Complete SWOT and STRATEGY
A Management Simulation
IMPORTANT THINGS TO REMEMBER
- Please ONLY use Firefox browser when playing the simulation. You may encounter functional limitations if you use any other browser. If you do not have Firefox, you can download it for free at https://www.mozilla.org/en-US/firefox/new/
- DO NOT USE THE “BACK” BUTTON – You will be logged off and brought back to the login screen. Your changes may not be saved if you use the “back” key on your browser.
- On some screens (for example, SWOT and STRATEGY, QBR, AOR, Quarterly Decisions), you have the option of SAVING your work without submitting, or SAVING AND SUBMITTING your work. To only SAVE without submitting, select the SAVE or MODEL button (depending on the screen). To SAVE AND SUBMIT, check the box in the blue highlighted section, then select the SUBMIT button. Saving will allow you to come back and make changes at a later time, without submitting your decisions. Submitting will progress the simulation forward to the next step.
- If the Simulation is left idle for more than 1 hour, you will automatically be logged out and your changes may not be saved.
- If you log in to two separate sessions at the same time, the first session will be automatically logged out and your changes may be lost.
- For technical help, please click the CONTACT US button on the bottom left of any page. You can then send an email to hepdesk@tri-sim.com. Please include as much information as possible about your question (including print screens if possible). We will respond to you as soon as we can; normally within 24 hours
HOW TO PLAY
How to Play Detailed Instruction
Step 1: Develop SWOT Analysis and Strategy
Record both on the SWOT AND STRATEGY tab. To SAVE your SWOT and STRATEGY for further review before you submit it, click the orange SAVE button at the bottom of the screen. When you have finalized your SWOT and STRATEGY, check the box in the blue highlighted section at the bottom, then select the orange SUBMIT button.
Step 2: Set Annual Operating Plan and Quarter 1 Decisions
Enter your total year plan in all four quarters of the Quarterly Decisions, Current Quarter tab. Review Stan Sloane’s expectations for Net Income in the Welcome email. Quarter 1 of the Operating Plan you develop and submit for approval will be the final decisions for Quarter 1. That is, once your Operating Plan is submitted and accepted, the Quarter 1 decisions you have made cannot be changed. You may adjust your Short Range Outlook (SRO) for future quarters; only the decisions for the current quarter being played will be submitted.
Step 3: Analyze Results
Use the Financial Statements, Supply Chain, Quarterly Dashboard, and Inbox tabs to analyze your results. Complete the Quarterly Business Review (QBR) in the Executive Summary, under the Quarterly Decisions tab, each quarter to move on to the next quarter’s decisions.
Step 4: Make Decisions for your Short Range Outlook (SRO) for Quarters 2, 3, and 4
After submitting your initial plan, click on the Quarterly Decisions tab to enter your business decisions for each subsequent quarter. Clicking the “MODEL MY SRO” button at the bottom will allow you to analyze your proposed changes in the Financial Statements and other tabs before you commit to those decisions. Check the box in the blue highlighted section, then click the “SUBMIT SRO” button when you have finalized your decisions for that quarter.
Step 5: Complete Annual Operating Review (AOR)
After playing all four quarters, you will see the “Winning” slide which will show you how you compared on the five metrics vs your competitors. You will then fill out the AOR (click on Quarterly Decisions, Executive Summary tab). Stan Sloane has a final message for you after you submit your AOR.
HOW TO WIN
At the end of the year, Hisco will be measured on six annual metrics against Redex and Matek:
1) Sales
2) Net Income
3) Cash Flow from Operating Activities
4) Return on Total Capital
5) % Ownership Retained by Original Shareholders
6) Absolute value of the difference between Plan and Actual Net Income
The ranking for the first five metrics will be high to low. For the sixth metric, the ranking will be low to high. The sixth metric is designed to measure your ability to meet your commitments. Each ranking will receive a weighting as seen in the matrix below. The rankings of 1, 2, and 3 in each of the above metrics will be allocated weighted points. The team that has the lowest cumulative points is the winner. This cumulative total can be seen in the lower right hand corner of the matrix below.
If you are “out of covenant” with the bank at any time during the simulation, you are precluded from coming in first or second place. “Out of covenant” occurs if you exceed your credit line in three or more quarters.
.
|
Metric |
Sales |
Net Income |
Cash Flow |
Return on Total Capital |
% Retained by Original Shareholders |
Plan Net Income |
Net Income Absolute Value of Variance to Plan |
Number of Credit Line Exceeded Times |
TOTAL |
|
|
Weight |
10 |
25 |
20 |
20 |
5 |
|
20 |
|
|
|
|
Hisco |
$4,010,875 |
$322,500 |
$315,261 |
70.5% |
100.0% |
$310,976 |
$11,524 |
0 |
|
|
|
Matek |
$4,686,740 |
$280,269 |
($122,635) |
45.4% |
100.0% |
$356,853 |
$76,584 |
1 |
|
|
|
Redex |
$5,125,570 |
$10,639 |
($475,706) |
5.8% |
90.0% |
$387,866 |
$377,227 |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hisco |
3 |
1 |
1 |
1 |
1 |
|
1 |
|
|
|
|
Matek |
2 |
2 |
2 |
2 |
1 |
|
2 |
|
|
|
|
Redex |
1 |
3 |
3 |
3 |
3 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hisco |
30 |
25 |
20 |
20 |
5 |
|
20 |
0 |
120 |
|
|
Matek |
20 |
50 |
40 |
40 |
5 |
|
40 |
0 |
195 |
|
|
Redex |
10 |
75 |
60 |
60 |
15 |
|
60 |
300 |
580 |
|
EXPLANATION OF DECISION CATEGORIES
The simulation exercise is driven by your decisions submitted quarterly as well as those of your competition. Each decision is discussed below to clarify its meaning and its impact, as used in this exercise.
ENGINEERING QUALITY ($000) How many dollars will be invested in Quality efforts? Through this investment, management is able to influence the technical quality of the product relative to the competition. The value of the investment will decrease as production levels increase, and diminishing returns will result at some level. The quality achieved can be measured by access to the quality survey report. A lack of quality may be reflected in sales. The survey report may be requested each quarter, but it will not be available each quarter. When available, it will assess both the technical quality and the customer perceived quality of the product for all companies in an industry. Perceived quality is a function of technical quality and marketing/advertising investment. The report will be provided when available, if requested. There is no charge for the report until it is provided. The report will be for the quarter just ended.
RESEARCH FUNDING ($000) How many dollars will be invested in Research and Development engineering? Management uses this means to achieve product improvements and product breakthroughs. R&D work requires dollars and time to be successful. Management must decide how R&D blends into the overall strategy of the company and how much of the company resources will be allocated to this effort. Progress in R&D will be announced to management through memos from the R&D operation.
MARKETING ($000) How many dollars will be invested in the marketing function? These dollars are spent to sell the company product. Sales persons, promotions, market research and other activities which focus on getting the customer to buy the product are funded by these dollars. The principal effect of this investment is on market share. Share is primarily a function of marketing dollars, product quality and pricing decisions interacting in the marketplace. A move in one area may be offset by a countermove in a related area.
ADVERTISING ($000) How many dollars will be invested in the advertising function? These dollars are spent to let current and potential customers know about your product. Through this effort, all who provide the same product benefit from advertising. If all companies advertise, the overall market will grow larger and faster than if less than all participate. The principal effect of this investment is on market growth.
LEAN SIX SIGMA EXPENSE ($000) How many dollars will be invested in driving the cost to produce downward? Production costs trend upward in new companies unless actively driven down by improved product and production engineering. These efforts are measured by Cost/Unit to produce and Planned Time. Once costs are turned downward, continued investment at some level is necessary to retard the inefficiencies, which tend to creep back into the production process over time. These cost avoidance measures are no less important than initial cost reduction. The principal effects of these dollars are to reduce planned time and reduce production costs.
LABOR How many production employees will be employed during the quarter? The number of employees is one key ingredient to determining the company’s capacity to produce. Labor is expensive and the costs associated with hiring and firing go beyond the wages paid. Changes in employment will affect employee effectiveness. The impact is proportional to the magnitude of change.
PICK-UP CELL ORDER How many units of raw material will be ordered this quarter for delivery next quarter? Material is another key to determining production capacity. One unit of raw material is necessary for each unit of product produced. This decision includes consideration of the back order potential and the cash consequences of payment on delivery.
PLANNED PRODUCTION How many units of finished goods will be produced this quarter? This is the planned production normally found in an Manufacturing Resource Planning (MRP) or production scheduling system. The actual production will be limited by the capacity to produce; but, management may use this entry to limit production to a level below the production capacity. Production cannot be higher than requested, but it may be lower due to capacity bottlenecks (labor, lines, raw material).
NUMBER OF NEW LINES How many new inspection lines will be ordered this quarter for delivery next quarter? This is the third ingredient to determining production capacity. Each inspection line has a rated capacity. Installing lines in the factory is disruptive and will impact effectiveness of the labor force. That impact is proportional to the number of lines installed at one time.
PRICE ($) How much will the company charge its customers for its product during the quarter? Price, marketing, advertising and quality determine market share, which determine Sales. A pricing strategy must consider these and other factors no less important: the perception of the customer; the competitors’ pricing actions; the costs of forecasts; financial goals; and many other management concerns. The principal impact of price is on market share, but that must be moderated by the other concerns discussed.
TERMS (IN DAYS) How many days will be granted to the customer before payment is expected? This may be between 1 and 90 days. If terms are 45 days, a company would expect to collect about 50% of its outstanding Receivables during the quarter; if terms are 30 days, collections should approximate 66%. It is important to recognize the difference that may exist between terms extended and actual collections. There is no bad debt in the exercise; however, there may be delinquent payments. Terms are related to price in the impact on the market place.
MARKETING SURVEY May be requested each quarter, but will be delivered only when available. When delivered, the recipient will be charged $5,000. Do not add dollars to the decision sheet for the report. The charge will be shown as an added Marketing expenditure when the results are received.
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