Congratulations NSSEC 2022 Participants!

You have successfully established your team’s company and now it’s time to start
making some money! From this quarter onwards you will be selling your products,
generating revenue and setting yourself up to dominate the market. The leader board
will be generated once teams have begun to sell their products at the end of this
decision period.

Recap of Q1:

In the last quarter all teams should have named their business, set up their factory (by
increasing your fixed capacity) as well as setting up their first sales office. Your team
distributed the roles and responsibilities for the businesses’ functional areas, and you
selected your target markets. Some teams got an early jump on the design of their
products, but don’t worry…designing your products this quarter is just as good as all
teams will only begin to sell at the end of this quarter.

Upcoming for Q2

Accounting for last quarter: Here you can see the financial impact of your decisions
from the previous quarter. Remember, in new businesses it essential to always keep a
close eye on your level of cash. Think of profits as the queen, and cash is being king.
Like in chess, you can keep playing with no queen (profits), but with no cash (king) you
are in trouble!

Goals and Strategy: Here you can modify your initial target segments and plans. One
thing to note is that in the calculations of game score, the category ‘marketing
effectiveness’ is determined based on your performance in your 1stand 2ndpriority
segments. While it is ok (and even encouraged) to eventually produce for all segments,
be sure to ensure you match your efforts to succeeding in your chosen priority
segments.

Marketing: In addition to the customer needs and ability to design a brand, this quarter
you can design and place ads in popular media outlets and must set the price at you
wish to sell your products. Before you submit please be sure that you have designed
your product(s), set their price and developed an advertising campaign to help get them
sold. Once you have developed your ads you must choose what media outlets to place
the ads. The best teams match the preferences of their target markets to the price, the
design of the product, ad design and their placement…but be sure that you only make
truthful claims! It is also suggested; though not required to purchase market research to
ensure you can properly assess the competitive landscape. Market research will give
you insight into what the competition is doing and you can use this information to make
better decisions. Don’t forget to set your prices based on your target markets ability and
desire to pay for them and to design your products to meet the needs and wants of the
customers you are hoping to serve!

Sales Channel: Your team has already chosen its initial sales outlet. Now you must
make a decision as to how many members of staff to put to work at the location and
what product or area you wish to assign them. Forward thinking teams will likely attempt
to open another sales outlet (given cash availability) that will open in the following
quarter (remember it takes 1 full quarter for the sales office to be opened). As a tip, if
you intend to win, it’s going to be important to have as many outlets in order to sell as
many products as possible.

Human Resources: You will be able to alter the levels of compensation given to your
staff members. These changes will likely have an impact on the level of productivity of
staff members. Further, you will be able to see the average industry compensation for
salary, health, vacation and pension. The decisions competing firms make will also have
affect the impact on your own decisions. In a vacuum your 5% increase in salary may
improve productivity. However, if competing firms all give an 10% increase, the effect of
your increase will be minimized. Remember also the laws of diminishing returns when
increasing the compensation packages. For instance, if you increase an employee’s
salary by $100 and generate an additional $50 in profit….that making any sense?

Manufacturing: An essential element of operating a factory is knowing how much you

need to produce. Often determining the factory size is tricky, and can be called a razor’s
edge. Too little a factory and you will not be able to produce enough goods to satisfy
your demand. Too big a factory and you will be paying workers to just stand around all
day without producing anything. Teams need to do their best to as accurately as
possible project their demand and then build a factory that can handle the expected
demand. Some things to remember:

· Your fixed capacity is the most you can theoretically produce with that factory
size
· Your operating capacity is your chosen amount for how much to produce,
given that you can’t produce beyond the maximum fixed capacity as above.
· You can influence productivity with different policies, for example by altering
how much you compensate your staff (and with what type of compensation!)
· Be sure to run factory simulations that will predict how the factory will operate
given the decisions you have made for the factory. The best teams will consider
a range of possibilities (sensitivity analysis) and will be ready for multiple
outcomes
· You can also choose to expand your factory again if you forecast that
additional capacity will be necessary to meet your projected demand. Remember
it takes 1 full quarter for the factory to be built, so planning ahead is essential.

Pro Forma Accounting: While it is important to keep an eye on your P and L and
Balance Sheet, the cash flow projection is always essential. By clicking modify in the
cash flow projection, you can then click load data. This will then automatically import the
costs and revenues from your decisions and projections so that you can assess the
potential impact of your decisions. Be sure again to run multiple scenarios so that you
are best prepared in the event that your sales exceed, or fall short of your expectations.
Once again you have to try to walk the razor’s edge. Running out of cash will mean that
you may have to take an emergency loan, which will dilute your equity (how much of the
business you own) and may come with a high rate of interest that must also payback.
On the other hand, having too much cash is a poor use of your resources and may be
spent more productively by increasing your marketing, factory or wages (or even put in
the certificate of deposit at a small rate of interest).

Finance: You have received an additional $1,000,000 in equity financing this quarter,
for a total investment of 3,000,000. While it was not required, many teams with excess
cash at the end of the last quarter placed it into a certificate of deposit (COD) and
earned 1.5% interest on the deposit. Other teams placed the money under their pillow
and earned 0% interest. As the quarters unfold the COD has the lowest profit potential,
but in Q1, any team that did not invest in the COD simply left money on the table. Never
leave money on the table!

A summary of Q2 Activities

• Design your brand(s), establish brand price and priority. (Located under
Marketing, Brand Management and Pricing, Price and Priority)
• Design an advertising campaign. (Located under Marketing, Advertising, Design
Ad)
• Place your ads in media outlets (Located under Marketing, Advertising, Local
Media Placement. NB In the first few quarters there is a maximum on how much
you can spend on marketing which is lifted in later quarters)
• (Recommended) Purchase market research. (Located under Marketing, Buy
Market Research)
• Hire sales and service personnel. There is a limit 7 per office in the first few
quarters, which is lifted in later quarters. (Located under Sales Channel, Hire
Sales People)
• Total salespeople refers to your overall staff in the location. Segment-Focused
Training is for specialized training for them and to focus on selling the assigned
segment’s products
• (Optional) Open an additional sales outlet.
• Establish employee compensation packages. (Located under Human Resources)
• Complete all areas under Manufacturing. (In order from top to bottom. Be sure
the read the lecture tabs!)
• Review your Pro Forma Accounting and run a cash flow simulation to assess the
potential impact of your decisions
• (Optional) Deposit money in your CoD (Located under Finance, Certificate of
Deposit). There is of course a tradeoff here as possible your cash may be better
invested in other areas.
• Check your Final Check for errors and then Submit your decisions.

Things this quarter really start to pick up. Going forward you will be refining your
decisions, as well as having more features and product options introduced. To keep you
on the right path here are a couple tips:

· Play to win. Teams that are reactive to the market are often left behind. As the
lottery vendors often say, “You can't be lucky and coward.”

· Focus on your competitive advantage. The best performing teams are often those
that have a clear strategy and make decisions that align with that strategy. Remember
there is no best strategy in this game, only better execution!

· Cash is king. The point cannot be made enough that without cash, you are going to
have an impossible time running a business. This of course is not to say that you should
horde cash….quite the opposite! The best teams strategically use their cash to align
their strategy with their outputs. The best way to spend your cash is on things that
create value, especially as it related to your competitive advantage.

If you are in need of assistance you can email us at nssec2022@gmail.com. We do our

best to get back to you as soon as we can. It is also recommended that you take a look
at the available help files (which are very extensive) and practice using the build in
micro simulations. While the micro simulations don’t directly impact your score they can
be helpful to your success in the game, and of course, in real business!

We do hope you are enjoying the experience and we hope that you are ready for the
real competition to begin. Does your school have what it takes to be a market leader?
Do you have the hustle in you to make those millions? We know you do! Good luck to
all students, teachers and schools.

Kindest Regards,
Dr. Christian Stone.
3Stone Limited