GLOBAL OPERATIONS an exploration of business strategy.
-
Upload
michael-cobb -
Category
Documents
-
view
213 -
download
1
Transcript of GLOBAL OPERATIONS an exploration of business strategy.
GLOBAL OPERATIONSan exploration of business strategy
GLOBAL OPERATIONSThe 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
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
The SimulationPreparation• familiarization• define responsibilities• set objectives• decide strategies
Decision Making• submit decisions• business simulated• analyze results• research markets
Review & Debriefing• make directors’ report• review results
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
The Global Markets
• Europe • North America• South America• Japan• SE Asia• India• Middle East• AfricaAll are different in terms of potential and needCurrently like today’s world but may change.
Operations Information• No factory• Factory Capacity bought in blocks of 1,000
– 5 to 9 blocks cost $100,000 per block– 10 to 24 blocks cost $90,000 per block– 25 blocks and above cost $75,000 per block
• Material Costs - $50 per unit of production• Direct Labor Costs - $25 per unit of production• Indirect Costs - $20 per unit of capacity• Production Overheads - $20,000 per year• Multiple Product Cost - $20,000 per product• Depreciation - 10 % per year.
Financial Information• Other Expenses
– Market Overheads are $20,000 per market– General Overheads are $50,000 per year– Royalties are $5 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 leverage > 50%
• Other Information– Tax rate 33% – Long term parent company requires a 12% dividend
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• But later models will cost more.• Ultimately can sell several products• Only one model may be offered to a market
Decisions• Market Decisions
– whether to serve or not– if served
• Price• Promotion• Product
• Other Decisions– Product Development– Production Capacity– New Long Term Loans– Dividends
The Results• Company Reports
– Preliminary Results– Full Results
• Market Report• Other Information• Income Statement• Balance Sheet• Key Measures• Competitive Report• Comments
– Business Research• Company Reports• Market News
Market Research
• Competitive Report• Market Potentials• Economic Trends• Test Markets• Other ResearchResearch is charged for.Produced during each decision period.No research until second year.
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.