Each firm in the globalview business simulation opens and operates a firm. In order to begin you must issue at least 300000 shares of stock.
The globalview world runs on a quarterly decision making system beginning in quarter 1, year 1. Each quarter the firm must enter a set of decisions. On the decision deadline (on or before Friday 9am Pacific Standard time - unless you are running in a unique session), the decision menus are closed and the simulation is "run". This produces a set of results. The firm must read results and determine what decisions to make for the next quarter etc...
In the simulation you sell product to the retail buyer. The retail buyer is simulated and will react to economic and political events as well as specific industry factors. The retail buyer purchases product that they will then sell to the end consumer. You compete with other firms to sell your product to the retail buyer. Firms compete for this retail market share ONLY within their own market group (up to 8 firms per market group).
Firms compete across ALL market groups for NPV (net present value). A winning strategy is one that permits the firm to earn positive net income after taxes and to increase its earnings over the duration of the game. Shareholders are counting on a 20% return per year. This means that dividend payments and increases in share price must yield at least this rate of return. The measure of performance is net present value (NPV). It is used to rank firms each week - see the Dollars and Scents Quarterly. Increases in stock price and dividends paid to shareholders are the drivers of NPV. Profit per share and the debt-equity ratio are the two principal determinants of stock price.
In the simulation firms are allowed to make a host of contracts with one another including the sale/purchase of product (finished goods). These contracts can be made across market groups and between the introductory and advanced levels of the simulation. Goods purchased from other firms for resale to the retail market carry your private labels.
Firms operate in the scent industry. There are two products. Products are treated as a unit. 1 unit = 1 case.
|Aftershave||100000 to 150000 units||80000 to 120000 units|
|Perfume||100000 to 250000 units||100000 to 250000 units|
|Low end||$85-100 per unit||$150-185 per unit|
|Q1||12.5 % of annual sales||30 %|
|Q2||25 %||15 %|
|Q3||12.5 %||15 %|
|Q4||50 %||40 %|
Backorder Rate: If your firm cannot supply the quantity demanded in a given quarter, some customers will be willing to accept delivery of their unfilled order the following quarter (called a backorder). The backorder rate refers to the percentage of the undelivered product that can be delivered the following quarter:
Unfilled orders that do not go into backorders are ‘lost sales’. When you cannot deliver the product demanded, the simulation automatically contacts your two closest competitors. If they have product available, they get the sales. Otherwise, lost sales are filled by importers.
There are 2 additional plant location options that give you added benefits/risks: locating in Mexico (becomes your area 1 plant location) or the Czech Republic (becomes your area 2 plant location). In order to locate in Mexico or the Czech republic you must enter a contract along with a decision to add capacity. These options give the advantage of lower labor rates. There are additional risks in production variability.
The Euro will be the currency used in the EU for both pricing and paying laborers if you're a manufacturer. All other figures are in U.S. dollars.
You can follow economic and political trends and try to predict what lies ahead by reading the Dollars and Scents Quarterly. This news source will help you understand the economic environment you are operating within.
Peacock Industries has been in the scent industry for a long time. This globalview company operates firm 18. Peacock Industries sells product to firms. Peacock does not buy product or sell raw materials, plant hours, or other assets, unless through a special arrangement, such as the liquidation of a bankrupt firm.
Peacock sells finished goods only in the early quarters of the simulation, before manufacturers are present. They may maintain their presence longer at the Introductory level of the simulation. The prices for Peacock wholesale product change weekly. The current Peacock asking price can always be found in the Dollars and Scents Quarterly Contract News. In quarter 1, year 1 Peacock prices are $56 per unit of p1 and $99 per unit of p2.
This is further explanation of how firms are organized.
There are a series of market groups. Each market group has two retail markets, NAFTA and the EU. Competition for retail market share occurs within a market group (contracts and subsidiaries open markets to firms). Firms in different market groups do not compete with one another for retail market share. They do, however, compete with one another for overall rank within the simulation as expressed by quarterly Net Present Value figures listed in the Dollars and Scents Quarterly.
|Mkt Group 1||Mkt Group 2||Mkt Group 3||Mkt Group 4|
|Firm 1||Firm 11||Firm 21||Firm 31||Firm 41|
|Firm 2||Firm 12||Firm 22||Firm 32||Firm 42|
|Firm 3||Firm 13||Firm 23||Firm 33||Firm 43|
|Firm 4||Firm 14||Firm 24||Firm 34||Firm 44|
|Firm 5||Firm 15||Firm 25||Firm 35||Firm 45|
|Firm 6||Firm 16||Firm 26||Firm 36||Firm 46|
|>Firm 7||Firm 17||Firm 27||Firm 37||Firm 47|
|Firm 8||Firm 18
Peacock Inc. -does not compete for retail market
|Firm 28||Firm 38||Firm 48|
Rule 1: Outstanding shares may never fall below 300,000. Starting
from the date of your first stock issuance, you must always have at least
300,000 shares outstanding.
Fine: $20,000 and immediate sale of stock required to bring the number of shares outstanding to the 300,000 share minimum.
Rule 2: Paying dividends with no retained earnings is illegal.
Retained earnings must be positive both prior to and after the dividend
Fine: $20,000 plus additional penalties if the decision is judged to be intentional.
Rule 3: Firms may not willfully bankrupt other firms through contract
manipulation (including your own subsidiary)
Fine: To be arranged by your administrator. Penalty will be severe.
Rule 4: Price fixing or engaging in setting market shares or establishing
cartel arrangements is not allowed.
Fine: This act is criminal in character. A firm could be assessed $500,000 plus damage awards up to $5,000,000 to customers and competitors judged to have been injured by the process.
Rule 5: Theft through contracts is not allowed. If you find that
your firm is losing suspect amounts of money, goods, raw materials, etc...
check your records. Your firm may be experiencing theft through the contracts
program. Keep your eye on the quarterly list of executed contracts (in the Dollars and Scents Quarterly) to
make sure that only legal and confirmed contracts for your firm are being
Fine: Heavy fines apply, dependent upon assessment of damages.
Rule 6: Firms may not retain unreasonable financial benefits.
It happens, although rarely, that a firm may receive windfall amounts
of money through an administrator error.
Fine: Any unreasonable asset gained will be removed. If a cover-up of the benefit is intentional, further action will be taken.
Firm 7: Dumping is not allowed. Firms may not place product on
the retail market for less than cost, unless it already has a sustained
presence in that market. This is considered dumping and is illegal.
Fine: A firm may be fined up to $500,000, depending upon whether or not executives dumping product did so intentionally.