International Business Simulation | My Assignment Tutor

User ManualInternational Business Simulation “PhoneVentures”User Manual PhoneVentures ©2Word in advancedThis document serves as a user manual for students using the international businesssimulation: “PhoneVentures”. This manual describes all decisions in detail and explainsthe various effects of those decisions presented within the results and analysis part ofthe simulation. But first we start the manual by explaining what a simulation is, how itworks and how to win.Hope you will enjoy competing against your peers, collaborating with your teammembers and learning by doing.Edumundo UK 2018 ©Further support:If matters remain unclear after reading, please contact our online helpdesk at:http://www.edumundo.co.uk/helpdesk. Alternatively, there is a “Support” button onthe top of the simulation page, enabling you to send your queries or remarks to thesame helpdesk. All helpdesk questions will be answered within one working day.User Manual PhoneVentures ©3Table of ContentsThe Simulation …………………………………………………………………………………………………….4How to get started ……………………………………………………………………………………………5Ranking……………………………………………………………………………………………………………6How to earn ranking points: ………………………………………………………………………………6Calculation ………………………………………………………………………………………………………7Analyze your decisions’ results once a round is calculated…………………………………….7Business Plan……………………………………………………………………………………………………….8Analysis ………………………………………………………………………………………………………………8SWOT analysis………………………………………………………………………………………………….8Competition …………………………………………………………………………………………………….8Identity……………………………………………………………………………………………………………….8Vision………………………………………………………………………………………………………………8Targets…………………………………………………………………………………………………………….8Long-term goals ……………………………………………………………………………………………….8Perspective………………………………………………………………………………………………………….9Growth strategy ……………………………………………………………………………………………….9Decisions …………………………………………………………………………………………………………….9Countries……………………………………………………………………………………………………….11Country information ……………………………………………………………………………………….12Country decisions……………………………………………………………………………………………13Management………………………………………………………………………………………………….14HR (Human Resources) ……………………………………………………………………………………16Product………………………………………………………………………………………………………….18Research & Development ………………………………………………………………………………..19Distribution ……………………………………………………………………………………………………21Marketing………………………………………………………………………………………………………22Financial ………………………………………………………………………………………………………..23Results………………………………………………………………………………………………………………24Balance Sheet…………………………………………………………………………………………………24Income statement…………………………………………………………………………………………..27Cash flow statement ……………………………………………………………………………………….29Inventory……………………………………………………………………………………………………….30Staff at your Headquarter………………………………………………………………………………..31Analysis …………………………………………………………………………………………………………….32Market analysis ………………………………………………………………………………………………33Targets…………………………………………………………………………………………………………..37Scores……………………………………………………………………………………………………………37Communication………………………………………………………………………………………………….38News……………………………………………………………………………………………………………..38Press messages ………………………………………………………………………………………………38Marketing campaigns………………………………………………………………………………………38Simulation Schedule: ………………………………………………………………………………………39More questions? ………………………………………………………………………………………………..40User Manual PhoneVentures ©4The SimulationQuick start guideCongratulations, you are now entrepreneurs and you own your own smartphonecompany. You are not producing smartphones yourself. They are produced in Asiaunder your license, and based on your quality demands and with features developed byyour R&D department.Your competitors are the other teams in your group. They start with exactly the samefinancial situation, market, staff numbers, etc. Each round stands for 1 year ofoperations. You can alter all your decisions over and over again, until the dead line ofthe round.Business planEach year you can alter your strategic Business Plan. The most important part are theTargets. Choosing your 5 targets and KPI will make sure you’re able to receive rankinglist points. Other parts of your Business Plan are for example your Competitivestrategy, where you decide on which of the three market segments you’d like to focus.Operational DecisionsYour operational Decisions should be taken in line with your Business Plan. Each yearyou can alter all decisions for all different departments of your company. On top of thatyou have to decide to which countries you’d like to expand your business.ResultsThe Results section shows you the results of your previous year’s Decisions. Here youcan analyse the financial statements, the HQ’s staff indicators and inventory levels percountry.Final notes1. Don’t forget to click Save at the bottom of each tab. Remember you can save asmany times as you like, until the deadline of the round.2. No chosen Targets (within the Business Plan) means no ranking points.3. Click on Help desk in the top right corner for all your questions. Please note that theywill be answered within 1 working day.Good luck and may the best company win!User Manual PhoneVentures ©5How to get startedBelow you will find how to get started in 6 steps.1. Introduction presentationYour lecture or an Edumundo specialist will introduce the simulation to you using ashort presentation. You can also look at our online presentation on YouTube to knoweverything there is to know on how to get started.Go to: https://www.youtube.com/watch?v=B9DKMg426q4&t=0s2. LoginOn the login sheet provided by your lecturer or Edumundo specialist you will find thewebsite (http://businesssimulation.edumundo.com) on which the simulation can befound. Drop down to the correct simulation name, and use your unique team’susername and password.3. Company ProfileClick on Company Profile and work your way through the 3 tabs in the sub-menu:• Change company data: choose your company name, add a description and a logo.• Change board members: Add your team member’s names and give them a rolewithin your company (CEO, Marketing Director, etc.)• Change password: Change your password. Your username will remain the same andcannot be changed.4. Business PlanOnce you have settled on a profile for your company, you must think of a strategy thatwill make your company grow into the largest of your market. Click on Business Planwithin the Strategy Plan submenu.• First, fill in how you will compete at the ‘Competition’ page.• Second, analyse your business by making your SWOT.• Then, ensure the vision of your company is clear to you and your team members.• Most importantly, strategize about which Targets you will set and how high thosetargets will be. Too low and you may miss out on points, but too high and you maynot accomplish them at all.• Finally, write your growth strategy.5. DecisionsOnce you have finished all of the above you are ready to start making decisions. Thesedecisions are made locally per country and for the entire global company. Being:Countries, Management, HR, Product development, Marketing and Finance.User Manual PhoneVentures ©6RankingAfter calculation you can look at your position by visiting the “Ranking” page at the topright corner of the simulation. This page will show you:• Your ranking in comparison to the other teams.• Your company name, and the names of your competitors.• The percentage of growth (or shrinkage) of your company compared to theprevious round.• The group you are playing in (you only compete directly against the companieswithin your own group).• And finally, the total cumulative amount of ranking points received thus far.How to earn ranking points:To earn ranking points, you must set annual targets and achieve them. The moreambitious you set your targets, the more points you will receive. As such, a companythat sets its target to achieve a 10 million Euro in profit will receive much more pointsin comparison to a company aiming for a 1 million Euro in profit. But only if theymanage to reach their target ff course.Targets: The more you move the indicator to the right the more ambitious your target willbe. The more difficult is becomes to reach the target and earn more Ranking points.To add to this, you will only receive 75% of your points when you have made a loss inthe previous round. Ultimately, you do not receive any points when your company hasno more equity and is solely running on liabilities.A final note: Targets can (and probably should!) be changed each round. Be sure tofine-tune your targets at the start of each round.User Manual PhoneVentures ©7CalculationThe simulation will be calculated automatically according to the pre-set calculationschedule. This schedule can be found in section Communication → Calculationdeadlines. The last decisions that are saved will be taken into account by the algorithm.Analyze your decisions’ results once a round is calculatedAfter calculation follow the 4 main steps to analyse your results:1. RankingGo to the Ranking (top right of every page within the simulation) to see how yourcompany has scored and compare your score with all other companies in your market.2. AnalysisThe second thing you need to do is visit the Analysis page. At the External Analysissubmenu, you can see how many sales you have had in your chosen countries. Click onthe drop-down menu and select a country you operate in, then click on one of thethree market segments to view relevant market data and the impact of your decisionon those market segments. But also in comparison to other teams that are alsooperating in the same country.At the Internal Analysis submenu you will find all the data concerning your companiespoints and how you achieved them. Score will give you the data on how your pointscame to be. It shows how you have performed and if you have reached the targets youhave set for yourselves last round.3. ResultsOnce you know how many ranking points you’ve received( Ranking), how you’veearned them( Internal Analysis Score), by performing well in the countries you operatein ( External Analysis Markets) you can review your results of last round.Results are provided in financial and non-financial4. TargetsFinally, after evaluating your results and current situation, you need to fine tune yourtargets to fit this situation. As an example, if you have set ‘Staff education level’ as atarget make sure you are not already past your target value, but that you change it tosomething ideally challenging but realistic.User Manual PhoneVentures ©8Business PlanWithin this part of the manual we discuss the several strategic parts of your businessplan. No company can do without. By determining your business plan you as a teamwrite down your analysis, determine your identity and set out what you wish toaccomplish.AnalysisSWOT analysisWhat are your company’s strengths, weaknesses, opportunities and threats? Byfilling this in you will have a much better chance of creating a successfulbusiness strategy.CompetitionDetermine why your customers should purchase your products over yourcompetitors. Choose your competitive strategy:o Cost leadership.o Product leadership.o Customer intimacy.o Combination of all of the aboveElaborate on your decision by writing a short justification on the choice made. This willbenefit you while reflecting on your strategy and your overall performance.IdentityVisionA company is nothing without a clear vision of where it wants to go, and what itwants to be. A powerful message to tell your customers what the future of yourbusiness will look like. Select three core values and decide their priority. Nowwrite down your vision and elaborate on the values you believe are important.TargetsArguably the most important part of the simulation. Correctly setting yourtargets might ensure your victory. Choose five and pick one of these five to beyour KPI. Your KPI will provide you with five times the amount of points inrelation to the other four targets.Long-term goals1If strategic goals are made available, you have to decide which strategic goalyou wish to accomplish in 5 years’ time. These goals are:1 Strategic goals are optional and are part of the scenario. It could be that this decision is not part of yoursimulation.User Manual PhoneVentures ©9• Highest annual profit• Highest overall reserve• Highest annual sales numbers• Highest global annual turnover• Europe’s highest turnover• Highest turnover outside EuropePerspectiveGrowth strategyCreate your Ansoff Matrix to give yourself a good overview of how you plan ongetting your company to grow.DecisionsAfter establishing your strategic business plan you are ready to take tactical decisionsfor the upcoming round. As you know, one round stands for one year of operations.You have to take all annual decisions that are presented to you within eachdepartment. Being:• Countries• Management• HR• Product ( development)• Distribution ( logistics )• Marketing (global and E-marketing)User Manual PhoneVentures ©10• FinancialUse the main submenu or hover over the HQ building to enter each department and take your annualtactical decisions.ImportantPlease note that you have to click Save at the bottom of each tab before you go to thenext tab. You can save your decisions as many times as you want during a round. Thelast decisions that are saved will be taken into account.User Manual PhoneVentures ©11CountriesDecide which countries you want to be operating in. You can either use the map or clickon the list below. Each year more countries are made available.Look at the list of available countries. This list will grow while each year/round morecountries will open their borders.By selecting a country, information about this country is presented. Read the genericdescription of the country, analyse the market size, the annual demand per marketsegment, the yearly cost for entering the market, cultural differences, productivity andHR cost.By checking the box: Enter this market, you accept the yearly cost mentioned and more decisions for thisspecific market will appear.User Manual PhoneVentures ©12Country informationAt the top of each country page generic information is provided.On the right side of the page market information provides youwith the necessary data you need to use before entering themarket, making a sales fore cast and to see the cost structure foroperating in the country itself.YEARLY LOCAL OFFICE COSTSThis shows you the annual cost to operate within this countryper round. These fixed cost are forLOCAL COMPETITIONThis will give you a general idea of how many localcompetitors are already active within this country. The localcompetition are not your global competitors. Countries with astrong local competition are much harder to enter and beatthe local competition and the global companies that also seekprofit in the same market.ADDITIONAL WORKLOAD HEADQUARTERS IN FTEThis means that by doing business in this country more fulltime employees in the HQ are needed to handle orders. Makesure you have enough employees to handle the extra workload !MARKET SEGMENTSThis will tell you the size of the market segments within thiscountry. The numbers represent the annual demand per piepart.LOCAL EMPLOYEESMore details on what the effects will be on your staff’s performance when active inthis market. It will tell you how many staff members will work in this country, theirproductivity per full-time employee and the wages.HOFSTEDE’S CULTURAL DIMENSIONSA short description of the country’s culture dimensions as by Hofstede’s model.User Manual PhoneVentures ©13Country decisionsOnce you have read the country information and decided to enter the market, thick thebox and the following decisions are made visible:PriceDetermine your selling price per country. Be aware of your manufacturing cost anddistribution cost in order to maintain a healthy gross margin.MarketingDetermine your local marketing policy:• Penetration Marketing: This action will contribute to the effect of yourmarketing campaign. Especially in the first two years that you’ll enter a newmarket and are still trying to establish your brand.• Marketing Budget: The annual local promotion budget you are willing to spendon marketing in this particular country. The higher the budget, the moreeffective your marketing will be.• Target group: This allows you to focus your marketing efforts towards onespecific market segment. Or to aim at more segments, less focus.Human Resources• Independent Organization: Checking this will give this country’s manager moreautonomy. It increases the effectiveness of marketing and human resources,but will reduce the effect of corporate marketing and corporate training.• HR Business partner: This improves the deployment of HR processes from thehead office and supports local management. It increases the effects of thecorporate HR policy.Storage and logisticsHere you decide on how this country handles its storage, rental agreements for storageunits and ordering processes.• Size Storage Location: Choose your warehouse. Decide which warehouse hasthe right capacity and characteristics for your local inventory.• Rental Contract Term: The longer you set your contract terms, the morediscount you receive on renting your warehouse. However, if you decide toleave this country you will still need to pay the rental fees until the contractterms expire.• Order Limits: This will allow you to choose when to order new products. Thiswill be done automatically once your stock level reaches the minimal amount.Your stock will then automatically be filled up to the highest amount.Remember you will sell your smartphones on a weekly bases. Try to make asales forecast in order to know what the minimal stock level should be. Take inconsideration the delivery time of your logistic service provider (Distribution).User Manual PhoneVentures ©14ManagementHere you can take decisions regarding the general management of your company.Organisational StructureChoose one of three organisational structures that fits your company best.• Functional Structure: The simplest structure that you start out with.Management is responsible for a functional and effective business, andinternationalization is done from existing functions.• Geographic Structure: This structure gives opportunities to respond best tolocal needs. However, functions are duplicated and resources are used lessefficiently. The countries have a major responsibility to decide for themselves inbusiness. The costs are: € 1.000.000• International Division: In an international division structure, one division incharge of the international expansion. This division has the internationalexpertise, is responsible for sales, but research and production remain outsideits responsibility. Because of the additional overhead, this structure is moreexpensive than a functional structure, but considered a necessity for astructured growth. Yearly costs are € 5.000.000,00HeadquartersThis decision sets the headquarters of your company. You don’t have to have your HQin a country you do business in. Each country has its own perk(s) and or downsides,that could impact your demand or cost.User Manual PhoneVentures ©15Management teamHere you can decide on which managers you would like to hire. You and your teammembers represent the executive board of this global enterprise, but for the dailyactivities you rely on managers to make sure that your strategy is implementedaccordingly. You are advised to hire two managers.Hiring high potential managersYou start off with a limited number of candidates, but as you progress you will unlocknew managers with special capabilities. This is done through the size of your businessas well as the size of your network. Selecting ‘Networking’ at ‘Activities’ (below) toexpand your network and get in contact with these high potential managers.ActivitiesThese are the annual priorities for the upcoming year. Select three activities youbelieve are most important to your brand and for reaching your annual targets. Eachactivity provides a specific benefit to your company. Read the descriptions carefully tounderstand the benefits of each activity.User Manual PhoneVentures ©16HR (Human Resources)Decide your company’s HR-policy. There are many decisions allowing you to customizethe size of your work force, their remunerations, bonusses and training or coaching.Before taking decisions look closely at the results of your current employees at:‘Results’ and submenu ‘Staff’. Discuss within the board (team members) what your HRpolicy should be. For employees in HQ, but also for all sales representatives workingabroad.Headquarters’ workforceThe decisions underneath will have an effect on the employee’s active in your headoffice. HQ is responsible for strategic planning, corporate communications, tax, legal,marketing, finance, human resources, information technology, and procurement.– Maximum work load per staff memberAn employee at HQ will handle all logistics, regulations and support to alllocations you are– Current amount of staffThis slider simply lets you hire new employees. Remember by entering newmarkets more employees are needed at HQ. The additional minimum amountof employees is stated at the countries decision page. Make sure the workloadof the HQ personal will not exceed the maximum workload per staff memberwhile external employees will be hired automatically. External employees, akafreelancers, are less effective and will cost you € 85.000,- a year.– Purchase HCMAn HCM, or Human Capital Management, support system takes care ofsupporting all HR processes. This can be the review of employees, theircoaching, education and efficiency. It’s annual costs are €15.000,- with an extrainitial fee of another €15.000,- but it increases the loyalty and productivity ofyour employees in HQ.User Manual PhoneVentures ©17The decisions underneath will have an effect on all employee’s that are working for thecompany. So HQ personal as well as the local sales representatives.RewardDecide on wages and bonusses of your employees. –RemunerationThis lets you increase the wages of your employees by a certain percentage. –BonusSet a percentage as a bonus on their regular wage for their performance. This can be divided into three levels of performance: above average, average, andbelow average. –Profit SharingDecide on how much of the profit you want to go to your employees. This can be a very effective reward system, especially for rapidly growing businesses.EducationDecide your HR policy to increase the education level of your employees.– Budget of educationSet the slider to the desired amount you wish to invest in your employees’general education.– Average time spent training and on personal developmentAs your employees only have a limited amount of time, you may decide on howmuch time is spend on training and education during working hours. While theday to day activities have to continue it will increase their work load as well. –Development High Potential ProgramAn expensive program that takes your high potential employees and gives them extra guidance and training. It will increase your company’s efficiency greatlyafter a minimum of three years. For every year longer than the 3 initial yearsthe productivity increases with 1.5% (with a maximum of 6%). It also decreasesthe chance of high potential employees leaving your company prematurely. –Coaching and Mentor ProgramsCoaching is meant to develop the individual employee, assigning him to experienced co-workers. This allows coaches to transfer knowledge andexperience to younger colleagues. Starting such a program is free, however, itwill increase the work load by 5%. It does increase the level of education anddecreases the chance of new employees leaving the company. –Mandatory Internal CoursesDetermine the courses your employees have to complete. Each year, these courses will be updated and can be thought to your employees again.RecruitmentHere you set the budget for recruitment. You want people to be excited about workingfor you. The slider will allow you to set the budget, and optionally you can decide youwant to invest in an Onboarding program. This tries to keep new employees motivatedand tries to decrease the chance employees leave your company.User Manual PhoneVentures ©18ProductAll of the decisions made on this page have to do with your product.You do not manufacture your products yourself. Rather, you send the ‘blueprints’ ofyour products to an independent manufacturer which produces them for you.Agreements with manufacturerDetermine the quality level of your product. By choosing different star-levels thequality will differ and the manufacturing cost will change accordingly. You start off withthe ability to produce a 5-star level product. The highest two quality levels are not yetavailable.Select the quality you wish to purchase by clicking on the stars. The purchasing cost per unit is stated underneath.You are able to unlock two more quality levels if you decide to invest heavily intoQuality research to unlock stars. (See below)User Manual PhoneVentures ©19Research & DevelopmentR&D is one of the most important part of each global smartphone company. To beatthe competition tomorrow you have to invest today. How will your brand stand out anddiffers from the other global smartphones. Either on price, quality, reliability orinnovation. First you have to decide how much you are willing to invest in research inthe upcoming year. This will provide you a competitor advantage in the medium tolong term.Increase R&D departmentDecide on the size of your R&D department. Each researcher will cost you € 750.000euro per year. The more researcher you hire the more research power you have. Youcan hire a maximum of 60 researchers. Researchers have to get acquainted to thecompany and the research and technology itself, therefor are less (50%) effective in thefirst year on the job.R&D budgetNext to the number of researchers you have to decide the annual budget you arewilling to provide. Normally a 100% budget is recommended. Which means the numberof researchers times € 750.000 a year. If you set your budget lower the effectiveness ofthe R&D department will lower as well.Research machineOptionally, you can decide on buying an expensive R&D machine that will quicken yourR&D progress significantly. Straight away the effectiveness of the department increasesby 50%. This means that the progress bar will fill up 50% faster. So finished muchearlier.Time allocated to R&DWith researchers in place and a sufficient budget the R&D department is able to doresearch on the following four subjects:• Decrease purchasing cost of your smartphone: Once the progress bar reaches100%, your purchasing costs will be decreased by a maximum of 20%.• Increase reliability of your smartphone: When starting out, you have areliability of 85%. That means there is a 15% chance a customer receives afaulty product, which will hurt your company imagine. Once this progress barreaches 100% your reliability will also be a 100%. Especially loyal customerswithin the customer intimacy segment are sensitive to reliability. But also theother two market segments will respond positive to more reliable smartphones.• Quality research to unlock stars: Conduct this research for 50% to unlock star 6and 100% to unlock star 7. The purchasing cost per unit will also increase. But ifyou seek out to be the most premium smartphone player this will become yourcompetitive advantage while others will not be able to deliver this quality youheavily invested in.User Manual PhoneVentures ©20• Innovation to launch the next level smartphone: Once the progress bar is at100%, you will launch a new model smartphone the next year. All smartphonesbrand launches new smartphones every two to three years. A completeredesign of functions and capabilities. Especially loyal customers within thecustomer intimacy segment are sensitive towards a new innovativesmartphone . But also the other two market segments will respond positive tonew smartphone releases. On the dashboard of the simulation you are able totrack your current status of innovation to see when a new smartphone will bereleased.On your dashboard you are able to see your progress on developing a new model.Financing your R&D departmentR&D budgets can run up to dozens of millions per year. These budgets are not to beseen as costs but as expenses. Therefor you need to have a significant amount of cashin order to invest heavily into R&D. Investments made within the R&D departmentbecome part of your company’s assets. Look at your balance sheet to see how muchhas been invested in Research and Development in the previous years.Go to ‘Results’ ‘Balance sheet’ to see how much has been invested in R&D already and how muchCash you have to invest in the upcoming year(s).User Manual PhoneVentures ©21DistributionPick the logistic service provider you think fits your business best. There is a selection of6 different distributors, each with their own characteristics. These logistic partners willship your smartphones from the manufacturer to the markets you are operating in andrent storage locations for. The way they organize their logistics diver and therefor theirCarbon Footprint divers as well. Choose your logistic service provider by looking closelyat cost, reliability and delivery time.The following numbers are provided for each distributor:– Costs for distribution: This price paid per product shipped (price per unit).– Delivery time: The time it will take the distributor to get the products shippedto your local storage facilities.Be aware: Once an inventory level, in one of the markets, drops below the minimumorder limit ( See ‘Country decision’, ‘Automatic order limits’) an order is madeautomatically. You have to make sure that during the delivery of your smartphones asufficient amount is still in place to meet demand, while waiting for the newsmartphones to arrive.– Turnover bonus: The turnover bonus is a percentage of the annual deliverycost, that is paid back to your company by the distributor at the end of the year,once the threshold of the distributor is met.– Bonus is rewarded .. has reached: This is the threshold that, once reached, willprovide you with a turnover bonus.Example on how to calculate a turnover bonus:In order to receive a turnover bonus from Express Service Transport you have toforecast how many products are likely to be distributed in the upcoming year.Once Express Service Transport transports 1.020.409 units at a delivery price of€ 24,50 per unit, the threshold of € 25 million is reached and a turnover bonusof 15% will be granted to your company. Being: € 3.750.003,08– Reliability: The more reliable the distributor, the less chance their shipmentswith your products will be late, and less chance of missing products withinshipments. Each distributor is ranked on a scale of 1 to 5.User Manual PhoneVentures ©22MarketingOnce more markets are available and your company becomes a global brand setting upa global marketing campaign could be a smart thing to do. Next to global marketingonline marketing could also create brand awareness.Developing a global promotion campaignDetermine your global marketing budget for your campaigns. This campaign runsglobally and could well also benefit the local marketing budgets you have set up ineach individual market(See ‘Country decisions’). Once the global marketing budgetexceeds the 2.5 million mark, specific options become available, allowing you to specifythe intended effect of your global marketing campaign(See below).Choose which campaign effect suits your global marketing campaign and the currentposition of your global brand at the moment.E-MarketingTodays customers spend more time online as ever. To attract these customers anonline strategy should be part of your marketing efforts as well. Here you decide:SEO (Search Engine Optimization): By setting an annual marketing budget your websiteis going to get higher results by search engines like Google or Bing and get more traffic.Price per click: Decide your search engine advertisement policy. Global companies putin a price per click. The company with the highest price per click will be most visible onsearch engines (Google adds) The average price per click is €3 but could run up to €50.Advertisement on social media: Determine the monthly budget for advertisement onsocial media like Facebook, Instagram or Twitter. You will compete against the othersmartphone brands on the amount of attention that is provided to the highest bidder.User Manual PhoneVentures ©23FinancialHere you take decisions on financing your global company. If you are in need of capitalyou can apply for a loan. At the start of the simulation and your business you can alsoattract capital by launching a Crowd funding campaign as well.Before applying for a loan or crowd funding you have to look at your current financialposition. Go to ‘Results’ ‘Balance Sheet’ to look at your cash position. If you believe thisis sufficient additional capital is not required.Look at your current Cash and bank account to see if applying for a loan is necessary.On the Financial page, you can find your current loans, as well as your currentapplications and allow you to apply for a new loan. Once you apply for a new loan youdecide the credit provider. Being:• Traditional Bank: This is the most common financial partner to apply for a loan.• Crowdfunding (loan): is similar to the traditional bank, but may have a slightdifference in amount, costs and form.• Teacher’s bank: Your teacher could become a bank as well. This is optional andonly possible if he or she is willing to do so. If not, consider the other two creditproviders.Once you have decided on the credit provider you have the following options:• Amount: Decide how much you wish to borrow.• Maturity: Decide how long you wish to borrow this amount.• Type of loan: Decide what type of loan you prefer:– End of maturity: Payback the loan at the end of the maturity. Which is onlypossible for a loan with a limited maturity of 3 years.– Linear: In which you pay back the loan with an equal amount during thematurity of the loan itself.– Annuity: In which you pay back the loan with increasing amount anddecreasing amount of payment of interest.User Manual PhoneVentures ©24ResultsAfter calculation of a round, the year has ended and results of previous decisions arepresented here. Before taking new decisions for the upcoming round/year looking atthe results is very important. Results are divided into two categories:Financial results• Balance sheet• Income statement• Cash flow statementInternal results• Staff• InventoryBalance SheetThe balance sheet provides information on the company’s assets, liabilities andshareholders’ equity at a specific point in time. Look closely at your cash and bankaccount to see how much money you have to invest. If your cash and bank accountruns empty, while more money is spend than coming in, you automatically create anoverdraft facility. This short term liability will cost you 10% interest rate.Wide column overview: Look at your cash position to see how much money you have(to invest). Once your cash runs up you automatically create an overdraft facility.Next to the Wide column presentation of your balance sheet, you are also able tochoose a vertical column view. This provides you a better understanding of eachindividual category and its mutation over the last three years. We will now use thisoverview to explain each category.User Manual PhoneVentures ©25AssetsOn the asset side of the balance sheet the following categories are listed in order ofliquidity. The fixed assets are least liquid and cash being most liquid.Fixed assetsLand and property: represents the value of the HQ building. Each year the building isdepreciated by € 50.000.Research and Development: represents the total amount invested in R&D minusdepreciation. Each year 20% on R&D is depreciated.Equipment: represents the value of the machine bought for the R&D department.Current assetsInventory (in warehouse): represents the value of smartphones that are currently in stock.Click on the I-buttons to see the value of the stock in different storage locations.Inventory (in transport): represents the value of smartphones that are being shipped atthe moment. While these smartphone are already paid for they are all ready part of theassets of the company.Accounts receivable: represents the value of customers that have already bought thesmartphones and received them but they have not paid yet. The term for accountsreceivable is 1 month. So all customers that have bought smartphones in December willpay in January. Click on the I-buttons to see the amounts and value per country.CashCash and bank account: represents the amount of money you have to invest. Oncethis amount is diminished you will automatically create an overdraft facility.User Manual PhoneVentures ©26LiabilitiesOn the liability side of the balance sheet the following categories are presented.Owner’s Equity is also part of liabilities.Owner’s EquityIssued capital: The total value of the share capital is € 250.000,00. The price per share(face value) is € 1,00. You as board members own the shares yourself.Premium reserve: Shareholders invest in the company, in return getting shares. Everyshare has the exact same value as is written on the shares (face value). The face value isnot equal to the market value, and the difference between the two is the ‘Premiumreserve’.Reserves: All net profits and losses of all the rounds/years combined are listed underreserves. High reserves means that the company has plenty of cash to do investments. Amutation in the reserves corresponds to the net profit or loss within a year.Long term liabilitiesLoans: The total amount of capital that is been loaned by a traditional bank or has beenprovided by Crowd funding. Click on the I-button to see the list of loans and understandthe loan procedures.Short term liabilitiesLoans: The part of the long term loans that is due to be repaid within the next year.Remember, part of the loans that will be paid back within one year are no longer under‘long term liabilities’ but are now under ‘short term liabilities’.Accounts payable: The value of the smartphones that are delivered in December but notyet paid for. Click on the I-button to get an overview per country.Overdraft facility: Once you run out of cash you automatically create an overdraftfacility. This short term loan comes at a price of 10% interest.User Manual PhoneVentures ©27Income statementHere you have your performance of each year. For the entire corporation as well as theretained profit per country. By clicking on the i-buttons more information about acertain category is provided.Net turnover: The total amount of revenues. Selling price( per country) times the amount ofsmartphones sold.Cost of sales: The manufacturing cost and distribution cost per unit that has been sold.Gross margin: The difference between net turnover and cost of sales. Rule of thumb: try tokeep your gross margin at a minimum of 30% of net turnover.Sales and marketing: The amount spend on global, local and online marketing.General administration cost: All other cost. Most of the cost consist of personnel and thesocial securities. Externally hired personnel can also be quite a large sum. Externally hiredpersonnel is been hired automatically once the work load is bound to exceed. But also theyearly cost to be active in a certain market can be substantial. Furthermore, depreciationcosts for buildings, research and equipment, rental cost for storage location and overhead.Net sales result: Is gross margin minus the sum of costs.Other costs and income: Here the turnover bonus is being listed. The turnover bonus isprovided by the distributor for large customers. See ‘Distribution’.Operating profit: Net sales result minus Other costs and income.Net interest payable: The amount of interest paid on loans and overdraft facilities.Profit ordinary activities before taxes: Operating profit minus net interest payable.User Manual PhoneVentures ©28Profit retainment per country:This submenu on the right side of the income statement page provides informationto see how much profit each of the markets is earning you. Keep in mind that onlydirect related costs are assigned to a country. Costs that are created in the HQ arenot part of this result.Look at the result page per country to see the gross margins, cost structures and retained profits.On the result page per country the following items are listed:• Net turnover: The amount of sold smartphones in this country times selling price.• Cost of sales: The amount of sold smartphones in this country multiplied by thevariable cost( being: manufacturing cost + distribution cost).• Gross margin: Net turnover minus cost of sales. Rule of thumb: make sure thatyour local Gross margin is at least 35% of your Net turnover.– Sales cost: Local marketing budget.– Location cost: The yearly cost for being active on this market.– Rental cost storage: Cost for renting a storage facility.– Recruitment cost: New local sales representatives have to be recruited.Especially if the amount of smartphones and your position in the market isgrowing.– Remuneration and Social security: This represents all cost for staff.– Education costs: training local sales representatives.• Sum of costs: The cumulative amount of the list above.• Retained profit: Gross margin minus sum of costs.User Manual PhoneVentures ©29Cash flow statementWhile income statements covers revenues and cost. The cash flow statements coversall income and expenses. The difference between the total income and the totalexpenses as shown on the cash flow statement is equal to the mutation in cash on yourbalance sheet.List of all possible expenses on the cash flow statementUser Manual PhoneVentures ©30InventoryPay a close look at your inventory levels over the past round(s)in each country that youare active in. You can use the graphic for a generic overview but you should also lookinto the numbers at the table. Here you find information on when a purchase deliveryhas been made(green), the demand per week(red), the number of sales(blue) and theinventory level at the end of each week(yellow).Press on button to look at the instruction movie,explaining inventory management. Or use the link below:Explanation stock: https://youtu.be/uD2crKlWLdYBy looking at the numbers on the table pay close attention to:• The red lines implicating that there was a decline in sales during that week.This could have huge impact on your sales numbers.• The average demand per week. While this provides you useful informationon how to set your order limits ( ‘Decisions’ ‘Countries’).• The purchase amount and the delivery time of your distributor. Rememberonce your stock level drops below the minimum amount, you have setyourself, a purchase order is made automatically. During the delivery time ofthe distributor you have to make sure that the current inventory is sufficientto meet demand.User Manual PhoneVentures ©31Staff at your HeadquarterHere you find necessary information on the workforce within your HQ. The first graphshows you what has happened with your team, the turnover of employees, the amountof new personnel but also the number of externally hired people.Important! If you start seeing a significant increase in ‘Externally hired’ staff, thismeans your company cannot handle the volume of sales and is forced to hire staffexternally, which are more expensive and less productive. Please make sure you haveenough staff to enter large market(s).Look at your total workforce in combination with the Key indicators explaining how staff isreacting to your HR policies.On the second graph you find information on the following key numbers consideringyour staff at HQ:• The workload: Telling you how busy they have been the last year, on a scale of1-100%. 100% being extremely high which could implicate that automaticallyexternally hired staff was necessary.• The motivation / satisfaction: Telling you how satisfied your employees at HQhas been over the last year. On a scale of 1-100%. 100% being most satisfied.Motivation can be increased in multiple ways. Off course, rewards are a bigcontribution, but also education and workload is taken into account. If theworkload is high year on year more people are likely to lose their motivation.Especially if the reward (remuneration) is also disappointing.• Education: To equip your personal and increase their skill level education andtraining is necessary. By allocating more time for training the workload willincrease on the shirt term. While the have to finish their tasks and join coursesas well. In the long run, higher educated staff is more productive ( increasedlevel of workload), and are less likely to leave the company. (motivation)User Manual PhoneVentures ©32AnalysisNext to ‘Results’ you have to pay close attention to the ‘Analysis’ part of the simulation.Providing you with useful information and showing you data on the effect of thedecisions made in the previous round/year.The analysis part consists of two parts:• External analysisMarket information explaining the annual demand to your smartphones andwhich decisions and product specifications have contributed. Also how manycompetitors are active in each market but also in the market segments you arefocusing on.• Internal analysisFind information on how much ranking points are earned based on the targetsyou have set within your strategic business plan. If you have not set any(annual) targets you won’t receive any ranking points.User Manual PhoneVentures ©33Market analysisThis allows you to analyze the markets you are currently active in. Click on thedropdown menu, and select the country your company is present in. The three circlesthat show up resemble the three market segments.Being:• Price: Customers that are in search of a smartphone that is most affordable.• Quality: Customers that are looking for premium smartphones.• Customer Intimacy: Customers that are sensitive to a strong innovative andsocially responsible brand.Here you see the total demand per year for each of the three segments. Based on yourdecisions made in the previous year your sales numbers are provided.Here you see that there wasn’t any sales to customers in the Quality nor the CustomerIntimacy segment. There has been a lot of sales in the Price segment.Click on each market segment (one of the circles) to get more information on how thetotal numbers of sales came to be.User Manual PhoneVentures ©34In depth market analysisTo fully understand how your products are received by your target group ( one or twoof the three market segment) a lot of data is presented. One you have clicked on thesegment you wish to understand, categories are visible:Your sales within this segment is completely transparent and are based on your decisionswithin each market and on a corporate level.• Core score: Based on your product, the quality and selling price plus yourcorporate image your core score is calculated. Each segment weighs each ofthese components differently. But how your core score is calculated is thesame. Click on Core score to see how this is calculated and how you couldimprove your core score.• Multiplier on Core Score: This captures all the decisions you have made in theprevious year and the impact it has had on this segment/target group. Click onMultiplier on Core score to see the decisions and teach of the multiplier effectsof the individual multipliers.• Your Total score: Core Score X Multiplier on Core Score• Total score of all companies in this segment: Total number of points earned byall teams within this segment (including your Total Score).• Your market share within this segment: Your Total score / Total score of allcompanies within this segment X 100%.• Total segment size: “Fixed amount” of annual demand. This information is alsoavailable at country information. This number could develop during thesimulation, based on the scenario in place.• Your sales within this segment: The actual number of sales. Tis is based onYour market share within this segment, but also by the number of declinedsales by yourselves or your direct competitors ( in the same market segment).That could not meet demand due to a lack of inventory.User Manual PhoneVentures ©35Multiplier on Core scoreTo understand what each of your decisions have contributed to the demand you havehad, look closely at the Multpliers. Click on this category to see a list of items as shownbelow:How to read these numbers?:Each of the topic in the list has a multiplier number. All these numbers multipliedrepresent the overal Multiplier on Core score. A multiplier number that is below 1,00 isnegative at should be addressed is you wish to be succesfull within this marketsegment. These numbers could also be used to calculate the effect of your marketingefforts. In other words the return on marketing investments(ROMI). You can calculatethe Multiplier Score with and without your marketing effort to see how much demandand additional sales this has provided you. Take into account the marketing cost itselfto calculate the ROMI.User Manual PhoneVentures ©36Your total sales within this segmentThe total sales numbers are calculated by first looking at your market share within thissegment. This is done by adding all Total scores of each company that is active withinthis market (segment). Click on this category to see how many competitors there areand how many ‘Total points’ they have earned individually. Local competition arerepresenting computer competitors. The force of the local competition iscommunicated at Country information.Look at your total score in comparison to the total score but also in comparison to theCompetitors and the local competition. If Market analysis is one of your ‘Activities’ withinthe management tab of the simulation, names of your competitors are made visible here.SalesBased on the total segment size and your market share within this segment thesales numbers are calculated. But……what happens to the demand that could not bemet? Either by your company or by your competitors? Due to mismanagement anor bad inventory policies companies could have to decline sales. These customerswill purchase their smartphone by one of the other competitors. This correction canbe found by clicking on the category Your sales within this segment.User Manual PhoneVentures ©37TargetsAchieving the targets you set in ‘Business plan’ is the only way to score points and risein the ranking. How well you are on your way to achieving these targets is shown onthis page. Underneath ‘Targets’ you see what you have set, and if you have met yourannual targetsScoresA more detailed overview on how your ranking score is build up, click on ‘Score’. Hereyou see how much points you have earned exactly.How are ranking points calculated:Points from previous round: here you find at the bottom of the list how many pointyou have had in the previous year.Points received for progress towards meeting targets: You only receive ranking pointson the targets you have set yourself. If you have made a result on this target betweenthe minimum and maximum value you will receive ranking points.Points received for achieving targets: You will only receive ranking points for thiscategory once the target has been reached. If you don’t have achieved your target youwon’t receive any.Penalty for having a loss (-25%) or negative Owner’s Equity(-100%): A penalty is inplace if you have made a loss or if the equity is negative.Strategic goals: Could be in place. This is optional but if you have set a strategic goaland met the goal within 5 years you receive a huge amount of points (optional)Points awarded by lecturer: Lecturers could add or deduct points for additionalassignments (optional)User Manual PhoneVentures ©38CommunicationNewsThis is an important page, which shows you news messages generated by the system.These news messages will likely impact your company and as such cannot beoverlooked. What will happen in certain markets due to this event? What can you doto decrease the effect? Before taking decisions New messages should always be read.Press messagesYour company is able to issue press releases for your competition to see. Be creative,and let your competitors know who’s best.Marketing campaignsSimilarly to press messages, you are able to create marketing campaigns for yourteacher and your competition to see.User Manual PhoneVentures ©39Simulation Schedule:Here you will find all deadlines for each of the rounds. One round represents one yearof operations. Make sure you save all decisions that need to be made before thedeadline has struck. Once the deadline is passed you automatically enter in a newround/year.User Manual PhoneVentures ©40More questions?If your question is not answered within this document, please feel free to contact ouronline helpdesk at:http://www.edumundo.co.uk/helpdeskPlease note that each question will be answered within one working day.Good luck with the simulation,The Edumundo Team

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