The Business Simulation Blog

12 Business Concepts To Practice With Cesim Global Challenge

Posted by Zsuzsa Jakab on Wednesday, January 11, 2012 | Reading time: 5 min.

business conceptsBelow is a list of business concepts that participants will practice by playing the international business and strategy simulation game, Cesim Global Challenge. If you are wondering whether this simulation is right for your course or training program, have a look at this list to get a general overview of the concepts present within the game.

Cesim Global Challenge is designed to develop participants' understanding of the complexity of global business operations in a dynamic competitive environment. The task for the teams is to manage a global mobile telecommunications company through technological evolution in a fast paced 21st century operating environment. Participants will develop and execute strategies for their simulated company operating in the USA, Asia, and Europe.

Download Cesim Global Challenge Guide Book

The management simulation game integrates a range of concepts from various management related disciplines, including:

1. Accounting

Cesim's business strategy game contains detailed financial information (projections) for each virtual company, such as the:

  • income statement (global, and all areas separately)
  • balance sheet (global, and all areas separately)
  • financial ratios (EBITDA, ROCE, ROE etc...)
  • parameters (exchange rates, interest rates, corporate tax rates etc...)
2. Companies

Participants will form teams of 1-8, and will take over as the new management team of Mobilé Inc, a global mobile handset manufacturer and will be responsible for the company’s strategy, R&D, marketing, production, logistics, and finance.

The essence of Mobilé Inc is a fast developing mobile handset market with product life cycles driven by technological evolution.

The team will develop and execute global strategies and its success is measured by its capability to deliver value to the shareholders. Strategic approach to decision-making, careful analysis, continuous R&D, good timing, and successful product positioning are the keys to success.

3. Competition

Each simulation market consists of 2-12 teams, with 1-8 members in each. The number of parallel simulation markets is not limited, making it possible to utilize the simulation for any number of students in the class.

All teams are starting from exactly the same position, with similar market shares and profits. Equally, teams will face the same market conditions during the simulation.

Note that the teams compete against other teams in their own market, not against a computer. The decisions of each team influences the other teams’ results and the market development overall.

4. Economics

Cesim's business management simulation game is heavily focused on how economic agents behave and interact, and how economies work. The simulation is especially good at illustrating this concept on a microeconomic level, between individual agents (buyers and sellers) and markets.

Concepts within microeconomics that you can illuminate with the business game are:

  • markets
  • production, cost, and efficiency
  • specialization
  • supply and demand
  • firms

5. Finance

The goal of the financing decisions is to minimize the cost of funding to the company and to return capital to the equity holders. Decisions that are available include:

  • treasury management (transferring funds between group companies)
  • increases (+) and decreases (-) in long-term loans
  • share issues and buybacks
  • dividend payments

6. Human Resources

Cesim Global Challenge can be used with or without human resources decisions. If your course has them enabled, you are able to hire R&D personnel to handle the research and development function in addition to buying technology and design licenses.

The human resources function consists of three decisions:

  • number of employees this round
  • monthly salary
  • monthly training budget

The number of employees is definite and you can always have the amount of workforce you wish provided that your salary level is high enough. You can also lay off all employees if you so choose. Costs from human resources include salary, training, recruitment, layoff and other R&D costs. All of these items are included in research and development costs on the income statement.

7. International Trade

The virtual companies of Cesim Global Challenge are very international both in their operations and their target markets, with manufacturing both in the USA and Asia, and sales in the USA, Asia and Europe.

The importance of this will be translated into the varying infrastructures in those markets, as well as their different demand curves and price sensitivity. Shipping and transfer pricing decisions will also be important cross-border considerations.

8. Investment

Investments can be made to start production in Asia and/or expand production facilities in the USA. Investments take two decision-making periods from decision to completion.

Research and development consists of own research & development and license purchases. The main differences between the two are time-to-market and costs. Own R&D has one period delay before the technologies and features become available for production. License purchases bring technologies and features available immediately.

9. Logistics

As the production is demand driven, the logistics is demand driven too. This means that the products are shipped from the manufacturing sites automatically to the sales sites according to the production capacity allocations. No separate decision is needed for the shipping.

A key driver for logistics is that each manufacturing site is incentivized to minimize the idle time in production. Consequently, if a team overestimates demand, the excess will be reduced from both production areas even if it would be cheaper to ship everything from one area and stop the machines in the other area.

In practice this means that in order to minimize the logistics costs, a team should allocate exactly the right capacity in the right places at the right time. This can only be achieved by managing the whole demand-supply network well.

10. Manufacturing

There are two production areas (USA, Asia) that can be used to satisfy demand in three market areas (USA, Asia, Europe). There are max 2 production lines per area, i.e., four in total. In the beginning, production facilities are located only in the USA.

Contract manufacturing can be used to complement own production. Using contract manufacturing requires that one own production line is committed to the outsourced product. This means that at any point during the simulation the maximum amount of different technologies that can be produced is four.

11. Marketing

In this simulation, the marketing mix consists of product (technology and features), price, promotion (product promotion and brand). Customers are comparing between the offers of the different vendors and making their purchase decisions accordingly. This means that each teams marketing mix relative to the other teams marketing mixes is crucial in the process of dividing market shares between the teams.

  • Features (Product)
  • Price
  • Promotion

12. Strategic Management

Cesim Global Challenge is a great opportunity for the participants to practice long term strategic planning, often by creating the vision, mission, objectives and other policies for their virtual companies.

They should then be advised to review this strategy after each round, and adjust it according to the market development. Because the overall goal of the business simulator game is to creative sustainable and profitable growth, this is an excellent tool for instructors to assess the ability of participants to plan and execute.

Does it sound like the business simulation game that your course or training program needs?

Request a demo

Tags: Educator 2.0, Why use business simulations, Practice business theories

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