The company which you are running is fairly complex and, although it is fairly easy to understand its broad structure, there are many subtle aspects to its operation.
The second part of the manual describes the structure of your company. In doing this it looks at the four main management functions of:
One of the main aims of this simulation is to illustrate these interactions and to demonstrate that when it comes to managing a company, achieving a proper balance is fundamental to success and that this can best be achieved by teamwork, good organisation, and effective communication.
Your team needs to organise itself to carry out the duties of senior management of the company, but precisely how you organise yourselves is left up to you.
You can, for example, set yourselves up along functional lines, with each person responsible for looking after one aspect of the business. The chairman's role is to ensure that everyone's views are heard, and then brought together to form a consensus.
Alternatively, you can have a more relaxed setup, using a broadly based committee.
There is no constraint on what technical aids you can use. If you wish to write your own spreadsheet models, you can find detailed definitions in the Management Report section.
back (to Introduction)
Once you have a strategy you can work out the business tactics to make that strategy happen. (If you find that you are running into difficulties the strategy can always be revised to make it achievable.)
One approach is -
Teamwork and compromise help to find the best corporate solution not only in the short term, but also one that fits into the longer term strategy.
Many of the relationships in the simulation are purely logical or arithmetic (eg financial accounts), but many more are of a kind which cannot be derived exactly, even in real life (eg how many orders are you likely to get; what is the effect of advertising, etc.?).
You should try to identify and explore these imprecise elements
as the simulation proceeds, test their sensitivity,
and discover how they interact, and affect the way your company runs.
This type of analysis allows you to draw broad conclusions
about what is likely to happen when you make a particular set of decisions.
Remember, you are trying to maximise the value of your company. The share price reflects your company's future prospects and you should, therefore, try to get your company into the best possible shape towards the end of the simulation.
back (to Introduction: Objective)
Each product has a marketing image which you are seeking to promote in order to attract sales. This image is a combination of your actual, or potential, customers' perceptions of your product in a particular market.
The image is formed over time from a number of factors, of varying importance, and relative to similar factors in your competitors' products.
Some of these are directly under your control and are decided by you as part of your marketing plan. Because the image is composed of many factors, which vary over time, it is not easy to strike the right balance. Some factors need to be considered together - for example, charging a high price for a poor product is unlikely to be effective. On the other hand, customers may be prepared to wait for a high quality product that is being sold at a fair price.
As in many fields, there isn't a single best answer. Different approaches can be equally successful. For example, an exclusive (high-price, high-quality) strategy may be just as profitable as a 'stack-them-high and sell-them-cheap' strategy. In the words of a classic song, written by Sy Oliver - 'T ain't what you do, it's the way that you do it'.
Naturally one strategy might take longer to achieve than another.
In order operate effectively, your marketing department should review the market place and the competition; prepare strategic marketing plans; make decisions to put them into operation both in the long term and short term; and work with the company's other departments to ensure that sales are profitable.
Using a combination of the available economic and business information, plus any conclusions you have drawn from the Company History and your experience in running the company so far, you should be able to prepare a detailed marketing plan for each of your products in each market. The marketing plan should involve:
The preparation of this plan implies that you have an expectation of how many orders you may get for each product. That expectation, in turn, becomes your forecast which you should use to discuss your plans with the company's other departments.
It is critically important that marketing works closely with your production department, providing the best possible forecasts of demand so that adequate quantities can be delivered to the areas. Production problems which affect availability also become problems for marketing, and must be solved by mutual agreement.
Marketing factors such as advertising, commissions, etc. are subject to the law of diminishing returns - i.e. increased effort does not yield pro rata results.
Other factors, such as the activities of your competitors, must also be taken into account as you prepare the plan. This can only be done by trying to forecast how they are likely to behave in the future and making allowance for them in your plans.
back (to Business Environment: Marketing)
You must work with your marketing department to ensure that their forecasts of likely demand can be met by a sufficient flow of products, both in the short term and the long term. It also implies working with your personnel department to ensure that there is sufficient labour to do the job at reasonable cost.
Furthermore, proper forward planning must ensure that there is sufficient machinery available at the right time.
Your production schedule should be prepared in co-operation with the marketing department, because it reconciles their sales forecast with the production department's ability to make products for delivery to the sales areas.
When planning your production schedule you must remember to adjust these demand forecasts by:
A properly planned production schedule takes into account the resources available to you, and allows for all the factors which constrain the utilisation of these resources.
back (to Business Environment: Production Scheduling)
Personnel management implies monitoring the labour market, working with the other functional departments in the company to forecast the demand for employees and taking steps, both in the long and short term, to ensure that personnel targets are met.
Employees may leave because of retirement, sickness or because they have left to work for rival companies that seem to be offering better conditions. The main reasons are low average earnings, but excessive overtime working, colleagues being dismissed and poor quality products, all relative to the other companies, also have an effect.
It is therefore essential for your personnel department to work as part of the management team to ensure that employee requirements are met, and that those who are working for the company do so under the best conditions that the company can afford.
Recruitment of salespeople and assembly workers needs careful planning in co-operation with the other functional departments of the company. Personnel decisions to recruit or dismiss should be taken within the management team.
Success in recruiting depends on the current level of average earnings (not the basic pay rates) of your current employees, the quality of goods which you produce, and the ability of your personnel management, all compared to the same factors in the other companies.
Recruitment also depends on the number of unemployed available in the labour pool. If there is high unemployment, recruitment tends to be easier; if unemployment is low, recruitment can become very difficult and depends on your ability to tempt people away from other companies, which can lead to a very unstable labour market.
As well as ensuring that you have enough employees, your personnel department must manage the cost of the workforce, while at the same time trying to keep them happy. Although you decide pay rates, the way in which your employees are treated can also have a significant effect on earnings. For example, overtime, and shift payments can be controlled to keep costs down, but these elements can only be managed effectively in the context of current economic conditions, and the needs of your Marketing and Operations Departments.
If there is no error indicator, and you believe the wrong number has been used, then you must contact the simulation Controller immediately so that a check can be made against the Decisions which you sent in. If the number turns out to have been wrongly entered to the computer, the appropriate action can then be taken.