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TERTIA Edusoft -

Management Game







TOPSIM - General Management II














Participants Manual



Edition 10.0-English

























Copyright TERTIA Edusoft GmbH D-72070 Tbingen

TOPSIM - General Management II Participants' manual
Table of contents
Page
1. Preface..................................................................................................................2
1.1 What is TOPSIM - General Management II ? ..........................................................2
1.2 The training objectives of TOPSIM - General Management II ..................................2
1.3 The business management content and variables of TOPSIM - General
Management II .......................................................................................................3
2. Introduction............................................................................................................5
2.1 The Daily Observer / Business Section...................................................................5
2.2 In-house memo of COPYFIX Inc. ............................................................................6
3. The functional areas of COPYFIX Inc. ............................................................... 10
3.1 Sales / Inventory .................................................................................................. 10
3.1.1 Product description and Product policy ................................................................. 10
3.1.2 Pricing policy........................................................................................................ 11
3.1.3 Publicity policy ..................................................................................................... 11
3.1.3.1 Advertising........................................................................................................... 11
3.1.3.2 Corporate Identity (CI).......................................................................................... 12
3.1.3.3 Corporate image .................................................................................................. 12
3.1.4 Distribution policy................................................................................................. 12
3.1.4.1 Utilisation of sales personnel ................................................................................ 12
3.1.4.2 Distribution costs.................................................................................................. 13
3.1.5 Marketing Mix ...................................................................................................... 13
3.1.6 Bulk buyers / Requests for bids ............................................................................ 14
3.1.6.1 Sales to bulk buyers............................................................................................. 14
3.1.6.2 Sales through requests for bids (tenders) ............................................................. 14
3.1.7 Incapacity to supply.............................................................................................. 14
3.1.8 Market research report for your branch of business .............................................. 15
3.1.9 Products Inventory Copy I .................................................................................... 15
3.2 Research & Development ..................................................................................... 16
3.3 Purchasing........................................................................................................... 17
3.3.1 Demand and price conditions ............................................................................... 17
3.3.2 Inventory Input materials/parts ............................................................................. 17
3.4 Production ........................................................................................................... 18
3.4.1 The inventory of production lines at the start of the game ..................................... 18
3.4.2 Demand for production capacity ........................................................................... 18
3.4.3 Possibilities of influencing production capacity...................................................... 18
3.4.3.1 Investments ......................................................................................................... 19
3.4.3.2 Disinvestments..................................................................................................... 19
3.4.3.3 Maintenance ........................................................................................................ 19
3.4.3.4 Rationalisation ..................................................................................................... 20
3.4.3.5 Overtime allotted to production lines..................................................................... 20
3.4.4 Investments in environmental technology.............................................................. 21
3.4.5 Rework ................................................................................................................ 21
3.4.6 Factory materials ................................................................................................. 21
3.5 Personnel ............................................................................................................ 22
3.5.1 Labor force at the start of the game...................................................................... 22
3.5.2 Potential changes to the workforce ....................................................................... 22
3.5.2.1 Recruitment and Dismissals ................................................................................. 22
3.5.2.2 Adjustment of the workforce (Purchasing and Administration) ............................... 22
3.5.3 Additional staff costs ............................................................................................ 23
3.5.4 Employee pension plan ........................................................................................ 23

TOPSIM - General Management II Participants' manual
3.5.5 Personnel report of the cost centers ..................................................................... 24
3.5.6 Overtime production staff ..................................................................................... 24
3.5.7 Productivity .......................................................................................................... 24
3.5.7.1 Process optimisation projects ............................................................................... 24
3.5.7.2 In-service training................................................................................................. 24
3.5.7.3 Productivity index I ............................................................................................... 25
3.5.7.4 Experience and Productivity ................................................................................. 25
3.5.7.5 Actual Productivity ............................................................................................... 25
3.5.8 Absenteeism........................................................................................................ 25
3.5.9 Production staff table ........................................................................................... 25
3.6 Finance and Accounting ....................................................................................... 26
3.6.1 Customer paying patterns..................................................................................... 26
3.6.2 Financial investments........................................................................................... 26
3.6.3 Loans................................................................................................................... 26
3.6.3.1 Medium-term loans............................................................................................... 26
3.6.3.2 Long-term loans ................................................................................................... 26
3.6.3.3 Overdraft loans .................................................................................................... 26
3.6.4 Taxation...............................................................................................................27
3.6.5 Dividend payments............................................................................................... 27
3.6.6 Share price and the value of the company ............................................................ 27
3.6.7 Shareholder Earnings........................................................................................... 27
3.6.8 Business reports in your branch of industry........................................................... 28
3.6.9 Accounting........................................................................................................... 28
4. COPYFIX Inc.'s results at the end of period 0................................................... 30
4.1 Decisions ............................................................................................................. 31
4.2 Reports................................................................................................................ 32
4.2.1 Market results and Inventory values ..................................................................... 32
4.2.2 Production plants - Environmental technology....................................................... 33
4.2.3 Human resources and product development ......................................................... 34
4.2.4 Cost type accounting, Cost center accounts (Departmental accounting) ................ 35
4.2.5 Cost accounting (Unit-of-output costing) ............................................................... 36
4.2.6 Profit and Loss Statement and Cash flow.............................................................. 37
4.2.7 Financial Report and Balance Sheet ..................................................................... 38
4.2.8 Overall company results ....................................................................................... 39
4.2.9 Out-of-line situations ............................................................................................ 41
4.2.10 Market research report ......................................................................................... 42
4.2.11 Business reports from the industry........................................................................ 43
4.2.12 Profit and lost statement and balance sheet with US-GAAP norm: ........................ 44
4.2.13 Financial report and balance sheet (US-GAAP) .................................................... 45
Index ............................................................................................................................ 46
Appendix

TOPSIM - General Management II Participants' manual Page 1
TOPSIM
General Management II





Preface







TOPSIM - General Management II Participants' manual Page 2
1. Preface
1.1 What is TOPSIM - General Management II ?
TOPSIM - General Management II is a business management game that establishes a link
between business management theory and business management practice.

The simulation presents a realistic model of an industrial company and thus provides
participants with the opportunity to gain:

lasting practical experience,
quickly, and
in a risk-free environment.

TOPSIM - General Management II is an interactive teaching and learning system (action lear-
ning) based on the premise:



1.2 The training objectives of TOPSIM - General Management II
= Recognising and formulating the general conditions for commercial success
= Experiencing links in business management by adopting an holistic approach
= Defining goals and strategies and realising them in an economic and ecological
environment
= Deriving practice-related insights and decisions from industry figures
= Understanding the fundamentals of marketing
= Learning to use the instruments of cost accounting, income analysis, product
costing, and marginal costing
= Coping with complex decision making in uncertain situations
= Keeping control of a business in difficult situations
= Developing a sense for the essential and the global
= Learning to think and act in an inter-disciplinary way
= Learning how to define and solve problems
= Practicing effective communication through visualisation
= Arriving at decisions within a team and by using personal computer-supported
planning models


TOPSIM - General Management II Participants' manual Page 3
1.3 The business management content and
variables of TOPSIM - General Management II


TOPSIM
C
Company targets
- Planning and establishing economic, social and
ecological targets
- Controlling targets



General
Management
II
C
Distribution (Selling)
- Competitive Analysis
- Marketing mix
- Product policy
- Profit contribution costing as a basis for
marketing decisions




C
Purchasing/Warehousing
- Determining optimal order sizes
- Problems of warehousing


C
Production
- Investment decisions
- Internal production or External procurement
- Loading schedules



C
Research & Development
- Strategies for the technological and ecological
improvement of products
- The development of new products



C
Finance and Accounting
- Financial Planning
- External Accounting
(Balance Sheets and Income Statements)
- Internal Accounting (Cost Accounting,
Contribution Costing)
- Ratios in company management




C
Personnel
- Demand Analysis and Staff Adjustment
- Staff productivity
- Problems of staff absenteeism and staff turnover



C
Economic conditions
- Inflation
- Economic activity
- Exchange rate
- Real net output


TOPSIM - General Management II Participants' manual Page 4
TOPSIM
General Management II




Introduction






We welcome you
as new members of the managing
board of COPYFIX Inc. !



TOPSIM - General Management II Participants' manual Page 5
2. Introduction
2.1 The Daily Observer / Business Section


COPYFIX INC.:Drastic changes at board
level - Satisfactory results

In recent weeks there have been
increasing rumours in the business press that
COPYFIX is about to clear out its
management board. At today's balance sheet
press conference a satisfactory result was
reported. At the same time the president of
the supervisory board announced the names
of the new management board members. The
company hopes to provide fresh impetus
through these changes in the face of growing
competition, especially from abroad.
In the period under review the company
achieved satisfactory results with its black
and white photocopier Copy I. With sales of
129.00 mEuro
1)
and a market share of 20%
the company can show similar results to
those of its competitors.
This year was no exception in that no
supplier was able to gain a clear domination
over the competitors. One advantage for the
1222 employees is that they are working for
a company with a solid background - or so it
seems.
The stockholders are also very optimistic
about future developments, having an
operating income of 12.00 mEuro, as well as
a 4.93 mEuro profit for the year.
The following proposal has been put
forward concerning the distribution of
profits: The stockholders should receive half
of the profits and the other half should be
used for revenue reserves.
Net assets of app. 30.00 mEuro are
counterbalanced by pension reserves of
app. 12.00 mEuro and liabilities of 25.00
mEuro. The cashflow of app. 14.00 mEuro
is surely a foundation for future
investments, but will this be sufficient in
the long term? If these trends continue,
the antiquated production lines, which in
no way meet modern environmental
standards, will next year lead to fiscal
penalties of 1.50 mEuro to be paid to the
Environmental Authorities.
So despite the recent positive results,
the future of the company is still in some
doubt. Will the company be able to retain
its market share if it continues to pursue
the same corporate policies? Which
strategies are going to be devised in order
to come to terms with the increasingly
tight knit and complex nature of the
business environment?
At the press conference there was no
evidence of a clear concept for the coming
years. At a recent employee meeting, the
latter accused the existing management of
thinking in a confused, rather than
practical manner.
It can only be hoped that the new
management team faces the urgent issues
of the coming decade with convincing
concepts and goals.
What this region needs above all is
new and safe jobs.

1)
mEuro= million Euro


TOPSIM - General Management II Participants' manual Page 6
2.2 In-house memo of COPYFIX Inc.
From: Former management To: New management

Dear Successors,

In view of the uncongenial press reports over the last months my management
colleagues and I have decided for age reasons (I remind you that we are all 64) to
give way to young and maybe more dynamic and creative colleagues.
You now face the difficult yet exciting task of familiarising yourselves with the work
involved in running COPYFIX Inc. We submit all the reports from the last business
year knowing full well, however, that figures alone cannot explain and reveal "how
our business is doing.
First of all, the following diagram provides you with an outline of the various
operating units, company procedures, and cost centers as well as the existing
management reports of COPYFIX Inc.
Fig. : Surface of the Participants system of TOPSIM General Management II

Presently we are producing our black and white copier Copy I with some success.
Last year we sold 43000 units at a price of 3000 Euro per machine. We supply
mainly to specialised retail dealers, although sometimes also to large industrial
buyers such as MEGRO. In addition, we now and then bid for procurement
tenders put out by public authorities.





TOPSIM - General Management II Participants' manual Page 7

From: Former management To: New management

Until now there have been six colleagues responsible for the following areas:




Fig.: Former organisational structure of COPYFIX Inc.

The chairmanship of the management board has changed each year on a
revolving basis. In the past, cooperation within the firm has been marked by
problems brought on by conflicting departmental interests. These problems have
often been settled in a practical way and have fortunately benefited the company
as w hole.
With hindsight I feel I must level one criticism at all of us: We sometimes had too
simplistic and optimistic a picture of what was going on in reality. So I would like to
give you, as our successors, the following advice: Try to gain a clear and
unprejudiced picture of reality and remember that each day begins anew and also
that successful strategies are becoming more and more short-lived. So it is
important that the company's "files" should be full of alternative strategies so that
it can react swiftly to change.
In view of the fact that everybody is talking about "lean management" these days,
it would be advisable to consider whether the board really needs six members.
Surely an alternative would be to combine areas of responsibility and reduce the
number of members to three or four. Or another possibility would be to plan
everything together without dividing up responsibility into organisational units. Try
from the start to find an efficient organisational system and the right way of
proceeding at board level.
The diagram following page shows the various areas of responsibility, typical
issues that have required our constant attention, and the system of
communication between the board members.
We also enclosed a report by external consultants concerning the individual
members areas of work on the executive board and their views about the
activities of their colleges. As a matter of fact, everyone just looks at his or her
tasks, as well as other peoples tasks from their own personal point of view.
Following this in-house memorandum you will find detailed information on the
various areas of our company. As the new chairman of the supervisory board I
look forward to future board meetings with you. Finally, my colleagues and I would
like to take this opportunity to wish you a most successful future!
Yours sincerely
Paul Smith
(Chairman of the Supervisory Board, COPYFIX Inc.)
Mike Hughes
Purchasing
Peter Rabbit
R & D
Walter Hunt
Production
Henry Winter
Sales
Phil Miller
Personnel
Paul Smith
Finance and Accounting


TOPSIM - General Management II Participants' manual Page 8
Task areas, typical concerns, and the system of communication of the previous managing board of COPYFIX Inc.

Size of the whole market for the next period ?
What are our competitors going to do ?
Our market share should be ...
What are our expenses for the marketing-mix ?
What do bulk buyers and request for bids achieve ?
How high are the costs of goods manufactured ?
What product attributes do
customers desire ?
Which product attributes do we
wish to provide ?
What are the costs involved in
achieving this ?
How shall we react to
competitors developments ?
How much can the plants produce ?
How much must/should be produced ?
How much do lean management
projects accomplish ?
How high should productivity be ?
What are the influences on the costs of
goods manufactured ?
What are the overall effects of
expenditure on incidental personnel
costs, training and lean production ?
What are the staff requirements in
production for the coming periods ?
Sales Manager
Head of
Purchasing
Production Manager
Personnel Manager
Manager
Finance and Accounting
What does the discount schedule
achieve ?
How high are the storage costs ?
How are the financial expenses for
specific quantities purchased ?
What are the material requirements
for the coming period ?
How is income generated and where
are costs incurred ?
How much profit must be made in
order to survive ?
Are we working in an economic way ?
Where is there potential for cost
reduction ?
What is necessary in order to
optimise the value of the company ?
Manager R & D


TOPSIM - General Management II Participants' manual Page 9
TOPSIM
General Management II



The functional areas
of COPYFIX Inc.


COPYFIX Inc.


The functional areas


Sales

Production

Research & Development

Personnel

Purchasing

Finance and Accounting



TOPSIM - General Management II Participants' manual Page 10
3. The functional areas of COPYFIX Inc.
3.1 Sales / Inventory
3.1.1 Product description and Product policy
COPYFIX Inc. sells the high-quality black and white
copier Copy I (referred to as "product 1- old" in the
reports under point 4.2). It possesses the following
technical characteristics:




Technical data of Copy I
Type Desk model
Copying speed 25 A4 copies per minute.
12 A3 copies per minute.
Copy pre-setting 1 - 99
Dimensions W D H
804 664 415 mm
Weight 80 kg
First copy Approx. 7 Sec.
Paper supply 2 cassettes of 200 sheets (A3, A4)
Copy formats Cassette A5 - A3
Sheet feeding A5 - A3
Copying material Paper, Cassette, sheet feeding
Transparency
Self-adhesive labels
Accessories Interrupter key for sheet feeding
Checkout procedure system
Automat. zero setting

The technology and the environment-friendliness of the copiers available on the market are
examined regularly by the Which? consumer magazine. In comparison with other copiers
COPY I is middle of the range as far as these characteristics are concerned. Result of Which?
quality control test for Copy I (Figures for period 0):

Technology index: 100.0 Ecology index: 100.0

Publications such as Which? are considered as a guideline for consumers. Consequently, the
indices that are awarded are to be seen as important product attributes: As the indices for
technology and ecology improve, the market acceptance for Copy I becomes higher.



TOPSIM - General Management II Participants' manual Page 11
3.1.2 Pricing policy
When competing with other suppliers, the price is an important marketing instrument that
takes immediate effect. At the start of the game the price on the domestic market (referred to
as "market 1" in the reports in section 4.2) is 3000 Euro.

The following fundamental link can be made between the price and the sales volume:

Market researchers feel that the following reaction can be expected (provided that all other
variables remain constant).

Price (EUR/unit) Demand (units)
3150 (+ 5%) App. 36000
3000 (Period 0) 43000 (Period 0)
2850 (- 5%) App. 53000
3.1.3 Publicity policy
3.1.3.1 Advertising
Advertising expenses normally increase demand. They have an effect over several periods yet
have a most pronounced effect in the period when they are incurred. The effect of advertising
on demand can be represented on a graph as follows:


Price in EUR per unit
"Double bend in
price-demand function"
Demand (Units)
3000
43000
0


Demand in units
Advertising expenses in mEUR
43000
6.0



TOPSIM - General Management II Participants' manual Page 12
In the period at the start of the game the advertising budget for market 1 is 6.00 mEuro.
Experts are of the opinion that with advertising expenses of 7.00 mEuro sales of app. 45000
could have been achieved. Once the expenses reached double this amount, the sales would
only increase very slowly.
3.1.3.2 Corporate Identity (CI)
A further measure that can be adopted within the Publicity policy is the consistent cultivation
of a striking company image (corporate identity) in order to exert a positive influence on sales
in an indirect way. In the period 0 spending amounted to 2.00 mEuro.

There is some disagreement among experts concerning the concrete effect of corporate
identity. It is clear, however, that it is an important influencing factor for the whole company
and has a relatively long-lasting effect.
3.1.3.3 Corporate image
In every period, the image of a company in the public eye is ascertained and recorded in the
form of an index. The expenses of CI are a considerable influencing factor. However,
additional factors such as the environmental damage caused by the company and the degree
of environment-friendliness of the product play an important role. The corporate image has an
effect on the stock exchange price of the company.
3.1.4 Distribution policy
3.1.4.1 Utilisation of sales personnel
In period 1 Copy I is sold to specialised retail traders on the domestic market (= market I)
by a sales staff of 100. An increase in the utilisation of personnel improves sales
opportunities and has an effect over several periods. Experts are of the opinion that a sales
force of 110 persons could increase sales up to app. 45000 units. Generally the following
relationship arises between the utilisation of sales personnel and sales:


Sales in units
Number of sales staff
43000
100



TOPSIM - General Management II Participants' manual Page 13
3.1.4.2 Distribution costs
The supply of copiers to specialised retail traders involves packaging and transport costs of
25.00 Euro per machine.
3.1.5 Marketing Mix
The sales of Copy I are dependent on the selection and implementation of all the marketing
instruments. They are to be combined and adapted to each other in such a way that they
achieve the desired effect on the market as a package of measures (marketing mix). The
components of the marketing mix are:

= Product attributes (Product policy)
= Price (Pricing policy)
= Expenses for Publicity (Publicity policy)
Advertising expenses
Expenses for Corporate Identity
Corporate Image
= Utilisation of sales staff (Distribution policy)

When planning your marketing mix you should remember that its impact is also directly
influenced by the marketing efforts of your competitors on the market and the overall
economic conditions.



Sales
marketing mix
Your company's
Product
policy
Pricing Communications Distribution
Customer
Price Index
Situation of
demand
Environmental indices
of production lines
policy
policy policy
economy
Product
policy
Pricing
policy
Communications
policy
Distribution
policy
marketing mix
competitors'






TOPSIM - General Management II Participants' manual Page 14
3.1.6 Bulk buyers / Requests for bids
In addition to sales to the specialised retail trade, there are further possibilities that can be
created on the domestic market by responding to requests for bids, such as those made by
public authorities. Furthermore, private bulk buyers sometimes invite bids also.
3.1.6.1 Sales to bulk buyers
In the case of these sales in which all companies can become involved, the bulk buyer fixes
the price and the maximum supply quantity per company. So a smaller quantity can also
be supplied, if necessary. The supply of goods is affected within the decision-making
period and has priority over the supply to the specialised retail trade. No distribution
costs are incurred in this case.

This distribution channel may be used to reduce inventory. Contribution margins are also
usually lower compared to sales retail stores. Cost of goods manufactured (CGM) will serve
as the basis for information when making this decision. This figure can be found in the "Unit-
of-output costing"-report from the cost accounting department.
3.1.6.2 Sales through requests for bids (tenders)
In this case, public authorities have a specific demand for copiers in larger quantities. A
request for a bid contains the required quantity. Every company can respond to a tender by
bidding. The bid may not exceed the quoted price on the domestic market. The company
offering the lowest price is awarded the contract. Results of new sales and revenue from a
successful bid occur in the following period. In this case as well, delivering the tender
amount has priority over supplying the specialised retail trade. In the event of identical
price quotations, the company whose product possesses the better product attributes receives
the contract. There are no distribution costs in this case either.

Cost of goods manufactured (CGM) will also serve as the basis for information when
calculating the bid price. This figure can be found in the "Unit-of-output costing"-report from
the cost accounting department.
3.1.7 Incapacity to supply
Copy I is supplied according to the following priorities:

= Supply on the basis of a contract resulting from request for bids
= Supply to bulk buyer on the basis of a commitment
= Supply to specialised retail trade (Market 1)

If, as a consequence of your marketing policy, you create a higher demand than your
company is able to satisfy, the result is an incapacity to supply. 80% of the demand that has
remained unsatisfied in market 1 is distributed amongst the other companies according to
their existing market shares.


TOPSIM - General Management II Participants' manual Page 15
3.1.8 Market research report for your branch of business
In order to obtain information on the marketing efforts of competitors, you may in any period
purchase a market research report for 0.10 mEuro. The market research report contains the
following information:
Market research report I
Advertising Sales Revenue Product indices

Com-
pany

Price
EUR
MEUR % Units % MEUR % Techn. Ecolog.
1 3000 6.00 20.0 43000 20.0 129.0 20.0 100.0 100.0
2 3000 6.00 20.0 43000 20.0 129.0 20.0 100.0 100.0
3 3000 6.00 20.0 43000 20.0 129.0 20.0 100.0 100.0
4 3000 6.00 20.0 43000 20.0 129.0 20.0 100.0 100.0
5 3000 6.00 20.0 43000 20.0 129.0 20.0 100.0 100.0
Product 1 Market 1
/ 3000 30.00 100.0 215000 100.0 645.0 100.0 100.0 100.0

Com- Prod. Prod. 1 Product lines Expenses R & D Sales/Distr.
pany staff O/R/N Typ A Typ B Typ C (MEUR) (no. pers.)
1 868 O 4 0 0 5,0 100
2 868 O 4 0 0 5,0 100
3 868 O 4 0 0 5,0 100
4 868 O 4 0 0 5,0 100
Other data
5 868 O 4 0 0 5,0 100

3.1.9 Products Inventory Copy I
The storage costs for the finished goods amount to:

0.10 mEURO per 1000 units (closing inventory)

Here is an excerpt from the inventory report:

Inventory for
finished goods
Quantity
(Units)
Cost of goods
manufactured
(EUR per unit)
Inventory figures
(mEUR)
Opening inventory 7000 1880 13.16
+ Addition from production 40000 2033 81.30
- Retirements to sales 43000 2010 86.42
= Closing inventory 4000 2010 8.04

The closing inventory in period 0 amounts to 4000 units valued at a cost of production of 2010
Euro per unit. The value is calculated by employing compensatory pricing of the opening
inventory and the additions to inventory.


7000 (Units) * 1880 (EUR/Unit) + 40000 (Units) * 2033 (EUR/Unit)
7000 (Units) + 40000 (Units)


= 2010 EUR/Unit



TOPSIM - General Management II Participants' manual Page 16
3.2 Research & Development
Companies must continue to further develop their products due to technological progress,
increasing environmental awareness on the part of customers, and growing pressures from
competitors. For the further development of the product Copy I (referred to as "Product 1-old"
under point 4.2 in the reports) COPYFIX Inc. can take the following measures:

Measures in
the area of
Result Effects
1. Technology
Staff recruitment in
area of R & D.
Increasing quality of
technology.
Technology index rises
- Market share
increases.
- Rework costs rise on
account of increased
technical demands.
(e.g. demands for
precision, increased
complexity)
2. Ecology
Expenses for external
consultancy services in
the area of ecology.
Increased ecological
sustainability.
Ecology index rises
- Market share rises.
3. Value analysis
Expenses for external
consultancy services in
the area of value
analysis.
Increased economic
efficiency.
Value analysis index rises

- Reduction of materials
usage.
- Increased costs
through rework.
- No influence on market
share

Decisions for period 0:

Decision area Decision Level of
effect indices
Technology 34 employees 100.0
Ecology 2,5 mEURO 100.0
Value analysis 1.0 mEURO 100.0

Excerpt from the report "Product Development" in period 0:

Product development
Technology Ecology Value analysis
(mEUR) (mEUR) (mEUR)
Products Period Cumul. Index Period Cumul. Index Period Cumul. Index
Prod. 1-old 1.50 8.20 100.0 2.50 5.00 100.0 1.00 1.00 100.0

Note: Expenditure on technology during the period = No. of staff * Labor costs
= 34 * 44 000 Euro


TOPSIM - General Management II Participants' manual Page 17
3.3 Purchasing
3.3.1 Demand and price conditions
With a value analysis index of 100.0, one unit of "input material/parts" must be employed
for one copier. Value analysis reduces the required material input, i.e. with a value analysis
index of more than 100.00, less than one unit is needed. The demand for input material/parts
is calculated as follows:

Demand in units =
Units of Copy I to be produced
Value analysis index
*

100

At the present time the following graduated price range and volume scale from the supplier
are valid:

Volume scale (units) EUR per unit
0 to < 30000 650
30000 to < 50000 550
50000 to < 70000 450
70000 upwards 400

The input material/parts ordered in one period are already available for production at the start
of the period in question.

If in one period there is insufficient input material available, then the deficiency is
offset. This is achieved automatically by employing special measures such as express
consignments, air freight etc. all of which have to be paid for through a mark-up of
20%.
3.3.2 Inventory Input materials/parts
The storage costs for input material/parts are

0.05 mEURO per 1000 units of closing inventory

The closing inventory in period 0 amounts to 10000 units valued at 540 Euro
*)
per unit.

Inventory for
input material/parts
Volume
(Units)
Inventory values
(EUR/unit) (mEUR)
Opening inventory 20000 525 10.50
+ Additions Purchasing
- Retirements from production
30000
40000
550
540
16.50
21.60
= Closing Inventory 10000 540 5.40

*) This value is calculated by employing compensatory pricing of the opening inventory and
additions to inventory.


TOPSIM - General Management II Participants' manual Page 18
3.4 Production
3.4.1 The inventory of production lines at the start of the game
At present COPYFIX Inc. possesses four production lines of the type A. The company gives
each production line a number. The following data is valid for the plants that are in use at the
present time:

Prod.-
lines
Type No.
Normal
capacity
(Units)
Procure-
ment
period
Acquisit.
value
(mEUR)
Remain.
term
(Periods)
Deprec.
(mEUR/
period)
Net-
book val.
(mEUR)
Other
fixed costs
(mEUR)
Environm.
index
A 1 8000 - 8 12.50 1 1.25 1.25 1.50 83.0
A 2 9000 - 7 15.00 2 1.50 3.00 1.00 90.0
A 3 11500 - 6 20.00 3 2.00 6.00 0.50 95.0
A 4 13500 - 5 20.00 4 2.00 8.00 0.25 98.0
Total / 42000 67.50 6.75 18.25 3.25 91.5

Eventhough the production lines are of the same type, they vary according to their capacities
and to the extent of damage they cause the environment. This performance data remains the
same during the entire life of the machines.

Other fixed costs from the production lines are, for example, inspection and insurance costs
resulting from contracts.

Once production lines are depreciated, they may still be utilised fully for production purposes.
3.4.2 Demand for production capacity
One available unit of capacity is required to produce one Copy I.
3.4.3 Possibilities of influencing production capacity
The available production capacity in a period can be influenced by the following measures:

= Investments in new plants
= Disinvestments of lines
= Maintenance
= Rationalisation
= Overtime allotted to production lines



TOPSIM - General Management II Participants' manual Page 19
3.4.3.1 Investments
For the production of Copy I, new production lines of the type A, B, and/or C can be
purchased. The differences between the types are illustrated in the following table:

Type of-
line
Purchase
price
(mEUR)
Term
(Periods)
Normal
capacity
(Units/
period)
Other fixed
costs
(mEUR/
period)
Environm.
index
Rem.
revenue
(% of the
net book
value)
Rationa-
lisation
factor
A 20.00 10 14000 0.30 100.0 20 1.00
B 25.00 10 18000 2.00 105.0 25 1.00
C 30.00 15 22000 2.50 110.0 30 1.00

A maximum of 9 production lines may be purchased per type. Newly acquired production lines
are immediately available for production in the period when the order is made.

For possibilities for rationalisation of the production lines see point 3.4.3.4.
3.4.3.2 Disinvestments
Production lines can be disinvested (junked). The production line that has been junked is then
no longer available at the start of the period in question.

The production line that has been junked is immediately depreciated at the value of the net
book value (extraordinary expenditure). Proceeds are made from the scrapping of the
machine. These proceeds are measured as a percentage of the net book value. The
percentage varies according to the different types of lines.

Production line Type A Type B Type C
Proceeds from scrap (Residual revenue)
in % of net book value
20 25 30

In one period a maximum of three production lines of the same type may be disinvested. In
order to disinvest a certain production line, you are required to enter the number of the line in
the decision form.

The effects of disinvestments in the
= Profit and Loss Account:
Depreciation (Net book value) = Extraordinary expenditure
Residual revenue = Extraordinary income
(Proceeds from scrap)
= Financial Report:
Residual revenue = Deposit from disinvestments
(Proceeds from scrap)
3.4.3.3 Maintenance
The production lines are subject to constant wear and tear. The resulting reduction in capacity
can be avoided or held in check by ensuring that parts of the plant in need of repair are
regularly maintained. This also applies to newly acquired production lines.


TOPSIM - General Management II Participants' manual Page 20
The following figures (there is an interpolation between the figures) are available for the
relationship (which is valid for all production lines) between the maintenance costs and the
maintenance factor, i.e. the degree of availability of the capacity.

Maintenance costs per period
and production line in mEUR
Degree of availability in
%
Type A Type B Type C
of the normal capacity
0.10 0.10 0.10 50
0.50 0.40 0.40 70
0.70 0.60 0.60 80
1.00 0.90 0.80 95
2.50 2.20 2.00 97
3.00 2.70 2.40 99
4.00 3.60 3.20 100

Normal capacity
*
Maintenance factor = Available capacity I

The minimum level of maintenance expenses per production line amounts to 0.10 mEuro.
(You may enter values that lie between those given in the table.)
3.4.3.4 Rationalisation
The available capacity of the production lines can be further increased by rationalisation
measures. Rationalisation can only be carried out uniformly for all the production lines of
one type. The degree of rationalisation achieved is expressed in terms of a rationalisation
factor and is dependent on the cumulative rationalisation expenses in mEuro since period 0
for the respective production lines. Newly acquired production lines have an initial
rationalisation factor of 1.00.
The entire rationalisation expenditure from a period is claimed in the same period as costs.

Available capacity I
*
Rationalisation factor = Available capacity II
3.4.3.5 Overtime allotted to production lines
Overtime can further increase the available capacity II, but only up to a maximum of 10%.
The program automatically schedules overtime when the planned production volume is higher
than the available capacity. If overtime is necessary then there are extra costs for
supervision and operation of 2.50 mEuro in the period (step-fixed costs).

Available capacity II
*
Overtime factor = Available capacity III


TOPSIM - General Management II Participants' manual Page 21
3.4.4 Investments in environmental technology
By investing in environmental technology for things such as additional clarification plants or
filters (end-of-pipe investments) you can reduce the overall amount of environmental damage
caused by your company. (You can improve the ecology index of the production lines
themselves only by replacing certain lines.) If the environmental damage indicator drops
below the legally required level of 100.0 (Index), then in the following period a fiscal charge
per missing index point must be paid to the Environmental Authorities. On the basis of the
values in period 0 1.50 mEuro must be paid in period 1.

Environmental index of production lines (Level End of period 0) Index 91.50
Cumulative investment in environmental plants (Level End of period 0) mEUR 1.50
Improvement in environmental indices (Level End of period 0) Points 1.00
Environmental damage indicator of production lines (end of period 0) Index 92.50
Charge payable to authorities next period mEUR 1.50

Investments in the environment are depreciated over 10 years using the straight-line method.

Your company's environmental damage indicator has a direct influence on the following
factors:

= Sales
= The absence rate of the production staff
= Corporate image
= Share price
3.4.5 Rework
Incurred rework (rejects) expenditures are included in production costs. These are dependent
on the following factors:

Technology index = Higher technology leads to more rework as a
result of increased complexity of the product.
Value analysis index = Intensified value analysis increases the
expenditure on rework.
Level of additional =
staff costs
Higher additional staff costs lead to a reduction
of rework (rejects) as a result of increased staff
motivation.
3.4.6 Factory materials
Costs of 50 Euro are incurred (in period 0) for factory materials per manufactured Copy I. The
factory materials are purchased automatically and are always readily available in the required
amounts.


TOPSIM - General Management II Participants' manual Page 22
3.5 Personnel
3.5.1 Labor force at the start of the game
The staff situation of COPYFIX Inc. in period 0 can be represented as follows:


Cost center

Closing workforce
Salaries in period 0
in EUR without
additional staff costs
Purchasing 18 30000
Administration 202 28000
Production 868 30000
Research & Development 34 44000
Marketing/Sales 100 40000
Total 1222

The cost center Administration has the following areas:

= Human resources management
= Finance and Accounting
= General Administration

3.5.2 Potential changes to the workforce
3.5.2.1 Recruitment and Dismissals
For the functional area Production you may recruit and dismiss staff. In the case of R & D as
well as in Sales you determine the closing workforce. In this way, cases of recruitment and
dismissal arise automatically at the same time as staff turnover is taken into account.

Each new case of recruitment in a cost center leads to non-recurring costs of 12500 Euro.
The dismissal costs (non-recurring) amount to 10000 Euro. If more than 5% of the staff from
the areas of production, R&D and Sales are dismissed, then the employee council (game
supervisor) can demand that a social plan be worked out. Redeployment in the areas of R&D
(from product 1 to product 2 or vice versa) and Sales (e.g. from market 1 to market 2) do not
constitute recruitment or dismissals. The maximum number of new hirings in production can
be restricted by possible bottlenecks on the labor market.

In the functional areas of the company, the workforce is also influenced by employees giving
notice to quit = staff turnover. The rate of staff turnover depends greatly on the level of the
additional staff costs.
3.5.2.2 Adjustment of the workforce (Purchasing and Administration)
The number of employees in the areas Purchasing and Administration is dependent on the
company's sales revenue. In the event of fluctuations in sales the necessary number of
employees is adjusted automatically through recruitments and dismissals. In administration,
however, an unrelated-sales share of 2.50 mEuro in personnel costs remain in the initial
situation.



TOPSIM - General Management II Participants' manual Page 23

Cost center Administration- Required staff dependent on the total sales revenue:

100
200
300
50 100 150 200 250
50/150
75/170
100/190
125/200
150/215
175/228
200/240
250/260
Total sales revenue in MEUR
Required staff
250
150
75 125 175 225
225/250



Cost center Purchasing - Required staff dependent on total sales revenue:

10
50 100 150 200 250
Total sales revenue in m EUR
Required staff
12
14
16
18
20
22
24
75/14
100/16
125/18
150/20
175/21
200/22
250/24
75 125 175 225
225/23


3.5.3 Additional staff costs
The most recent figures for the additional staff costs were 40% of the respective wage and
salary totals. The minimum rate of 37% corresponds to the legal regulations such as the
employer's contribution to the social benefits, paid holiday etc.

The additional staff costs can be increased at will, but may only be reduced, at most by 3%,
when compared with the previous period.

The additional staff costs have a direct influence on the rate of staff turnover as well as on
the absenteeism of the employees of the individual cost centers.
3.5.4 Employee pension plan
COPYFIX Inc. has agreed to provide all employees with a pension plan. Therefore, in each
period pension reserves accrue that amount to 5% of the wages and salaries total.


TOPSIM - General Management II Participants' manual Page 24
3.5.5 Personnel report of the cost centers
In each period you will receive the following table describing the workforce, staff changes, and
personnel costs of the cost centers.

Excerpt from the report Period 0

STAFF BREAKDOWN IN COST CENTERS
Number of persons Purchasing Administr. Production R & D Sales/Dist. Total
Opening workforce 20 200 870 30 100 1220
+ Recruitment 0 10 50 5 9 74
- Dismissals 1 0 0 0 0 1
- Staff turnover 1 8 52 1 9 71
= Closing workforce 18 202 868 34 100 1222
Wages & Salaries (1) mEUR 0.54 5.66 26.04 1.50 4.00 37.73
Recrt./Dism/Train. mEUR 0.01 0.12 1.13 0.06 0.11 1.43
Additional staff costs mEUR 0.22 2.26 10.42 0.60 1.60 15.09
Pension reserves. mEUR 0.03 0.28 1.30 0.07 0.20 1.89
Total staff costs mEUR 0.79 8.33 38.88 2.23 5.91 56.15
Additional staff costs in % of Wages and Salaries: 40.0 Training Production mEUR: 0.5
(1) without costs for overtime
3.5.6 Overtime production staff
The normal level of productivity of an employee in production is 50 copiers of the type
"Copy I" per period. Overtime is automatically scheduled when the planned production volume
cannot be produced with the available staff numbers (or with the available production
capacity.) The amount of possible overtime is limited. Presently the limit is 10%. (s. also
3.4.3.5)

In the case of overtime, whether caused by production staff or production lines, extra costs of
2.50 mEuro per period are incurred for supervision and operation. (s. also 3.4.3.5) An
additional premium of 25% on wages and salaries generated by overtime is paid to
production staff. (These additional premiums are not recorded in the personnel report.)
3.5.7 Productivity
3.5.7.1 Process optimisation projects
With the help of process optimisation projects the work processes in production can be
rationalised, which leads in turn to an increase in staff productivity. However, such projects
lead to an increase in absenteeism.

In period 0 the process optimisation index is 1.00. Advisors mean that with an investment of
2.0 mEuro an index of approximately 1,05 can be attained. Once an index value has been
reached it loses 0.01 points in effect per period ( "forgetting how to do things" ). The minimum
value remains 1.00.
3.5.7.2 In-service training
Expenditure on in-service production staff training improves the skill of the employees and
leads to increased productivity. Expenditure on training increases the staff qualifications


TOPSIM - General Management II Participants' manual Page 25
index (period 0 = 1.00). This value is also reduced by 0.01 points per period due to
employees forgetting how to do things. This value, however, can go below 1.00.
3.5.7.3 Productivity index I
The productivity index I is derived from the indices for process optimisation and staff
qualifications.
Process optimisation index
*
Staff qualifications index = Productivity index I
3.5.7.4 Experience and Productivity
As more units are produced, the production workers gain in experience, which results in an
increase in productivity. This whole process is termed experience or learning curve. It
results in productivity index II. This index amounts to 1.00 in the starting situation. This
gain in productivity will not deteriorate over time.
3.5.7.5 Actual Productivity
Therefore, the actual productivity of an employee in production is:
Normal productivity (e.g. 50 Copy I / period)
*
productivity index I * productivity index II
3.5.8 Absenteeism
Absenteeism reduces the utilisable staff in production. The following factors influence the
absence rate:

Influencing factor
Measure for
influencing factor
Effect on
absenteeism
Additional staff costs

N
Process optimisation projects

7
Env. index of production lines

N
In-service training measures

N
Staff increase (Recruitment)

7
Staff cuts (Dismissals)

N
3.5.9 Production staff table

Excerpt from report, Values for period 0


PRODUCTION STAFF: AVAILABILITY AND PRODUCTIVITY
Workforce (Persons) 868 Process optimisation index 1.00
- Absences (Persons) 68 * Staff qualifications index 1.00
= Utilisable staff (Persons) 800 = Productivity index I 1.00



TOPSIM - General Management II Participants' manual Page 26
3.6 Finance and Accounting
3.6.1 Customer paying patterns

80% of the sales revenue lead to deposits in the current period,
20% lead to deposits in the following period.

This is also valid for bulk buyers and requests for tenders. The deposits for the following
period are shown in the balance sheet of the current period under the item "Accounts
receivable".
3.6.2 Financial investments
In any period the company's executives can purchase securities - as long as they have
surplus liquid funds at their disposal. In the initial period of the game the interest rate is 5.0%.
The yield on interest is credited in the current period. The securities themselves are
automatically sold and paid back in the following period.
3.6.3 Loans
3.6.3.1 Medium-term loans
According to company requirements a medium-term loan may be taken up in any period.
(Term = 1 period). The interest on this loan is paid during the current period and the loan is
paid back automatically in the following period. The interest rate is calculated according to the
amount of equity capital from the previous period. The following interest rates were valid in
period 0.

Up to the amount of the equity capital 12.0 %
Up to twice the amount of the equity capital 14.0 %
Above twice the amount of the equity capital 16.0 %

In the period 0-1 the equity capital amounted to 25.00 mEuro, the medium-term loans in
period 0 were 25.00 mEuro. The interest for period 0 was calculated as follows:
25.00 mEuro loan at 12.0% = 3.00 mEuro interest
3.6.3.2 Long-term loans
You always have the possibility to redeem medium-term loans with long-term loans with a ten-
year term. The advantage gained here in terms of the interest is counterbalanced by the
disadvantage that a premature repayment of the loan is ruled out. The interest rate
amounts to 10.0% in the initial period, but it may be adjusted according to the general
development of interest rates.
3.6.3.3 Overdraft loans
If in one period the available liquidity is insufficient to cover all the financial obligations, the
company is automatically granted an overdraft loan in order to avoid insolvency. The cash
balance must amount to at least 0.10 mEuro. A bridging loan (credit in current account) is
taken up until a cash balance of 0.10 mEuro is achieved. The interest rate for the overdraft
loan amounted to 16.0% in period 0. The interest is due in the current period. The overdraft
loan itself is paid back automatically in the following period.


TOPSIM - General Management II Participants' manual Page 27
3.6.4 Taxation
The company's tax burden amounts to 45% of the

profit or loss on ordinary activities
extraordinary profit or loss.

Possible losses are carried forward and are set off against the pre-tax profit for the year until
a positive balance remains on which tax then must be paid. The payment of tax is realised in
the current period.
3.6.5 Dividend payments
Each year COPYFIX Inc. must pay out at least 30% of the post-tax profit for the year as
dividends in accordance with its charter. A high payout, however, has a positive influence on
the company's share price.
3.6.6 Share price and the value of the company
In each period the share price is determined as the basis for the value of the company. The
following factors have an influence on the share price:


Influencing factor
When the value of
the influencing
factor increases ...

The influence on
the share price is
Equity capital for period 7
Post-tax profit for period 7
Declared dividends for period 7
Cumulatively declared dividends 7
Return on sales 7
Cumulative expenses for marketing mix 7
Corporate image 7
Environmental index of production lines 7
Sales compared with competitors 7
Planning quality 7
Debt-equity ratio N
3.6.7 Shareholder Earnings
The shareholders of the COPYFIX Inc. evaluate their shares according to how much they
have contributed to an increase in their personnel assets. This increase includes the
dividends paid out over the periods and the increase in share prices. Both these values are
recorded as shareholder earnings in the ratios of the company. (At the starting situation no
values are available.)


TOPSIM - General Management II Participants' manual Page 28
3.6.8 Business reports in your branch of industry
As part of the business reporting service you receive in every period and free of charge a
statement with the most important data from the profit and loss accounts as well as the
balance sheets of the competing companies.
3.6.9 Accounting
COPYFIX Inc. has a modern accounting department, which was set up to ensure that
comparisons within the branch of industry would be possible. The evaluations of the
company's accounting department which consists of cost type accounting, cost center
accounting (departmental costing) and unit-of-output costing, form an important base for
planning and controlling costs. The evaluations of the financial accounting department comply
with legal requirements and show the financial situation of the company. Contribution costing
analysis is being drafted.

For the analysis of cost center reports the following information is of interest:

Depreciation for land and buildings:
The depreciation allowance per period for land and buildings is 0.25 mEuro. This depreciation
allowance is allocated to the cost centers as follows:

Purchasing Production R & D Sales Administration
5% 70% 5% 5% 15%

Maintenance in administration:
The machinery in the administration department (copiers, computers etc.) must also be
maintained so that they function correctly. To ensure this there are fixed maintenance
contracts costing 1.00 mEuro per period.

Administration costs:
In period 0 an unrelated-sales amount of 2.50 mEuro from the wages and salaries is debited
from the cost center "Administration" (overheads). Also see point 3.5.2.2. The remaining
wages and salaries of the administration are allocated to the product as direct costs.


TOPSIM - General Management II Participants' manual Page 29
TOPSIM
General Management II




COPYFIX Inc.'s results
End of period 0







TOPSIM - General Management II Participants' manual Page 30
4. COPYFIX Inc.'s results at the end of period 0
The former management board has left documents relating to its decisions as well as the
following reports on the developments in period 1.


Market results and Inventory values Page 32


Production plants- Environmental technology Page 33


Human resources and product development Page 34


Cost type accounting, Cost center accounts Page 35


Cost accounting (Unit-of-output costing) Page 36


Profit and Loss Statement and Cash Flow Page 37


Financial Report and Balance Sheet Seite 38


Overall company results Page 39


Out-of-line situations Page 41


Market research report Page 42


Business reports from the industry Page 43


Profit and Loss statement and Balance Sheet Page 44


Financial Report and Cash Flow (US-GAAP) Page 45


TOPSIM - General Management II Participants' manual Page 31
4.1 Decisions

Sales/Distribution Produkt 1
Market 1
Price (EUR/unit)
3000.00 EUR

Advertising (mEUR)
6.00

Sales (No. of pers.)
100

Corporate Identity (mEUR)
2.00

Mrk. Research Report Yes:

Product development Techno- Ecology Value

logy analysis


(No. of
pers.)
(mEUR) (mEUR)

Product 1 - old
34 2.50 1.00


Purchasing
Product 1

Input material/parts (units)
30000

Production
Product 1

Production volume (units)
40000

Production lines Type A Type B Type C
Investments
(number of new lines) --- --- ---
Disinvestment
(numbers of the lines) --- --- --- --- --- --- --- --- ---
Maintenance
(mEUR/line) 1.5 --- ---
Rationalisation
(mEUR/line) 0.0 --- ---
Process optimisation
projects (mEUR)
0.0 Training (mEUR) 0.5
Investments in environ-
mental plants (mEUR)
1.5
Additional
staff costs (%) 40.0
Production staff
Recruitm. / Dismiss.(-)
50


Financing (mEUR) Medium-term loan
25.0

Long-term loan
0.0

Purchase of securities
0.0

Dividends (% from profit)
50


Planned figures (mEUR) Sales
revenue
Product 1:
Market 1 130.0


Return on equity (%)
20.0 Cash flow 14.0

Note on the planned figures for the "Sales revenue Product 1 - Market 1": They do not
include any sales with bulk buyers and/or from requests for bids.


TOPSIM - General Management II Participants' manual Page 32
4.2 Reports
4.2.1 Market results and Inventory values

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 1 MARKET RESULTS and INVENTORY VALUES





MARKET RESULTS


COMPANY 1 TOTAL

MARKET 1 Price (EUR/Unit) 3000 3000
Sales (Units) 43000 215000
Revenue (mEUR) 129,00 645,00

Market share (%) 20,00 100,00

TOTAL Sales (Units) 43000 215000
Revenue (mEUR) 129,00 645,00


INVENTORY

INVENTORY FOR Inventory values
INPUT MATERIALS/PARTS Quantity
(Units) (EUR/Unit) (mEUR)

Opening inventory 20000 525 10,50

+ Addition from supplier 30000 550 16,50
- Retirem. to Production 40000 540 21,60

= Closing inventory 10000 540 5,40


INVENTORY

INVENTORY FOR Co. of goods Inventory
FINISHED PRODUCTS Quantity manufactured values
(Units) (EUR/Unit) (mEUR)

Opening inventory 7000 1880 13,16

+ Addition from production 40000 2033 81,30
- Retirem. to distribution 43000 2010 86,42

= Closing inventory 4000 2010 8,04


Note: The inventory figures in EUR/unit are based on average values, see point 3.1.9.


TOPSIM - General Management II Participants' manual Page 33
4.2.2 Production plants - Environmental technology

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period: 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 2 PRODUCTION PLANTS - ENVIRONMENTAL TECHNOLOGY



KEY DATA ON PRODUCTION LINES

Procurem.-Acquisit.- RemainingDepreciat. Net book Other
period value life (mEUR/ value fixed co.
Production lines (mEUR) (periods) period) (mEUR) (mEUR)

Type A Line No. 1 -8 12,50 1 1,25 1,25 1,50
Type A Line No. 2 -7 15,00 2 1,50 3,00 1,00
Type A Line No. 3 -6 20,00 3 2,00 6,00 0,50
Type A Line No. 4 -5 20,00 4 2,00 8,00 0,25

Total 67,50 6,75 18,25 3,25



CAPACITIES OF PRODUCTION LINES

Normal cap. Maintenance Rationalisat. Availbl.cap. Envirnm.
Production lines (Units) (mEUR)Factorcu.mEURFactor (Units) Index

Type A Line No. 1 8000 1,5 0,96 0,0 1,00 7653 83,0
Type A Line No. 2 9000 1,5 0,96 0,0 1,00 8610 90,0
Type A Line No. 3 11500 1,5 0,96 0,0 1,00 11002 95,0
Type A Line No. 4 13500 1,5 0,96 0,0 1,00 12915 98,0

Total 42000 6,0 0,0 40180 91,5



PRODUCTION STAFF : AVAILABILITY AND PRODUCTIVITY

Workforce (Persons) 868 Process optimisation index 1,00
- Absence (Persons) 68 * Staff qualifications index 1,00

= Utilisable staff (Persons) 800 = Productivity index I 1,00



EXPERIENCE AND PRODUCTIVITY

Product 1 Cum.prod.prev.period 0 Productivity index II (per.) 1,00



UTILISATION RATE OF PRODUCTION LINES

Production Production cap.Product. staff Allocation in %
(Units) FactorRequiredFactorRequired Req.cap. Req.pers.

Product 1 40000 1,0 40000 50 800 99,6 100,0

Utilisation (%) 99,6 100,0



ENVIRONMENTAL TECHNOLOGY

Environmental index of production lines (Index) 91,50
Cumulative investment in environmental plants (mEUR) 1,50
Improvement of environmental indices (Points) 1,00
Environmental damage indicator for the company (Index) 92,50
Tax payable to Environmental Authority next period (mEUR) 1,50


Notes: Fully depreciated production lines are still available for production.
The maintenance factor is issued as a rounded up figure (internally: 0.956666)


TOPSIM - General Management II Participants' manual Page 34
4.2.3 Human resources and product development

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 3 HUMAN RESOURCES AND PRODUCT DEVELOPMENT





STAFF BREAKDOWN IN COST CENTERS


Number of persons Purchasing Administr. Production R & D Sales/Dist. Total

Opening workforce 20 200 870 30 100 1220

+ Recruitment 0 10 50 5 9 74
- Dismissals 1 0 0 0 0 1
- Staff turnover 1 8 52 1 9 71

= Closing workforce 18 202 868 34 100 1222

Wages & Salaries (1) mEUR 0,54 5,66 26,04 1,50 4,00 37,73
Recrt./Dism./Train. mEUR 0,01 0,12 1,13 0,06 0,11 1,43
Additional staff co. mEUR 0,22 2,26 10,42 0,60 1,60 15,09
Pension reserves mEUR 0,03 0,28 1,30 0,07 0,20 1,89

Total staff costs mEUR 0,79 8,33 38,88 2,23 5,91 56,15


Additional staff costs in % of Wages and Salaries: 40,0
Training (Production) mEUR: 0,5

(1) without overtime costs



PRODUCT DEVELOPMENT


TECHNOLOGY ECOLOGY VALUE ANALYSIS

(mEUR) (mEUR) (mEUR)
PRODUCTS Period Cumul. Index Period Cumul. Index Period Cumul. Index

Product 1 old 1,5 8,2 100,0 2,5 5,0 100,0 1,0 1,0 100,0


Note: The value of 1.50 mEuro for product development in the column "Technology" corresponds
to the item "Wages and Salaries" of the cost center R & D with 1.50 mEuro.


TOPSIM - General Management II Participants' manual Page 35
4.2.4 Cost type accounting, Cost center accounts (Departmental accounting)

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 4 COST TYPE, COST CENTER ACCOUNTING




COST CENTER ACCOUNT (mEUR)



COST TYPES Total Overheads Direct costs

MATERIAL COSTS
Input material/parts 21,60 21,60
Factory material 2,00 2,00

PERSONNEL COSTS
Wages and Salaries (1) 37,73 10,58 27,16
Recrt./Dism./Training 1,43 1,43
Additional staff costs 15,09 4,23 10,86
Pension reserves 1,89 0,53 1,36

DEPRECIATION
Buildings 0,25 0,25
Production lines 6,75 6,75
Environmental technol. 0,15 0,15

OTHER COSTS
Other fixed costs 3,25 3,25
Maintenance/Rational. 7,00 7,00
Process optimis.proj. 0,00 0,00
Environmental tax 0,00 0,00
Rework/Rejects 1,19 0,00 1,19
Storage costs 0,90 0,90
Advert./Market re./CI 8,10 2,10 6,00
Other costs R & D 3,50 0,00 3,50
Transport costs 1,08 0,00 1,08

TOTAL COSTS 111,91 37,17 74,74

(1) Overtime included


COST CENTER ACCOUNTS (mEUR)


COST CENTERS

COST TYPES TOTAL Purchs. Prodcn. R & D Sls/Dist Admin.

PERSONNEL COSTS
Wages and Salaries 10,58 0,54 2,04 1,50 4,00 2,50
Recrt./Dism./Training 1,43 0,01 1,13 0,06 0,11 0,12
Additional staff costs 4,23 0,22 0,82 0,60 1,60 1,00
Pension reserves 0,53 0,03 0,10 0,07 0,20 0,13

DEPRECIATION
Buildings 0,25 0,01 0,18 0,01 0,01 0,04
Production lines 6,75 6,75
Environmental technol. 0,15 0,15

OTHER COSTS
Other fixed costs 3,25 0,00 3,25 0,00 0,00 0,00
Maintenance/Rational. 7,00 6,00 1,00
Process optimis.proj. 0,00 0,00
Environmental tax 0,00 0,00
Storage costs 0,90 0,50 0,40
Advert./Market re./CI 2,10 2,10
Other costs R & D 0,00 0,00

TOTAL COSTS 37,17 1,31 20,41 2,24 8,42 4,79


Note: Cost type accounting includes all the costs incurred within the company.
The overheads of 37.17 mEuro are the costs of the cost centers.
The direct costs are costs which can be allocated directly and immediately to
Copy I as a product.
Example: The utilised production staff appears under "Wages and Salaries" as direct costs
in cost type accounting together with the direct costs of the administration.
The "Wages and Salaries" for the absences of the production staff appear in the
cost center Production (overheads).


TOPSIM - General Management II Participants' manual Page 36
4.2.5 Cost accounting (Unit-of-output costing)

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 5 COST ACCOUNTING (Unit-of-output costing)




COST ACCOUNTING (Costs in mEUR)

Material 21,60
+ Factory material 2,00

= Direct material 23,60
+ Indirect material 1,31

= Material costs 24,91
Production direct costs (1) 35,99
+ Production overheads (cost center production) 20,41
= Production costs 56,40

= COST OF GOODS MANUFACTURED CGM 81,30

+ R & D Direct costs (ecol.+ val.anal.) 3,50
+ Overheads (cost c. R & D) 2,24
+ Sales/Distribution Direct costs (advert. + transp.) 7,08
+ Overheads (cost c.sales) 8,42
+ Administration Direct costs (2) 4,58
+ Overheads (cost c.admin.) 4,79

= COST OF PRODUCTION 111,91




COST ACCOUNTING (Costs in EUR/unit)

Material 540
+ Factory material 50

= Direct material 590
+ Indirect material 33

= Material costs 623
Production direct costs (1) 900
+ Production overheads (cost c. prod.) 510
= Production costs 1410

= COST OF GOODS MANUFACTURED CGM 2033

+ R & D Direct costs (ecol.+ val.anal.) 88
+ Overheads (cost c. R & D) 56
+ Sales/Distribution Direct costs (advert. + transp.) 177
+ Overheads (cost c.sales) 211
+ Administration Direct costs (2) 114
+ Overheads (cost c.admin.) 120

= COST OF PRODUCTION 2798

(1) wages/salaries + add.staff costs + pension reserves + rework
(2) wages/salaries adm. - fixed costs admin. + add.staff c. + pension reserves

Note: Unit-of-output costing works out step by step (job order costing) the costs
incurred by Copy I.
The finished products of Copy I enter the finished goods inventory at the
value of the costs of goods manufactured (CGM).
The cost of production show the total costs incurred for the cost unit Copy I.
Direct costs: Costs allocated directly to the product.
Overheads: Costs which were initially allocated to a cost center. (see
previous report)
The costs in Euro/unit refer to the units which were manufactured in the
period (period 0 : 40000 units).


TOPSIM - General Management II Participants' manual Page 37
4.2.6 Profit and Loss Statement and Cash flow

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 7 PROFIT and LOSS STATEMENT and CASH FLOW



Total Cost Accounting mEUR Cost of Sales Accounting mEUR


SALES REVENUE 129,00 SALES REVENUE 129,00

Increase/Decrease in -5,12
finished goods
inventory - Cost of products sold 86,42
- Material expenses 23,60
- Personnel costs
- Wages and Salaries 37,73
- Recruit.-/Dism.-costs 1,43 - Sales costs 15,50
- Pension reserves 1,89
- Other personnel costs 15,09 - R & D costs 5,74
- Depreciation 7,15
- Other expenses 25,01 - Administration costs 9,36

= OPERATING RESULT 11,97 = OPERATING RESULT 11,97

+ Yield from securities 0,00
- Interest and similar expenses 3,00

= RESULT FROM REGULAR BUSINESS OPERATIONS 8,97

Extraordinary income 0,00
- Extraordinary expenses 0,00

= EXTRAORDINARY PROFIT/LOSS 0,00

- Taxes from income 4,04

= PROFIT/LOSS FOR YEAR 4,93


APPROPRIATION OF NET INCOME mEUR

Profit/Loss for year 4,93
Loss carried forward from previous year 0,00
- Transfer into revenue reserves 2,47
= Balance sheet profit (Dividends) / Balance sheet loss 2,47
- Distributable amount (Dividends) 2,47

= Loss carried forward 0,00


CASH-FLOW mEUR

Profit for year 4,93
+ Depreciation (incl. disinvestment) 7,15
+ Pension reserves 1,89

= Cash-flow after tax 13,97


Note:
Increase/reduction of the finished goods inventory:
= Closing inventory 8.04 mEuro - Opening inventory 13.16 mEuro
= Inventory change 5.12 mEuro
In other words, the finished goods inventory was reduced in value in
the period by 5.12 mEuro.
Material expenses = Material for the production of Copy I
= Material (Input materials/parts) + Factory supplies
= Cost of direct material
Other expenses = Total costs which appear under "Other costs" in
cost type accounting

The Cash-Flow shows a companys potential to finance new investements without additional
capital. It can be derived by adding depreciation expenses plus the rise in pension reserves to
the profit after tax.


TOPSIM - General Management II Participants' manual Page 38
4.2.7 Financial Report and Balance Sheet

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period: 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 8 FINANCIAL REPORT AND BALANCE SHEET




CURRENT PLANNING FOR THE
FINANCIAL REPORT in mEUR PERIOD NEXT PERIOD

OPENING CASH BALANCE 0,84

CASH IN:
Cash in from sales current period 103,20
+ Cash in from sales previous period 17,50
+ Securities 0,00
+ Yield on securities 0,00
+ Extraordinary income/Share capital incr. 0,00
+ Disinvestment of production lines 0,00
+ Medium and long-term loans 25,00
+ Overdraft loan 0,00

= TOTAL CASH IN 145,70

CASH OUT:
Purchase input mat./parts + fact.mat. 18,50
+ Outside production 0,00
+ Personnel costs (- Pension reserves) 54,26
+ Other expenses 25,01
+ Pay back medium-term & overdraft loans 40,00
+ Interest paid on loans 3,00
+ Purchase of production lines 0,00
+ Purchase of securities 0,00
+ Purchase of environmental plants 1,50
+ Taxes from income 4,04
+ Pay out of dividends (previous period) 0,00
+ Extraordinary expenses 0,00

= TOTAL CASH OUT 146,31

CLOSING CASH BALANCE 0,23




BALANCE SHEET in mEUR


ASSETS Period Prev.per LIABILITIES Period Prev.per

FIXED ASSETS 27,35 33,00 OWNERS' EQUITY 29,93 25,00
Property, Plant and Equipm. Subscribed capital 15,00 15,00
Land and Buildings 7,75 8,00 Capital reserves 2,50 2,50
Machinery and Equipment 19,60 25,00 Revenue reserves 7,50 6,50
Loss carried forward 0,00 0,00
Profit/Loss for year 4,93 1,00

CURRENT ASSETS 39,47 42,00 PENSION RESERVES 11,89 10,00
Inventories
Material 5,40 10,50
Finished goods 8,04 13,16 LIABILITIES 25,00 40,00
Accounts receivable 25,80 17,50 Remaining life over 5 yrs. 0,00 0,00
Securities 0,00 0,00 Remaining life under 1 yr. 25,00 40,00
Cash 0,23 0,84 Overdraft loan 0,00 0,00

BALANCE SHEET TOTAL 66,82 75,00 BALANCE SHEET TOTAL 66,82 75,00


Notes on the financial report:
Deposits from sales Current period : Sales * Payment receipts (%) in the period
Deposits from sales Previous period : Value of the balance sheet item "Accounts receivable" from
deliveries and services of previous period
Other expenses : correspond to the item "Other expenses" in the P/L Statement
Calculation of the borrowing requirements for the period:
Opening cash balance + Amount of all depostis
- Amount of disbursements - Minimum cash balance


TOPSIM - General Management II Participants' manual Page 39
4.2.8 Overall company results

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 9 OVERALL COMPANY RESULTS




OVERALL COMPANY RESULTS


x=Total sales(mEUR) +=Profit for year(mEUR) Share price (EUR/share)
240 350
230 20
220 300
210 15
200 250
190 10
180 200
170 + 5
160 150
150 0
140 100 +
130 x -5
120 50
110 -10
100 Periods 0 Periods

0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8

Return on sales (%) Return on equity (%)
10 50
9 45
8 40
7 35
6 30
5 25
4 + 20 +
3 15
2 10
1 5
0 0
-1 -5
-2 -10
-3 -15
-4 -20
-10 Periods -50 Periods

0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8


RATIOS Per.0 Per. Per. Per. Per. Per. Per. Per. Per. Average

Total sales mEUR 129,0 129,0
Operating result mEUR 12,0 12,0
Profit for year mEUR 4,9 4,9
Owners' equity mEUR 29,9 29,9

Return on sales % 3,8 3,8
Return on equity % 19,7 19,7

Payout dividends mEUR 0,0 0,0
Cumul. dividends mEUR 0,0

Planning quality index 2,9 2,9

Share price EUR/share 100,0 100,0
Value of company mEUR 50,0 50,0

Corporate image index 100,0 100,0

Sharehold.earnings mEUR 0,0
Sharehold.earn.since 0 0,0




TOPSIM - General Management II Participants' manual Page 40

Note:
Planning quality index Value from the report "Out-of-line situation", see next page.

Value of company Share price (Euro/share) * 500.000 shares

Return on sales Profit after Tax,Sales revenue
Return on equity Profit after tax actual period,Equity end of prev. period


TOPSIM - General Management II Participants' manual Page 41
4.2.9 Out-of-line situations

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period: 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 10 OUT-OF-LINE SITUATIONS



PERIODS

PLANNING VALUES 0 Aver.


SALES (mEUR) Plan.val. 130,0 130,0
PRODUCT 1 Actual 129,0 129,0
MARKET 1 Abs. var. -1,0 -1,0
Var.in % -0,8 -0,8

PLANNING QUALITY 1,0 1,0


RETURN ON Plan.val. 20,0 20,0
EQUITY (%) Actual 19,7 19,7
Abs.var. -0,3 -0,3
Var.in % -1,3 -1,3

PLANNING QUALITY 1,0 1,0


CASH FLOW Plan.val. 14,0 14,0
(mEUR) Actual 14,0 14,0
Abs. var. -0,0 -0,0
Var.in % -0,2 -0,2

PLANNING QUALITY 1,0 1,0


Profit for year (mEUR) 4,9 4,9
Cum. profit for yr.(mEUR) 4,9 4,9
Planning quality of per. 2,9 2,9
Cum. planning quality 2,9 2,9


Earn.cap.value (mEUR) 6,4 6,4
Cum.earn.cap.value (mEUR) 6,4 6,4


Planning quality : The planning quality arises according to the extent of the planning from the
variance between the plan and actual performance.
Ranges of planning quality:
Best value = +1.0 at an absolute variance of approx. 0.0.
Worst value = -1.0 at a large absolute variance.
Planning quality of the
period
: Number of individual planning qualities for the period
Cum. planning quality : Cumulative planning quality of previous period
+ Planning quality of period
Earning value of period
(mEuro)
: The earning value of the period is composed of :
profit for the period (mEuro)
+ (Planning quality of the period
*
Value of a planning point in mEuro).
The value of a planning point (planning quality) is determined by the game
supervisor.
Cum. earning value
(mEuro)
: Cumulative earning value of the previous periods
+ Earning value of the period


TOPSIM - General Management II Participants' manual Page 42
4.2.10 Market research report

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 11 MARKET RESEARCH REPORT I



ADVERTISING SALES REVENUE PRODUCT INDICES
MARE I COM- PRICE
PANY EUR mEUR % Units % mEUR % Techn.Ecolog.


PRODUCT 1 MARKET 1 1 3000 6,00 20,0 43000 20,0 129,0 20,0 100,0 100,0
2 3000 6,00 20,0 43000 20,0 129,0 20,0 100,0 100,0
3 3000 6,00 20,0 43000 20,0 129,0 20,0 100,0 100,0
4 3000 6,00 20,0 43000 20,0 129,0 20,0 100,0 100,0
5 3000 6,00 20,0 43000 20,0 129,0 20,0 100,0 100,0

Av./Tot 3000 30,00 100,0 215000 100,0 645,0 100,0 100,0 100,0



OTHER DATA COM- PROD. PROD.1 PRODUCTION LINES EXPENSES R & D SALES/DISTR.
PANY STAFF O/R/N Type A Type B Type C (mEUR) (No.of pers.)

1 868 O 4 0 0 5,0 100
2 868 O 4 0 0 5,0 100
3 868 O 4 0 0 5,0 100
4 868 O 4 0 0 5,0 100
5 868 O 4 0 0 5,0 100


Notes: Product 1 Market 1:
The average price is a weighted average price = Revenue/Sales

Expenditure R & D mEUR =
Total R & D costs for
- Technology
- Ecology
- Value analysis

Other data:
O = Old product 1
R = Relaunch Possible product strategies which may be imple-
N = New product 1 mented by the game supervisor during game.


TOPSIM - General Management II Participants' manual Page 43
4.2.11 Business reports from the industry

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 13 BUSINESS REPORTS FROM THE INDUSTRY



PROFIT AND LOSS STATEMENT

VALUES in mEUR Comp. 1 Comp. 2 Comp. 3 Comp. 4 Comp. 5

SALES REVENUE 129,00 129,00 129,00 129,00 129,00

- Cost of products sold 86,42 86,42 86,42 86,42 86,42
- Sales costs 15,50 15,50 15,50 15,50 15,50
- R & D costs 5,74 5,74 5,74 5,74 5,74
- Administration costs 9,36 9,36 9,36 9,36 9,36

= OPERATING RESULT 11,97 11,97 11,97 11,97 11,97

Result reg.business operations 8,97 8,97 8,97 8,97 8,97
Extraordinary result 0,00 0,00 0,00 0,00 0,00
- Taxes from income 4,04 4,04 4,04 4,04 4,04

= PROFIT/LOSS FOR YEAR 4,93 4,93 4,93 4,93 4,93


BALANCE SHEET

ASSETS in mEUR Comp. 1 Comp. 2 Comp. 3 Comp. 4 Comp. 5

FIXED ASSETS 27,35 27,35 27,35 27,35 27,35
Land and Buildings 7,75 7,75 7,75 7,75 7,75
Machinery and Equipment 19,60 19,60 19,60 19,60 19,60
CURRENT ASSETS 39,47 39,47 39,47 39,47 39,47
Material 5,40 5,40 5,40 5,40 5,40
Finished goods 8,04 8,04 8,04 8,04 8,04
Accounts receivable 25,80 25,80 25,80 25,80 25,80
Securities 0,00 0,00 0,00 0,00 0,00
Cash 0,23 0,23 0,23 0,23 0,23

BALANCE SHEET TOTAL 66,82 66,82 66,82 66,82 66,82

LIABILITIES in mEUR Comp. 1 Comp. 2 Comp. 3 Comp. 4 Comp. 5

OWNERS' EQUITY 29,93 29,93 29,93 29,93 29,93
Subscribed capital 15,00 15,00 15,00 15,00 15,00
Capital reserves 2,50 2,50 2,50 2,50 2,50
Revenue reserves 7,50 7,50 7,50 7,50 7,50
Loss carried forward 0,00 0,00 0,00 0,00 0,00
Profit/Loss for year 4,93 4,93 4,93 4,93 4,93
PENSION RESERVES 11,89 11,89 11,89 11,89 11,89
DUE TO BANKS 25,00 25,00 25,00 25,00 25,00
Remaining life over 5 years 0,00 0,00 0,00 0,00 0,00
Remaining life under 1 year 25,00 25,00 25,00 25,00 25,00
Overdraft loan 0,00 0,00 0,00 0,00 0,00

BALANCE SHEET TOTAL 66,82 66,82 66,82 66,82 66,82


COMPANY RATIOS Comp. 1 Comp. 2 Comp. 3 Comp. 4 Comp. 5

Return on sales (%) 3,8 3,8 3,8 3,8 3,8
Return on equity (%) 19,7 19,7 19,7 19,7 19,7

Payout dividends (mEUR) 0,0 0,0 0,0 0,0 0,0
Share price (EUR/share) 100,0 100,0 100,0 100,0 100,0
Value of company (mEUR) 50,0 50,0 50,0 50,0 50,0

Corporate image (Index) 100,0 100,0 100,0 100,0 100,0

Shareholder Earnings (mEUR) 0,0 0,0 0,0 0,0 0,0
Shareholder Earnings (% P0) 0,0 0,0 0,0 0,0 0,0


Note : The most relevant data on the company for competitive analysis.


TOPSIM - General Management II Participants' manual Page 44
4.2.12 Profit and lost statement and balance sheet with US-GAAP norm:
Important note: starting from version 10.0 the most important reports of the external account system
can be output in accordance with US-GAAP with TOPSIM general management. You can find these
reports as appendix. Whether in your seminar is based HGB or US-GAAP, you need to ask your
seminar instructor.


UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period : 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 7 PROFIT AND LOSS STATEMENT, BALANCE SHEET (US-GAAP)





PROFIT and LOSS STATEMENT


Total Cost Accounting mEUR Period Prev.per. Cha.(%) % o.sal.

SALES REVENUE 129,00 0,00 0,00 100,00

- Cost of products sold 86,42 0,00 0,00 66,99
- Sales costs 15,50 0,00 0,00 12,02
- R & D costs 5,74 0,00 0,00 4,45
- Administration costs 9,36 0,00 0,00 7,26

= OPERATING RESULT 11,97 0,00 0,00 9,28

+ Yield from securities 0,00 0,00 0,00 0,00
- Interest and similar expenses 3,00 0,00 0,00 2,33

= RESULT FROM REGULAR BUSINESS OPERATIONS 8,97 0,00 0,00 6,95

Extraordinary income 0,00 0,00 0,00 0,00
- Extraordinary expenses 0,00 0,00 0,00 0,00

= EXTRAORDINARY PROFIT/LOSS 0,00 0,00 0,00 0,00

- Taxes from income 4,04 0,00 0,00 3,13

= PROFIT/LOSS FOR YEAR 4,93 0,00 0,00 3,82



APPROPRIATION OF NET INCOME mEUR Period Prev.per. Cha.(%) % o.sal.

Profit/Loss for year 4,93 0,00 0,00 3,82
Loss carried forward from previous year 0,00 0,00 0,00 0,00
- Transfer into revenue reserves 2,47 0,00 0,00 1,91
= Balance sheet profit (Dividends) / Bal.sh.loss 2,47 0,00 0,00 1,91
- Distributable amount (Dividends) 2,47 0,00 0,00 1,91

= Loss carried forward 0,00 0,00 0,00 0,00




BALANCE SHEET in mEUR


ASSETS Period Prev.per LIABILITIES Period Prev.per

FIXED ASSETS 27,35 33,00 OWNERS' EQUITY 29,93 25,00
Property, Plant and Equipm. Subscribed capital 15,00 15,00
Land and Buildings 7,75 8,00 Capital reserves 2,50 2,50
Machinery and Equipment 19,60 25,00 Revenue reserves 7,50 6,50
Loss carried forward 0,00 0,00
Profit/Loss for year 4,93 1,00

CURRENT ASSETS 39,47 42,00 PENSION RESERVES 11,89 10,00
Inventories
Material 5,40 10,50
Finished goods 8,04 13,16 LIABILITIES 25,00 40,00
Accounts receivable 25,80 17,50 Remaining life over 5 yrs. 0,00 0,00
Securities 0,00 0,00 Remaining life under 1 yr. 25,00 40,00
Cash 0,23 0,84 Overdraft loan 0,00 0,00

BALANCE SHEET TOTAL 66,82 75,00 BALANCE SHEET TOTAL 66,82 75,00




TOPSIM - General Management II Participants' manual Page 45
4.2.13 Financial report and Cash Flow (US-GAAP)

UNICON GmbH - D-88709 Meersburg Copyright (c) 2000 by Unicon

MANAGEMENT GAME Company 1 Period: 0
T O P S I M - General Management II Demo Date 1. 8.2000


No. 8 FINANCIAL REPORT AND CASH FLOW (US-GAAP)




CURRENT PLANNING FOR THE
FINANCIAL REPORT in mEUR PERIOD NEXT PERIOD

OPENING CASH BALANCE 0,84

CASH IN:
Cash in from sales current period 103,20
+ Cash in from sales previous period 17,50
+ Securities 0,00
+ Yield on securities 0,00
+ Extraordinary income/Share capital incr. 0,00
+ Disinvestment of production lines 0,00
+ Medium and long-term loans 25,00
+ Overdraft loan 0,00

= TOTAL CASH IN 145,70

CASH OUT:
Purchase input mat./parts + fact.mat. 18,50
+ Outside production 0,00
+ Personnel costs (- Pension reserves) 54,26
+ Other expenses 25,01
+ Pay back medium-term & overdraft loans 40,00
+ Interest paid on loans 3,00
+ Purchase of production lines 0,00
+ Purchase of securities 0,00
+ Purchase of environmental plants 1,50
+ Taxes from income 4,04
+ Pay out of dividends (previous period) 0,00
+ Extraordinary expenses 0,00

= TOTAL CASH OUT 146,31

CLOSING CASH BALANCE 0,23



CASH FLOW STATEMENT (US-GAAP) in mEUR

Net earnings / net loss for year 4,93
Depreciation of fixed assets 7,15
Increase of pension fund 1,89
Changes in current assets
Increase (-) / Decrease (+) of raw material 5,10
Increase (-) / Decrease (+) of finished products 5,12
Increase (-) / Decrease (+) of receivables -8,30

A. NET CASH PROVIDED/USED BY OPERATING ACTIVITIES 15,89 15,89

Investments in fixed assets -1,50

B. NET CASH USED IN INVESTING ACTIVITIES -1,50 -1,50

Increase of subscribed capital 0,00
Prior years dividend paid 0,00
Increase (-) / Decrease (+) of securities 0,00
Increase (+) / Decrease (-) of bank loans -15,00

C. NET CASH PROVIDED/USED BY FINANCING ACTIVITIES -15,00 -15,00

D. NET INCREASE (+) / DECREASE (-) OF CASH (A+B+C) -0,61 -0,61


Notes to the financial statement:

Cash in from sales current period : Sales * Payment receipts (%) in the period
Cash in from sales previous period : see Balance Sheet "Accounts receivable Prev.
Per.
Calculation of the credit needs for the period : Closing cash balance + Total all cash in
- Total all cash out Minimum closing cash



TOPSIM - General Management II Participants' manual Page 46
Index

A
absenteeism 21, 25
absenteeism 23
Accounting 28
Accounts receivable 26
additional premium by overtime
24
additional staff costs 21, 22, 23
Administration costs 28
advertising 11
available capacity 18, 20
B
bulk buyers 14
C
cash balance 26
communications policy 11, 12
corporate identity 12
corporate Identity 13
corporate image 12, 21
cost accounting 36
cost of production 15
costs of goods manufactured 36
customer paying patterns 26
D
deficiency 17
degree of availability 20
deposits 26
depreciation 28
depreciation of production lines
18, 33
Direct costs 36
disinvestment 19
dismissals 22
distribution 12
distribution costs 13
dividend payments 27
domestic market 12
E
ecology index 10, 16
environmental damage 12, 21
Environmental damage 21
environmental damage indicator
21
environment-friendliness 10, 12
Equity 27
experience 25
F
factory materials 21
finished goods inventory 37
Fixed costs administration 22
I
incapacity to supply 14
input material/parts 17
in-service training 24
insufficient input material 17
interest rates 26
inventory 15
inventory input materials/parts
17
investment 19
L
learning curve 25
loans 26
long-term loans 26
loss carried forward 27
M
maintenance 19
maintenance factor 20
market research report 15
marketing mix 13
medium-term loans 26
O
overdraft loans 26
Overheads 36
overtime
extra costs 24
overtime 20, 24
P
pension reserves 23
personnel 22
Planning quality 41
pricing policy 11
proceeds from scrap 19
process optimisation 24
product inventory 10
product policy 10
production 18
production capacity 18, 24
production line 18, 20
productivity 24, 25
productivity index 25
products inventory 15
profit 27
purchasing 17
R
rate of staff turnover 23
rationalisation 20
rationalisation factor 20
recruitment 22
Redeployment 22
requests for bids 14
rework 21
rework 16, 21
S
sales 10
sales personnel 12
sales-unrelated share of
personnel costs 22
securities 26
share price 12, 27
shareholder earnings 27
staff qualification 24
staff turnover 22
stock exchange price 12, 27
storage 15
storage costs 15, 17
T
taxation 27
technology index 10, 16, 21
transport costs 13
V
value analysis 16, 17
value analysis index 16, 21
volume scale 17



TOPSIM - General Management II Participants' manual

TOPSIM - General Management II
Checklist for the first periods of the seminar
1. Which type of company are we working
for?
Internal structures (operating units, cost centers)
Market (customers and competition)
Production costs, Product results

2. What do we want to have achieved by
the end of the game? Which goals:
Market shares, Sales, Turnover,
Product attributes,
Profit for the year, Return on equity ...

3. How do we wish to achieve our goals?
Which strategies:
Conservative? Expansive? High risk?
Which marketing mix do we use over the various periods?
Can we achieve our aims with the intended strategies?

4. How will we organise ourselves within
our team?
Who will take responsibility for what?
Do we work in a functional or a collegial system?
Job rotation?

5. How do we organise the work within our
team (methods and procedures)?
Time management for decision making
Content of analysis and of decision stages

6. How can we identify and follow
significant influences and events (early
warning system)?
Development of an informative information system (visualisation)
Development of a decision-oriented planning system




TOPSIM - General Management II Participants' manual
TOPSIM - General Management II
Stockholders Meeting

1. What was planned?
- Goals and Strategies

2. How did things arise?
(Decisions and Adaptions)
- Sales
- Marketing Mix
- Net income
- Cash on hand/
Overdraft facilities

3. Where do we stand?
- Inventory total in the final period

4. How are we to continue?
- Prospects for the next 5 periods

5. What have we learned?
- What would we possibly do differently?

6. What was our groupwork like?
- Working methods and group dynamics

Time for the group presentation: max. 25 minutes


TOPSIM - General Management II Participants' manual
Report on the Findings by the Management Consultants:
How members of the COPYFIX Inc. Board of Supervisors view their personal strategies and activities and those of their colleagues.
Who How they
+ view them

Managers Manufacturing Sales Human Resources Purchasing R & D Finance and
Accounting
Manufacturing

Play big !!!
We earn the money !

Production is too
expersive.
Chooses the wrong
planning capacity.
Always slams our stocks
full.
Ensures that there are
sufficient salaries for
marketing personnel and
minimizes well.
Minimizes fluctuation
What does he want from
me?
Produce the
improvement too late.
Brings in their own
ideas, instead of what
the customers require.
Are too reluctant.
Lowers the marketing
output and marketing
personnel.
Have no notion of the
market.
Sales

Can never settle on
definite production
figures
I am the one suffering
from inaccurate sales
forecasts
Nothing runs without me.
Favorable costs are only
possible with the most
modern systems and
continuous extention of
utilization.
Has to be more flexible
in his adjustment of the
personnel capacity.
Debits surplus personnel
everywhere.
Just-in-time inventory
produces a reduction in
costs
Because of unnecessary
product improvements
rework and retooling
rise.
Bean counters !
Prevents opening new
manufacturing plants,
and calculates the wrong
enonomic values.
Human Resources

Demands low fluctuation
on one hand yet is
asking for rapid
adjustment in the level
of sales personell on the
other hand.
Because of their chaotic
personnel application I am
constantly bothered by the
labor unions.
Long-term personnel
planning lowers the
personnel expenditure.
High social security
benefits (supplementary
personal expenses)
increase motivation.
Personally, I have no
problems with
purchasing.
Wants too much and
everything made
immediately.
Produces too much too
fast without
consideration for what
we can use later.
Saves in the wrong
places with staganating
supplementary
personnel expenses.
Bonusues would
increase motivation.
Purchasing

We only meet each other
in the boardroom,
otherwise we have no
contact with each other.

Rarely thinks of how much
material he will need in the
future.
He is a nice guy, who
surely does his best.
High purchase quantities
produce high discounts.
Obtain gains through
purchasing..
With more value analysis
I could save material.
Does not understand
purchasing problems.
Calculates values until
they are inefficient or
uneconomical.
R & D

Gives me impossible
improvement requests.
Modify their
specifications too often
and are too easily
moved by the
competition.
Says any developments
are unnecessary, too
complex, and thereby lead
to higher retooling and
rework costs.
Always thinks his ideas are
better.
A fast reaction to market
changes means a
stronger personnel
increase or decrease.
So it must continue.
I have no problems with
purchasing.
Only the highest quality
products produce gains.
Must constantly improve
our products.
Know only one
expression
this costs too much
And means, simpler
products would do the
same job.
Finance and
Accounting
Orients himself too
strongly towards the
competition. Thinks only
of price reductions.
Believes in marketing
too much.
Very cost-conscience.
Do not understand my cost
accounting.
Gives too much money
away for supplementary
expenses.
Should be more
assertive with wage
negotiations.
Relies too much on
setting up
comprehensive cost
calculations for
purchasing strategies.
Rarely thinks of the cost
of the product.
Always wants to be
better than the
competition.
Must drastically reduce
all costs.
All products and markets
must bring in a profit.