Business Management Laboratory Simulation

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Business Management Laboratory Simulation Prof.
Jonathan Kornbluth
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Business Management Laboratory SimulationJensen
Cherrington
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Major Features

• Quarterly periods
• 4 ½ - 5 year game span
• 2 products
• 2 areas
• Up to 8 teams - ideally 4 5 per team

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Framework

• First half Entrepreneurship / New Venture
• New Product..
• Second Half International Business

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Responsibilities

• Functional Management ? production
• 
  marketing
• 
  finance
• 
  data analysis
• Board Level

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Production

• 2 production stages
• 2 types of raw materials
• 2 markets futures versus spot

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Special features

• RD
• Quality Assurance
• Engineering Studies

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Marketing

• Sales representatives
• Base salary commissions
• Product pricing
• Promotion / Advertising

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Finance short term

• Loan (line of credit lt 200,000)
• Factoring of Accounts Receivable

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Finance Long Term

• Shares (issue and repurchase)
• Bonds - (issue and repurchase)
• Long Term Loan

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Pedagogical issues
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• Formulating business plan
• List of decisions over time
• Use of /-
• Conversion to quantities and hence to cash flow
• Strategic lead time

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• Type I / Type II errors
• Upside/ Downside
• Gordon share price effects of negative
  growth
• Data Analysis demand curve
• P Q relationships
• Supply Curves - MC, AVC, ATC
• MC MR P11/?
• 4 Ps Application to marketing variables and
  marketing expenses

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Major Financial Decisions

• Marginal cash flow
• Go / No Go Area II
• Fixed versus current expense
• Ratio Analysis
• Stocks / Bonds / Loans
• Dividend Policy
• Repurchase
• Gordon with positive growth

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Feedback Session

• Overall Industry Performance
• Price convergence
• Ratio Analysis
• RETURN RETURN x SALES
  x FIXED ASSETS
• EQUITY SALES FIXED
  ASSETS EQUITY

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• SALES/ASSETS
• GROSS PROFIT / SALES
• NET PROFIT / SALES
• SHARE PRICE / NET PROFIT
• RETURN PER SHARE / SHARE PRICE

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Strategic Mapping

• Price / Quality
• Price / Commission
• Quality / Commission