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GLOBAL OPERATIONS an exploration of business strategy

Dive into global business strategy through the simulation of high-tech product development with key decisions on markets, funding, and operations. Experience challenges, analyze results, and enhance your strategic management skills.

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GLOBAL OPERATIONS an exploration of business strategy

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  1. GLOBAL OPERATIONSan exploration of business strategy

  2. GLOBAL OPERATIONS The strategic development of a high technology business - the Virtual Patient (VP) With decisions covering • which markets to serve • product development • capacity planning • funding • information needs

  3. Global Operations The Issues • business/market/product portfolios • financial measures & business success • gap analysis • fast to market • customer/market needs • operational efficiency • cash flow & survival

  4. The Simulation Preparation • familiarisation • define responsibilities • set objectives • decide strategies Decision Making • submit decisions • business simulated • analyse results • research markets Review & Debriefing • make directors’ report • review results

  5. The Situation • new business • one million equity from parent company • new, high tech product (the Virtual Patient) • strategic management • several competitors • test marketed in Europe • can sell globally • can borrow up to 50%of equity • financial items measured in Account Units (AUs)

  6. The Global Markets • Europe • North America • South America • Japan • SE Asia • India • Middle East • Africa All are different in terms of potential and need Currently like today’s world but may change.

  7. Operations Information • No factory • Factory Capacity bought in blocks of 1,000 • 5 to 9 blocks cost 100,000 AUs per block • 10 to 24 blocks cost 90,000 AUs per block • 25 blocks and above cost 75,000 AUs per block • Material Costs - 50 AUs per unit of production • Direct Labour Costs - 25 AUs per unit of production • Indirect Costs - 20 AUs per unit of capacity • Production Overheads - 20,000 AUs per year • Multiple Product Cost - 20,000 AUs per product • Depreciation - 10 % per year.

  8. Financial Information • Other Expenses • Market Overheads are 20,000 AUs per market • General Overheads are 50,000 AUs per year • Royalties are 5 AUs per unit sold • Current Bank Interest • Term Loans - 12% plus 1% arrangement fee • Overdraft Interest - 20% • Interest received on cash balances - 6% • Interest premiums will be charged if gearing > 50% • Other Information • Tax rate 33% • Long term parent company requires a 12% dividend

  9. Product Information • Current Product is Model 1 • Subsequent products are Model 2, 3 etc. • Later models are more sophisticated • But will cost the same to manufacture • To develop Model 2 will cost 300,000 AUs • But later models will cost more. • Ultimately can sell several products • Only one model may be offered to a market

  10. Decisions • Market Decisions • whether to serve or not • if served • Price • Promotion • Product • Other Decisions • Product Development • Production Capacity • New Long Term Loans • Dividends

  11. The Results • Company Reports • Preliminary Results • Full Results • Market Report • Other Information • Profit & Loss Account • Balance Sheet • Key Measures • Competitive Report • Comments • Business Research • Company Reports • Market News

  12. Market Research • Competitive Report • Market Potentials • Economic Trends • Test Markets • Other Research Research is charged for. Produced during each decision period. No research until second year.

  13. Observations • it takes time to understand • but the business still must be run • so your decisions will not be perfect • time will be a constraint • but, by the end you should be just in command of your business! • your business competencies will be challenged • and you should have fun.

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