Addenda Appendices ABSEL 2001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwartz and Teach, Absel 2001

April 6, 2001

Appendix I

The Boards

1.  Start-up (Building the firm)

2.  Market Introduction (Implementation of first strategies)

3.  Market Growth (Implementation of building strategies)

4.  Market Maturity (Implementation of stabilization strategies)

5.  Market Decline (Implementation of harvest strategies)

Lay-out

The boards have 5 squares a side, 24 total with the four corner squares.  The 24 squares are repeated randomly, with extra squares for strategies.  The squares include:

Personnel

Operations Strategies

Marketing Strategies

Finances

Environmental Occurrences

Extra Move Squares

 


Appendix II

The Moves

Moves are made by the throw of a die.  Players must land on a square, draw a card and make a decision in order to select personnel, operations and marketing strategies, and finances.  The players must accept the environmental interventions.  The other squares can be passed on, but ultimately before a player leaves a board, all firm needs must be met.  For the first board these include three additional venture team members; marketing and operations strategies; a minimum amount of capital; and minimum congruence scores for both personnel and strategies.  For the second and later boards, personnel can be replaced; strategies can be changed; a minimum amount of capital for each stage must be raised; and certain minimum congruence scores must be achieved.  As the players move to higher levels, additional capital and higher congruence scores must be achieved or maintained.

The cost for every complete round around a board is $100,000 the first level;  $200,000 the second board;  $400,000, $800,000 and $600,000 respectively for each round on the last three boards.  The more changes in the decision-making, the greater the number of moves to reach an objective, the costlier it is.


Appendix III

The Cards

Personnel

Each set of personnel cards will have five choices for each of the functional positions in the firm.  There will be one best person in each set for the firm being played.  The player can choose to decline a person and the card goes to the bottom of the stack.  If the person is accepted, then the cost of that person along with any funds that that person has to invest are noted on the score sheet. 

 

 

The Firm

 

FastChips

 

Product:  Computer chips to replace hard drives.  The unit is approximately the size of a 3.5" floppy disk and there is a unit to fit PCs and a unit for Macs.

 

 

Entrepreneur               Name:  Larry Barnhart

 

Larry thinks the best strategies should be low cost because the hardware ware business is very competitive and a low cost strategy would allow for some profit margin even at very low prices.  Larry thinks it is very important to tell customers how their products are different than all the competitors.  He thinks that quality is a major factor in this market as well as market development.  He thinks finding new markets are more important than market penetration.

 

 


1.2.1  The Best Finance People

 

Name:              Mike Meyers                Age:  37 

Education:        Bachelor in Finance (Emory)

                        MBA from Emory       

Employment:     Financial Consultant (5 years)

                        Financial Advisor  (3 years)

                        Sales Manager  (5 Years)

                        Marketing Trainee (2 years)

 

Personal Assets:  $250,000 and is willing to invest in a firm for a 10% equity position

 

Beliefs:             Emphasis on low price; emphasis on quality; pay employees fairly.

Ideals:              Do it right the first time.

Goals:               Be a "Leader" in the business community; get rich; do it on my own.

 

Skill sets scores:           Finance - 36  Marketing - 25  Operations - 15

 

 

Name:              Jennifer Bean                Age:  38 

Education:        Bachelor in Finance (GSU)

Employment:     Financial Manager (8 years)

                        Financial Analyst (6 years)

 

Beliefs:             Emphasis on quality.

Ideals:              To be the "Best."

Goals:               To work with others.

 

Skill sets scores:  Finance - 34  Marketing - 18  Operations - 16

 

 

Name:              Rehan Sayeed              Age: 39

Education:        Bachelor in Business Mgt.  (Northwestern)

MBA at Vanderbilt.

Employment:     Financial Analyst  (5 years)

                        Sales Person     (5 years)

                        Marketing Trainee  (2 years)

                        Business Mgr.  (4 years)

 

Beliefs:             Emphasis on market development and latest technology.

Ideals:              To be friends will all people.

Goals:               To get rich.

 

Skill sets scores:           Finance - 36  Marketing - 24  Operations - 10

 

 


Name:              Ansumana Mosley        Age: 50

Education:        Bachelors in Finance (Univ. of W. Virginia)

                        MBA (Howard University)

Employment:     VP Finance (Fortune 100) 10 years

                        Financial Advisor (6 years)

                        Financial Research Analyst (13 years)

Personal Assets:     250.000 and is willing to invest in a firm for a 20% equity position

 

Beliefs:             Emphasis on joint ventures and quality.

Ideals:              Have the "Best in the Market."

Goals:               Get rich, being profitable by being different.

 

Skill sets scores:           Finance - 40  Marketing - 14  Operations - 10

 

 

Name:              Michael Osborne          Age: 33

Education:        Bachelors in Management (UCLA)

Employment:     Financial Advisor (4 years)

                        Marketing Manager (3 years)

                        Mgt. Trainee (2 years)

 

Beliefs:             Emphasis on market development and low price.

Ideals:              Sell as much as possible to new customers.

Goals:               Be an Industry Leader.

 

Skill sets scores:           Finance - 30  Marketing - 24  Operations - 10

 


1.2.2  The Best Marketing People

 

Name:              Carol Smith                  Age: 56 

Education:        Bachelors in MGT (Georgia Tech)

Employment:     Marketing Dir.  (20 years)

                        Marketing Mgr.  (6 years)

                        Operations Mgr.  (8 years)

 

Beliefs:             Emphasis on low cost and low price.  Considers quality to be of the greatest importance.

Ideals:              Do things well and you will be rewarded.

Goals:               Be able to apply mass marketing techniques to homogeneous markets.

 

Skill sets scores:           Finance - 17  Marketing - 34  Operations - 25

 

 

Name:              Teresa Campbell          Age:  35

Education:        Bachelors in Business Mgt. (FSU)

                        MBA from Univ. of Pennsylvania.

Employment:     Marketing Director (3 years)

                        Marketing Manager  (4 years)

                        Financial Analyst  (3 years)

 

Beliefs:             Emphasis low cost, considers quality to be of the greatest importance.

Ideals:              Do it right the first time.

Goals:               To make a difference.

 

Skill sets scores:           Finance - 20  Marketing - 33  Operations - 10

 

 

Name:              Michelle Saylor             Age: 53

Education:        Bachelor in Management Information Systems (University of Georgia in Athens)

Employment:     Marketing Director (14 years)

                        Marketing Manager (12 years)

                        Database Manager (4 years)

 

Personal Assets: $250.000 and is willing to invest in a firm for a 30% equity position.

 

Beliefs:             Emphasis on latest technology and market development.

Ideals:              To sell as much as possible to existing customers.

Goals:               To be unique.

 

Skill sets scores:           Finance - 10     Marketing - 36   Operations - 10

 


Name:              Shriti Sharma                Age: 31

Education:        Bachelor in Finance (Stanford)

MBA from Colombia University

Employment:     Marketing Director (4 years)

                        Marketing Manager (2 years)

                        Operations Manager (3 years)

 

Beliefs:             Emphasis on joint venture and market penetration.

Ideals:              Technology is the "solution."

Goals:               Get rich, be my own boss.

 

Skill sets scores:           Finance - 15  Marketing - 35  Operations - 26

 

 

Name:              Christina Knopp           Age: 28

Education:        Bachelor in Industrial Engineering (Cal. Tech)

MBA from Stanford

Employment:     Marketing Director (3 years)

                        Operations Manager (5 years)

 

Beliefs:             Emphasis on use of latest technology and joint ventures.

Ideals:              To provide "the difference" for my customers.

Goals:               To be unique.

 

Skill sets scores:           Finance - 10  Marketing - 30  Operations - 25

 


1.2.3  The Best Operations People

 

Name:              William Goldberg          Age: 30

Education:        Bachelor in Business Mgt.  (Michigan State)

Employment:     Operations Mgr.  (2 years)

                        Operations Mgr.  (3 years)

                        Marketing Mgr.  (2 years)

                        Mgt. Trainee  (1 year)

 

Beliefs:             Emphasis on latest technology and joint ventures.

Ideals:              Technology is the "solution."

Goals:               Being profitable, but being different.

 

Skill sets scores:           Finance - 10  Marketing - 20  Operations - 29

 

 

Name:              Sherry Keating             Age: 49

Education:        Bachelors in Operations Mgt. (Univ. of Arizona)

Employment:     Operations Director (15 years)

                        Operations Manager (13 years)

                        Line Manager (2 years)

 

Personal Assets:     $250.000 and is willing to invest in a firm for a 10% equity position.

 

Beliefs:             Emphasis on latest technology and market penetration.

Ideals:              Sell as much as possible to existing customers.

Goals:               To work with others.

 

Skill sets scores:           Finance - 10  Marketing - 10  Operations - 34

 

 

Name:              Ralph Lee                     Age: 33

Education:        Bachelors in Business Management (UT, Austin)

Employment:     Operations Manager (4 years)

                        Line Manager (2 years)

                        Management Trainee (1 year)

 

Beliefs:             Emphasis on being unique.

Ideals:              Technology is the "solution."

Goals:               Being the "best" is very important.

 

Skill sets scores:           Finance - 12  Marketing - 10  Operations - 32

 

 


Name:              Frank M. H. White       Age:  34

Education:        Bachelors in Industrial Engineering (Georgia Tech)

Employment:     Operations Mgr. (4 years)

                        Line Mgr.  (4 years)

                        Sales person (4 Years)

 

Personal Assets:           $250,000 and is willing to invest in a firm for a 20% equity position.

 

Beliefs:             Emphasis on the importance of quality.  Not concerned with price.

Ideals:              Do things "well" and you will be rewarded.

Goals:               Help as many people as possible.

 

Skill sets scores:           Finance - 10  Marketing - 24  Operations - 33

 

 

Name               Patricia Chung              Age:  48

Education:        Bachelors in MGT (NYU)

Employment:     Operations Mgr (14 years)

                        Mgt. Trainee (1 year)

                        Project Leader (2 years)

                        Salesman (10 Years)

 

Beliefs:             Firm believer in low price and low cost.

Ideals:              Treat the customer fairly.

Goals:               Be on top of a large firm; be my own boss; do it on my own.

 

Skill sets scores:           Finance - 10  Marketing - 22  Operations - 30



Appendix IV

 

Strategies, Marketing and Operations

The strategies are written on individual cards and the player selects the desired strategies.  The player can choose to accept and pay the price for adopting a particular strategy and receive the benefits, or can decline a strategy.  Adopting and/or changing strategies on later boards is more costly than on earlier boards (no cost to adopt on the start-up board).  Congruence scores are associated with each strategy selected.  Before they can proceed to the next board, each player must select three operations strategies (one each for cost, quality and technology); and one each for price, promotion, distribution and differentiation strategies.

Finances  

Cards will have an equity or debt opportunity and an associated cost.  The player can choose to accept and pay the price for adopting a particular financing opportunity and receive the benefit, or can decline it.  Because the firm has a greater value as it moves through the life cycle, changing on later boards is less costly than on earlier boards.  All debt must be repaid at the end of the start-up board, one-half at the end of the introduction board, and none for the remainder of the boards.   


Environmental Occurrences

Each card will have an opportunity or threat and the cost for each that the firm must be paid or received.  Some do not apply for the start-up board.  For example:

The firm has its bank loan called.  The firm loses its debt capital.

The angel investor dies and his/her estate takes the funds back.

A UN action has begun and the economy has slowed.  The firm's maximum sales potential is reduced by 15% for the present board.

A technical breakthrough has created an opportunity for quality costs to be reduced by 50% and sales to increase by 25%.

Interest rates were lowered by the Fed and loan costs are reduced $20,000.

 

A major weather problem has occurred and the firm is charged an additional round fee of 50% due to delays. 

 

Due to changing consumer needs, lower quality is acceptable and the firm gains a quality bonus of $150,000.

 

A venture capitalist wants to buy 10% of the firm for $1,000,000.

 

The long-term economic prognosis for the industry is bad and the sales potential is reduced 25%.

 

The long-term sales potential is enhanced due to marketplace conditions and market size will expand 30%.

 

Your major distributor in South America has collapsed due to a coup.  Your firm loses $300,000.

 

A lawsuit finds for defendants and your firm benefits $200,000.

 

A lawsuit is settled and your firm receives a royalty for the next two rounds of play, equal to 10% of your total sales.

 

A war in Israel eliminates a joint venture and costs the firm $250,000. 

 

Interest rates go down 0.5%, the company has an additional $10,000 profit due to lower interest rates


Appendix V

Financial

As the game begins the players receives $5,000,000 as the initial start-up capital.  In order to move to the second board the player must have accumulated $2,500,000.  The player may do so by acquiring employees that have their own sources of funds or equity accumulation. On the second board the player may do the same, but also has sales revenue.  Sales revenue is calculated using congruence scores, of both personnel and strategies, serving to reduce maximum revene for the board by the overall % congruence.  The player may give up control of the firm in the second round, but only 50% equity is allowed in the first round.

Sales revenue is calculated for board two and for subsequent boards by utilizing congruence scores and multiplying those scores by the maximum sales value for each board.  For board two the maximum is $10,000,000; for the next board, the growth stage, $64,000,000; the maturity stage value is $100,000,000; the declining stage, $50,000,000.

To leave the first board, the player must have congruence scores of 80 and 125 respectively for personnel and strategy congruence and a total of $2,500,000.  For the second board, the scores must be 90 and 175 with cash in excess of $6,000,000.  There are no minimums, but the 90 and 175 values must be maintained for the remainder of the boards as the player then knows what congruence is (scoring paradigms are given to the player after the second round).  Maximum congruence for personnel is 110 and for stratggies, 250.

Completing a Game

If a player bankrupts, for the first two boards the player must go back and start over again.  "Winners" can be defined by meeting personal goals or if playing competitively, by overall dollars accumulated or by cash and congruence scores, equally weighted.


Finance Cards

Start-up Equity  $5,000,000

$500,000

$1,000,000

$2,000,000

Each card has one of the three amounts on it with a 10, 20 or 30% ownership cost of equity.

Equity may not exceed 50% of ownership

 

Start-up Debt

Debt may not exceed 100% of equity.

Cost of debt is 4% a round.

Each card has 25, 50, 75 or 100% debt allowed.

 

Introduction Board

Equity increases to:

5,000,000

7,500,000

10,000,000

Cost of equity is 10, 20, or 30% randomized per card.

 

Cost of debt for the second board rounds is 3%.

Debt is set at a maximum of 2:1 to equity.

All debt is paid off before proceeding to the next board.

Cards have 50, 100, 150 or 200% debt allowed.

 

For the administrator, increase sales in the second and later rounds up to 50% equity, if over 50% reduce sales by 150 -% Equity.  In other words, if 25% eqwuity given, then sales increase fto 125%;  if 60% given, then sales decrease to 90%.

Appendix VI

Scoring

At any time, each team may complete a scorecard that includes the name of the person for each position and their respective position scores.  In addition, the player reports excess cash the firm has retained (and obtained) from hiring, financing, etc.  The player reports the selected strategies and presents the firm score card to the game administrator.

The game administrator sums the position values for the team member and divides by 100.  This value may range between a low of 0.70 and a high of 1.10.  This is the personnel congruence score.  The strategy value matrix is then used to calculate the value of the strategies and their relationship to firm performance.  This value is calculated by adding up the scores for each of the selected strategies.  This number is then divided by 100.  This result will range between a low of 0.70 and a high of 2.50.  This is the strategy congruence score.

For board two (market introduction) scoring, the player may make any changes to increase their congruence score and may change the strategy selections based upon the possible new congruence resulting from employee changes.  Scoring for the second board is the same as for the first board, but with the higher costs associated with changes as noted on the scorecards.  Congruence scores are then multiplied by the $10,000,000 maximum possible sales.  This figure is added to the other accumulated capital.


Strategy Congruence Values

 

All Possible Strategies and Their Scoring Values for Product 1

 

Key Strategy

Start-up

Intro.

Growth

Maturity

Decline

Quality

 

 

 

 

 

High Quality

25

25

25

25

25

 

20

20

25

25

25

 

15

15

15

10

15

 

10

10

15

10

10

Low quality

5

5

10

15

10

Price

 

 

 

 

 

Low price

25

25

20

15

10

 

20

20

20

15

10

 

15

15

15

15

10

 

10

10

10

15

15

High Price

5

5

10

15

20

Cost

 

 

 

 

 

Low Cost

50

50

50

50

50

 

40

40

40

40

40

 

30

30

30

30

30

 

20

20

20

20

20

High cost

10

10

10

10

10

Technology

 

 

 

 

 

Latest Technology

50

50

40

30

10

Current Technology

30

20

10

20

30

Old Technology

10

10

20

30

40

Promotion

 

 

 

 

 

Inform

25

25

10

 

 

Persuade

10

10

25

50

10

Remind

 

 

10

25

50

Distribution (Place)

 

 

 

 

 

Selective

25

25

10

 

25

Intensive

10

10

25

25

 

Extensive

 

 

10

50

 

Differentiation

 

 

 

 

 

Low

10

10

10

10

10

 

20

20

20

20

20

 

30

30

30

30

30

 

40

40

40

40

40

High

50

50

50

50

50

 


Appendix VII

 

Administrator Instructions for Playing the Game

For a two hour session of playing, 15 minutes should be allocated for pre-game briefing; 45 minutes maximum for two boards; and 15 - 30 minutes for final debriefing. 

Additional Financial Information for a Player's Strategic Choices

Each strategy used in the game has its unique sets of choices and changes in fees that increase as the player advances to higher boards and the product matures.

 


Start-up

Introduction board

 

 

Personnel (3)

Personnel (3)

    Hire (100,000)

    Hire (150,000)

    Fire (25,000)

    Fire (100,000)

$50,000 to change any strategy

 

Operations

Operations

    Quality (5 choices)

   Quality (5 choices)

 

   Change in Strategy Fee    (100,000)

 

        Per round quality cost

 

(1) low 50,000

 

(2)  100,000

 

(3)  200,000

 

(4)  400,000

 

(5) high 500,000

 

 

Latest technology

   1,000,000

Current technology

      500,000

Older technology

      100,000

 

 

Marketing

 

            Place

Selective              500,000

 

Intensive           2,000,000

 

Extensive          5,000,000

            Promotion

Inform                 500,000

 

Selective           2,000,000

 

Remind             5,000,000

 

 

No costs for start-ups

  Change in strategy fee

  $100,000


 

Differentiation

(1) low 100,000 

 

(2)  200,000

 

(3)  300,000

 

(4)  400,000

 

(5) high 500,000

 

 

No costs for start-up

 Five choices ($100,000 to change)

            Cost

(1) low 500,000

 

(2)  400,000

 

(3)  300,000

 

(4)  200,000

 

(5) high 100,000

 

 

Price

(1) low 100,000

 

(2)  200,000

 

(3)  300,000

 

(4)  400,000

 

(5) high 500,000

 


Appendix IX

Personnel

Persons

Scores

 

Congr.

Start Cash

5000000

Times of

 

 

 

 

 

 

 

Each

Finance

 

 

 

 

Rounds

100000

 

 

Marketing

 

 

 

 

 

 

 

Operations

 

 

 

 

Equity %

(50% max)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt (1:1)

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rounds

 

 

Total

PGS

 

/100

=

Hiring ea

100000

 

 

 

 

 

 

Firing ea

 25000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategies

 

 

 

 

Changes

 

 

 

 

 

 

 

50000 ea

 

 

3. Opps (3)

 

 

 

 

 

 

 

Quality

 

 

 

 

 

 

 

Technol.

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

4. Mkt.

 

 

 

 

 

 

 

Price (1)

 

 

 

 

 

 

 

Differ. (1)

 

 

 

 

 

 

 

Place (1)

 

 

 

 

 

 

 

Promo. (1)

 

 

 

 

 

 

 

 

Total

 

SGS

 

 

 

Environ

Occurrences

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

/100

=

Total Cash

 

 

Start-up Board

 

To leave this round, a PGS score of 80 is needed;  a SGS of 175 is needed;  and 2,500,000 cash. 

 

The cash at the bottom right hand corner of the score sheet is what is available to begin year 2.  The first board has zero sales.  The second board sales factor is $10,000,000.  Each firm begins with $5,000,000 start-up dollars.  Depending on whether or not new employees buy equity or not and depending on what their negotiated salaries are, the amount of initial cash results.  This number is added to the congruence cash available to determine the second year start-up cash.  A similar calculation is done for the second and subsequent boards.


Second Board--Introduction

Personnel

Persons

Scores

 

Congr.

Start Cash

5000000

Times of

 

 

 

 

 

 

 

Each

Finance

 

 

 

 

Rounds

200000

 

 

Marketing

 

 

 

 

 

 

 

Operations

 

 

 

 

Equity %

(50% max)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt (2:1)

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rounds

 

 

Total

PGS

 

/100

=

Hiring ea

100000

 

 

 

 

 

 

Firing ea

 25000

 

 

 

 

 

 

 

 

 

Strategies

 

 

 

 

Changes

 

 

 

 

 

 

 

100000 ea

 

 

3. Opps (3)

 

 

 

 

 

 

 

Quality

 

 

 

 

 

 

 

Technol.

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

4. Mkt.

 

 

 

 

 

 

 

Price (1)

 

 

 

 

 

 

 

Differ. (1)

 

 

 

 

 

 

 

Place (1)

 

 

 

 

 

 

 

Promo. (1)

 

 

 

 

 

 

 

 

Total

 

SGS

 

 

 

Environ

Occurrences

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

/100

=

Total Cash

 

 

 

 

 

 

 

+

 

 

PGS X

SGS

X

$10 M

=

Sales

=

 

 

 

PGS of 90;  SGS of 210;  and $10,000,000 to leave this Board.

The cash at the bottom right hand corner of the score sheet is what is available to begin the third Board.