Developing Technical Developing Technical and Management and Management

Abilities.Abilities.in individuals holding in individuals holding

key-decision jobs.key-decision jobs.

Bill Armitage BSc, MSc, FOR, CEng, MIMechEDr Dan Davidson BSc, PhD

Brasov, Romania 3Brasov, Romania 3rdrd-5-5thth Oct 2007 Oct 2007

Emerald-VbeEmerald-VbeEmerald-VbeEmerald-VbeAn EDIT 515 Ltd.An EDIT 515 Ltd.Virtual Business Virtual Business

EnvironmentEnvironment

DECISIONS INPUT

Accounts

OVERHEADS PROFIT and LOSS BALANCE SHEET CASH FLOW Advertising Sales Revenue Assets Trading Receipts Sales Office Materials Purchased Liabilities Capital Receipts etc etc etc etc Overdraft Limit Next Quarter

AVAILABILITYAND USE OFRESOURCES

PRODUCTMOVEMENTS

The Management Report

Last Quarter of HistoryLast Quarter of History

GENERAL BUSINESS INTELLIGENCE

MARKET SHARE% Share of markets by

Products sold

Share Price % Dividend Last Qtr

All COMPANY BALANCE SHEETS

Free information Prices, Number Employed, and Wage Rate

PAID FOR INFORMATION Advertising, Research Spend and Star ratings

SimulationSimulation FormatFormat

History

Analysis

DecisionMaking

Computation

ManagementReports

QuartersQuarters

NOW

LastQuarter

NextQuarte

r

QBL QAN

Time

LatestReport

NewDecisions

NOW

CorporateCorporate FunctionsFunctions

Managing Director

H.R.M FinanceProductionMarketing

Product Package

Promotion

Selling

R & D

Scheduling

Purchasing

Transport

Borrowing

Investment

Dividends

Hire & Fire

Wages

Conditions

Sources Of FinanceSources Of Finance

MarketsMarkets

The ProductsThe Products

DistributionDistribution

Factory

South

West North

Retailer

Retailer

Retailer

Retailer

Retailer

Marketing FunctionsMarketing Functions

MARKETING

PRODUCT DESIGN PROMOTION ORDER GATHERING MARKET INTELLIGENCE

Product DesignProduct Design

Prices

Design

CompetitionAvailability

Quality

CompetitivenessCompetitiveness

COMES FROM

Low PricesGood DesignHigh Quality

High Stock Levels

But Market Share doesn’t always bring Profit

DemographyDemography

4 Million Homes

7 Million Homes

13 Million Homes

AdvertisingAdvertising

Trade PressReaches out to

the retailers

TV & Press AdvertisingInfluences the buying

public

Merchandising

Builds a long term image

Sales ForceSales Force

How Many?

Where?

Commission?

Salary?

How Many

?Where?

Commission?

Salary?

Some EconomicsSome Economics

Underlying Trend

Seasonality

The Competition

The Law of Diminishing Returns

Diminishing ReturnsDiminishing Returns

Effort

Result

Research & DevelopmentResearch & Development

Product ImprovementsProduct Improvements

Minor?

avoided obsolescenc

e

Product ImprovementsProduct Improvements

Major?

ProductStocks?

Product ImprovementsProduct Improvements

None? Its

deteriorated!

ProductionProduction

Machine

ShopAssembly

Shop?

Product ContentProduct Content

1

2

MaterialContent

MachiningTime

AssemblyTime

1 Unit 100 mins60 mins

3 Units

120 mins 300 mins

The Machine ShopThe Machine Shop

Single Shift needs 4

Unskilled operators per

machine

The Machine ShopThe Machine Shop

2 Shifts needs 8

Operators per

machine

The Machine ShopThe Machine Shop

3 Shifts needs

12 men

The Assembly ShopThe Assembly Shop

Skilled Assembly WorkersWork only single

shift

The Underlying ConflictThe Underlying Conflict

Marketing Production

The Vision

Marketing PlanResources

Production PlanThe Forecast

Warehouse Stock Order Backlog

H.R.M.H.R.M.

Take Home Pay

Overtime

Product Quality

Downsizing

Recruitment

AbsenteeismWastage

Strikes

The Underlying ConflictThe Underlying Conflict

Marketing

Production

H.R.M.

FinanceFinance

PROFIT & LOSS BALANCE SHEET

Revenue

Cost of SalesOverheads

PROFIT

Fixed Assets

Current Assets

Liabilities

NET ASSETS

Dividends

FinanceFinance

PROFIT & LOSS BALANCE SHEET

Revenue

Cost of SalesOverheads

Fixed Assets

Current Assets

Liabilities

NET ASSETSLOSSES

AdditionalFunding

Buying MachinesBuying Machines

Machines cost £120,000and take two quarters to come on-line

Overdraft Limit

Current Overdraft

Share PriceShare Price

Some of the factors affecting Share Price

Net Asset Value per ShareLiquidity

R & D Effort

Stocks & Backlog

Resources (Machines & People)

Market DominanceDividend Performance

The Criterion for Success

The Underlying ConflictThe Underlying Conflict

SHAREHOLDER’S MEETINGSHAREHOLDER’S MEETING

DECISION TIME

SummarySummary

- Virtual Business Environments (VBE)- Virtual Business Environments (VBE)Decision and ChoiceDecision and Choice

- Human Resource Management- Human Resource ManagementAssessing EmployeesAssessing Employees

NeedsNeedsAspirationsAspirationsAttitudesAttitudesConflictsConflicts

Recruiting EmployeesRecruiting EmployeesTraining EmployeesTraining Employees

- Training HR Staff- Training HR Staff- Conclusion- Conclusion

Virtual Business Environments (VBE)Virtual Business Environments (VBE)

- Business or Management Games- Business or Management Games

Examples:-Examples:-

- Global Management Challenge- Global Management Challenge

- Emerald-Vbe- Emerald-Vbe

- Users- Users

- Human Resource Managers- Human Resource Managers

- Management Consultants- Management Consultants

- Universities and Colleges- Universities and Colleges

- Banks and Financial - Banks and Financial Institutions Institutions

Decision versus ChoiceDecision versus Choice

- Choice is when a solution to a - Choice is when a solution to a problem is selected qualitativelyproblem is selected qualitatively

typified by entrepreneurial typified by entrepreneurial ‘decisions’‘decisions’

- Decision is when a solution is the - Decision is when a solution is the result of continuous problem result of continuous problem transformations by the action of transformations by the action of decision criteria defined to achieve decision criteria defined to achieve a global objective (or strategy) and a global objective (or strategy) and often subject to constraints -often subject to constraints -

typified by analytical decisionstypified by analytical decisions

A rigorous definition of ‘Decision’A rigorous definition of ‘Decision’D.J. White rigorously defines decision asD.J. White rigorously defines decision as

ФФ {Q, A}----{Q, A}----{q {q ६६ Q}Q}

WhereWhereQ is the set of possible solutionsQ is the set of possible solutionsA is the decision environment A is the decision environment including the objective and the set of including the objective and the set of constraintsconstraintsФФ is the decision criterionis the decision criterionqq is the solution selected by the action is the solution selected by the action

of the criterionof the criterion

If q is still a set of alternative solutions If q is still a set of alternative solutions then the action of the criterion has then the action of the criterion has transformed the problem into a simpler transformed the problem into a simpler problem requiring a new criterion.problem requiring a new criterion.

Human Resources (HR) use of VBEsHuman Resources (HR) use of VBEs

- Team Building- Team Building

Participants working togetherParticipants working together

Common objectiveCommon objective

Appreciation of other’s problemsAppreciation of other’s problems

- Ice Breaking- Ice Breaking

Introducing graduates to companyIntroducing graduates to company

All have similar experience - noneAll have similar experience - none

Assess team leadership qualitiesAssess team leadership qualities

Assess analytical approachesAssess analytical approaches

Human Resources use of VBEsHuman Resources use of VBEs (cont) (cont)

- Behavioural Studies- Behavioural Studies

Individual behaviour in various Individual behaviour in various simulated environmentssimulated environments

- Team player or individual?- Team player or individual?

- Team leadership qualities?- Team leadership qualities?

- Effective communicator?- Effective communicator?

- Easily dissuaded or forceful?- Easily dissuaded or forceful?

Assess an individual’s initiatives,Assess an individual’s initiatives,

entrepreneurial and qualitative entrepreneurial and qualitative skillsskills

Human Resources use of VBEsHuman Resources use of VBEs (cont) (cont)

- Functional Training- Functional Training

Objective is to improve personal Objective is to improve personal technical performancetechnical performance

- Focus on the task (for example- Focus on the task (for exampleunderstanding management understanding management

accounts)accounts)

- Working under pressure - Working under pressure (complexity or shortage of time) (complexity or shortage of time)

- Improve quantitative skills such - Improve quantitative skills such as using computers, modelling, as using computers, modelling, mathematical and analytical mathematical and analytical

other other relevant quantitative toolsrelevant quantitative tools

VBEs in training HR personnelVBEs in training HR personnel- ‘Learning through Decision - ‘Learning through Decision Making’ teaching paradigmMaking’ teaching paradigmA simulated but realistic scenario A simulated but realistic scenario that requires participants to make that requires participants to make decisions that enhance their decisions that enhance their expertise and experienceexpertise and experience- Gaining experience by adopting - Gaining experience by adopting disparate functions in the disparate functions in the simulationsimulation- Understanding the need for - Understanding the need for effective ‘sub-optimal’, objective effective ‘sub-optimal’, objective driven decision-making.driven decision-making.

Team DynamicsTeam Dynamics

- Multi-disciplinary teams - Multi-disciplinary teams (including HR personnel) allow (including HR personnel) allow the HR professional to observe, the HR professional to observe, interact with and improve the interact with and improve the team dynamics.team dynamics.

- Need for a single global - Need for a single global objectiveobjective

- VBEs are very effective in - VBEs are very effective in internal training when business internal training when business roles are inter-changedroles are inter-changed

ConclusionsConclusions

Virtual Business Environments are Virtual Business Environments are much simplified simulations of a much simplified simulations of a business, but essentially, they must business, but essentially, they must be complex enough to pose realistic be complex enough to pose realistic business problems.business problems.

If it is difficult in a VBE to achieve If it is difficult in a VBE to achieve optimal performance, this illustratesoptimal performance, this illustrates

the H.R. message that training is the H.R. message that training is essential and necessary if a company essential and necessary if a company is to have any chance of being ‘Fit to is to have any chance of being ‘Fit to Execute’ the implementation of the Execute’ the implementation of the company’s strategy.company’s strategy.