Glo Bus Presentation
- 1. 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 000100101001001111010100100010010100100111101010010001001010010011110101 GLO-BUS : Developing Winning Strategies An Online Simulation Orientation and Overview
- 2. What Is GLO-BUS All About? It’s an online, PC-based exercise where you run a digital camera company in head-to-head competition against companies run by other class members. The marketplace is worldwide — production occurs at the company’s plant in Taiwan and sales activities can be pursued in North America, Latin America, Europe-Africa, and Asia Pacific. There are 8 market segments—4 geographic segments each for entry-level digital cameras and multi-featured cameras.
- 3. What Is GLO-BUS All About? The industry setting is modeled to closely approximate the real-world character of the globally competitive digital camera industry. Company operations are patterned after those of a camera company that designs and produces its digital cameras at company-operated plants and that also outsources some of its cameras from contract manufacturers. Cause-effect relationships and revenue-cost-profit relationships are based on sound business and economic principles. Company operations are made as realistic as possible and the functioning of the marketplace in GLO-BUS closely mirrors the competitive functioning of the real-world digital camera market, thus allowing you and your co-managers to proceed rationally and logically in deciding what to do.
- 4. What Is GLO-BUS All About? The concept underlying a business simulation like GLO-BUS is to put you and your co-managers in as realistic a company and competitive market setting as possible and have you manage all aspects of the company’s operations—this not only allows you to test your ideas about how to run a company but the “live case” nature of a simulation also provides prompt feedback on the outcomes of your decisions . Your challenge is to craft and execute a strategy for your digital camera company which, when pitted against the strategies of rival companies, proves capable of delivering good bottom-line results and building shareholder value.
- 5. How Does GLO-BUS Work? Virtually all GLO-BUS activities take place online, on a PC that must be installed with both Internet Explorer and Microsoft Excel (either the 2000, XP, 2003, 2007 versions). You can either use the same PC for all GLO-BUS sessions or you can use different PCs; all that is required is an Internet connection, Internet Explorer, and Microsoft Excel. GLO-BUS automatically transfers the needed software from the GLO-BUS server to the PC you are working on very quickly (within a couple of minutes even on a slow connection); when you exit a session, your work is saved and transferred back to the server. The last decisions saved to the GLO-BUS server at the time of the decision deadline are the ones used to generate the results.
- 6. How Does GLO-BUS Work? All companies start out on the same footing—with equal sales volume, global market share, revenues, profits, costs, digital camera quality, and so on. Each decision period in GLO-BUS represents a year (although there may be opportunities for you to update a portion of your decisions on a quarterly basis). The company you will be running began operations 5 years ago, and the first set of decisions you and your co-managers will make is for Year 6. Your company is selling close to 800,000 entry-level cameras and 200,000 multi-featured cameras annually. Prior-year revenues were $202 million and net earnings were $20 million, equal to $2.00 per share of common stock. The company is in sound financial condition, is performing well, and its products are well-regarded by digital camera users.
- 7. How Does GLO-BUS Work? You and your co-managers will make decisions each period relating to Camera design and performance and the number of camera models in your company’s line (10 decisions) Production operations and worker compensation (15 decisions) Pricing and marketing (15 decisions) Corporate social responsibility and citizenship (6 decisions) The financing of company operations (4 decisions). In addition, there is accounting and cost data to examine, import duties and exchange rate fluctuations to consider, and shareholder expectations to satisfy.
- 8. You Have Many Strategic Options C ompany managers have wide strategic latitude in staking out a market position and striving for good performance. There’s no built-in bias that favors any one strategy. Companies can pursue a competitive advantage keyed to low-cost/low-price top-of-the-line camera quality and performance more value for the money. Companies can have a strategy aimed at being the clear market leader in (a) entry-level cameras or (b) multi-featured cameras or (c) both. Companies can focus on one or two geographic regions or strive for geographic balance. Companies can pursue essentially the same strategy worldwide or craft slightly or very different strategies for the Europe-Africa, Asia-Pacific, Latin America, and North America markets.
- 9. No One Strategy Is “Best” Most any well-conceived, well-executed competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness . In other words, which strategies deliver the best performance hinges on the strength and interplay of the strategies employed by rival companies — not on some mystery “silver bullet” decision combination that players are challenged to discover.
- 10. Competitive Variables That Determine Company Sales and Market Shares Price Performance/quality (P/Q) rating Number of quarterly sales promotions Length of promotions in weeks Promotional discounts Advertising Number of camera models Size of dealer network Warranty period Technical support provided to camera owners
- 11. A Company’s Competitive Effort vis-à-vis Rivals Is Crucial All the sales and market share differences among companies are attributable to differing competitive efforts on price, P/Q rating, advertising, warranties, promotions, and so forth. Hence, every company’s strategic challenge is to craft a competitive strategy (consisting of its prices, P/Q ratings, advertising, models, warranties, promotions, and so on) that it believes will produce the desired sales and market share outcomes when pitted against the competitive strategies of rival companies, region by region .
- 12. A Battle of Strategies Following each year’s decisions, you’ll be provided with Competitive Intelligence reports containing information of the actions rivals took to capture the sales and market shares they got. Armed with this information, you will be in pretty good position to figure out some of the strategic moves that rival companies are likely to make in the upcoming decision period. Just as in sports where it is customary for every team to scout its next opponent thoroughly and develop a game plan to defeat them, you will need to scout the strategies of rivals, try to judge what they will do next, and come up with a competitive strategy of your own aimed at “defeating” their strategies and boosting your company’s performance.
- 13. Outcompeting Rivals Is the Key to Market Success You’ll have to stay on top of changing market and competitive conditions, try to avoid being outmaneuvered and put into a competitive bind by the actions and maneuvers of rival companies, and make sure your digital cameras are attractively priced and competitively marketed. Just as you are trying to win business away from rival camera companies, some or all rivals are certain to be actively striving to take camera sales away from your company. It is the competitive power of your strategy vis-à-vis the competitive power of rivals’ strategies that is the deciding factor in determining sales and market shares in the entry-level and multi-featured segments, region-by-region.
- 14. How Company Performance Is Judged Board members and shareholders/investors have set five performance objectives for the company: Grow earnings per share at least 8% annually through Year 10 and at least 4% annually thereafter. Maintain a return on equity investment (ROE) of 15% or more annually . Maintain a B+ or higher credit rating. Achieve stock price gains averaging about 8% annually through Year 10 and about 4% annually thereafter . Achieve an “image rating” of 70 or higher (the image rating is tied to the performance/quality of a company’s entry-level and multi-featured camera and to its market share penetration in each of the 4 geographic regions).
- 15. Scoring Weights The weights that will be placed on your company’s achievement of each of the five annual performance targets are as follows: EPS 20% ROE 20% Credit Rating 20% Stock Price 20% Image Rating 20%
- 16. The Two Scoring Standards Two scoring standards are used in calculating “performance scores” for each company: The investors expectations standard (Did you meet or beat the annual performance targets for each of the 5 performance measures?) The best-in-industry standard (How well does your company’s performance stack up against the company with the best EPS, ROE, stock price, and image rating and against an industry-best A+ credit rating?) The scoring standards are explained in the Participant’s Guide and even more fully on the “Help” screens for pages 1, 2, and 3 of the GLO-BUS Statistical Review.
- 17. The Two Quizzes There are 2 “open book” 20 multiple-choice question quizzes built into the exercise. The quizzes are taken online and scored immediately upon completion: Quiz 1: Covers the Participant’s Guide—its purpose is to spur you to read and absorb how things work in preparation for managing your company. There’s a 45-minute time limit for this quiz. Quiz 2: Covers the Company Operating Reports and certain information in the GLO-BUS Statistical Review—the role of this quiz is to check to see if you understand the numbers and how they are calculated. There’s a 75-minute time limit for this quiz. Click on the links for the quizzes on your “Corporate Lobby” web page for more information—the three sample questions for each quiz give you an idea of what to expect.
- 18. The Peer Evaluations At the end of the exercise, you will be asked to complete a 12-question evaluation of each of your co-managers and a self evaluation of your own performance. These are completed online and can be reviewed by clicking on the Peer Evaluation Link on your Corporate Lobby web page. The peer evaluations are for your instructor only and are completely confidential.
- 19. How Do You Register and Get Started? The registration process consists of five steps: Step 1 : Have your assigned company registration code handy (this code is used to put you into the database for this specific course and to certify you as a co-manager of your assigned industry and company). Your instructor provides this code . Step 2 : Go to www.glo-bus.com Step 3 : Click on the “Create Student Account” button and enter the company registration code provided by your instructor in the box. Step 4 : Continue on to the next step of the registration process where you will need either a credit card or a Prepaid Access Code that came on a card bundled with your text.
- 20. How Do You Register and Get Started? Step 5 : Complete the personal registration information (user name, password, and so on) and the credit card payment process (if not using the Prepaid Access Code on the card bundled with your textbook). The Web site for credit card payment is fully secured; you will receive a receipt e-mail. If you have no credit card or Prepaid Access Code, the easiest way to complete this step is to arrange to use a friend’s or co-manager’s credit card and reimburse them directly with cash or a check. Once you are registered, you have full use of the student portion of the GLO-BUS Web site.
- 21. The Corporate Lobby Page Each time you log-on to www.glo-bus.com , you are automatically routed to your company’s “Corporate Lobby” web page. The Corporate Lobby page is your gateway to all GLO-BUS activities . Near the top of the Corporate Lobby screen is a series of menu selections that provide instant access to all the necessary information, materials, and tools you will need: Participant’s Guide Decision Schedule Assignments Support Company Name Below these menu items are (1) a Decisions and Reports box for accessing the decision entry screens and viewing reports, a message center box, and information showing the latest exchange rate adjustments, current interest rates, and a company performance scoreboard. You have anywhere, anytime access to your Corporate Lobby page from any PC that is connected to the Internet.
- 22. Creating a Name for Your Company Shortly after registering, you and your co-managers should decide on a name for your digital camera company. Your company’s name must begin with the letter of the alphabet that you have been assigned. Names can be up to 20 characters. To name the company, click on the Company Name menu item near the top of the Corporate Lobby screen, and enter your company’s full name in the space provided. All company names are “public” and appear in the GLO-BUS Statistical Review; thus you should select a name that you are proud of and that reflects the image you want to project to your customers, shareholders, other company stakeholders, and the general public.
- 23. Some Procedures See the Decision Schedule link on your Corporate Lobby Web page for the dates and deadlines for the decisions. The decision deadlines are strictly enforced , since the results are processed automatically on the GLO-BUS servers immediately following the deadline. The results of each decision will be available online about 15-20 minutes after the decision deadline. You will be notified via e-mail as soon as the results are ready. At that point you can log-on, see what happened, and proceed with the next decision.
- 24. An Important Capability All company co-managers can access the latest decisions and results from any PC connected to the Internet—there’s no need to e-mail decisions back-and-forth to get things coordinated. Info on your Corporate Lobby screen indicates the last date at which a co-manager saved decisions to the server and whether other co-managers are currently logged on. All company co-managers can be logged on simultaneously on PCs at different locations (or side-by-side in a lab). Instant messaging and cell phones can be used to communicate back-and-forth. If another logged-on co-manager clicks on the Save icon and uploads new decisions to the server, you will be notified the next time you press the Save icon—you then have the choice of (1) overriding the co-manager’s saved decision entries by saving your decisions to the server or (2) importing the co-manager’s decisions onto your decision screens and overriding your own entries. Remember: the last set of decisions saved to the server are used to process the results.
- 25. Tips for Success Follow the Suggested Decision Procedures (see the link on your Corporate Lobby web page) Use the practice decision(s) to become fully acquainted with the menus and the functionality built into the screens Make full use of all the “Help/More Info” sections for each decision screen—these provide full explanations of the factors surrounding each and every decision entry and provide all kinds of tips and suggestions to guide your thinking. Make full use of the “Help/More Info” sections for the Company Operating Reports, the GLO-BUS Statistical Review, and the Competitive Intelligence Reports—these screens provide essential details of what the numbers mean, how they are calculated, and how to use the information to good advantage.
- 26. Tips for Success Run the company in a serious, professional manner. The overriding purpose of GLO-BUS is to give you practice in making business decisions, learning to craft winning strategies in a competitive market, and being held fully accountable for the results of your actions—just as managers in the real-world are held accountable for the performance of the companies they run. Be very wary of trying something that is imprudent or highly risky or un-businesslike (things that would get a manager fired in a real company). Students who resort to trying to “game the system” almost always shoot themselves in the foot. This is not the time to be a daring adventurer out to win some variant of a videogame by making wild decisions and testing the limits of the simulation.
- 27. The Special Order Option As the exercise progresses, your company may be given an opportunity to bid against rivals and obtain a special order of 50,000 entry-level cameras to be assembled in the third-quarter and shipped to chain store retailers in time for the peak retail demand in the fourth quarter. Bids are submitted as part of each year’s annual decision; the winning bids are based solely on low price (with brand image and P/Q rating as tie-breakers). All interested camera-makers can bid for these orders—bids are taken in each of the four geographic regions and there are two winning bids in each region (both for 100,000 entry-level cameras). Normally, winning bidders outsource the assembly of the cameras needed to fill these special orders. If and when the special order bid option is activated, a screen for entering bids will appear on the decision menu. The Help button for this screen contains detailed information about the how this option works and all the procedures.
- 28. The Quarterly Update Option Another option that you may have as the simulation progresses is the opportunity to review the company’s progress on a quarterly basis and to alter a select few (as many as 8) of your decisions quarterly Check the decision schedule to see if and when quarterly updates will occur.