DDBusiness Simulation

1. iBizSim: International Business
Simulations - Course
Batch 2017-19
1

2. Who and What
 Who is Elon Musk?
 What is the Tesla?
All Electric LuxuryCar
selling at$69,000
7/16/2018 2

3. TESLA
BGR – March 31, 2015 – Y. Heisler
7/16/2018 3
 Elon Musk: “I Was Screwed Over By
Chinese Customers”
 “The company has faced quite a few
bumps in the road to conquering the
Chinese market”
 “Tesla sales in China last year were not as
high as the company expected and the
company fired a bunch of executives in
China”.

4. 7/16/2018 4
TELSA
 “Last year, the number of pre-orders for
Tesla cars was much higher than actual
sales”
 “These “speculators,” who ordered a car
but backed out of the deal caused the
illusion of extremely high market demand
for Tesla cars in China”

5. 7/16/2018 5
TELSA
 “The company, therefore, had way too
much inventory in China last year because
of these fair-weather customers”
 However, Musk said “ I am optimistic for
Tesla's future in China, where we will still
make tons of money by selling extremely
expensive cars to very rich people”

6. 7/16/2018 6
Tesla
 What to do you think was the problem with
Tesla in China?
 Sales?
 Marketing?
 Manufacturing?
 Finance – Exchange rates?
 Supply Chain?
 Infrastructure?

7. 7/16/2018 7
China Problems
 Problem
 Consumers who owned Telsa electric
vehicles could not find charging station
 Future Problem
 If sales of electric vehicles do pickup and
every fueling station has charging stations
the Chinese national electric grid will see a
surge of power consumption
 Chinese power generators use coal
 This creates an increase in air pollution

8. Uber in China
February 18, 2016
7/16/2018 8
 Uber is losing $1 Billion a year in China
 CE0 Travis Kalanick said:
 “We’re profitable in the United States, but in
China we’re losing over $1 billion a year.”
 “We have a fierce competitor in every city
that is buying up market share.”
 Competitor Didi Kuaidi is valued at $16.5
Billion
 Uber is valued at $65 Billion

9. 7/16/2018 9
Opinion
 It tells you that even the brightest and
most successful people make marketing
blunders
 I can assure you that many of the
teams/companies in this business
simulation can and will make demand
forecast, and planning errors leading to
losses

10. 7/16/2018 10
Your Undivided Attention
 How do you avoid this from happening to
your company
1. Pay attention in this course
2. The first 3 days are the most important
3. Read the documentation
4. Divide the tasks among team members
5. Make team decisions
6. Do not miss deadlines
7. Improve your listening skills

11. Business Simulation Course
Philosophy
7/16/2018 11
 I would like you all to enjoy this course
 Make intelligent choices and decisions
 If your company debt to equity ratio equals
160% your company is bankrupt
 Analyze your company financials
 Stop me and ask as many questions you
may have
 The goal is to learn – there are no winners or
losers

12. Business Simulation Course
Philosophy
7/16/2018 12
 Important Information
 Login to the iBizSim simulation portal only
when I ask you do so
 You will automatically be locked out if
there is no activity when logged in
 If logged in you must be entering decisions
and downloading reports
 Subsequently logout immediately

13. Summary of this
Business Simulation Class
7/16/2018 13
 You will learn to develop increasingly
complex spreadsheets over the days
 These spreadsheets will enable you to
analyze the state of your company over 4
quarters and in 2 different scenarios
 You will enter your decisions into the
business simulation application
 And view the results of your decisions

14. Summary of this
Business Simulation Class
7/16/2018 14
 Your goals during the course is to learn
to, for your simulated company:
1. Forecast Demand
2. Compete for market share
3. Increase production capacity
4. Reduce overall cost
5. Be profitable

15. Introduction to iBizSim
Review and Emphasize
7/16/2018 15
 Please turn off your cell phones
 There is no need to access your cell
phone in this course
 It will become a distraction when team
discussions are in progress
 Session will start on time
 Arrive in class before the sessions start

16. Introduction to iBizSim
Review and Emphasize
7/16/2018 16
 When using iBizSim do not use IE
(Internet Explorer).
 Nor Microsoft Edge
 Use the following browsers in this order:
1. Mozilla Firefox
2. Google Chrome
3. Apple Safari

17. 7/16/2018 17
Introduction to iBizSim
 iBizSim is not an online learning tool
 The “Student Interface” has a timeout
function.
 If there is no activity the session time
expires, the account is locked
 Students will have to request the instructor
to unlock the account

18. 7/16/2018 18
Introduction to iBizSim
 Best practice is to:
1. Login
2. Complete any tasks you might have
3. Download reports
4. And logout – you must do this
5. Do not close the browser. You will be
locked out with this action

19. 7/16/2018 19
Introduction to iBizSim - Review
 Teams of students take over the
management of a simulated company
 The simulated company is already existing
and running.(Period 0, of 5 periods)
 Your team takes over the company after
Period 0
 Several such simulated companies are
competing on the markets

20. Student Teams
Example with 60 Students
Industry 1 Industry 2 Industry 3 Industry 4 Industry 5
Bench mark Co
1,1-1
Bench mark Co
2,2-1
Bench mark Co
3,3-1
Bench mark Co
4,4-1
Bench mark Co
5,5-1
1-2 2-2 3-2 4-2 5-2
1-3 2-3 3-3 4-3 5-3
1-4 2-4 3-4 4-4 5-4
12 Students 12 Students 12 Students 12 Students 12 Students
Home –Markets -Export
7/16/2018 20

21. 7/16/2018 21
Introduction to iBizSim Review
 The teams are required to analyze the
current state of the company after Period 0
and the markets through the:
1. Management report
2. Parameters List
3. Decisions report
4. Market reports
5. Exchange Rate report

22. Introduction to iBizSim Review
 The teams subsequently have to:
1. Define Business objectives
2. Develop strategy to achieve the
objectives
3. And setup plans to implement the
strategy
Objectives Strategy Plans
7/16/2018 22

23. 7/16/2018 23
Introduction to iBizSim Review
 The teams are required to create a plan in a
Word Document. I will provide you with a
format
 Objectives are to be defined in the first
column
 In the second column the strategy “how” is
noted to reach those objectives
 This document is used to write your first
“Strategy Paper” at the end of the Learning
Phase

24. Introduction to iBizSim Review
Example
DefineBusiness
Objectives
Define Strategy (How)in
achieving these goals
1. Toincrease salesby 2% in Period1 • Bylowering the salesprice of “Petra”
and Quarto” by5%
2. Toincrease the after tax profit margin
by 10% eachPeriod 2
• Bydecreasing the production time per
unit of eachproduct by2%
3. Productivity Goals:
4. Growth Goals:
Quantify
7/16/2018 24

25. 7/16/2018 25
Introduction to iBizSim
 The decisions the teams make are entered
into the simulation.
 The business simulation uses a complex
algorithm to calculate:
1. Market reactions and
2. The resulting performance of the simulated
companies.
 The results of these calculations are then
available in the form of reports

26. 7/16/2018 26
Introduction to iBizSim
 This cycle of:
 Analyzing results
 Adjusting goals
 Adapting the strategy
 Preparing decisions
 Continues for 4 Periods

27. 7/16/2018 27
Introduction to iBizSim
 The simulated duration of a Period can be,
depending on the business simulation,
1. As short as one week or
2. As long as one year.
 The simulation is run over a number of
Periods
 iBizSim uses a Period of 3 months
 There are 4 Periods in this simulation for
each scenario.
 There are 2 scenarios (Learning & Doing)

28. iBizSimSimulation Cycle
4 Periods =1 Year
3/31/2016 GSIMS 31
Analyze the state of thebusiness
Define business objects, strategy
and plans
Enter decisions in theStudent
Interface
Calculate the results ofthe
simulated company
View results from reports
Period 0
Period1
Period2
Period 3
Period4

29. 7/16/2018
Introduction to iBizSim
 iBizSim is a general simulation that covers
all aspects of:
1. Managing a company in Germany
2. It produces consumer goods
3. For the:
4. “home market”
5. and the “export market”

30. 7/16/2018
Introduction to iBizSim
 The functional areas covered are:
1. Company
2. Sales
3. Logistics
4. Production
5. Purchasing
6. Finance
7. Human resources (a little of)
 There are 4 Phases in this simulation.

31. 7/16/2018
Introduction to iBizSim
1. Phase 1:
Learning phase
2. Phase 2:
Strategic planning phase
3. Phase 3:
Doing phase
4. Phase 4:
Reflection phase

32. 7/16/2018
Introduction to iBizSim
 Phase 1: Learning phase
 Explore and understand the simulated
environment,
 Manage the simulated company
 Learn the user interface to the business
simulation.

33. 7/16/2018
Introduction to iBizSim
 Phase 1: Learning phase
 Manage the simulated company for one
year - 4 Periods
 Develop spreadsheet templates for the
company, sales, production, purchasing
and finance plans.
 Learn to understand and accept
teammates and start working together as a
team.

34. 7/16/2018
Introduction to iBizSim
 Phase 1: Learning phase
 The mistakes made and the results
achieved during the Learning Phase do
not count towards your final grades.
 The results of a company at the end of
Phase 1 are not carried over to Phase 3.
 In Phase 3 each company starts once
again with a new initial situation.

35. 7/16/2018
Introduction to iBizSim
 Phase 2: Strategic planning phase
 Use modern tools of strategic
management and strategic planning:
1. Balanced scorecard (Boston Consulting
Group)
2. Strategy map
3. SWOT analysis
4. Financial Ratio Analysis

36. 7/16/2018
Introduction to iBizSim
 Balanced scorecard
 These nonfinancial metrics are valuable
mainly because they predict future financial
performance rather than simply report what’s
already happened

37. Balanced Score Card
7/16/2018

38. 7/16/2018
Introduction to iBizSim
 Strategy map
 A Strategy map is a diagram that is used to
document the primary strategic goals being
pursued by an organization or management
team

39. Strategy Map
7/16/2018

40. 7/16/2018
Introduction to iBizSim
 SWOT analysis
 A SWOT analysis (alternately a SWOT
MATRIX) is a structured planning method
used to evaluate:
 Strengths
 Weaknesses
 Opportunities
 Threats involved in a project or in a business
venture

41. SWOT Analysis
7/16/2018

42. 7/16/2018
Introduction to iBizSim
 Ratio Analysis:
 Financial analysis of the past performance
of a company through:
1. The Income Statement
2. Balance Sheet
3. And Cash Flow Statement

43. Introduction to iBizSim
 Examples of some ratios:
 Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
 Total
D
E
Ratio=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝑆ℎ𝑎𝑟𝑒 𝐻𝑜𝑙𝑑𝑒𝑟𝑠 𝐸𝑞𝑢𝑖𝑡𝑦
7/16/2018

44. 7/16/2018
Introduction to iBizSim
 Phase 2: Strategic planning phase
 Develop an integrated planning model with a
spreadsheet program and use it as a
decision planning tool.
 Analyze the state of the simulated company.
 Define the business objectives for the coming
fiscal year.
 Define the strategy for achieving those
business objectives .

45. 7/16/2018
Introduction to iBizSim
 Phase 2: Strategic planning phase
 Set up plans for one year:
1. Company
2. Sales
3. Production
4. Purchasing
5. Finance
 Prepare and submit a “Strategy Paper”.

46. 7/16/2018
Introduction to iBizSim
 Phase 3: Doing phase
 Manage the company for another year.
 Implement the strategy defined in Phase
2.
 Develop a controlling system to check the
results.
 If necessary, make appropriate changes to
the strategy and the business plans.

47. 7/16/2018
Introduction to iBizSim
 Phase 4: Reflection phase
 Analyze the results of the company at the
end of the Doing Phase 3.
 Compare the results of Phase 3 with the
business objectives set in Phase 2.
 Understand and explain the differences
between the expected, planned values
and the achieved, actual values.
 Prepare and submit an “Analysis Paper”.

48. Take Away-What have you learned
in this session and future sessions
7/16/2018
 Examples:
Formulating goals
Team work
Decision making
Taking a risk
Forecasting
Evaluation of
Competitors
Time Management
Working under
pressure
Effect on one
decision on another
Learning new
technology
Punctuality

49. 7/16/2018
Learning Phase
 Students should have read all of the
documents by downloading them before
coming to the first session
 The “User Manual” is essential to navigate
through the simulation
 The “Management Report” and the
“Parameter List”will provide all the
information needed for Period 0 and
transitioning to Period 1
 It will also provide all the answers to Quiz 1

50. 7/16/2018
Learning Phase
 An “EntryQuiz” will be taken in this
Session 3. (Individual Grade)
 This quiz has 15 question lasting 30
minutes
 It is an closed book quiz
 Except discussing answers with a team
member or classmates.