TOPSIM General Management II

Transcription

1 TOPSIM General Management II Introduction Version 12.1 TOPSIM General Management II

2 What is a Management Simulation? The Management simulation presents a realistic model of a company The idea: a flight simulator for managers

3 What is a Management Simulation? Participants in the simulation will manage a (virtual) company. They will make typical business decisions in a realistic environment. They learn principles of business administration: how to use information in decision-making, and how to handle risk and uncertainty. They experience decision-making processes within a team while managing time constraints. Management simulations offer, through (virtual) experiences, a high degree of transferable knowledge and skills which participants can utilize in their daily work.

4 A View on Business To be able to think and act strategically can only be learned by means of acting and thinking in an strategic way.

5 A Company between desire... Costs Turnover

6 ... And reality

7 Management in tough times

8 Decisions in TOPSIM - General Management II Owners Banks - Puchasig Strategy - Quality Policy - Optimization - Just-in-time Supplier company evaluation production Investments - Purchasing/Leasing - Investment Appraisal - Risk Analysis - Sensitivity Analysis Material Production Controll - Personnel Planning - Relative Contribution Margins - Optimal Job Size Personnel Policy Personnel Cost Accounting - Cost Accounting - Product Calculation - Contribution Margin Accounting Operating Supplies Finance and Accounting - Balance Sheets - P&L - Fin. Accounting - Ratios Creation/ Analysis Product Inventory Transport A B C X Inventory Optimization Products - Marketing-Mix - Profit Optimization - Life Cycles - Product Proposal Policy - Quality Policy Market Success Control End Customer Retailer - Product Positioning - Target Group Analysis Competitors Competition Analysis Competition Strategy

9 Linear Thinking Price + Sales + Turnover Costs + - Net Income

10 Holistic Thinking p - Price +/- x U p Turnover Sales + K x + Costs + - Net Income

11 Balance of Decision Tools 11 Competition 3 Communication 4 Sales When and how to use? 1 EUR 2 Product Quality 5 Purchasing 1 Price 7 Turnover 6 Personal Development 8 Sales Volume 9 Costs 10 Annual Surplus

12 Successful Management Manager: Observer and part of the system Where and when do costs in a company arise? Aids: cost accounting, planning accounting, scenarios Where and how is money earned? Own Company Who reacts how to whom? What does the customer want? Are trends recognizable? Aids: market research reports, scenarios, business reports Customers, The Market Successful Management: Concepts, Scopes Are trends recognizable? Competition Aids: market research reports, scenarios, business reports Due to what is the competition successful?

13 Group Dynamics and Working Methods Results of Period x Everything is discussed at the same time Concentration on irrelevant, secondary problems Uneasyness when confronted with complexity Hasty decisions Use of old plans of action Principle of hope working methods within the group Comparison of performance to budget Analysis of market situation: figures and trends Analysis of the competition: decisions, scope for action, strategy Redefining one s scope for action Potential adjustment of objectives and strategies Testing decisions (simulation) Defining of decisions Results of Period x + 1

14 Goals of TOPSIM General Management II Understanding the company as a holistic and interrelated organization, in order to have sufficient alternative courses of action Understanding complex structures and transforming them into competitive advantages Understanding the production process and improving it to better reach the company s goals

15 Goals of TOPSIM - General Management II Understanding the company as a holistic and interrelated organization, in order to have sufficient alternative courses of action Understanding complex structures and transforming them into competitive advantages Understanding the production process and improving it to better reach the company s goals

16 Introduction to COPYFIX Inc. Functional Areas Sales Purchasing Production Personnel Research & Development Finance & Accounting

17 COPYFIX Inc. s Former Executive Board Functional areas Lines of communication Typical concerns

18 COPYFIX Inc. s Former Executive Board Paul Smith Mike Hughes Walter Hunt Finance and Accounting Purchasing Production Phil Miller Henry Winter Peter Rabbit Personnel Sales R & D

19 Sales What will be the size of the entire market in the next period? What are our competitors going to do? What should our market share be? What expenses are associated with our marketing-mix? How do we benefit from bulk buyers and requests for bids? How high are the costs of goods manufactured? Henry Winter How satisfied are our customers?

20 Research and Development What product attributes do customers desire? Which product attributes do we wish to provide? What are the costs involved in achieving this? Peter Rabbit How should we react to the developments of our competitors?

21 Purchasing How can we take advantage of economies of scale? How high are the storage costs? How much more must be purchased to receive quantity-based discounts? What are the input material requirements for the coming period? Mike Hughes

22 Production How much can the production lines produce? How much must/should be produced? What have we accomplished through lean management? How high should productivity be? What influences the costs for goods manufactured? Walter Hunt

23 Personnel What are the overall effects of expenditures on incidental personnel costs, training, and lean production? What are the staff requirements in production for the coming periods? How can we reduce absenteeism? What can we do to increase staff motivation? Phil Miller

24 Finance and Accounting How is income generated and where are costs incurred? How much profit must be made in order to survive? Are we working efficiently? Where is there potential for cost reductions? What is necessary in order to optimize the value of the company? What is our rating? What can we do to improve it? Paul Smith

25 Technical Data for Copy 1 Type Copying Speed Deskmodel 36 A4 copies per minute 12 A3 copies pro minute Copy per setting 1 99 Dimensions W L H mm Weight First page out 80 Kg Approx. 7 Sec. Paper supply 2 cassettes 500 sheets (A3, A4) Copy formats Cassette A5-A4 Sheet feeding A5-A3 Copying material Paper, Cassette, Sheet feeding Transparency, Self-adhesive labels Accessories Job interrupt key Auto 2-side copying Auto reset

26 Product Policy Approach Result Effect on 1. Technology: Hiring employees in the area of R&D 2. Ecology: Ecology-oriented investments 3. Value analysis: Expenses for external consultants Advance in technology Technology index Increase in environmental sustainability Ecology index Increase in efficiency Value analysis index - Market share - Rework costs due to higher technical standards (e.g. accuracy) - Market share - Rework costs - Material consumption Decisions in period 0: Achieved efficiency (as index) Technology 34 Employees Ecology 2.5 MEuro Value analysis 1.0 MEuro 100.0

27 Marketing Mix Product policy Technology, Ecology Heterogeneity Marketing - Mix Market 1 Private buyers through specialized retailers Lower price Price policy More sales Price in P 0 : 3000 Euro Price Sales Communication policy More More publicity sales Larger effect in the initial period. Expenditure in P 0 : 6.0 meuro Sales Distribution policy More sales employees More sales Sales empl. in P 0 : 100 Publicity Corporate Identity: Expenditure in P 0 : 2.0 meuro Transport costs during P 0 : 25 Euro/ machine

28 Customer Satisfaction 8 Corporate image 4 Price compared to competitors 5 Technology compared to competitors 2 Demand 3 Changing price 1 Customer satisfaction 10 Rating 6 Ability to supply 7 Age of equipment

29 Purchasing 1 photocopier COPY 1 1 unit materials/parts Quantity purchased (units) Euro/Unit Up to < Up to < Up to < and more 400 Materials ordered for production are immediately available. Shortages: Automatic express deliveries require a 20% additional charge.

30 Storage Materials / Parts Storage costs 0.05 meuro per 1000 units in the initial situation Final inventory in period 0 15,000 units at 527 Euro / Unit Finished Products Storage costs 0.10 meuro per 1,000 units in initial situation Final inventory in period 0 5,000 units at 2,046 Euro / Unit (costs of goods manufactured)

31 Existing Production Lines Production Normal Purchasing Remaining Deprec. Net book Other Environ- lines sustainable value life (meur/ value FC mental Type No. capacity (Units) (meur) (Periods) Period) (meur) (meur/ Period) index A A A A Σ /

32 Investments and Disinvestments Line Purchase Life span Norm. Other FC Environ- Residual Rational- Type price (Periods) sustain- (meur/ mental revenue ization (meur) able capacity Period) index (% of net book value) factor (Un./ Per.) A B C Data for Period 0

33 Investment in Environmental Technology Environmental index of the prod. lines (End of period 0) Cumulative investment in environmental technology (End of period 0) Achieved reduction of ecological damage (End of period 0) Ecological damage indicator of the company (End of period 0) Index meur 1.50 Points Index Environmental tax next period meur 1.50 Note: The environmental protection authority does not measure the environmental damage caused by the individual production lines, but that of the entire company. It therefore considers your environmental investments, with which you can reduce the environmental impact of the production lines.

34 Capacity and Production for Copy 1 Required production capacity Production capacity currently available Means to improve upon current situation Investments Disinvestment Maintenance Rationalization Overtime Manufacturing personnel required Manufacturing personnel currently available Means to improve upon current situation Recruitment Dismissals Overtime Process optimization Training Production capacity actually available Available staff capacity and productivity

35 Production Lines and Production Staff The manufacturing employees make the final product out of pre-fabricated devices on the production lines. Line No. 1 Line No units 9000 units One person can assemble 50 units of COPY I Line No units Line No units

36 Maintenance of the Production Line Necessary to prevent a reduction in capacity caused by wear and tear Maintenance factor (%) (Degree of availability of normal sustainable capacity) Expenditure for maintenance per period and production line in meur Type A Type B Type C 70 % % % % % Values between those given in this table can also be calculated.

37 Maintenance, Rationalization, and Available Capacity Normal capacity Maintenance factor Rationalization factor = Available Capacity II (100% utilization) = Overtime increases the available capacity by a maximum of 10%. Overtime is automatically scheduled when the projected output cannot be completely achieved with the capacity available. This causes additional step-fixed costs of 2.50 meuro and an additional premium on wages and salaries of 25%. Available Capacity II Overtime factor = Available Capacity III (110% utilization) = 44198

38 Productivity of Staff Expenses for process optimization and training increase productivity directly Index Cumulated expenses Training Process optimization Motivation Adaption Staff competence index Process optimization Motivation * index * index * Adaption index = Productivity Index I Effects of productivity are decreasing gradually due to knowledge loss if no countermeasures are taken.

39 Learning Curve Time Cum. Prod. Learning Curve Experience in production: (based on cumulative productivity increase up to previous period) Decreased time spent on production increases productivity: Productivity Index II Standard production cap. per person Productivity index I Productivity index II = Actual production capacity per person e.g. 50 e.g e.g = 54.08

40 Personnel Costs Cost centre Final workforces Wages & salaries in P0 in EUR, without non-salary staff costs Purchasing Administration Production R & D Sales Total 1204

41 Factors Determining Availability of Personnel Production, R & D, Sales Purchasing, Administration Decisions made about the total number of employees through employment / dismissal Adjusted automatically based on the sales revenue Purchasing staff Employees dependent on the sales revenue Administration staff

42 Costs Associated with Personnel I New hire: Dismissal: 12,500 Euro per person Effect on absenteeism 10,000 Euro per person Effect on absenteeism Non-salary staff costs: Period 0: 40% Effect on attrition and absenteeism Non-salary staff costs can be increased at will, whereas they may only be reduced by 3% at the most in comparison to the previous period.

43 Costs Associated with Personnel II Pension scheme: Production Productivity: Pension reserve in each period 5% of the total wages and salaries 50 photocopiers per employee in Overtime: Max. 10%. Additional premium of 25% on wages and salaries for overtime. Step fixed costs of 2.50 meur Dismissals > 5% Production, R&D, Sales: Severance packages discussed with the union (game facilitator)

44 Factors Influencing the Rating 2 Equity Ratio 3 Equity Capital 4 Annual Profit 5 Planning Quality 13 Free Cash-Flow / Debt 6 Overdraft Loan 12 Oper. Cash Flow / Debt 11 Technology P2 10 Technology P1 1 Rating 14 Interest Rate of Loan 7 Staff Productivity 9 Customer Satisfaction 8 Staff Motivation

45 Finance and Accounting: Loans Medium-term loans Term: 1 period Interest accumulates in the period. Repaid in the following period Interest rate depends on the amount of equity capital (in the previous period) Interest rate in Period 0 : Up to the amount of equity capital: 8.0% Up to twice the amount of equity capital: 10.0% Above: 12.0%

46 Finance and Accounting: Loans Long-term loans Medium-term loans can be replaced by long-term loans (10 years). The advantage gained here by the lower interest rate is counteracted by the fact that premature repayment of the loan is not allowed. Interest rate in Period 0: 7.0 %

47 Finance and Accounting: Loans Overdraft Loan Automatically granted if the minimum cash amount of 0.1 meuro is not available Interest due in the current period Repaid in the following period Interest rate in period 0: 13.0 %

48 Finance and Accounting Customer payment patterns The sales revenue for the period is received as follows : Securities 80% in the current period 20% in the following period Term: 1 period The yield on interest is credited in the current period. Repaid in the following period Interest rate in period 0: 3.0%

49 Finance and Accounting Taxation Possible losses are carried forward until a positive balance is attained. Tax rate: 45% Dividends Usually, 50 % of the profits will be distributed in the next period as dividends.

50 Internal Network 15 Purchase Volume 7 Ecology Technology Advertising Sales Force 8 C.I. 3 Price 17 Storage Costs 16 Material Costs 11 CGM 2 Sales Volume 9 Competitors 26 Value Analysis 24 Personnel Costs 12 R & D 13 Sales costs 25 Cum. Prod. Learning Curve 10 Cost of Product. 1 Sales Revenue 18 Loans 20 Interest Expense 21 Interest Rate 19 Investment NewLines 14 Admin. Costs 22 Operating Result 23 Profit

51 External Network 3 Profit/Loss (Period) 4 Dividends (Period) 5 Dividends (Cumulative) 2 Own Equity 6 Return on Sales 13 Dept/Equity Ratio 1 Share Price / Comp. Value 7 Mktg. Mix (Cumulative) 12 Ecology Ind. Production 8 No.Products / Markets 11 Planning Quality 10 Rank (Sales) 9 Image Factor

52 Material Flow Material Flow (period 0) Supplier units Production personnel Initial workforce Attrition 52 + Hired 50 - Dismissed 0 = Final workforce Loss from absenteeism 68 = Utilizable staff 800 Capacity 100% Productivity / Person 50 Copy I per period Lean production index 1.00 * Staff competence index 1.00 = Productivity Index I 1.00 Stock Input material Units Initial inventory Qty. received f. supplier Qty. used in production = Final inventory Production volum e copiers Capacity 99.6% One Copy I requires one unit of capacity Stock Finished products units Initial inventory Qty. produced Qty. distributed = Final inventory 4000 Possible capacity Maintenance factor 0.96 Rationalization factor 1.00 = Available capacity Sales: Copy I

53 Decision Form Decision Form Period: 1 Team: ❺ Planned figures: Sales revenue for Product 1 in Market 1 excluding sales revenue from bulk buyers or tenders

54 Steps of the Analysis of the Planning Model I 3. Are the values corresponding to the product 1-new better than the those of product 1-old? 2. Will production meet sales requirements? If not: are you producing enough? 1. Is capacity under 100%? If yes : Too much personnel and /or production capacity. 4. How did you managed to change the manufacturing costs in comparison to the previous period? 7. An overdraft loan means more loans! 6. If cash is > 2 MEUR, you can reduce loans. 5. Is the annual profit good enough?

55 TOPSIM - GENERAL MANAGEMENT II : PRODUCTION PLAN Company: Period: Production Staff (People) Initial workforce - Attrition + Hired - Dismissed = Final workforce - Loss from absenteeism = Utilizable staff Staff Productivity MEUR Competence Process optimization Learning curve Knowledge loss Other factors = Resulting productivity Index One production worker can produce copiers per period Purchasing (Units) Quantity ordered: Stock of Input Materials (Units) Initial inventory + Qty. received from supplier - Qty. used in production = Final inventory Production (Units) Production order Stock of Finished Products (Units) Initial inventory + Quantity produced - Quantity distributed = Final inventory Market 1 + Bids won + Bulk buyers + Market 2 = TOTAL Sales (Units) Materials required: units of material per copier Producing one copier requires units of capacity Production Line Capacities No. Production Line - Type A Production Line - Type B Production Line - Type C = Total Units Marketing-Mix (for the various markets if applicable) Price (EUR) Promotion (MEUR) Distribution (People) CI (MEUR) Technology (People) Ecology (MEUR) Possible capacity * Maintenance factor = Available capacity

56 Teams of Experts Three Teams Procedure: 1. Team members of a company are assigned to their respective functional team. Company 1 Sales 2. The functional teams complete their assignment with the help of the participants manual (45 minutes) for a presentation in plenary. 3. Experts present their results in plenary (5 to 10 minutes per team). 4. Participants go back to their companies as the first period is being prepared. Company 2 Company 3 Purchasing Storage Personnel R&D Production

57 Teams of Experts Four Teams Procedure: 1. Team members of a company are assigned to their respective functional team. 2. The functional teams complete their assignments with the help of the participants manual (for 45 minutes) and prepare a presentation. 3. Experts present their results in plenary (5 to 10 minutes per team). 4. Participants go back to their companies to prepare decisions for the first period. Comp. 1 Comp. 2 Comp. 3 Expert team A Sales & Marketing Expert team B Purchasing Storage Personnel Expert team C R&D Production Comp. 4 Expert team D Finance and Accounting

58 Teams of Experts Five Teams Procedure: 1. Team members of a company are assigned to their respective functional team. 2. The functional teams complete their assignments with the help of the participants manual (for 45 minutes) and prepare a presentation. 3. Experts present their results in plenary (5 to 10 minutes per team). 4. Participants go back to their companies to prepare decisions for the first period. Comp. 1 Comp. 2 Comp. 3 Comp. 4 Expert team A Sales & Marketing Expert team B Purchasing Storage Personnel Expert team C R&D Production Comp. 5 Expert team D Finance and Accounting

59 Phases of the Seminar Introduction to the seminar Professional orientation and preparation: teams of experts Analysis of the simulation's results Depth Transfer to the company's practices and one's own tasks Analysis and decisions within the "company"

60 Guideline Questions 1. What kind of company are we working for? 2. What do we want to have achieved by the end of the game? What are our goals? 3. How do we plan to achieve our goals? What are suitable strategies? 4. How will we organize ourselves within our team? 5. How do we organize the work within our team (methods and procedures)? 6. How can we observe and follow relevant factors and events (to identify early warning signs)?

61 Stockholders Meeting 1. What was planned? What were our goals and strategies? 2. How did things arise? (Decisions and Changes) Sales Marketing mix Net income 3. Where do we stand? 4. How would we have continued What are our prospects for the next 5 periods