Fluent Essays

Stratsim Reflection (individual assignment) At lease 800 words. Due may 20th via Canvas The purpose of this assignment is to ask you questions that can help you understand factors that help or hurt the development of stratsim teams and apply those lessons to your future teams. Please detail your stratsim team experience following the transition to remote work as a result of COVID-19. Specifically: a) What happened right after the transition related to your stratsim team? b) Did anyone take on a new or different leadership role or did you perform tasks in a similar way as before the transition? c) Did everyone contribute in the same way or did some members contribute less? What were the challenges with working remotely and how (or did) you overcome those challenges? How would you say leadership emerged in your team (what does it look like when it emerges)? Has it been the same person or multiple people? Did you team have strong processes (i.e., planning, action and interpersonal: see teaming ppt) and psychological safety? Did that change after the COVID-19 transition? INTRODUCTION STRATSIMMANAGEMENT 1 STRATSIMMANAGEMENT In this computer simulation, your team will take over the management of one of five automobile manufacturing companies for up to 10 simulated years and make decisions in the areas of: Marketing Distribution Manufacturing R & D Finance Integrated, long-term, market-focused strategy, while managing for short-run outcomes. 2 Goals and Objectives Financial Projections Strategy Business Tactics THE STRATEGIC PLANNING PROCESS 3 THE STRATEGIC PLANNING PROCESS Variable Costs Business Fixed Costs Discretionary Expenditures Breakeven, ROI, CLV, etc. Reasonableness of Sales Forecast Goals and Objectives Financial Projections Strategy Business Tactics 4 STRATSIM ENVIRONMENT Based on the Automobile Industry. Consumer market sold via dealerships Currently, low GDP and inflation growth rates. Demand sensitive to GDP, interest rates, and decisions that you make as an industry. Maximum of 10 yearly decision periods. 5 STRATSIM ENVIRONMENT Vehicle Class Size Engine / Performance (“HP”) Interior, Styling, Safety, Quality (“ISSQ”) AND… Price (from consumer perspective) Cost (from manufacturer perspective) Principle Characteristics THE PRODUCTS: CARS & TRUCKS 6 STRATSIM ENVIRONMENT 3 Product Classes with Existing Vehicles: (E)conomy (F)amily (T)ruck Plus potential new classes if developed (S)ports (L)uxury (M)inivan THE PRODUCTS: VEHICLE CLASSES (U)tility (A)EV 7 STRATSIM ENVIRONMENT Up to 7 Firms (A-G), each with the same 3 vehicles on the market. Firm A . . . . . . . . . . . . . . . . . . Alfa ( F+ ), Alec ( E ), Ace ( T ) Firm B . . . . . . . . . . . . . . . . . . Boffo ( F ), Buzzy ( E ), Boss ( T ) Firm C . . . . . . . . . . . . . . . . . . Cafav ( F ), Cameo ( E ), Crash ( T ) Firm D. . . . . . . . . . . . . . . . . . Defy ( F ), Delite ( E ), Dusty ( T ) Firm E . . . . . . . . . . . . . . . . . . Efizz ( F ), Echo ( E ), Egad ( T ) Firm F . . . . . . . . . . . . . . . . . . Fantasy ( F ), Fish ( E ), Fast ( T ) Firm G . . . . . . . . . . . . . . . . . .Gas ( F ), Go ( E), Gone ( T ) All firms start with the same products. The firms start from the same position in the market. +Corresponds to Product Class. THE COMPETITION 8 STRATSIM ENVIRONMENT Starting positions for all teams on several key performance measures: MANUF. SALES ( M$ ) UNIT SALES ( 000s ) NET INCOME ( M$ ) STOCK PRICE ( $ ) Period 0 23,853 1,452 1.204 35 Period -1 22,801 1,403 .680 30 THE COMPETITION 9 INDUSTRY OVERVIEW CLASS POSITION SEGMENTS COMPETITORS EXAMPLE ECONOMY Smaller Low Price 1, 2 All Firms FAMILY Mid Size Mid Price 2, 4 All Firms LUXURY Larger Expensive 4, 5 SPORTS Mid Size Mid Price 3 MINIVAN Larger Mid Price 2 UTILITY Larger Mid-High Price 3, 5 TRUCK Mid-Large Size Mid Price 1, 3 All Firms AEV Mid Size Mid Price 5 10 THE MARKET Value Seekers (1) Families (2) Singles (3) High Income (4) Enterprisers (5) 5 segments (1-5) with different needs and class preference. SEGMENTS 11 THE MARKET Consumers have different needs and expectations with regard to vehicle characteristics. Their “consideration set” is based on vehicle class, size, and price. Consumers prefer a particular size vehicle. Consumers prefer a specific engine horsepower (HP) due to the trade-off between performance and fuel economy. Consumers prefer better (more) Interior, Styling, Safety, and Quality (“ISSQ”). Consumers weigh this bundle of goods against the price charged. HINTS: Consumers may have certain “hot buttons” or attributes that are particularly important to them, and some may be more price-sensitive than others. PURCHASE PROCESS 12 RESULTS & DECISIONS MENU Dashboard Financial Statements Product Contribution Technology Product Development Marketing Distribution Manufacturing Financing Special Decision Integrated, Long-Term, Strategic. 13 DASHBOARD Net Income Cumulative Net Income Stock Price Total Shareholder Return These are the four default measures of performance, but more may be added using the Edit link. 14 FINANCIAL STATEMENTS Income Statement Balance Sheet Cash Flow Click on the Income Statement, Balance Sheet and Cash Flow buttons at the top of the screen for each statement. 15 PRODUCT CONTRIBUTION Total (sums of all units) Per Unit Percent Click on the Total, Per Unit, and Percent buttons at the top of the screen for each view. Note: Some values not shown as this is an internal report not available to competitors. 16 TECHNOLOGY Each firm has an overall technology capability with regard to Interior, Styling, Safety, and Quality (ISSQ) that can be improved through investment in technology. For Example: If firm A’s technology profile is 4, 5, 4, 5, it can develop and/or upgrade vehicles to these maximum specifications. A firm with greater technology capability can produce vehicles with better ISSQ features AND produce vehicles with the same features at lower per unit cost. Weigh benefit against cost of investment. IMPORTANT: Investing in technology does not automatically improve the specifications of your products, only your ability to do so through upgrades. 17 TECHNOLOGY Cost of Investment and Estimated Benefit. (Estimated savings based on current vehicles and volume). Click here to change your Technology Capabilities. 18 PRODUCT DEVELOPMENT All product development takes place in Development Centers. New products begin as concepts and then may be moved into a development center once specifications are finalized. Upgrades also take place in the centers. Each firm starts with 2 development centers allowing concurrent development on two products (new products or upgrades). New development centers can be added over time up to a maximum of five (one additional center per period). DEVELOPMENT CENTERS 19 PRODUCT DEVELOPMENT CONCEPTS To introduce a New Product (new brand name, not an upgrade), a firm must first develop a product concept. Your firm receives feedback on the projected base cost (unit cost @ 100K units), development cost, and time to develop. Note the up-arrow icon (to move concept into development) and trash icon (to delete a concept) to the left of the concept name. Your firm may also run a concept test to see how a potential market (“microsegment”) views your concept. 20 PRODUCT DEVELOPMENT Improving existing vehicles is important as customer needs and competition change. This is done through Upgrades. Three types: Cost Reduction (same specifications at a lower unit cost), Minor (small changes), Major (large changes). Both minor and major upgrades also will attempt to reduce costs. These are done directly in your development centers and your firm will receive feedback on the upgrade’s unit cost, development cost, and time to develop. Your team must specify the changes in the Minor and Major upgrades. Multiple attributes may be adjusted in the same upgrade. UPGRADES 21 PRODUCT DEVELOPMENT Cost Reduction: Based on existing product, uses 1 center for 1 decision period, prepare launch now (immediate impact after advance). Minor Upgrade: Based on existing product, uses 1 center for 1 decision period, prepare launch now (immediate impact after advance). Inventory disposed now. "tweak" – Max. change of 2 size, 5 HP, 1 other specs. Major Upgrade: Based on existing product, uses 1 center for 2 decision periods, prepare launch next decision (1 year). Inventory disposed next year. Max change of 10 size, 20 HP, 2 other specs + "tweak" next year IN SUMMARY, 5 GENERAL APPROACHES: 22 PRODUCT DEVELOPMENT New Product, Same Class: Based on concept, uses 1 center for 2 decision periods, prepare launch next decision (1 year). New Product, New Class: Based on concept, uses 1 center for 3 decision periods, prepare launch in two years. IN SUMMARY, 5 GENERAL APPROACHES: Balance opportunities, speed to market, cost, and need for change. 23 PRODUCT DEVELOPMENT TIMELINES Product Development Timelines (From the StratSim Case) CURRENT PERIOD PERIOD +1 PERIOD +2 PERIOD +3 Cost Reduction  $100-$200 Million in current year Project in Dev. Center (no changes to specifications allowed) In Market Retooling. Results impacted. (vehicle costs reduced) Minor Upgrade  $100-$300 Million in current year Modify Specs In Dev. Center Adjust Marketing Mix Adjust Production (Inventory disposed) In Market Results impacted. (Including sales, retooling, inventory write-off) Major Upgrade  $250-$750 Million Spread over 2 years Modify Specs In Dev. Center Build Additional Capacity Modify Specs In Dev. Center Adjust Marketing Mix Adjust Production (Inventory disposed) In Market Results impacted. (Including sales, retooling, inventory write-off) New Product (Existing class)  $250-$1,500 Mill. Spread over 2 years Create Concept Name Product Modify Specs In Dev. Center Build Additional Capacity Modify Specs In Dev. Center Set Marketing Mix Set Production In Market Results impacted. (Including sales, retooling) New Product (New class)  $500-$2,500 Mill. Spread over 3 years Create Concept Name Product Modify Specs In Dev. Center Modify Specs In Dev. Center Build Additional Capacity Modify Specs In Dev. Center Set Marketing Mix Set Production In Market Results impacted. Including sales, retooling) General Rule: A brand upgrade or new brand enters the market in the last year it is in a development center. 24 PRODUCT DEVELOPMENT In the 1st decision period, a firm initiates a minor upgrade and a new product in a new class… If, in the following period, the firm thinks it will want to initiate two more upgrades, what are its options? Build a new development center in the 1st decision period so they would have 3 operational centers in the 2nd decision period. Only choose one upgrade in the 2nd decision (because the new product would occupy one development center). Choose to discontinue development of the new product to free a development center. EXAMPLE HINTS: Be sure to plan development time lines and development capacity. 25 PRODUCT DEVELOPMENT EXAMPLE Sample development screen showing an upgrade (Alfa), new product (Aphid), and a new development center: Upgrade (Alfa) New Product (Aphid) New Development Center 26 MARKETING Budget set by region (North, South, East, West) to create general firm preference and support dealerships. Set corporate ad theme(s): Interior, Styling, Safety, Quality, Performance. Social Media to stimulate interest in recent firm announcements. Direct Marketing to particular consumer segments. CORPORATE ADVERTISING 27 MARKETING MSRP set per vehicle. Dealer Discount % by vehicle. Advertising Budget to build and maintain awareness. Advertising Theme (performance, interior, style, safety, quality) to appeal to target segment Promotion Budget to help spur sales during slow periods used for rebates, special financing, dealer incentives, attractive leases, etc. Sales Forecasts for the coming year to use in pro-forma reports. PRODUCT MARKETING 28 MARKETING VEHICLE PRICING MSRP = Manufacturer’s Suggested Retail Price used to position vehicle and set expected price in mind of consumer and dealership. Dealer Discount (%) = Discount off MSRP to dealer Dealer Invoice ($) = MSRP* (1 – Dealer Discount %) Dealer Invoice ($) = Revenues to your firm Retail Price (price to consumer) determined by dealer. Retail Price ($) – Dealer Invoice ($) = Revenues to Dealer 29 MARKETING Marketing Decision Screen 30 DISTRIBUTION Dealerships make the actual sale to consumer. Set up on a regional basis (North, South, East, West). Decision is to open or close dealerships in each region. Maximum of 10% change each year. Changes in number of dealerships takes one year to take effect. Dealer ratings (1-100 scale) indicate customer experience at dealership, impacted by: Profitability and product offerings. Training, education and support. Dealer discounts and servicing. 31 Note Coverage ( = established / full) … decision in the North region is to add 5 new dealerships resulting in coverage of 62.5% once the new dealerships have opened. DISTRIBUTION 32 MANUFACTURING CAPACITY Total vehicle production must be less than capacity or incur over-capacity charges. Capacity may be increased, but takes one year to build and become available for use. Entering the capacity increase will display the cost of the investment in capacity. Capacity investment is depreciated over 10 years. Maximum increase (or decrease) in a year is 50% of current capacity. 33 MANUFACTURING PRODUCTION Set production based on sales forecasts and inventory levels. Retooling cost for initial or increased production. Remember there is a cost to dispose of inventory of old vehicles if upgraded (minor or major). Set flexible production (+/- 10%) Adjusts production if > 120 days or insufficient to meet orders. 34 MANUFACTURING Note Alfa inventory write-off (upgrade) and retooling costs… ...and over-capacity line with resulting charge. 35 FINANCING Technology, product development, capacity, retooling, marketing, distribution, repurchase of bonds and stock, repayment of loans, dividends. USE OF CASH SOURCES OF CASH Operations, selling bonds and stock, short-term borrowing. Use Pro-Forma to see likely impact on cash position based on YOUR forecasts and decisions. 36 FINANCIAL DECISIONS To repurchase stock, enter a negative value (in $). Bonds are optionally callable after three years. Inputs for CDs, stock and dividends, short-term debt, and bonds. HINT: Implement a capital structure that is consistent with the nature of this business: cost of capital, financial leverage dynamics, amount of long-term fixed capital, new investment in long-term capital projects, sales volatility risk, technology change risk, inventory size and timing risk, competitive dynamics risk, etc. 37 SPECIAL DECISION Check this menu option for one-time events that may require management’s attention. Some events will have an impact on your results down the road, others may just require you to think about an issue and be prepared to discuss in class. Often, there is not a right or wrong answer. Some responses may be better than others, but will likely depend upon your particular firm’s situation. 38 DECISION ANALYSIS Check your decisions on the Decision Analysis: Review screen before the simulation is advances to the next period. Timeline displays your major production events. Use the Pro-forma to enter your forecasts and help you to determine your best course of action. 39 DECISION ANALYSIS: REVIEW Check the Decision Review: Alerts section for warning messages before the decision deadline. You may modify any decision other than purchase of market research and tools. 40 PRO-FORMA Enter forecasts for each product then click on the Reports button to view pro-forma: Product Inventory Income Statement Balance Sheet Cash Flow Product Contribution Modify decisions and forecasts until the decision deadline or until your team is satisfied. 41 Industry News Vehicle Sales Consumer Segments MARKET MARKET ANALYSIS 42 Products Technology Marketing Communications Distribution Manufacturing Financial Summary COMPETITION COMPETITIVE ANALYSIS 43 Sales by Segment ($) Focus Groups ($) Concept Tests ($) Competitive Mapping ($) Test Market ($) Portfolio Analysis (Free) TOOLS TOOLS & MARKETING RESEARCH NOTE: Tools available will vary based on customization selected. 44 LOGISTICS All decisions are automatically saved on the server. When one person makes a change, the whole team makes that change. In particular, when one team member purchases a tool, the whole team purchases the tool. In other words, organize your decision process! All decisions other than the purchase of market research / use of tools may be modified until the decision deadline. It is recommended that you review the decision summary and pro-forma income statement when your team is done entering its decisions. Team leader may lock decisions (not required) Decisions must be completed on time. Results will be available at beginning of next meeting time. 45 FINAL CONSIDERATIONS Your strategy drives your decisions – make sure you have one! Focus on how to best serve your target markets through a total offering – product, marketing, service, and price. Importance of team organization and process. Manage your margins and understand the financial implications of decisions. Understand fixed and variable costs. Long term vs. short term. Make wise investments. Use the Pro-Forma for insights. Try new approaches – apply concepts – experiment – have fun! 46 47