In GLO-BUS, 1 to 5 class members run companies that are in a neck-and-neck race for global market leadership in two product categories: (1) wearable video cameras and (2) sophisticated camera-equipped copter drones. As many as 12 companies can compete in a single industry grouping (class sizes above 50 are typically divided into two or more industry groups). The companies compete in a global market arena, selling to buyers in four geographic regions—Europe-Africa, North America, Asia-Pacific, and Latin America.
The co-managers of each company are responsible for assessing market and competitive conditions in the two product categories, determining how to respond to the actions of competitors, forging a long-term direction and strategy for their company, and making decisions relating to:
- the design and performance of the company’s two products (21 decisions, 10 for cameras and 11 for drones),
- assembly operations and workforce compensation (up to 8 decision entries for each product)
- pricing and marketing (7 decisions for cameras and 5 for drones)
- corporate social responsibility and citizenship (as many as 6 decisions)
- the financing of company operations (up to 8 decisions).
Plus, company managers have accounting and cost data to examine, import duties and exchange rate fluctuations to consider, and shareholder expectations to satisfy. Experience confirms that this many decisions is right on the money—enough to keep company co-managers engaged and challenged but not too many to confuse and overwhelm.
Each time co-managers make a decision entry, an assortment of on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, total profit, earnings per share, ROE, costs, and other pertinent operating outcomes for both cameras and drones. All of these on-screen calculations help co-managers evaluate the relative merits of one decision entry versus another. Company managers can try out as many different decision combinations as they wish in arriving at a decision combination and set of actions that seem likely to yield good company performance.
If company co-managers want additional help/assistance in making decision entries, they can watch the 2-4 minute video tutorials for each decision screen and/or consult the comprehensive Help sections on each decision screen that explain cause-effect relationships, provide tips and suggestions, explain how the numbers in the company and industry reports are calculated, and otherwise inform company co-managers how things work.
The Quest for a Winning Strategy Each company typically seeks to enhance its performance and build competitive advantage via its own custom-tailored competitive strategy based on such factors as more attractive pricing, greater advertising, a wider selection of models, more appealing performance/quality, longer warranties, a better image/reputation, and so on— there are 11 factors that determine each company’s unit sales/market share in wearable video cameras, and 9 factors that determine each company’s unit sales/market share in camera-equipped copter drones.
Any and all competitive strategy options—low-cost leadership, differentiation, best-cost provider, focused low-cost, and focused differentiation—are viable choices for pursuing competitive advantage and good company performance. A company can have a strategy aimed at being the clear market leader in either action cameras or UAV drones or both. It can focus on one or two geographic regions or strive to build strong market positions in all four geographic regions. It can pursue essentially the same strategy worldwide or craft customized strategies for the Europe-Africa, Asia-Pacific, Latin America, and North America markets. Most any well-conceived, well-executed competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness.
How the Outcomes Are Determined Instructors establish a deadline (date and time) for company co-managers to complete for each decision round and other related assignments. Instructors have the flexibility to change the deadlines at any time for any reason. Decision rounds can be scheduled once per week, twice per week, daily, or even twice daily, depending on how you want to conduct the exercise. You will be able to peruse sample decision schedules when you are settling on the times and dates for the deadlines.
When the instructor-specified deadline for a decision round arrives, the decision entries of rival companies are automatically processed. GLO-BUS algorithms allocate sales and market shares in the action-camera and UAV drone segments to the competing companies, region by region. The factors governing how many units a company sells in each geographic region are based on the competitiveness and overall buyer appeal of its product offering versus the product offerings of rivals for each of 11 competitive factors for cameras and the 9 competitive factors for drones.
For instance, a company’s price in a region is determined to be more competitive the further it is below the average price in that region charged by all companies and less competitive the further it is above the regional average. A company’s product performance and quality is determined to be more competitive the further its performance/quality rating is above the average performance/quality rating of all companies competing in the region and less competitive the further its rating is below the regional average. The overall competitiveness of a company’s product offering in a region is a function of its combined competitive standing across all competitive factors for that product. For example, a company can offset the adverse impact of an above average price with above-average performance and quality, more advertising, longer warranties, and so on.
The greater the differences in the overall competitiveness of the product offerings of rival companies, the bigger the differences in their resulting sales volumes and market shares. Conversely, the smaller the overall competitive differences in the product offerings of rival companies, the smaller the differences in sales volumes and market shares. This algorithmic approach is what makes GLO-BUS a “competition-based” strategy simulation and accounts for why the sales and market share outcomes for each decision round are always unique to the particular strategies and decision combinations employed by the competing companies. There's no built-in bias favoring any one strategy and no "secret set of strategic moves" that are sure to result in a company becoming the industry leader. Which strategies end up delivering the best performance in any given group of 4 to 12 companies that are competing head-to-head always depends on the competitive interplay among the specific decisions and strategies of rival companies.
Once sales and market shares are awarded, the company and industry reports are then generated and all the results become available 15-20 minutes after the decision deadline passes. Company performance is judged on five criteria: earnings per share, return on equity investment (ROE), stock price, credit rating and brand image. Company performance, along with a wealth of industry and company statistics, are available to company co-managers after each decision round to use in making strategy adjustments and decisions for the next competitive round.
All cause-effect relationships and underlying algorithms in GLO-BUS are based on sound business and economic principles and connect tightly to the real-world workings of the markets for wearable cameras and camera-equipped copter drones. The “real-world” character that has been carefully and systematically designed into GLO-BUS allows company co-managers to think rationally and logically as they analyze industry and company conditions; they can be businesslike in deciding how to manage their camera/drone company. The thesis is that the more GLO-BUS mirrors real-world market conditions and real-world managerial decision-making, the more pedagogical value it has. Why? Because tight linkages between the functioning of GLO-BUS and “the real world” provide class members with an authentic learning experience, a bona fide means of building their skills in analyzing markets and the actions of competitors, and a true-to-life way to practice making business-like decisions and applying the knowledge they have gained in business school.
Time Requirements for Class Members You should expect that company co-managers will likely spend an average of about 2 hours plus working on each decision round. The first couple of decision rounds often take considerably longer, not only because co-managers have to explore the menus, familiarize themselves with the information on the screens, and absorb the relevance of the calculations shown whenever new decisions are entered, but also because it takes time for them to establish a working relationship with one another, debate what sort of long-term direction and strategy to pursue, and arrive at a consensus on the “best” decision entries.
The total workload ends up between 20 and 30 hours, given an average of 2 hours per decision round, 9 to 12 decision rounds (including practice rounds), and the time needed to complete optional assignments (quizzes, strategic plans, company presentation, and peer evaluations). You can compensate for the hours students spend on the simulation by trimming the number of case assignments, eliminating a written case assignment (which can take students 10-15 hours to prepare), and perhaps allocating one or more regularly-scheduled class periods to having class members work on their decisions or the 3-Year Strategic Plan assignment.
It will consume part of a class period to introduce class members to the simulation and get things under way. Thereafter, the simulation becomes mainly an out-of-class group exercise where co-managers collaborate face-to-face or online to develop a set of consensus decision entries—of course, you can allocate some portion of class time (especially in classes that meet 3 hours once-per-week) to group meetings to work on simulation activities.
All GLO-BUS activities for class members and instructors take place here at http://www.glo-bus.com/.