Production businesses

The basic subjects in the game are fictitious production businesses, motor car works producing passenger cars. These entities compete with each other at the product market. In accordance with rules of the game, they can also participate in other markets.

All production businesses produce automobiles of comparable operation characteristics but which can be designed for different target groups of customers and therefore they differ in terms of purpose for which they are used. They are medium-size automobiles. In the course of the game, this basic concept cannot be abandoned.

These fictitious businesses in the game are represented by students representing the top management of the company (CEO, expert directors or other supervisors and expert employees). In the groups representing the production businesses, the establishment and occupation of the CEO position will be dealt with first. This position is filled on the basis of a selection procedure. A committee of three members will be established from the members of the group to provide the selection procedure; according to the business owner, the committee organizes the entire selection procedure.

The organizational establishment of a study group as a business is taking place in relation to the position of the CEO. Immediately after being selected, the CEO sets up the individual functional positions (mainly expert directors) and fills those positions with concrete people so that the tasks that the given group will have to deal with are divided the best.

During this stage of the game, adequate departments of the top management process the organizational and salary system of the business, contracts of employment are closed with workers of individual departments and their salary slips are set up. At the same time, a wide range of other measures is realised to organize the group into individual levels of top management. At the end of this stage, the group – the business has to be perfectly organized and ready for the actual run of the game.
Within the actual run, members of management participate in the business activity at seminars organized by means of meeting of the CEO or expert directors and also by means of activities outside those meeting so that the necessary documents and background documents are ready for the decision in the course of the week. One round of the game is a week. Seminars of businesses are organized by means of meetings of CEOs and meetings of individual expert directors.

Within its activity, the business analyzes the results of the previous dealings. The meeting will yield possible strategies for the next round and tasks for individual expert departments that will prepare documentations. Strategies for every round are formed by the number and price of products and also by a range of other concrete measures stated in the market protocol and documentation on them. A document of provision of financial coverage of a given measure (e.g. loan contract) is also a vital part of the documentation.

In immediate sequence of the CEO meeting, meetings of expert directors also take place within the seminar. Their aim is distribution of concrete tasks and responsibility for their fulfilment to individual persons.

The actual run of the game consists of seven rounds. Every round represents a period of one year. For every round, every business selects an automobile type produced, the number of pieces produced and their price for the separate rounds. A business can produce only one type of automobile per round. Introducing new types (models) and volume of their production is limited by production capacity and financial resources of the business. The production programme and capacity can be changed in terms of quantity and quality according to the rules of the game.

A production business takes steps in the given round; those steps include:
- analysis of results of the previous round;
- preparation of plans in the production programme and production capacity;
- preparation of documentation for marketing communication;
- provision of financial resources.

On the basis of submitted plans of all production businesses (which are in the form of documentation handed to the teacher of the game and are considered realised by their submission), a simulation of market behaviour is performed on a computer – a competition fight of the businesses takes place here. The result of the simulation is information on success rate of product sales of individual production businesses.
After the results are announced, adequate departments of the businesses process and publish their annual report.

Financial resources can be acquired from their own sources (re-invested profit, deprecations) and from foreign sources, mainly by means of loans from banks.
Activities of businesses as teams are also assessed in the assessment of the management game. Results achieved by the businesses are published and compared by means of business accounting indexes and financial analysis.

Automobile market model

In the course of the actual run, the reaction of customers to the offered production of individual production businesses is simulated on a computer. When formulating a market model, it is necessary to take one of the simplifying presumptions in the similar way the standard microeconomic theory approaches formulation of such models.

On the offer side of the market, it is possible to discern 2 – max. 8 businesses; producers of medium-size passenger cars. Every company enters the market with a model of a normal year and in case the company did not sell its entire production in the previous year, also with the last year’s model. There are always 2 - 16 models of cars encountering at the market.

As for their operation characteristics, those models are not identical; it is therefore rather a group of products, partial substitutes, not one homogenous product of the same operation serviceability. The serviceability of the product can be changed (increased) in the course of the game, mainly by the product innovation. When communicating with the demand side of the market (i.e. customers substituted by a computer algorithm) the perception of serviceability is influenced also by quality of promotion.

The demand side is formed by a computer algorithm whose output is a calculation of demanded quantity of every product. This algorithm was created to respect some of the simplifying presumptions:
Persons demanding the production of motor car works can be characterized as a group of persons whose income limitations, value preferences, structure of consumption basket, shopping habits etc. are relatively similar. Each of those persons knows the exact price they are willing and able to pay for the given type of automobile. The set sequence of such prices then forms a so called reservation price curve. These curves are simplified into linear functions – lines – in the computer model.

On the basis of these presumptions, the automobile market model is constructed. Demanded quantity is influenced by the price (demanded quality decreases with an increasing price - in conditions that are otherwise stable) and by the quality and standard of marketing activities of the business. The resulting quantity of sold product is significantly influence by the strategies selected by the rival businesses.

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