assumed that people in your target segment are 50% more likely to notice the advertisement than people
in other segments.

PROMOTIONS

Promotions refer to any special incentives or offers provided to channel partners or the consumers. Your
promotional budget is automatically optimized to strike the balance between consumer and trade
promotion. Consumer promotion includes various promotional schemes and offers. E.g. 10% discount
during specific events, buy a smartphone and get an accessory free etc. The promotional cost covers the
extra expense on discount/freebies and also the cost of advertising the offer. Any extra incentive in the
form of a gift or discount offered to channel partners falls under the category of Trade Promotion. This is
a push strategy to sell the products. It impacts both accessibility as well as sales of your brand.

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 Figure 3 Marketing Mix 1

3.2.3 SALES AND DISTRIBUTION

There are 3 sales channels for company through which the products are sold to the end consumers:

MODERN RETAIL

Modern Retail is the upcoming retail format in the region. It includes large retail chains as well as online
retailers. They purchase in bulk and attract consumers via discounts. The contribution of Modern Retail to
sales is less to begin with but the growth rate is high compared to other channels.

COMPANY OWNED STORES

Company owned stores are under an associate company but for all practical purpose, they are treated as
own stores. The company has reasonable presence and penetration in the market. Typically, the buyers
expect the sales man to be more knowledgeable about products and to guide him to select the appropriate
brand. It represents a very crucial channel in distribution strategy for the company.

DISTRIBUTORS

All sales via traditional retail outlets is routed via distributors. Even though the company is selling to
distributors who in turn sell to whole-sellers or retailers, the company needs dedicated sales people to help
the distributor in converting more stores. Distributors account for the largest percentage of sale among all
the channels.

STOCK OUTS AND INVENTORY

The company needs to decide the sales target to be given to sales people for each channel for every brand.
The products are distributed in the same ratio as targets. If the demand in a particular channel exceeds the
supply, you end up with stock outs. If the demand is lesser than the supply, there is inventory pile up. Cost
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 of maintaining inventory is borne by the company.
It should be kept in mind that the total available stock for distribution includes last quarter’s ending inventory.
For example, if there are 240 units of inventory leftover and the new production target is 1500 for a brand,
then 1740 is the total units available for distribution. This is then transported according to % allocated to
each channel.
Note: Margins for channel partners are same for all 3 distribution channels. Therefore there is no
financial advantage of preferring a particular channel over others.

Figure 4 Marketing Mix 2

3.3 OPERATIONS

The operations department decides on Production and Capacity planning.

3.3.1 PRODUCTION PLANNING - SALES FORECASTING

Accurate sales forecasting is a key element to company success. Manufacturing too many units results in
higher inventory carrying costs. Manufacturing too few units results in stock outs and lost sales
opportunities, which can cost even more. While it is impossible to ascertain the exact demand, close
estimation by the marketing team substantially impacts the revenue as well as costs.

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 Figure 5 Operations Screen – Production Planning

3.3.2 PLANT EXPANSION

Capacity is defined as the number of units that can be produced on the assembly line in a single quarter. All
companies have the same overall capacity to begin with. Later on you may choose to expand the capacity
based on market demand.
Capacity can only be increased by certain units at a time. These options would be shown as small plant,
medium plant and large plant on your decision page. Increase in capacity require a full quarter to take
effect– increase it this quarter, use it next quarter.

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 Figure 6 Operations Screen ‐ Capacity Planning

3.4 MANPOWER

3.4.1 TOTAL WORKFORCE

Total manpower of the company is to be entered in the “planned workforce” field. Based on the production
and other decisions, required workforce is automatically calculated and shown. However, you need to take
the final call on the actual number of employees. Note that both hiring as well as firing are associated with
extra costs. Shortfall in actual number of workers may lead to lower production/sales and higher attrition.

3.4.2 TRAINING AND INNOVATION BUDGET

In this industry, after sales service is a critical success factor. Companies which are able to provide a better
experience to the end customer tend to receive better word of mouth than others. In an era where products
are getting commoditized, this is a potential differentiating factor. Amount spent on training and
innovation leads to higher productivity and lower turnover and also increased service level. Estimated
change in productivity and service level is shown corresponding to the chosen budget. Note that ‘Required
Workforce’ explained in the above section doesn’t include productivity gains (if any).

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 Figure 7 Manpower planning

3.5 FINANCES

3.5.1 FINANCIAL PLANNING - DEBT

Company can also raise long term funds from banks. These are issued for a period of 5 quarters. Your
company pays x% brokerage fee for raising long term loan. As a general rule, long term loans are used to
fund long term investments in capacity. Banks will lend total amounts up to 80% of the value of your plant
and equipment (the Production Department’s capacity).

3.5.2 FINANCIAL PLANNING - EQUITY

Stock issue transactions take place at the current share price. Your company pays a 5% brokerage fee for
issuing stock. New stock issues are limited to 4,00,000 shares/quarter..
As a general rule, stock issues are used to fund long term investments in capacity, new product
development or research projects. Stock price is driven by a number of factors including profits, revenue,
assets, dividend, future outlook etc.
The dividend is the amount of money paid per share to stockholders each quarter. Rate of dividend has
been fixed by the board of directors and cannot be altered. However, this simulation is unlike the real
world in one important aspect– there are no external investment opportunities. If you cannot use profits
to grow the company, idle assets will accumulate.
Note: When new shares are issued, the impact on market cap is marginal. Therefore, share price of
each share would be lower after each new issue.

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 3.5.3 EMERGENCY LOANS
Financial transactions are carried on throughout the quarter directly from your cash account. If you manage
your cash position poorly and run out of cash, the simulation will give you an emergency loan to cover the
shortfall. The loan comes from a gentleman named Big Shark, who arrives at your door with a checkbook
and a smile. Big Shark lends you the exact amount of your shortfall. You pay 25% interest rate on this loan.
You do not need to do anything special to repay an emergency loan. The interest penalty only applies to the
quarter in which the emergency loan is taken, not to future quarters. The total amount displays in the Debt
due cell under Debt.
Emergency loans depress stock prices, even when you are profitable. Stockholders take a dim view of
your performance when they witness a liquidity crisis. Emergency loans are often encountered when last
quarter’s sales forecasts were higher than actual sales or when the Finance Department fails to raise funds
needed for expenditures like capacity purchases.

Figure 8 Finance Screen

3.6 SPECIAL PROJECTS

Special Project Initiative department (previously known as R&D) is the nerve center of everything futuristic
in the company. At any moment of time, special project team is busy working on multiple projects. These
projects could either help in a) increasing sales, b) reducing costs or c) enhancing products. Each of these
projects require a quarter to complete.

The outcome of the undertaken project (success or failure) is known in the subsequent quarter.

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 For product enhance projects, successful outcome entails opening up of more options for your product
design team to define product specs. Without product enhancement research, the company wouldn’t be
able to update its products and consequently lose out to competitors.

Like all innovative ideas, there exists an element of uncertainty about the final outcome. The special project
team has done a good job in evaluating project risks and these are indicated as low, medium or high.
However, the final call on investing in the projects rests on your shoulders.

Figure 9 Special Projects Screen

4 MOVING TO NEXT QUARTER

To transition to next quarter, you need to click on “Run Simulation” option on the left menu. Before
transitioning, you are presented with a sensitivity analysis report to review your plan of action.
4.1 SENSITIVITY ANALYSIS

Forecasting requires a little math and a little logic. For example, does your forecast predict your product
will acquire half a segment’s sales when there are four or five products in the segment? Unless your
product’s specifications are significantly superior to the other products and your price is at the low end of
the range, it is not likely that you will acquire half the sales. Does your forecast predict you will take only
one tenth of the sales when there are four or five products in the segment? Unless your product’s
specifications are significantly inferior and your price is at the high end of the range or above, chances are
you can sell more.

For the sake of financial planning, a sensitivity analysis tool is available in this simulation. This tool checks

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 all the decisions and generates the proforma income and cash flow statement. If you enter a forecast that
is unrealistically high, the proforma statement will take that forecast and project unrealistic revenue.
Reverse would happen if the forecast is unrealistically low.

NOTE: The proforma Income statement and proforma cash flow statement show the forecast under
best case scenario i.e. the company is able to sell 100% of all the products. However, the reality
could be very different. To explain this, break even charts are shown.

Sensitivity Analysis Page gives you a picture right from 0% of the sales achieved to 100% of the sales
achieved. One can see how financial statements vary and look like at different sales percent achieved. This
page helps you prepare for the worst case to best case scenarios.

4.1.1 BREAK EVEN: INCOME VS SALES FORECAST

The X axis shows different level of sales w.r.t. total units available. If the company has 500 units in inventory
and produces 7500 units in the quarter, then 8000 units is available for sale. 80% on X-axis would mean
80%*8000 i.e. 6400 gets sold. The Y axis shows different profit projections.
The chart plots expected profit levels at different level of sales. For example, in the chart below we can see
that the breakeven is at 90%. It means the company needs to sell more than 90% of total units to achieve
profitability in the current quarter.

4.1.2 BREAK EVEN: CASH FLOW VS SALES FORECAST

The X axis shows different level of sales w.r.t. total units available. If the company has 500 units in inventory
and produces 7500 units in the quarter, then 8000 units is available for sale. 80% on X-axis would mean
80%*8000 i.e. 6400 gets sold. The Y axis shows cash balance projections.
The chart plots expected cash levels at different level of sales. For example, in the chart below we can see
that the breakeven is at 60%. It means the company needs to sell more than 60% of total units to achive
profitability in the current quarter. If the sales fall below break‐even point (60% in the current
example), the company would go bankrupt!

TIP: After studying the sensitivity reports, you can always go back to decisions to improve them and come back
to check the impact on sensitivity.

TIP 2: The profits and cash balances are projections and real results are going to be different.

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 Figure 10 Sensitivity Analysis Screen

4.2 GENERATING RESULTS – RUNNING SIMULATION

Once you are satisfied by the result of sensitivity analysis, click on the “run Simulation” button on the
bottom of the page. Instantly, you would transition to the next quarter and would be redirected to
Dashboard screen which contains the result of the quarterly performance.

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 Figure 11 Run Simulation

   

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 5 DASHBOARD - BALANCED SCORECARD

Dashboard provides a summary of the key metrics. It also shows competitive position of all players in the
market. Performance of teams is measured via Balanced Scorecard. Balanced Scorecards allow companies
to gauge their performance by assessing measures in four categories:

• Financial– includes profitability and stock price;

• Customer– includes market share and customer service level;
• Internal Business Process– measures plant utilization and demand fulfillment;
• Learning and Growth– evaluates employee productivity and investment in innovation.

Note that on each parameter, a score between 0 and 100 is generated. This is not the same as the KPI value.
For e.g. a score of 0 on stock out costs means that the company is losing a lot of business due to stock out.
A score of 100 would mean there are no stock out and demand is sufficiently met. Similarly, a score of 20
on market share doesn’t mean that the market share is 20%. Actual Market Share could be very low (<10%)
which resulted in a score of 20 out 100.

Figure 12 Dashboard Screen 1

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 Figure 13 Dashboard Screen 2

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 6 REPORTS AND ANALYTICS

Modern day businesses are built on the foundation of data driven decision making. Gone are the days where
intuition alone could drive major business decisions. Your company firmly believes in this model. All the
department heads have been strongly advised to make use of the multiple research reports available at the
company’s disposal.
Report are accessible via “Analysis” option on the left menu.

Figure 14 Analysis Screen

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 6.1 MARKET ECONOMY

This report contains data on demand (forecast and industry news) as well as supply (Industry Production
and Industry Sales). The demand forecast section has both estimated demand and industry update that
maybe useful in understanding market trends.

Note that all the data in the report pertains to entire industry and not just your company.

This report also contains the capacity data of different teams.

Figure 15 Market Economy Report Screen

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 6.2 MARKET SHARE

Market Share report shows the market share of all competitor based on volume i.e. units sold as well as
revenue i.e. revenue generated.
The report also shows the share by volume and revenue of your company’s brands. This helps in
understanding the contribution of each brand to company’s sales.

Figure 16 Market Share Report Screen

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 6.3 BENCHMARKING REPORT

This report helps in benchmarking the company’s products against the competition. Not only does it show
specification, it also mentions their price and market share by volume and value.

This is extremely useful in understanding the specifications that are being preferred by customers, price
point at which they are most likely to spend, strategy of the competitors and likelihood of product
upgradation etc.

Figure 17 Benchmarking Report Screen

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 6.4 SALES ANALYSIS REPORT

The report shows the share by volume and revenue of your company’s brands. This helps in
understanding the contribution of each brand to company’s sales.
It also shows inventory for each brand that is leftover in each channel. A large inventory pileup in a
channel indicates oversupply whereas 0 inventory in a channel indicates stock outs.

Figure 18 Sales Analysis Report Screen

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 6.5 FINANCIAL STATEMENTS REPORT

The company releases the cash flow and income statement at the end of quarter. It shows the previous
quarter’s performance. These statements help in comparing the performance against previous
performance. A close scrutiny of the changes (growth/decline) could reveal a lot about the challenges and
opportunities in front of the company.

For e.g. If revenue increases but profitability suffers, the management needs to ask itself – is the extra
revenue worth the investment? Or is it because the company took on huge debt to fund expansion instead
of balanced approach? Is the revenue decreasing? What are the gross margins? Such questions become the
starting point to delve deeper into decisions and identify scope of improvements.

Figure 19 Financial Statements Screen

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 6.6 R&D REPORT

As mentioned in “Special Projects” section, investments made in projects do not guarantee success. R&D report shows
a summary of the investments made in the previous quarters and their status – Successful, Partially successful or
Failed.

Figure 20 R&D Report Screen

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 7 FINAL GUIDELINES – DO’S AND DON’T’S

 Read the manual carefully before starting the simulation

 Keep the manual open while using the simulation. Refer to corresponding section, whenever there
is a doubt.
 The correct order for using the simulation is:

• Check overall position

Dashboard • Review balanced scorecard

• Analyse each report carefully and make notes

Analysis

• Enter your decisions

Planning

• Check Sensitivity analsysis, Replan if necessary and finally submit/run

Simulation
simulation

 Create your own models in excel for projections.

 Before entering decisions, define the overall strategy of your company
 Use the various analysis tools i.e. BCG, SWOT, 5 FORCES model as and when necessary before
coming to actual planning
 Study competitor’s data carefully

ALL THE BEST!

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