CES

IM G

LOB

AL

CH

ALL

ENG

E In

trod

uctio

n Si

mul

atio

n fo

r int

erna

tiona

l bus

ines

s an

d st

rate

gy

2

Ces

im G

loba

l Cha

lleng

e is

an

onlin

e bu

sine

ss s

imul

atio

n ga

me

that

de

velo

ps s

tude

nt u

nder

stan

ding

of t

he c

ompl

exity

of g

loba

l bus

ines

s op

erat

ions

in a

dyn

amic

com

petit

ive

envi

ronm

ent.

It

inte

grat

es a

rang

e of

con

cept

s fro

m v

ario

us m

anag

emen

t rel

ated

di

scip

lines

, inc

ludi

ng e

cono

mic

al, p

oliti

cal,

and

finan

cial

dec

isio

n m

akin

g, a

s w

ell a

s ac

coun

ting,

pro

cure

men

t, H

R, p

rodu

ctio

n,

corp

orat

e so

cial

resp

onsi

bilit

y, lo

gist

ics,

rese

arch

& in

nova

tion,

and

m

arke

ting.

Th

e ta

sk fo

r the

stu

dent

team

s is

to m

anag

e a

glob

al m

obile

te

leco

mm

unic

atio

ns c

ompa

ny th

roug

h te

chno

logi

cal e

volu

tion

in a

fa

st p

aced

21s

t cen

tury

ope

ratin

g en

viro

nmen

t. Th

e st

uden

ts w

ill d

evel

op a

nd e

xecu

te s

trate

gies

for t

heir

sim

ulat

ed

com

pany

ope

ratin

g in

the

US

A, A

sia,

and

Eur

ope.

Wha

t is

Ces

im G

loba

l Cha

lleng

e?

3

To in

crea

se th

e pa

rtici

pant

s aw

aren

ess

of th

e co

mpl

exity

of o

pera

ting

an in

tern

atio

nal c

ompa

ny fr

om a

stra

tegi

c an

d ge

nera

l man

agem

ent

pers

pect

ive.

To

dev

elop

cap

abili

ties

in id

entif

ying

& a

naly

zing

key

env

ironm

enta

l an

d or

gani

zatio

nal v

aria

bles

that

may

influ

ence

an

orga

niza

tion’

s pe

rform

ance

with

in a

nd a

cros

s na

tiona

l mar

kets

, and

how

thes

e va

riabl

es m

ay in

fluen

ce th

e or

gani

zatio

n.

To e

nhan

ce fa

ct b

ased

ana

lytic

al d

ecis

ion

mak

ing

and

crys

talli

ze th

e fin

anci

al im

plic

atio

ns o

f bus

ines

s de

cisi

ons

by li

nkin

g th

e de

cisi

ons

to

cash

flow

s an

d bo

ttom

line

per

form

ance

. To

giv

e st

uden

ts p

ract

ical

exp

erie

nces

in te

amw

ork

and

prob

lem

so

lvin

g an

d ex

cite

com

petit

ive

spiri

ts in

a d

ynam

ical

ly e

volv

ing

mar

ketp

lace

.

Lear

ning

Goa

ls

4

Lear

ning

Pro

cess

Ap

ply

ing

ne

w id

ea

s

An

aly

sis &

pla

nn

ing

Ob

serv

atio

ns &

refle

ctio

ns

Re

sults

& t

ea

mw

ork

Ge

nera

lizin

g fr

om

the

e

xpe

rienc

e

Lec

ture

s &

disc

uss

ion

Co

ncre

te e

xpe

rienc

e

De

cisi

on

ma

kin

g

5

The

sim

ulat

ion

is c

ompl

etel

y w

eb b

ased

. Th

ere

is n

o ne

ed t

o in

stal

l an

y se

para

te a

pplic

atio

ns a

nd t

he s

imul

atio

n ca

n be

acc

esse

d fro

m

any

com

pute

r tha

t has

an

inte

rnet

con

nect

ion.

Th

e si

mul

atio

n pl

atfo

rm a

llow

s te

am m

embe

rs to

wor

k vi

rtual

ly if

they

w

ish.

Eac

h te

am m

embe

r ha

s he

r/his

ow

n ac

coun

t tha

t ena

bles

them

to

mak

e de

cisi

ons

and

scen

ario

s on

thei

r ow

n an

d la

ter

com

bine

the

outc

omes

with

the

oth

er t

eam

mem

bers

on

the

[dec

isio

n ch

eckl

ist]

-pa

ge.

The

plat

form

als

o in

clud

es a

com

mun

icat

ions

foru

m th

at c

an b

e us

ed

to c

omm

unic

ate

with

in te

ams

and

betw

een

all t

eam

s in

one

mar

ket.

Web

Bas

ed S

olut

ion

6

The

sim

ulat

ion

plat

form

incl

udes

the

follo

win

g pa

ges:

[Hom

e] -

Ove

rvie

w p

age

with

dea

dlin

es

[Dec

isio

ns]

- All

deci

sion

s ar

e m

ade

unde

r ’D

ecis

ions

’

[Res

ults

] - R

esul

ts b

ecom

e av

aila

ble

in th

is a

rea

afte

r eac

h de

adlin

e

[Sch

edul

e] -

Sim

ulat

ion

sche

dule

is a

vaila

ble

on th

is p

age

[Tea

ms]

- T

eam

s an

d te

am m

embe

rs in

you

r mar

ket c

an b

e vi

ewed

he

re

[Com

mun

icat

ions

] - A

cces

s to

the

disc

ussi

on fo

rum

s fo

r tea

m a

nd

mar

ket

[Rea

ding

s] -

Acc

ess

to th

e de

cisi

on m

akin

g in

stru

ctio

ns a

nd c

ase

desc

riptio

n

Sim

ulat

ion

Plat

form

Str

uctu

re

7

Eac

h si

mul

atio

n m

arke

t con

sist

s of

2-1

2 te

ams,

with

1-8

mem

bers

in

each

. Th

e nu

mbe

r of

pa

ralle

l si

mul

atio

n m

arke

ts

is

not

limite

d,

mak

ing

it po

ssib

le to

util

ize

the

sim

ulat

ion

for

any

num

ber

of s

tude

nts

in th

e cl

ass.

A

ll te

ams

are

star

ting

from

exa

ctly

the

sam

e po

sitio

n, w

ith s

imila

r m

arke

t sh

ares

and

pro

fits.

Equ

ally

, te

ams

will

fac

e th

e sa

me

mar

ket

cond

ition

s du

ring

the

sim

ulat

ion.

N

ote

that

the

tea

ms

com

pete

aga

inst

oth

er t

eam

s in

the

ir ow

n m

arke

t, no

t ag

ains

t a

com

pute

r. Th

e de

cisi

ons

of e

ach

team

in

fluen

ces

the

othe

r te

ams’

res

ults

and

the

mar

ket

deve

lopm

ent

over

all.

Sim

ulat

ion

Org

aniz

atio

n

8

As

an in

stru

ctor

you

hav

e th

e op

tion

to in

clud

e or

exc

lude

inve

ntor

y, H

R, a

nd

corp

orat

e so

cial

resp

onsi

bilit

y -r

elat

ed d

ecis

ions

for y

our c

ours

e.

HR

, in

vent

ory,

and

CS

R a

re d

isab

led

by d

efau

lt. I

f yo

u w

ant

to u

se t

hese

m

odul

es th

ey n

eed

to b

e en

able

d at

the

begi

nnin

g of

you

r cou

rse.

If

you

wan

t to

ena

ble

inve

ntor

y, H

R,

and/

or C

SR

you

nee

d to

go

to [

Cas

e m

anag

emen

t] –

page

and

clic

k ta

b ”Y

our

para

met

er s

ets”

. The

n fo

llow

thes

e st

eps:

1. 

Clic

k ”C

reat

e ne

w s

imul

atio

n pa

ram

eter

s” a

nd n

ame

it. T

he p

aram

eter

s no

w a

ppea

r und

er ”Y

our p

aram

eter

set

s”

2. 

Clic

k ”P

aram

eter

s” a

nd c

lick

the

box

Mod

ules

3. 

Act

ivat

e H

R, i

nven

tory

, and

/or C

SR

. 4. 

Go

back

to

[C

ase

man

agem

ent],

ch

oose

ta

b ”A

pply

pa

ram

eter

s to

gr

oups

]” an

d cl

ick

”Ass

ign”

Not

e th

at y

ou c

an a

lso

chan

ge a

ll th

e ot

her p

aram

eter

s w

ith th

e sa

me

ste

ps

as p

rese

nted

abo

ve.

Cou

rse

Opt

ions

9

1. 

Go

to h

ttp://

ww

w.c

esim

.com

and

cho

ose

“Reg

iste

r” o

n th

e to

p rig

ht.

2. 

Fill

in y

our e

mai

l and

oth

er d

etai

ls a

nd s

elec

t the

lang

uage

and

the

time

zone

.

clic

k <n

ext>

3. 

Ent

er th

e co

urse

cod

e th

at is

giv

en b

y yo

ur in

stru

ctor

.

clic

k <n

ext>

4. 

Ent

er li

cens

e co

de if

requ

ired.

(Not

e th

at if

the

licen

se c

ode

is re

quire

d yo

u m

ust e

nter

a v

alid

cod

e or

pro

ceed

to th

e on

line

paym

ent o

ptio

ns.

Oth

erw

ise

the

regi

stra

tion

will

not

con

tinue

.)

clic

k <n

ext>

1. 

Cho

ose

your

Gro

up a

nd T

eam

. Gro

up e

qual

s on

e w

orld

whe

re a

m

axim

um o

f 12

team

s op

erat

e.

c

lick

<nex

t>

2. 

Clic

k “F

inis

h” a

nd y

our r

egis

tratio

n is

alm

ost d

one.

3. 

Che

ck y

our e

mai

l and

clic

k th

e ac

tivat

ion

link.

4. 

Logi

n w

ith y

our e

mai

l and

pas

swor

d at

ww

w.c

esim

.com

.

Stu

dent

Reg

istr

atio

n P

roce

ss

10

Flow

of O

pera

tions

Intr

oduc

tion

Prac

tice

Rou

nd

Stra

tegy

and

O

bjec

tives

D

ecis

ion

m

akin

g (x

5 –

12)

C

oncl

usio

n an

d A

naly

sis

Dec

isio

n m

akin

g w

ith

the

web

inte

rface

Sys

tem

ca

lcul

ates

th

e re

sults

aut

omat

ical

ly

at th

e gi

ven

dead

line

Res

ults

from

the

pr

evio

us ro

und

and

m

arke

t inf

o fo

r the

new

ro

und

avai

labl

e

Ana

lysi

s

and

pl

anni

ng

Not

e th

at it

is n

ot p

ossi

ble

to m

odify

the

deci

sion

s af

ter t

he ro

und

dead

line.

If th

e te

am h

as n

ot s

aved

its

deci

sion

s fo

r a ro

und,

the

syst

em w

ill a

utom

atic

ally

use

the

resu

lts o

f the

pre

viou

s ro

und.

Afte

r the

intro

duct

ion,

the

team

s fa

mili

ariz

e th

emse

lves

with

the

deci

sion

mak

ing

proc

ess

via

a pr

actic

e ro

und.

The

resu

lts o

f the

pr

actic

e ro

und

will

not

hav

e an

y in

fluen

ce o

n th

e ac

tual

gam

e re

sults

. Th

e in

stru

ctor

dec

ides

the

num

ber o

f ac

tual

dec

isio

n m

akin

g ro

unds

(5-1

2)

and

deci

sion

mak

ing

follo

ws

the

cycl

e on

the

right

.

11

The

mai

n ob

ject

ive

for

the

team

s is

to

de

liver

su

stai

nabl

e,

prof

itabl

e gr

owth

. Ty

pica

lly

this

is

m

easu

red

by

a ra

tio

calle

d “c

umul

ativ

e to

tal r

etur

n to

the

sha

reho

lder

s”,

whi

ch c

ombi

nes

shar

e pr

ice

deve

lopm

ent a

nd d

ivid

ends

pai

d to

sho

w th

e to

tal r

etur

n to

the

shar

ehol

ders

. Th

e in

stru

ctor

may

, at h

is/h

er d

iscr

etio

n, c

hoos

e to

use

oth

er c

riter

ia

to m

easu

re t

he p

erfo

rman

ce o

f th

e te

ams.

For

exa

mpl

e, m

arke

t sh

ares

, ac

cum

ulat

ed p

rofit

s, a

nd r

even

ue g

row

th c

an b

e us

ed i

f so

de

cide

d.

We

reco

mm

end

cum

ulat

ive

tota

l re

turn

to

shar

ehol

ders

due

to

its

com

preh

ensi

vene

ss.

The

team

s m

ay t

ry t

o m

anip

ulat

e th

eir

prof

its,

reve

nues

, an

d m

arke

t sh

are

in t

he s

hort

run,

but

sha

re p

rice

will

pu

nish

any

sho

rt si

ghte

d de

cisi

ons

soon

er ra

ther

than

late

r.

Mai

n O

bjec

tive

& W

inni

ng C

riter

ia

12

Dec

isio

n m

akin

g is

rou

nd b

ased

. O

ne d

ecis

ion

mak

ing

perio

d is

ty

pica

lly re

gard

ed a

s on

e fis

cal y

ear.

In

the

beg

inni

ng o

f th

e ga

me,

so

calle

d ‘in

itial

rou

nd r

esul

ts’

are

avai

labl

e. T

hese

can

be

used

as

a st

artin

g po

int

for

the

prac

tice

roun

d de

cisi

ons.

Afte

r th

e pr

actic

e ro

und,

the

situ

atio

n is

cle

ared

ba

ck to

the

initi

al, a

nd d

ecis

ions

will

be

mad

e fo

r the

firs

t rou

nd.

The

man

ual

and

the

case

des

crip

tion

shou

ld b

e re

ad b

efor

e th

e pr

actic

e ro

und.

The

mar

ket o

utlo

oks

shou

ld b

e re

ad b

efor

e st

artin

g to

m

ake

deci

sion

s fo

r ea

ch r

ound

. A

new

mar

ket

outlo

ok c

onta

inin

g in

form

atio

n ab

out

the

mar

ket

deve

lopm

ent

beco

mes

ava

ilabl

e as

so

on a

s th

e pr

evio

us ro

und

has

pass

ed.

R

emem

ber

to s

ave

the

deci

sion

s be

fore

the

dead

line.

Dec

isio

n M

akin

g Fu

ndam

enta

ls I

13

Dec

isio

ns a

re e

nter

ed in

the

whi

te c

ells

. The

se w

ill b

e us

ed in

the

actu

al c

alcu

latio

n of

the

resu

lts.

Est

imat

ions

are

ent

ered

in th

e bl

ue c

ells

. The

se w

ill n

ot b

e us

ed fo

r th

e ca

lcul

atio

n of

the

resu

lts, b

ut th

ey a

re im

porta

nt b

ecau

se to

geth

er

with

the

deci

sion

s th

ey fo

rm th

e ba

sis

for t

he b

udge

ts.

D

rop-

dow

n m

enus

are

use

d in

cer

tain

dec

isio

ns w

here

ther

e ar

e so

me

spec

ific

optio

ns to

cho

ose

from

. A

s a

star

ting

poin

t in

the

sim

ulat

ion,

the

team

s ha

ve o

nly

first

te

chno

logy

pro

duct

s av

aila

ble.

Fur

ther

dev

elop

men

t of t

echn

olog

ies

can

take

pla

ce b

y ow

n de

velo

pmen

t or b

y lic

ense

pur

chas

ing.

Tim

e to

mar

ket w

ith o

wn

deve

lopm

ent i

s on

e pe

riod,

whe

reas

lice

nse

purc

hasi

ng m

akes

the

tech

nolo

gy a

vaila

ble

imm

edia

tely

.

Rem

embe

r to

sav

e th

e de

cisi

ons

befo

re th

e de

adlin

e.

Dec

isio

n M

akin

g Fu

ndam

enta

ls II

14

The

team

will

take

ove

r as

the

new

man

agem

ent t

eam

of M

obilé

Inc,

a

glob

al m

obile

han

dset

man

ufac

ture

r and

will

be

resp

onsi

ble

for t

he

com

pany

’s

stra

tegy

, R

&D

, m

arke

ting,

pr

oduc

tion,

lo

gist

ics,

an

d fin

ance

. (o

ptio

nal m

odul

es e

xist

for

HR

, fin

ishe

d go

ods

inve

ntor

ies,

an

d co

rpor

ate

soci

al re

spon

sibi

lity)

Th

e es

senc

e of

Mob

ilé I

nc i

s a

fast

dev

elop

ing

mob

ile h

ands

et

mar

ket w

ith p

rodu

ct li

fe c

ycle

s dr

iven

by

tech

nolo

gica

l evo

lutio

n.

The

team

will

dev

elop

and

exe

cute

glo

bal s

trate

gies

and

its

succ

ess

is m

easu

red

by i

ts c

apab

ility

to

deliv

er v

alue

to

the

shar

ehol

ders

. S

trate

gic

appr

oach

to

deci

sion

mak

ing,

car

eful

ana

lysi

s, c

ontin

uous

R

&D

, go

od t

imin

g, a

nd s

ucce

ssfu

l pro

duct

pos

ition

ing

are

the

mai

n ke

ys to

suc

cess

.

Bus

ines

s C

ase:

Mob

ilé In

c.

15

Dec

isio

n M

akin

g O

verv

iew

1. M

arke

t con

ditio

ns

- R

ead

the

mar

ket o

utlo

ok

Stra

tegi

c in

tent

4. In

vest

men

ts

-  E

stim

atio

ns o

f fut

ure

dem

and

-  In

vest

men

t in

new

pro

duct

ion

plan

ts

6. M

arke

ting

-  Fo

r eac

h pr

oduc

t and

mar

ket

-  P

rodu

ct fe

atur

e de

cisi

ons

-  P

ricin

g de

cisi

ons

- P

rom

otio

n in

vest

men

ts

7. L

ogis

tics

- D

eliv

ery

prio

ritie

s - 

Tran

sfer

pric

es

5. R

&D

- 

Dev

elop

men

t of t

echn

olog

y - 

Dev

elop

men

t of n

ew fe

atur

es

-  P

urch

asin

g of

lice

nses

for

tech

nolo

gy a

nd fe

atur

es

9. F

inan

ces

and

Bud

gets

- 

Trea

sury

man

agem

ent

- 

Div

iden

d po

licy

-  C

apita

l stru

ctur

e - 

Sho

rt an

d lo

ng te

rm d

ebt

-  Fi

nanc

ial i

ndic

ator

s -

Bud

gets

2.

Dem

and

- Tot

al m

arke

t dem

and

- Pre

dict

ed m

arke

t gro

wth

- P

rodu

ct s

elec

tion

- Mar

ket s

hare

s

3. P

rodu

ctio

n - 

Pro

duct

ion

capa

city

- 

Cap

acity

allo

catio

n - 

Out

sour

cing

- 

Inve

ntor

ies

(opt

iona

l) - 

Pro

cure

men

t/CS

R

(opt

iona

l)

HR

(opt

iona

l) - 

Rec

ruiti

ng, l

ayof

fs, r

emun

erat

ion

8. T

ax p

lann

ing

- Tr

ansf

er p

rices

16

Dem

and

Str

uctu

re

Sta

rtin

g si

tuat

ion

with

4 te

ams

(exa

mpl

e)

In th

e be

ginn

ing

all t

eam

s ha

ve e

xact

ly th

e sa

me

mar

ket s

hare

(e.g

.,25%

). E

ach

team

is s

tarti

ng

with

one

tech

nolo

gy o

nly

and

25%

mar

ket s

hare

co

nsis

ts o

f sal

es o

f one

pro

duct

(Tec

hnol

ogy

1).

15 %

25 %

8 %

22 %

30 %

33 %

Tech

1 Te

ch

2

Mar

ket s

hare

s fo

r ea

ch te

am a

re a

ffec

ted

by:

a. 

Pro

duct

(tec

hnol

ogy

+ th

e nu

mbe

r of

feat

ures

) b. 

Pric

e

c. 

Pro

mot

ion

d. 

Pas

t mar

ket s

hare

for t

he p

rodu

ct a

nd

tech

nolo

gy

Tot

al m

arke

t siz

e is

aff

ecte

d by

: a. 

Eco

nom

ic c

ondi

tions

b. 

Ave

rage

pric

e le

vel

c. 

Agg

rega

te in

vest

men

ts in

pro

mot

ion

d. 

Agg

rega

te in

vest

men

ts in

tech

nolo

gy

Dem

and

for

diff

eren

t tec

hnol

ogie

s is

aff

ecte

d by

: a. 

Net

wor

k co

vera

ge

b. 

Pric

e le

vel r

elat

ive

to th

e ot

her t

echn

olog

ies

c. 

The

num

ber o

f com

pani

es o

fferin

g pr

oduc

ts in

th

e te

chno

logy

d. 

Tota

l mar

ketin

g ef

forts

for t

hat t

echn

olog

y

17

Dem

and

Est

imat

ions

Rec

omm

ende

d st

eps

for

dem

and

estim

atio

ns:

1. 

Est

imat

e th

e to

tal m

arke

t gro

wth

for e

ach

mar

ket a

rea.

Mar

ket o

utlo

oks

prov

ide

a go

od fo

reca

st fo

r the

exp

ecte

d de

velo

pmen

t

2. 

Dec

ide

whi

ch te

chno

logi

es to

sel

l in

each

are

a.

3. 

Est

imat

e th

e m

arke

t sha

re fo

r eac

h pr

oduc

t (no

te th

at th

e m

arke

t sha

res

are

quot

ed p

er m

arke

t, no

t per

tech

nolo

gy).

Exa

mpl

e of

how

to s

et m

arke

t sha

res

for

two

prod

ucts

in o

ne m

arke

t:

1.  M

ake

your

bes

t est

imat

e ab

out t

he s

plit

betw

een

the

two

tech

nolo

gies

in a

pa

rticu

lar m

arke

t. Fo

r exa

mpl

e; U

S m

arke

t Tec

h 1

60%

and

Tec

h 2

40%

. 2.  E

stim

ate

your

targ

et m

arke

t sha

re in

eac

h te

chno

logy

, for

exa

mpl

e; 2

0% fo

r Tec

h1

and

35%

for T

ech2

. 3.  C

alcu

late

you

r sha

re o

f the

tota

l mar

ket f

or e

ach

prod

uct:

! 

Tech

1: 6

0% x

20%

= 1

2%,

! 

Tech

2: 4

0% x

35%

= 1

4%.

4.  In

put 1

2% a

nd 1

4% in

the

mar

ket s

hare

cel

ls o

n th

e de

man

d pa

ge a

ccor

ding

ly.

18

Net

wor

k C

over

age

Eac

h m

arke

t are

a ha

s its

ow

n ne

twor

k co

vera

ge

fore

cast

s. T

hose

fore

cast

s ar

e in

dica

ted

in c

harts

on

”Dem

and”

pag

e.

Key

issu

es to

con

side

r:

• N

etw

ork

cove

rage

fore

cast

is n

ot th

e sa

me

as

dem

and

fore

cast

. • 

Inha

bita

nts

outs

ide

the

netw

ork

cove

rage

of t

he

give

n te

chno

logy

do

not p

urch

ase

devi

ces

• 

New

tech

nolo

gy is

typi

cally

con

side

red

mor

e at

tract

ive

than

old

tech

nolo

gy, c

eter

is p

arib

us.

• N

etw

orks

are

usu

ally

est

ablis

hed

in th

e m

ore

cond

ense

d ar

eas

in th

e be

ginn

ing.

• 

It is

ver

y co

stly

to d

evel

op a

ll te

chno

logi

es s

o ch

oice

s m

ust b

e m

ade

betw

een

them

.

The

pict

ure

abov

e fo

reca

sts

that

in

roun

d 3,

Eur

ope

has

100%

cov

erag

e fo

r Te

ch 1

, abo

ut 5

0% c

over

age

for T

ech

2 an

d 4,

and

cov

erag

e is

just

sta

rting

to

deve

lop

for T

ech

3.

19

Ther

e ar

e tw

o pr

oduc

tion

area

s (U

SA

, Asi

a) th

at c

an b

e us

ed to

sat

isfy

de

man

d in

thre

e m

arke

t are

as (U

SA

, Asi

a, E

urop

e). T

here

are

max

2

prod

uctio

n lin

es p

er a

rea,

i.e.

, fou

r in

tota

l. In

the

begi

nnin

g, p

rodu

ctio

n fa

cilit

ies

are

loca

ted

only

in th

e U

SA

.

Inve

stm

ents

can

be

mad

e to

sta

rt pr

oduc

tion

in A

sia

and/

or e

xpan

d pr

oduc

tion

faci

litie

s in

the

US

A. I

nves

tmen

ts ta

ke tw

o de

cisi

on-m

akin

g pe

riods

from

dec

isio

n to

com

plet

ion.

Con

tract

man

ufac

turin

g ca

n be

use

d to

com

plem

ent o

wn

prod

uctio

n. U

sing

co

ntra

ct m

anuf

actu

ring

req

uire

s th

at o

ne o

wn

prod

uctio

n lin

e is

co

mm

itted

to th

e ou

tsou

rced

pro

duct

. Thi

s m

eans

that

at a

ny p

oint

dur

ing

the

sim

ulat

ion

the

max

imum

am

ount

of d

iffer

ent t

echn

olog

ies

that

can

be

prod

uced

is fo

ur.

Not

e th

at c

ontra

ct m

anuf

actu

ring

amou

nts

are

limite

d. T

he li

mits

are

giv

en fo

r ea

ch ro

und

and

team

s th

at u

se c

ontra

ct m

anuf

actu

ring

mor

e ac

tivel

y ha

ve

high

er li

mits

.

Pro

duct

ion

Dec

isio

ns I

20

Pro

duct

ion

is d

eman

d-dr

iven

by

defa

ult,

whi

ch m

eans

that

th

ere

are

no fi

nish

ed g

oods

inve

ntor

ies.

If th

e de

man

d is

ov

eres

timat

ed, t

he p

rodu

ctio

n w

ill b

e re

duce

d au

tom

atic

ally

to

mat

ch th

e de

man

d. T

his

adju

stm

ent c

ause

s ad

ditio

nal 5

-10%

co

st o

n to

p of

the

prod

uctio

n co

st. N

ote

that

pro

duct

ion

will

no

t adj

ust u

pwar

ds a

utom

atic

ally

. Thi

s m

eans

that

if

dem

and

is h

ighe

r tha

n es

timat

ed, t

he te

am w

ill e

ncou

nter

a

situ

atio

n w

here

it c

an n

ot m

eet t

he d

eman

d.

Fact

ors

that

influ

ence

the

prod

uctio

n co

sts

are:

a. 

Bas

ic c

ost l

evel

in th

e pr

oduc

tion

area

b. 

Pro

duct

ion

cost

func

tion

(see

nex

t pag

e)

c. 

Lear

ning

cur

ve e

ffect

(see

nex

t pag

e)

d. 

Pen

alty

for h

avin

g a

too

high

pro

duct

ion

targ

et a

s ex

plai

ned

abov

e

Pro

duct

ion

Dec

isio

ns II

21

If yo

ur G

loba

l Cha

lleng

e co

urse

has

inve

ntor

ies

enab

led,

you

will

find

de

taile

d in

form

atio

n on

the

inve

ntor

y pa

ge u

nder

the

prod

uctio

n ta

b.

The

begi

nnin

g an

d en

ding

inve

ntor

y fig

ures

are

als

o pr

esen

ted

on

the

prod

uctio

n pl

anni

ng p

age.

U

SA

and

Asi

a pr

oduc

tion

faci

litie

s ha

ve th

eir o

wn

inve

ntor

ies

and

prod

ucts

are

nev

er s

hipp

ed b

etw

een

the

area

s un

less

ther

e is

mar

ket

dem

and.

A

ll pr

oduc

ts in

inve

ntor

y ar

e ca

rrie

d at

thei

r orig

inal

pro

duct

ion

cost

an

d th

ere

is n

o de

prec

iatio

n of

inve

ntor

y. In

vent

orie

s in

cur

man

agem

ent c

osts

that

are

repo

rted

as p

art o

f the

adm

inis

tratio

n co

sts

in th

e P

&L

and

also

sep

arat

ely

on th

e pr

oduc

tion

repo

rt.

Inve

ntor

y va

lue

is c

alcu

late

d ba

sed

on fi

rst i

n –

first

out

(FIF

O)

met

hod.

Inve

ntor

y

22

Pro

duct

ion

Cos

t Fun

ctio

n &

Le

arni

ng C

urve

0,951

1,051,

1

1,151,

2 0 %

20 %

40 %

60 %

80 %

100

%12

0 %

Cap

acity

util

isat

ion

Cost multiplier

20

25

30

35

40

45

50

55

60

65

70

50

00

10

00

01

50

00

20

00

02

50

00

30

00

0G

lob

al c

um

ula

tive

pro

du

ctio

n p

er te

chn

olo

gy

Unit cost, USD

US

AA

SIA

Pro

duct

ion

cost

func

tion:

• 

Pre

sent

s pr

oduc

tion

cost

s pe

r uni

t as

a fu

nctio

n of

the

capa

city

util

izat

ion.

• 

Pro

duct

ion

cost

min

imum

can

be

foun

d in

th

e ra

nge

of 7

5-85

% c

apac

ity u

tiliz

atio

n • 

NO

TE: M

inim

izat

ion

of c

osts

doe

s no

t al

way

s le

ad to

pro

fit m

axim

izat

ion

Lear

ning

cur

ve:

• P

rese

nts

prod

uctio

n co

sts

per u

nit a

s a

func

tion

of c

umul

ativ

e pr

oduc

tion

per

tech

nolo

gy, i

.e.,

the

mor

e yo

u pr

oduc

e of

ea

ch te

chno

logy

, the

che

aper

the

prod

uctio

n pe

r uni

t • 

Ste

epne

ss o

f the

cur

ve is

diff

eren

t be

twee

n U

SA

and

Asi

a.

23

If yo

ur G

loba

l Cha

lleng

e co

urse

has

cor

pora

te s

ocia

l res

pons

ibili

ty

mod

ule

enab

led,

you

will

find

pro

cure

men

t pag

e un

der t

he p

rodu

ctio

n ta

b.

On

the

proc

urem

ent p

age

you

can

choo

se b

etw

een

five

diffe

rent

co

mpo

nent

sup

plie

rs. T

he s

uppl

iers

hav

e di

ffere

nt ra

tings

for t

heir

sust

aina

bilit

y an

d et

hics

. In

addi

tion,

they

hav

e di

ffere

nt c

osts

for t

he

com

pone

nts.

Whe

n yo

u ch

oose

sup

plie

rs th

at h

ave

high

er ra

tings

yo

u im

prov

e yo

ur c

ompa

ny’s

imag

e an

d it

will

giv

e yo

u ad

ditio

nal

bene

fit in

you

r mar

ketin

g ef

forts

. Th

ere

is a

lway

s a

fixed

cos

t for

cha

ngin

g a

supp

lier a

nd to

pre

vent

yo

ur c

ompa

ny fr

om s

witc

hing

from

one

sup

plie

r to

anot

her t

oo

frequ

ently

you

can

pur

chas

e st

udie

s fro

m in

depe

nden

t eva

luat

ors

in

orde

r to

dete

rmin

e th

e po

tent

ial l

ong-

term

dev

elop

men

t of t

he

supp

liers

.

Pro

cure

men

t/CS

R

24

Glo

bal C

halle

nge

can

be u

sed

with

or w

ithou

t hum

an re

sour

ces

deci

sion

s. If

you

r cou

rse

has

them

ena

bled

, you

are

abl

e to

hire

R&

D

pers

onne

l to

hand

le th

e re

sear

ch a

nd d

evel

opm

ent f

unct

ion

in

addi

tion

to b

uyin

g te

chno

logy

and

des

ign

licen

ses.

Thi

s w

ill a

lter t

he

in-h

ouse

dev

elop

men

t det

aile

d in

the

next

sec

tion.

Th

e hu

man

reso

urce

s fu

nctio

n co

nsis

ts o

f thr

ee d

ecis

ions

: num

ber o

f em

ploy

ees

this

roun

d, m

onth

ly s

alar

y an

d m

onth

ly tr

aini

ng b

udge

t. Th

e nu

mbe

r of e

mpl

oyee

s is

def

inite

and

you

can

alw

ays

have

the

amou

nt o

f wor

kfor

ce y

ou w

ish

prov

ided

that

you

r sal

ary

leve

l is

high

en

ough

. You

can

als

o la

y of

f all

empl

oyee

s if

you

so c

hoos

e. C

osts

fro

m h

uman

reso

urce

s in

clud

e sa

lary

, tra

inin

g, re

crui

tmen

t, la

yoff

and

othe

r R&

D c

osts

. All

of th

ese

item

s ar

e in

clud

ed in

rese

arch

and

de

velo

pmen

t cos

ts o

n th

e in

com

e st

atem

ent.

Hum

an R

esou

rces

I

25

Key

issu

es to

con

side

r in

hum

an re

sour

ces

incl

ude

empl

oyee

tu

rnov

er a

nd e

ffici

ency

. E

mpl

oyee

turn

over

is in

fluen

ced

by:

a)  S

alar

y b)  T

rain

ing

c)  S

ucce

ss o

f the

com

pany

d)  G

ood

use

of e

mpl

oyee

s' ti

me

(no

redu

ndan

cy)

Em

ploy

ee e

ffici

ency

is in

fluen

ced

by:

a)  S

alar

y th

roug

h ab

ility

to a

ttrac

t tal

ent

b)  C

umul

ativ

e tra

inin

g ex

pend

iture

s c)  L

ow e

mpl

oyee

turn

over

Hum

an R

esou

rces

II

26

Res

earc

h an

d de

velo

pmen

t con

sist

s of

ow

n re

sear

ch &

dev

elop

men

t an

d lic

ense

pur

chas

es. T

he m

ain

diffe

renc

es b

etw

een

the

two

are

time-

to-m

arke

t and

cos

ts. O

wn

R&

D h

as o

ne p

erio

d de

lay

befo

re th

e te

chno

logi

es a

nd fe

atur

es b

ecom

e av

aila

ble

for p

rodu

ctio

n. L

icen

se

purc

hase

s br

ing

tech

nolo

gies

and

feat

ures

ava

ilabl

e im

med

iate

ly.

Pay

men

t for

the

licen

se is

a o

ne-ti

me

fee

that

giv

es th

e rig

hts

for t

he

tech

nolo

gy a

nd fe

atur

es in

defin

itely.

Te

ams

can

use

any

com

bina

tion

of th

e tw

o to

reac

h th

e de

sire

d le

vel

of te

chno

logi

es a

nd h

ands

et fe

atur

es. F

or e

xam

ple,

team

can

firs

t in

vest

into

its

own

R&

D, t

hen

deci

de to

spe

ed u

p th

e pr

oces

s an

d bu

y a

tech

nolo

gy li

cens

e, a

nd th

en re

turn

bac

k to

ow

n R

&D

. The

onl

y re

quire

men

t is

that

you

hav

e co

mpl

eted

the

parti

cula

r R&

D c

ycle

(n

ew te

chno

logy

or n

ew p

rodu

ct fe

atur

e) b

efor

e yo

u sw

itch

betw

een

in-h

ouse

and

lice

nsin

g.

Res

earc

h &

Dev

elop

men

t

27

If yo

ur c

ours

e ha

s hu

man

reso

urce

s de

cisi

ons

enab

led,

the

in-h

ouse

de

velo

pmen

t dea

ls w

ith m

an-d

ays

inst

ead

of c

ash.

The

dev

elop

men

t w

ill w

ork

the

sam

e w

ay a

s w

ith c

ash,

but

in th

is c

ase

you

have

to

sync

hron

ize

your

pro

duct

dev

elop

men

t dec

isio

ns w

ith y

our h

uman

re

sour

ces

deci

sion

s.

It al

so m

eans

that

the

requ

ired

deve

lopm

ent e

ffort

varie

s ba

sed

on

your

effi

cien

cy le

vel a

nd th

e ul

timat

e co

sts

of d

evel

opm

ent a

lso

depe

nd o

n yo

ur s

alar

y an

d ot

her H

R d

ecis

ions

.

Res

earc

h &

Dev

elop

men

t with

HR

28

In th

e si

mul

atio

n th

e m

arke

ting

mix

con

sist

s of

pro

duct

(tec

hnol

ogy

and

feat

ures

), pr

ice,

pro

mot

ion

(pro

duct

pro

mot

ion

and

bran

d).

Cus

tom

ers

are

com

parin

g be

twee

n th

e of

fers

of t

he d

iffer

ent v

endo

rs a

nd

mak

ing

thei

r pur

chas

e de

cisi

ons

acco

rdin

gly.

Thi

s m

eans

that

eac

h te

ams’

mar

ketin

g m

ix re

lativ

e to

the

othe

r tea

ms’

mar

ketin

g m

ixes

is

cruc

ial i

n th

e pr

oces

s of

div

idin

g m

arke

t sha

res

betw

een

the

team

s.

It is

not

able

that

the

dem

and

func

tion

is c

ontin

uous

, with

out d

iscr

ete

step

s. T

his

mea

ns th

at th

e de

man

d do

es n

ot e

xplo

de o

r col

laps

e at

any

pa

rticu

lar s

ingl

e po

int,

e.g.

, pric

e ab

ove/

belo

w c

erta

in le

vel,

but i

t ref

lect

s th

e co

nsum

ers

pref

eren

ces

on a

con

tinuo

us s

cale

. Th

e ac

tual

mar

ketin

g de

cisi

ons

incl

ude

prod

uct f

eatu

res,

pric

ing,

and

pr

omot

ion.

Eac

h of

thes

e de

cisi

ons

are

mad

e fo

r all

prod

ucts

in a

ll m

arke

ts.

Mar

ketin

g

29

Feat

ures

can

onl

y be

impl

emen

ted

if th

e co

mpa

ny h

as in

vest

ed

suffi

cien

tly to

its

own

R&

D o

r lic

ense

pur

chas

es. T

eam

can

dec

ide

to

impl

emen

t bet

wee

n 1

and

10 fe

atur

es to

its

devi

ces.

Fro

m th

e co

nsum

ers’

poi

nt o

f vie

w m

ore

feat

ures

is b

ette

r tha

n le

ss fe

atur

es

(in th

e gi

ven

scal

e of

1-1

0). I

mpl

emen

tatio

n of

pro

duct

feat

ures

ca

uses

add

ition

al c

osts

. P

rice

is th

e si

ngle

big

gest

fact

or th

at in

fluen

ces

dem

and

and

dem

and’

s el

astic

ity to

pric

e is

alw

ays

nega

tive.

Pric

e el

astic

ity d

iffer

s be

twee

n th

e m

arke

ts.

Pro

mot

ion

deci

sion

influ

ence

s th

e de

man

d at

thre

e le

vels

: pro

duct

, m

arke

t, an

d gl

obal

. Onl

y th

e pr

oduc

t pro

mot

ion

deci

sion

is m

ade

expl

icitl

y, b

ut th

e to

tal o

f the

pro

duct

pro

mot

ions

in o

ne a

rea

are

sum

med

up

as m

arke

t pro

mot

ion,

and

the

tota

l of a

ll pr

oduc

t pr

omot

ions

in a

ll ar

eas

are

sum

med

up

as g

loba

l pro

mot

ion.

Mar

ketin

g –

Feat

ures

, Pri

ce,

Pro

mot

ion

30

As

the

prod

uctio

n is

dem

and

driv

en, t

he lo

gist

ics

is d

eman

d dr

iven

to

o. T

his

mea

ns th

at th

e pr

oduc

ts a

re s

hipp

ed fr

om th

e m

anuf

actu

ring

site

s au

tom

atic

ally

to th

e sa

les

site

s ac

cord

ing

to th

e pr

oduc

tion

capa

city

allo

catio

ns. N

o se

para

te d

ecis

ion

is n

eede

d fo

r th

e sh

ippi

ng.

A ke

y dr

iver

for l

ogis

tics

is th

at e

ach

man

ufac

turin

g si

te is

in

cent

ivis

ed to

min

imis

e th

e id

le ti

me

in p

rodu

ctio

n. C

onse

quen

tly, i

f a

team

ove

rest

imat

es d

eman

d, th

e ex

cess

will

be

redu

ced

from

bot

h pr

oduc

tion

area

s ev

en if

it w

ould

be

chea

per t

o sh

ip e

very

thin

g fro

m

one

area

and

sto

p th

e m

achi

nes

in th

e ot

her a

rea.

In

pra

ctic

e th

is m

eans

that

in o

rder

to m

inim

ize

the

logi

stic

s co

sts,

a

team

sho

uld

allo

cate

exa

ctly

the

right

cap

acity

in th

e rig

ht p

lace

s at

th

e rig

ht ti

me.

Thi

s ca

n on

ly b

e ac

hiev

ed b

y m

anag

ing

the

who

le

dem

and-

supp

ly n

etw

ork

wel

l.

Logi

stic

s

31

Team

s ca

n ch

oose

in w

hich

ord

er th

ey s

atis

fy th

e de

man

d fo

r di

ffere

nt te

chno

logi

es in

the

mar

kets

. For

exa

mpl

e, d

eliv

ery

orde

r 1,

3,2

wou

ld m

ean

that

firs

t the

who

le d

eman

d is

sat

isfie

d in

the

US

A,

seco

ndly

in E

urop

e, a

nd th

ird in

Asi

a. D

eliv

ery

prio

ritie

s ar

e se

t for

bo

th p

rodu

ctio

n ar

eas

and

each

tech

nolo

gy s

epar

atel

y.

Del

iver

y pr

iorit

y de

cisi

on is

ver

y re

leva

nt if

the

team

’s g

loba

l sup

ply

is

not e

noug

h to

sat

isfy

the

glob

al d

eman

d. F

or e

xam

ple,

del

iver

y or

der

1,3,

2 m

eans

that

if th

e te

am ru

ns o

ut o

f sup

ply,

del

iver

ies

will

firs

t be

cut f

rom

Asi

a.

In o

rder

to m

axim

ize

prof

its, t

eam

s m

ust b

e aw

are

of th

e pr

ofita

bilit

y fo

r eac

h pr

oduc

t and

mar

ket a

nd s

et th

e pr

iorit

ies

acco

rdin

gly.

Logi

stic

s –

Del

iver

y P

rior

ities

32

Tax

page

giv

es y

ou in

form

atio

n ab

out y

our c

ompa

ny’s

taxe

s in

eac

h ar

ea

as w

ell a

s ab

out t

he g

loba

l effe

ctiv

e ta

x ra

te. P

leas

e no

te th

at lo

ss-c

arry

-fo

rwar

d is

take

n in

to a

ccou

nt.

Tran

sfer

pric

ing

can

be u

sed

to a

lloca

te R

&D

and

oth

er fi

xed

cost

s be

twee

n th

e co

untri

es a

nd to

ben

efit

from

diff

eren

t tax

rate

s. In

pra

ctic

e th

is m

eans

adj

ustin

g pr

ofits

bet

wee

n di

ffere

nt a

reas

. Tr

ansf

er p

rice

is s

et a

s a

mul

tiplie

r. Th

e m

ultip

lier d

eter

min

es h

ow m

uch

the

man

ufac

turin

g un

it is

add

ing

mar

gin

on to

p of

the

dire

ct v

aria

ble

cost

w

hen

it sh

ips

the

prod

ucts

to th

e sa

les

unit.

Tr

ansf

er p

ricin

g is

a h

ighl

y re

gula

ted

disc

iplin

e in

the

real

life

and

it is

re

gula

ted

also

in th

e si

mul

atio

n ga

me.

The

mul

tiplie

rs m

ust b

e be

twee

n 1

and

2, w

hich

mea

ns th

at th

e in

tern

al p

rice

betw

een

the

man

ufac

turin

g un

it an

d sa

les

unit

can

not e

xcee

d tw

o tim

es th

e di

rect

var

iabl

e co

st in

an

y si

tuat

ion.

Tax

33

Fina

ncin

g de

cisi

ons

are

typi

cally

the

last

set

of d

ecis

ions

bei

ng m

ade.

The

goal

of t

he fi

nanc

ing

deci

sion

s is

to m

inim

ize

the

cost

of f

undi

ng to

the

com

pany

and

to r

etur

n ca

pita

l to

the

equi

ty h

olde

rs. D

ecis

ions

that

are

av

aila

ble

incl

ude:

a. 

treas

ury

man

agem

ent (

trans

ferr

ing

fund

s be

twee

n gr

oup

com

pani

es)

b. 

incr

ease

s (+

) and

dec

reas

es (-

) in

long

-term

loan

s c. 

shar

e is

sues

and

buy

-bac

ks

d. 

divi

dend

pay

men

ts

Cas

h at

the

end

of th

e ye

ar c

anno

t fal

l bel

ow 2

mill

ion

US

D. I

f the

pla

nned

fin

anci

ng is

not

suf

ficie

nt to

mai

ntai

n th

is re

quire

men

t, th

e sy

stem

will

fill

the

gap

auto

mat

ical

ly b

y ta

king

sho

rt-te

rm d

ebt.

Sho

rt-te

rm d

ebt i

s pa

id

auto

mat

ical

ly w

hen

it is

n’t n

eede

d an

y m

ore.

S

hort-

term

deb

t in

this

cas

e in

clud

es ‘e

mer

genc

y fu

ndin

g’ p

rem

ium

and

it is

m

ore

expe

nsiv

e th

an lo

ng-te

rm d

ebt.

Ther

efor

e it

is b

est t

o try

and

avo

id

shor

t-ter

m d

ebt.

Fina

ncin

g I

34

The

trea

sury

man

agem

ent d

ecis

ion

can

be u

sed

to tr

ansf

er fu

nds

betw

een

diffe

rent

cou

ntrie

s by

inte

rnal

loan

s, fo

r exa

mpl

e to

repa

triat

e ex

cess

cas

h re

sour

ces

from

Asi

a an

d/or

Eur

ope

or to

sup

ply

fund

ing

for p

lant

inve

stm

ents

in

Asi

a.

Long

-ter

m lo

ans

can

be in

crea

sed/

decr

ease

d as

nee

ded.

The

com

pany

’s

leve

rage

influ

ence

s th

e in

tere

st ra

te fo

r loa

ns (h

ighe

r lev

erag

e =

high

er ri

sk =

hi

gher

inte

rest

rate

).

Sha

re is

sues

and

buy

back

s ar

e m

ade

acco

rdin

g to

the

mar

ket v

alua

tion

in

the

begi

nnin

g of

the

roun

d. T

he n

umbe

r of s

hare

s is

sued

or r

epur

chas

ed

affe

ct th

e is

sue

or b

uyba

ck p

rice.

Sha

re b

uyba

cks

are

only

pos

sibl

e if

the

com

pany

has

equ

ival

ent a

mou

nt o

f ret

aine

d ea

rnin

gs.

Div

iden

d pa

ymen

ts c

an b

e us

ed to

retu

rn e

arni

ngs

to th

e sh

areh

olde

rs,

assu

min

g th

e co

mpa

ny h

as re

tain

ed it

s ea

rnin

gs.

Fina

ncin

g II

35

Pro

ject

ions

Pro

ject

ions

can

be

laun

ched

from

the

botto

m o

f the

pag

e an

d th

ey c

onsi

st o

f pro

fit

and

loss

sta

tem

ents

and

bal

ance

she

ets

for t

he w

hole

gro

up a

nd e

ach

area

se

para

tely

. In

addi

tion,

pro

ject

ions

incl

ude

key

finan

cial

ratio

s an

d pa

ram

eter

s.

Cur

rent

roun

d fig

ures

upd

ate

cont

inuo

usly

as

deci

sion

s ar

e m

ade.

Act

ualiz

ed fi

gure

s fo

r the

pre

viou

s ro

und

are

show

n on

the

right

. N

ote

that

all

R&

D a

nd m

arke

ting

(pro

mot

ion)

cos

ts a

re e

xpen

sed

on th

e pr

ofit

and

loss

sta

tem

ent d

urin

g th

e pe

riod

the

inve

stm

ents

are

mad

e. A

s a

cons

eque

nce,

pro

fit

for t

he y

ear m

ay h

eavi

ly fl

uctu

ate

depe

ndin

g on

the

inte

nsiv

enes

s of

R&

D a

nd

mar

ketin

g in

vest

men

ts.

R&

D e

xpen

se is

spl

it be

twee

n U

SA

and

Asi

a re

lativ

e to

the

num

ber o

f pro

duct

ion

faci

litie

s. T

hat i

s, if

ther

e ar

e pr

oduc

tion

faci

litie

s on

ly in

the

US

A, a

ll R

&D

ex

pend

iture

will

be

expe

nsed

in th

e U

SA

.

36

Ope

ratin

g pr

ofit

befo

re in

tere

st, t

axes

, dep

reci

atio

n (E

BIT

DA

) % =

EB

ITD

A /

Sale

s

Giv

es in

dica

tion

abou

t the

com

pany

’s c

urre

nt c

ash

gene

ratio

n ca

pabi

lity.

It is

cal

cula

ted

as s

ales

re

venu

e m

inus

ope

ratin

g ex

pens

es, e

xclu

ding

dep

reci

atio

n.

Ope

ratin

g pr

ofit

befo

re in

tere

st a

nd ta

xes

(EB

IT) %

= E

BIT

/ Sa

les

Giv

es in

dica

tion

abou

t the

pro

fitab

ility

that

the

com

pany

is e

arni

ng fr

om it

s op

erat

ions

. Cal

cula

ted

as

sale

s re

venu

e m

inus

all

oper

atin

g ex

pens

es, i

nclu

ding

dep

reci

atio

n.

Ret

urn

on s

ales

(RO

S) %

= P

rofit

for t

he y

ear /

Sal

es

How

muc

h th

e co

mpa

ny e

arns

from

eve

ry d

olla

r in

sale

s. A

lso

refe

rred

to a

s pr

ofit

mar

gin.

Eq

uity

ratio

= S

hare

hold

er’s

equ

ity /

Tota

l ass

ets

Indi

cate

s th

e co

mpa

ny’s

fina

ncia

l lev

erag

e, i.

e., w

hat p

ropo

rtion

of a

sset

s ar

e fin

ance

d w

ith e

quity

. G

earin

g, %

= (L

ong

term

loan

s +

Shor

t ter

m lo

ans

– C

ash

and

cash

equ

ival

ents

) / T

otal

equ

ity

Net

deb

t to

equi

ty (g

earin

g) is

a ra

tio o

f a c

ompa

ny's

leve

l of l

ong-

term

deb

t in

com

paris

on to

its

equi

ty

capi

tal.

Gea

ring,

like

equ

ity ra

tio, i

ndic

ates

fina

ncia

l lev

erag

e, b

ut g

earin

g ta

kes

the

com

pany

’s c

ash

posi

tion

into

acc

ount

. R

etur

n on

cap

ital e

mpl

oyed

, RO

CE

% =

EB

IT /

(Tot

al a

sset

s –

Cur

rent

liab

ilitie

s)

Indi

cate

s th

e ef

ficie

ncy

and

prof

itabi

lity

of a

com

pany

's c

apita

l inv

estm

ents

. H

ere,

EB

IT (E

arni

ngs

befo

re In

tere

st a

nd T

axes

) equ

als

turn

over

min

us c

osts

and

exp

ense

s du

ring

year

, whe

reas

cur

rent

lia

bilit

ies

are

com

pris

ed o

f sho

rt te

rm d

ebts

and

pay

able

s th

at a

re d

ue w

ithin

a y

ear.

Key

Fin

anci

al In

dica

tors

I

37

Key

Fin

anci

al In

dica

tors

II

Ret

urn

on e

quity

, RO

E %

= P

rofit

for t

he y

ear /

Ave

rage

sha

reho

lder

s’ e

quity

Indi

cate

s th

e re

turn

that

the

com

pany

ear

ns to

its

shar

ehol

ders

EP

S (E

arni

ngs

per s

hare

), €

= Pr

ofit

/ Num

ber o

f sha

res

outs

tand

ing

Div

iden

d yi

eld-

% =

Div

iden

d pe

r sha

re /

Shar

e pr

ice

Indi

cate

s th

e an

nual

per

cent

age

of re

turn

that

the

curr

ent l

evel

of d

ivid

end

prov

ides

to

the

inve

stor

, as

com

pare

d to

the

curr

ent s

hare

pric

e P/

E =

Mar

ket v

alue

per

sha

re /

EPS

P/E

indi

cate

s ho

w m

any

year

s it

take

s w

ith th

e cu

rren

t lev

el o

f ear

ning

s to

pay

the

pric

e of

one

sha

re.

Cum

ulat

ive

tota

l sha

reho

lder

ret

urn,

% (w

inni

ng c

rite

ria)

()

!! "#

$$ %&−

(( )*++ ,-

+×

1%

100

1period

this

price

share

period

initial

share

per

dividends

cumulative

price

share

current

The

conc

ept o

f tot

al s

hare

hold

er re

turn

is e

xpla

ined

on

the

next

slid

e

38

Cum

ulat

ive

Tota

l Sha

reho

lder

Ret

urn

is th

e av

erag

e an

nual

ized

pe

rcen

tage

retu

rn th

at a

com

pany

del

iver

s to

its

shar

ehol

ders

dur

ing

the

who

le s

imul

atio

n.

It

take

s in

to a

ccou

nt th

e ch

ange

s in

the

com

pany

’s s

hare

pric

e an

d cu

mul

ativ

e di

vide

nd p

aym

ents

.

Exa

mpl

e;

1. 

No

divi

dend

s. L

et’s

say

that

the

shar

e pr

ice

in th

e be

ginn

ing

of th

e ga

me

is 1

0EU

R, a

nd a

fter o

ne ro

und

(=ye

ar) t

he s

hare

pric

e is

12

EU

R. T

his

give

s 20

% re

turn

to s

hare

hold

ers

for t

hat g

iven

yea

r.

2. 

With

div

iden

ds. I

n ad

ditio

n to

the

abov

e, th

e co

mpa

ny p

ays

a 1E

UR

di

vide

nd p

er s

hare

dur

ing

the

roun

d. T

otal

retu

rn is

(12+

1)/1

0 =

30%

In

the

prev

ious

we

assu

med

that

the

chan

ge h

appe

ned

over

one

roun

d.

The

sam

e pr

inci

ple

appl

ies

for m

ultip

le ro

unds

. In

that

cas

e w

e ad

d cu

mul

ativ

e di

vide

nds

to th

e sh

are

pric

e an

d an

nual

ize

the

retu

rn. F

or

exam

ple,

30%

cum

ulat

ive

retu

rn o

ver t

hree

yea

rs w

ould

be

9%

annu

aliz

ed re

turn

on

aver

age.

Cum

ulat

ive

Tota

l Sha

reho

lder

R

etur

n

39

Dec

isio

n C

heck

list

On

the

deci

sion

che

cklis

t pag

e al

l tea

m m

embe

rs’ d

ecis

ions

can

be

seen

si

de b

y si

de. B

y pr

essi

ng ’c

opy’

a te

am m

embe

r’s d

ecis

ions

are

mov

ed to

th

e te

am d

ecis

ion

colu

mn.

At t

he d

eadl

ine,

the

syst

em re

ads

the

deci

sion

s fro

m th

e te

am d

ecis

ion

colu

mn

and

calc

ulat

es re

sults

for t

he ro

und.

Team

dec

isio

ns c

an b

e ac

cess

ed a

nd c

onse

quen

tly e

dite

d di

rect

ly b

y pr

essi

ng ’g

o’ in

the

team

col

umn.

Not

e th

at p

revi

ous

roun

d de

cisi

ons

will

be

used

if th

ere

are

no s

aved

de

cisi

ons

for t

he ro

und.

Als

o hi

stor

ical

dec

isio

ns fo

r any

team

mem

ber c

an b

e ac

cess

ed b

y ch

oosi

ng th

e re

spec

tive

roun

d fro

m th

e dr

opdo

wn

men

u.

40

Afte

r eac

h ro

und

the

syst

em g

ener

ates

repo

rts th

at s

how

the

resu

lts o

f eac

h te

am

with

in o

ne s

imul

atio

n un

iver

se.

Res

ults

con

sist

of:

a. 

Sum

mar

y re

port

with

a s

et o

f cha

rts

b. 

Fina

ncia

l sta

tem

ents

; inc

ludi

ng c

onso

lidat

ed P

&L

and

bala

nce

shee

t, an

d pa

rent

com

pany

(US

A) c

ash

flow

sta

tem

ent

c. 

Fina

ncia

l rat

ios;

incl

udin

g sh

are

pric

e in

fo a

nd k

ey fi

nanc

ial i

ndic

ator

s d. 

Are

a re

port

s fo

r all

area

s; in

clud

ing

mar

ket r

epor

ts a

nd P

&L

and

bala

nce

shee

t for

eac

h bu

sine

ss a

rea

e. 

Prod

uctio

n re

port

; inc

ludi

ng in

form

atio

n ab

out t

he p

rodu

ctio

n vo

lum

es,

cont

ract

man

ufac

turin

g, p

rodu

ctio

n fa

cilit

ies

f. C

ost r

epor

t; in

clud

ing

info

rmat

ion

abou

t scr

ap ra

tes

and

prod

uctio

n an

d lo

gist

ics

cost

s g. 

HR

repo

rt a

nd S

ocia

l res

pons

ibili

ty re

port

are

optio

nal a

nd v

isib

le o

nly

if th

e m

odul

es a

re a

ctiv

ated

.

Res

ults

pro

vide

use

ful i

nfor

mat

ion

abou

t a te

am’s

ow

n sa

les,

ope

ratio

ns, a

nd

finan

ces.

In a

dditi

on, r

esul

ts c

an b

e us

ed to

ben

chm

ark

perfo

rman

ce w

ith th

e co

mpe

ting

team

s in

the

sam

e m

arke

t.

Res

ults

41

Ces

im

Ark

adia

nkat

u 21

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0010

0 H

elsi

nki,

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and

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+358

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