IP MASTERS Trial Account
                                      Quick Guide, Page 1


Introduction

Please follow this Quic...
IP MASTERS Trial Account
                                     Quick Guide, Page 2


1) IP MASTERS Simulation Overview

Par...
IP MASTERS Trial Account
                                    Quick Guide, Page 3


3) Participating in a Simulation Round
...
IP MASTERS Trial Account
                                    Quick Guide, Page 4


4) Start-Up Phase

During the Start-Up ...
IP MASTERS Trial Account
                                     Quick Guide, Page 5


5) Building an initial Product Portfol...
IP MASTERS Trial Account
                                    Quick Guide, Page 6


6) Managing your Corporation

Once the ...
IP MASTERS Trial Account
                                     Quick Guide, Page 7


A) Corporate Key Figures

Your corpora...
IP MASTERS Trial Account
                                     Quick Guide, Page 8


B) Managing your Business Units

At th...
IP MASTERS Trial Account
                                    Quick Guide, Page 9


C) Strategic Success Factors

Strategic...
IP MASTERS Trial Account
                                     Quick Guide, Page 10


b) Identify and Acquire Growth Potent...
IP MASTERS Trial Account
                                    Quick Guide, Page 11


c) Leverage your Return on Equity (Pro...
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Ip Masters Quick Guide Trial Account

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Ip Masters Quick Guide Trial Account

  1. 1. IP MASTERS Trial Account Quick Guide, Page 1 Introduction Please follow this Quick Guide to access your Trial Account and to get acquainted with the IndustryPlayer MASTERS simulation. Your Trial Account gives you access to the publicly operated IP MASTERS simulation game, in which participants from around the globe are competing in real-time. In the public IP MASTERS game a new simulation round is opening every hour. After logging in, your MY ACCOUNT window will come up and indicate when the next simulation round will open. If you remain logged in, a voice message will invite you to participate as soon as the round opens. The IP MASTERS Premium Campus Edition and Corporate Edition are based on the same real-time business simulation as the public IP MASTERS game, only that the participants are playing within their own customized virtual economy. IP MASTERS offers a range of: 16 different “single industry sector” simulations and An “all sectors” simulation which combines the 16 sectors. This Quick Guide will introduce you to the simulation, the key figures, economic models and decisions by featuring the case of a “single sector” simulation. In the case that you have any questions or comments, please contact us: edu.support@industryplayer.com. CONTENTS Page 1) IP MASTERS Simulation Overview 2 2) Account Activation and Login 2 3) Participating in a Simulation Round 3 4) Start-up Phase 4 5) Building an initial Product Portfolio 5 6) Managing your Corporation 6 A) Corporate Key Figures 7 B) Managing your Business Units 8 C) Strategic Success Factors 9
  2. 2. IP MASTERS Trial Account Quick Guide, Page 2 1) IP MASTERS Simulation Overview Participants take the role of an Entrepreneur and receive an initial Seed Equity Funding. The goal is to maximize the Return on Equity (ROE). Throughout a simulation round the Share Price develops in function of the achieved Return on Equity. At the beginning of a simulation round, the participants build an initial product portfolio and hereby enter the market in one or more industries. In real-time, the participants are competing against each other at two levels: At the industry level the players are competing for market leadership. A market leader sells his products at a higher profit margin than the other market participants. At the corporate level all participants compete for the highest Share Price. An IP MASTERS simulation round has 60 Ticks, which corresponds to a simulated period of 5 business years with 12 months each, and which takes 60 minutes to play. The participants see their competitors moves in real-time and can adjust their own strategies accordingly. The simulation plays out interactively and at any moment the competitive situation of each player depends on the decisions of the other participants. The participant who achieves the largest overall profitability, throughout his product portfolio, will realize the highest Return on Equity and Share Price. 2) Account Activation and Login To log into your Trial Account, please follow the link provided in the Account Activation email. You can also log into your Trial Account by using this link in the future. After logging in, your MY ACCOUNT window will come up and indicate in how many minutes the next simulation round will open.
  3. 3. IP MASTERS Trial Account Quick Guide, Page 3 3) Participating in a Simulation Round In the public IP MASTERS game a new simulation round is opening every hour. If there is still time remaining before the next round opens, you can explore the currently running simulation round by opening the REAL TIME SCORES screen. You can click on any participant's user Clicking on the Industry „Sector“ in the name to view his corporation. Economy menu calls up the current market data. Once the next simulation round has opened, please click Participate to proceed with your trial. If you choose to participate at a later moment, just log out of your account.
  4. 4. IP MASTERS Trial Account Quick Guide, Page 4 4) Start-Up Phase During the Start-Up Phase, the participants are asked to invest capital into an initial product portfolio. In the public IP MASTERS game the Start-Up Phase has a duration of 12 minutes. Your Investment Budget equals your Seed Equity plus the available Debt (Credit Line). You can double your Investment Budget by increasing your Seed Capital Funding on the MY ACCOUNT page. Please click on the active Sector in the Economy menu to call up the current Industry data. The Supply Levels graph shows to which extend the demand for a product is served by the currently active players in each industry.
  5. 5. IP MASTERS Trial Account Quick Guide, Page 5 5) Building an initial Product Portfolio In the Start-Up situation it is recommended to build a portfolio of 1 or 2 products. For each product that you launch, a Business Unit is created instantly which serves to manage the product. Launching 2 products at the beginning has the advantage that you are more likely to be able to develop a strong market position with each of the 2 products while keeping your overhead costs relatively low. The risk of focusing on only 1 product is that your corporation's profitability can seriously decline if strong competition threatens your position in your sole market. You can later on launch more products and hereby diversify the risk of being challenged by strong competitors. With each product you launch, your company's overhead costs will increase, but you will also realize synergy savings resulting from economies of scope. To proceed with your Trial, please launch 1 or 2 products. In this example, the Supply Levels graph shows relatively low supply levels for most of the featured industries. Below the Supply Levels graph, you find the real-time market data for each product and the required Investment volume. Please select and launch 1 or 2 products that have a relatively low supply ratio and that fit with your Investment Budget.
  6. 6. IP MASTERS Trial Account Quick Guide, Page 6 6) Managing your Corporation Once the simulation is running, the MY CORPORATION screen shows the fundamental key figures both for your corporation and your Business Units (products). The learning objectives for a participant in an IP MASTERS simulation are to: experience the long-term outcomes of entrepreneurial decisions understand the structure of a corporation with various business units learn to anticipate the dynamics of industry competition get hands-on experience in corporate finance and accounting develop general manager and decision-making skills. For this reason, the IP MASTERS simulation focusses on the strategic aspects of managing a corporation rather than on day to day decisions. The IP MASTERS simulation uniquely combines fundamental micro- and macroeconomic models (price mechanism, general equilibrium model) with commonly used business concepts (product life cycle, economies of scale, economies of scope, corporate accounting, leverage effect). The strategic management of your corporation should aim at: achieving and defending market leadership with your business units identifying and acquiring more growth potential leveraging the return on your equity by using debt adequately.
  7. 7. IP MASTERS Trial Account Quick Guide, Page 7 A) Corporate Key Figures Your corporate key figures summarize the financial performance of your different Business Units. The share price reflects your corporation's overall performance from the perspective of a shareholder and is calculated on the basis of the Return on Equity (ROE). The ROE is a measure of how much net earnings your company has generated from your initial amount of Seed Equity. The control panels visualize 4 fundamental key ratios commonly used in the management of corporations: Revenues Growth, EBIT Margin, Debt Ratio and Profitability. In real-time, the control panels display both: your individual key ratio (main indicator) the benchmark (triangle and dotted line) reflecting the average ratio of all participants. Below your Business Units you find real-time business graphs that visualize your corporation's cost structure, revenues, cash flow, balance sheet and key ratios, and your products' stock levels, EBIT margins and EBIT.
  8. 8. IP MASTERS Trial Account Quick Guide, Page 8 B) Managing your Business Units At the level of the Business Unit (product), the strategic objective is to achieve and to maintain market leadership (a larger market share than the competitors). The market leader is able to impose a higher sales price than the competitors and hereby earns above average price margins. The profitability of a product is measured by it's EBIT (Earnings before Interest and Taxes) margin. Each featured industry sector has a specific Product Life Cycle (PLC), ranging from 12 to 27 months in length. After launching a product, both revenues and profits still are at a low level and then rise until the product reaches the stage of maturity. Once a product has reached the stage of maturity it's profitability starts to decline. At an early stage of a product's life cycle, an increase in the Marketing Budget accelerates sales, which can result in an increase in market share. Once a product has reached a maturity of 66 % or more you can increase it's sales volume in order to gain market share. To increase a product's sales volume you simply up-size the Business Unit. Up-sizing a Business Unit has the following effects: Production capacity increases by 1x and the additional products will automatically be sold. A decrease in product maturity, since the product is renewed. Lower costs per unit, since the overhead costs remain constant (economies of scale). An increase in the industry's supply level (at a given demand level). Supply Level = Supply/Demand Once a market's supply level exceeds 70 % the industry's price level will start to decline. At a supply level of 100 % market saturation is reached and profit margins become negative. Once a market reaches the stage of saturation it makes sense to renew a product by relaunching it rather than by up-sizing the Business Unit.
  9. 9. IP MASTERS Trial Account Quick Guide, Page 9 C) Strategic Success Factors Strategic success factors for achieving a high Return on Equity and Share Price: a) Observe your competitors b) Identify and acquire new growth potential c) Leverage your equity by using debt adequately a) Observe your Competitors During the course of a simulation round, some of your competitors may try to overtake your Business Units in terms of market share. To view the competitive situation within your markets, just click on a product image or name: You can track your competitors' moves by keeping an eye on the LIVE Ticker: The REAL TIME SCORES window provides an overview of all participants performance and key figures.
  10. 10. IP MASTERS Trial Account Quick Guide, Page 10 b) Identify and Acquire Growth Potential At each tick, your monthly debt payments are automatically debited from your corporation's bank account and your total debt declines. As long as your corporation is making profits and your cash flow is positive, this will result in an increase of your investment budget. The more profitable your Business Units are, the faster the investment budget will grow. You can use the profits generated by your Business Units to extend your product portfolio and hereby open up a new revenue source. Opening up another Business Unit has the following effects: The supply level of the market you are entering will increase by the amount of your market share. Each of your business units will operate at increased synergies, since the new Business Unit will not significantly affect the costs of distributing your products (economies of scope). The overhead costs rise proportionally to the size of the investment. The average EBIT margin declines since a new product generates comparatively less profits during the first phase of it's product life cycle. An increase in the debt load and in the interest rate leads to higher financial costs. As a result, the corporation's overall profitability will temporarily decline and then recover. By opening up new Business Units, you also diversify your revenue sources. The risk of ● relying only on 1 or 2 revenue sources is that your corporation can loose a large part of it's profits if one of it's Business Units is overtaken by other suppliers or if the market is over- saturated. To identify profitable new revenue sources, use the Supply Levels graph on the Industry Sector page. The industries offering the most growth potential are those with a comparatively low Supply Level (ideally 0). Once you have identified an industry in which competition is less intense than in other industries, you can scroll down the Industry Sector page to view the required investment budget. If your investment budget is large enough, you can can enter the industry by pressing „Launch Product“.
  11. 11. IP MASTERS Trial Account Quick Guide, Page 11 c) Leverage your Return on Equity (Profitability) by using Debt Properly used, debt can decrease risk and increase Return on Equity simultaneously. The economic concept employed in IP MASTERS to describe the relation between debt and a company's Return on Equity is the Leverage Effect. The Leverage Effect explains how it is possible for a company to deliver a Return on Equity exceeding the rate of return on the total capital invested. When a company raises debt and invests the funds it has borrowed sensibly, it generates additional profit that exceeds the interest expense due on it's debt. This surplus is added to shareholders’ equity. The Leverage Effect of debt thus increases the Return on Equity. The graph above shows a company that has leveraged it's Return on Equity (Profitability, green line) with an average Debt Ratio (yellow line) of 40 to 50 %. Such a dynamic growth in Profitability is possible only if your investments enable your company to realize sales margins that largely exceed the interest costs due on the additional debt.

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