Business Simulation Exercise: Manufacturing Mayhem

Course Overview

Teams are issued with a starting kit of cash and components that can be used to ‘manufacture’ different types of motor vehicle. There are five options; a Saloon Car, an Estate Car, a 4 x 4 Vehicle, a Sports Car and a Truck. Vehicles can be built in one of four colours, red, blue, black or yellow. These vehicles can be sold and the profits re-invested in further components. Additional capital can be borrowed from the Bank at certain times, subject to fees and interest payments which may change during the course of the exercise.

As in the real world, the market changes from session to session, with varying resale values for certain vehicles, component prices rising and falling, shortage and oversupply of parts and various other shifting goalposts! There may even be special customer requirements that present themselves as an opportunity for extra profit.

Good teamwork will be essential to do well in the exercise. There are many different roles that require filling. Time-keeping, financial control, research and gathering information on the activities of the competition are but a few. There may also be opportunities to make additional profits (and losses!) from activities other than the manufacture and sale of vehicles.

The exercise takes place over a number of business cycles and tests understanding and ability in a number of different management skill areas. This starts with teamwork and leadership as well as incorporating the more practical aspects such as strategic and operational business planning, negotiation skills, presentation and financial management.

The Exercise in Action

The exercise provides an environment in which the participants can practice the various management skills and abilities required to be effective in the workplace, but without the distractions and pressures of the real world. Delegates can therefore concentrate on the various aspects of management and leadership and the ways in which they interact and affect the outcome. The exercise is specifically designed to demonstrate and reinforce various taught elements of management practice.

Good leadership and effective team work are amongst the most important factors for success. Teams will have to organise themselves as in the real world in order to perform efficiently. As the exercise is played out in cycles, there are opportunities for role changes and for a different participant to take the leadership role from time to time. The tutorial and analysis sessions between each of the cycles allows time for reflection and feedback from facilitators and colleagues.

The winning team is not likely to be the one that builds vehicles on a random basis! As in the real world, a number of factors will influence the outcome. Careful planning is required, taking into account the actions of other teams, component availability and trends in the marketplace. Profits can be earned in many ways during the game and not just from the sale of cars! On the other hand, losses can be incurred as well. For example, a customer has a specific requirement. If three teams build the special order then the customer will be able to negotiate a considerable price reduction when they all turn up together! Amongst the financial disciplines required to succeed are the concepts of profit and loss, the company balance sheet and most importantly, the need to manage the cash flow.