Monthly Archives: September 2018

Smartsims Product Updates: September 2018

September 24, 2018Product Updates, Marketing Simulation, Business Simulation, NewsCamille Canuto

Updated Product Development/Launch Screens (MikesBikes Introduction & Music2Go Marketing)

The decision screens which enable students to modify an existing product and launching new products now feature additional information to help students make more informed decisions.

Launching a new product

Previously students would need to navigate to the Market Information and Market Summary Report for this key information, but we have now placed it directly within the screen.

Modifying an existing product

Students will now see a short description of each option with the corresponding cost and benefit.

Missed our previous Product Update articles? You can check these out here:

Question of the Week: How much should we pay our staff?

September 24, 2018Business Simulation Hints Tips Cheats, Student Advice, Business Simulator, Business SimulationCamille Canuto

This question relates to our MikesBikes Advanced Strategic Management Simulation.

Human Resources: Average Salary

This is the average annual earnings of an employee working on the factory floor. The average salary level you set will affect not only your bottom line but also attract better skills and will improve motivation.

Factory workers are paid (on average) the rate you select. Administration staff are paid (on average) twice this rate. For comparison purposes, the average industry salary is $25,000 per year.

How does Salary impact your staff’s motivation level?

Salary level is compared to an industry average of $25,000 and smoothed over several years.

Job security is reduced during downsizing, but is also smoothed over several years.

Including the training/skill level reflects the fact that employees are looking for more than salary and job security. They are looking for a job where they are learning and working with other highly-skilled people.

The graph below shows the motivation index achieved by changing the firm’s average salary from $25,000. The effect would be increased by sustaining the salary change across succeeding years.

The graph below shows the effect of job cuts on morale and staff turnover.

Check out the latest Question of the Week articles here:

Question of the Week: What is Preventative Maintenance? | MikesBikes Advanced Business Simulation

September 17, 2018Business Simulation Hints Tips Cheats, Student Advice, Business SimulationCamille Canuto

Preventative Maintenance

You should decide on the total amount to spend on Preventative Maintenance. This is an aggregate amount and so should be varied when a firm changes its plant capacity.

You should look at the Manufacturing Responsiveness Report (under the Key Reports menu) and if you are losing a significant amount of time to Breakdowns, then consider increasing your spend on Preventative Maintenance.

Effects of Spending in Preventative Maintenance

Expenditure on preventative maintenance has a number of effects. Preventative maintenance reduces the likelihood of plant breakdown and losses in capacity caused by these delays. Adequate maintenance also serves to maintain the resale value of plant. Finally, ensuring the plant is producing within tolerances contributes towards the reduction of defects and improves your internal quality.

Example: Currently your firm has approximately 25,000 SCU of plant. If it were new it would be worth $4 million. However it is a few years old and its book value is only $1.6 million, so about 7% of its potential is lost due to breakdowns.

Investment of about $24 per SCU or $600,000/year in preventative maintenance is sufficient to offset deterioration and will keep its operational level (and hence resale) value constant at its current level. Higher investment than this will increase the level accumulated maintenance and hence decrease machine breakdowns. Remember to adjust the amount you spend on maintenance as you increase or decrease your plant size.

Check out the latest Question of the Week articles here:

Question of the Week: What is Investor Relations?

September 10, 2018Business Simulation Hints Tips Cheats, Student Advice, NewsCamille Canuto

More than a mathematical analysis of risks and returns determines the value of a share. It is also affected by how much the investment community knows and understands about the company concerned, and their perceptions of the quality of the firm’s management.

Hence to ensure that their shares are fairly valued, firms need to make every effort to ensure that investors and their advisors have recent frequent clear information about the firm’s situation and plans. The larger and more complex the firm, the more effort is required.

Investor Relations (Investor PR) Index

The Investor Relations (also known as Investor PR) index essentially acts as a multiplier on your company’s share price. So for a very simple example, if your Investor PR index is 1.1, then your Share price will be 10% higher than if your Investor PR index is 1.0 (assuming no other changes). In practice, by spending on Investor PR you will reduce your profit, which will be a drag on your share price, so the effect isn’t quite as simple as that.

In general, the larger your company, the more you need to spend to get a higher PR index. The maximum PR index possible is around 1.2, and you have to spend more and more to raise your index the closer you get to that limit.

How much should we invest in Investor PR?

Your best guide to how much to spend on Investor PR is to look at your current Investor PR index and spend, then decide how much more you are willing to spend on it to try to boost it. Keep in mind that if you spend too much on Investor Relations you may depress your Share Price by reducing your profit and earnings per share. Also decide whether or not there is another better use for the money spent on Investor Relations such as on Product Development.

View other Question of the Week articles here:

What Does Awareness Index Mean and How Do You Influence It?

How Do We Decrease Our Factory’s Wastage?

How Do We Increase Our Delivery Rate?