COMPARATIVE STATIC ANALYSIS WITH THE COMPETE PPA PACKAGE: A STRATEGIC MARKET PLANNING TOOL Developments In Business Simulation & Experiential Exercises, Volume 22, 1995 130 COMPARATIVE STATIC ANALYSIS WITH THE COMPETE PPA PACKAGE: A STRATEGIC MARKET PLANNING TOOL Aspy P. Palia, University of Hawaii at Manoa ABSTRACT The COMPETE Product Portfolio Analysis (PPA) Package (Version 2.00) is used by participant teams in the marketing simulation COMPETE (Faria, Nulsen, and Roussos 1994) to formulate and implement a coherent marketing strategy and to control their marketing program. This package establishes inter-period scale anchor and circle position and size comparability in the growth share matrix (GSM) and growth gain matrix (GGM) displays generated. The inter-period comparability facilitates comparative static analysis of brand trajectories on the GSM and GGM displays used by the competing participant teams in strategic market planning. INTRODUCTION The COMPETE Product Portfolio Analysis (PPA) package is a pc-based marketing decision support tool that facilitates strategic market planning. This package enables competing participant teams in the marketing simulation COMPETE to use Product Portfolio Analysis developed by the Boston Consulting Group in strategic market planning (Palia 1991). The primary purpose of this paper is to demonstrate the use of the revised COMPETE PPA package (Version 2.00) in comparative static analysis of the firm’s product portfolio. The COMPETE PPA package is designed for use by competing participant teams in the COMPETE marketing simulation. This graphics application package has been tested and integrated successfully into the marketing curriculum at the University of Hawaii since the Fall 1990 semester. Marketing decision support systems have been developed and used in department-level promotion mix planning (Allaway, Mason, and Brown 1987) and in advertising research (Knuckles 1987). The COMPETE PPA package permits participant teams to review the results of their decisions and to compare their own performance with that of their main competitors. STRATEGIC MARKET PLANNING Strategic market planning is a complex problem for multiproduct multimarket companies. These firms have numerous products serving several markets with differing potentials. Some products may be in a dominant position relative to competitors, while others may be in a weaker position. Each product will have its own strategy, and may face several competitive products having their own marketing strategies. Some products may be profitable while others may need cash to finance growth or to fight competition. Faced with this complex situation, the organization must allocate its limited resources among these products in order to optimize its overall performance (Abell and Hammond 1979). In order to optimize the overall performance of its portfolio of products, the organization first monitors and analyzes the performance of each of its strategic business units (products). This analysis is conducted by the firm in order to decide which strategic business units to build, maintain, harvest, and divest. One of the best known and widely used models for this purpose is the Boston Consulting Group Product Portfolio Analysis model (Kotler 1991). The product portfolio analysis model developed by the Boston Consulting Group assigns strategic roles for each product based on the product’s market growth rate and market share relative to competitors. These individual roles are then integrated into a strategy for the whole portfolio of products, taking into consideration the product portfolios of the main competitors. The objective of the firm, when using the product portfolio approach, is to optimize the performance of the entire portfolio of products, while maintaining cash flow in balance. The growth share matrix (GSM) and the growth gain matrix (GGM) are used to display the relevant information about the firm’s portfolio of products. These displays help to reduce the inherent complexity of the problem to manageable proportions. The heart of product portfolio analysis involves the creation and interpretation of the GSM and GGM displays for the firm and its main competitors. Based upon GSM data, each firm’s strategic business units (products) are classified into four categories. First, “Cash Cows” are products that have a dominant share of slowly growing markets. These products provide cash to pay dividends and interest on corporate debt, cover overhead, finance R&D, and sustain the growth of other products. Second, ‘Dogs” are products with a low share of slowly growing markets. These products neither generate nor require substantial amounts of cash, and they are often called “cash traps.” Developments In Business Simulation & Experiential Exercises, Volume 22, 1995 131 Third, “Problem Children” are products with a low share of fast growing markets. These products require substantial resources to gain market share and to become strong members of the product portfolio. Finally, “Stars” are high- growth, high-share products whose present modest cash requirements will change to a large surplus when the market matures (Abell and Hammond 1979; Day 1986). THE MARKETING SIMULATION COMPETE COMPETE (Faria, Nulsen, and Roussos 1994) is a widely used marketing simulation designed to provide students with marketing strategy development and decision-making experience. Competing participant teams are placed in a complex, dynamic, and uncertain environment. Successful planning, implementation, and control of their respective marketing programs requires that each company constantly monitor trends in its own and competitive decision variables and resulting performance. Monitoring performance is facilitated by the use of spreadsheet and “C” graphics software packages. The COMPETE marketing simulation has been used at the University of Hawaii at Manoa undergraduate (BBA), graduate (MBA), and post-graduate levels (Executive MBA Program and Pacific Asian Management Institute International Business Program) and at the Japan-America Institute of Management Science. In addition, this simulation and the COMPETE PPA Graphics Package have been used overseas in India, Japan, Malaysia, the P.R.C., Singapore, Taiwan and Thailand. COMPETE (PPA) PACKAGE The COMPETE PPA package is a pc-based marketing decision support tool that exposes participant teams to the operation of a marketing information system. The data entered are transformed into relevant user information by the COMPETE PPA package. The resulting product portfolio analysis displays enable the competing participant teams to analyze the strengths and weaknesses of their own portfolio of strategic business units and those of their main competitors. Based on this analysis, the participant teams can formulate their own marketing strategy. This pc-based marketing decision support system is written in Borland’s Turbo C (Version 2.01) programming language. The COMPETE PPA package (Version 2.00) graphics application disk will work on any IBM PC/XT/AT/P52 or compatible clone running IBM-DOS or MS-DOS version 3.2+. The program requires 640k bytes of random access memory (RAM) and a color graphics adaptor. Participant teams input data on (1) sales in units and (2) price for each product in each region for their own firm and for each of their competitors. Based on these data, the COMPETE PPA worksheet computes the (1) relative market share (RMS), (2) industry growth rate (IGR), (3) brand growth rate (BGR), and (4) sales volume, for each of the strategic business units of each of the five competing firms. Next, these intermediate outputs are entered into the COMPETE PPA package graphics application disk. Based on the RMS, IGR, BGR, and sales volume entered, the COMPETE PPA package graphics application disk generates the GSM and GGM on the CGA monitor screen (in high-resolution mode) for the firm requested. Participant teams may use the COMPETE PPA package graphics application disk to obtain hardcopy (printed output), if the computer is attached to an IBM-compatible graphics printer. GSM and GGM displays are generated at the end of the second and third year of operations and permit the participant teams to conduct static, comparative static, and dynamic analyses of their own product portfolio and the product portfolios of their main competitors. By superimposing the display at the end of the third year of operations on the display at the end of the second year, the participant teams can determine the trajectories (direction and degree of movement) of each of their products. Competitor product trajectories can also be generated and analyzed. The COMPETE PPA package (Version 1.00) generated GSM and GGM displays for both the year 1-2 and the year 2-3 periods (Palia 1991). The Relative Market Share (RMS), Industry Growth Rate (IGR), and Brand Growth Rate (BGR) axes were auto-scaled for each of the two periods. In addition, the circle sizes were auto-scaled based on the data entered for the Regional Sales Revenue (RSR) of each strategic business unit (SBU) for each of the two periods. As the data entered for the year 1-2 and year 2-3 periods differ, the axes anchors (minimum and maximum values), and SBU circle positions and sizes on the GSM and GGM displays for the two periods were not strictly comparable. This drawback hindered comparative static analysis of brand trajectories over the three years of operation. The revised COMPETE PPA package (Version 2.00) graphics application disk generates GSM and GGM displays for both the year 1-2 and year 2-3 periods with comparable RMS, IGR and BGR scale anchors and comparable SBU circle positions and sizes. This interperiod RMS, IGR, BGR scale anchor comparability and SBU circle position and size comparability facilitates comparative static analysis of brand trajectories over the three years of operation. Table of Contents Volume 22, 1995 Simulation Performance, Learning and Struggle Are Good Simulation Performers Consistently Good? Cognitive and Behavioral Consistency in a Computer-Based Marketing-Simulation-Game Environment: An Empirical Investigation of the Decision-Making Process Chalk & Cheese: Executive Short-Course vs. Academic Simulations Revisiting Personality Bias in Total Enterprise Simulations Are Good Strategies Consistently Good? Investigating the Use of a Computer Simulation as an Effective Pedagogical Tool for the Application of a Strategic Model The Problem of determining an Individualized Simulation's Validity as an Assessment Tool A Simulation Based Analysis of the Value of Information in the Hrebiniak Joyce Typology of Adaptation Relative to Porter's Generic Strategies The Impact of Sales and Income Growth on Profitability and Market Measures in Actual and Simulated Industries A Comparison of a Stand Alone Version of a Simulation with the Traditional Competitive Version Computer-Assisted Gaming of International Business Analyzing Simulations with Computer-Based Programs and Applying the Experience to a Real-World Business A Preliminary Investigation of the Use of a Bankruptcy Indicator in a Simulation Environment Graduates' Views on the Use of Computer Simulation Games Versus Cases as Pedagogical Tools An Analytical Advertising Model Approach to the Determination of Market Demand Dealing with the Complexity Paradox in Business Simulation Games A Prototyping Approach for Incorporating Large Data Bases into Media Planning Simulations: An Example Using Magazine Media Through the Looking Glass, Inc: Superior-Subordinate Personality Type and the Leniency effect Evaluating the Effectiveness of Role Playing Simulation and Other Methods in Teaching Managerial Skills Student and Teacher Perceptions of a Management Simulation Course Performance Evaluation: The Effect on the Propensity to Create Budgetary Slack Management Team Formation for Large Scale Simulations Comparative Static Analysis with the Complete PPA Package: A Strategic Market Planning Tool Consistency in Intent: Learning Objectives at the 1994 Intercollegiate Business Policy Competition A New Twist on an Old Game: The Business Strategy Game: A Global Industry Simulation 3ed Evaluation of Performance in Management Simulation: A Management Coefficients Model Building SimuWorlds: Strategic Management Games of the Future Bulls and Bears: A Stock Market Simulation A Systems Thinking Paradigm and Think Computer Simulation Model of Broadcast and Cable Television Industry Competition Jacket Factory The Sales Management Simulation The Marketing Management Simulation A Demonstration of Promodel Demonstrating A New, Cross-Functional Business Simulation: Vision+ A Cost Chain For The Business Strategy Game Simulation Special Session On Experiential Teaching Compensation Dilemmas: An Exercise In Ethical Decision-Making Organizational Storytelling: Telling Tales In The Business Classroom Evaluating Experiential Training: Case Study And Recommendations The Internship Portfolio: An Innovative Tool For Experiential Learning, Critical Thinking, And Communication An Ethnographic Analysis Of The Pedagogical Impact Of Cooperative Communicating Consumer Behavior: A Long-Term Integrated Exercise Using Personal Consumption Journals And Consumer Analysis Papers An Experiential Paradigm For Teaching Business Problem Solving Developing Leadership Skills The Spss® Student Assistant: The Integration of A Statistical Analysis Program Into A Marketing Research Textbook Negotiating With Your Students Using TQM Principles To Transform Accounting Systems Into An Experiential Exercise Enhancing The Effectiveness Of Outdoor-Based Experiential Training Using Virtual Reality Concepts Case Writing In A Developing Country: An Indonesian Example Experiential Learning Using Focus Groups How Real Should Experiential Pedagogy Be? A Viewpoint From Our Students Reengineering The Internship: A New Approach To Experiential Learning Utilizing The Cosmopolitan/Local And Marginal Man Constructs To Measure Students' Propensity For Creativity Developing Experiential Processes For Teaching Quantitative Techniques For Business Team Learning Roles: A Cooperative Learning Technique Creating the Ultimate Small Business Student Experience: Melding Score/Ace with SBI The Development of Trust in Work Teams: The Impact of Touch Some Outcomes of Experiential Learning: How the Cultural Dynamics of Different Countries are reflected in Workplace Norms & Values Incorporation of Job Analysis Results in Various Forms of Selection Interviews Chudesno, Inc.: An Evaluation of an Experiential Training and Development Simulation An Exercise for Exploring the Relationship between Jungian Psychological Types and Organizational Dynamics Partnership: A Radical Approach to Experiential Learning Partnership: A Nice Idea, But How Do I Get Started? Recognizing Discrimination at Work Using Critical Incident Skills Questions to Help Students Become More Successful at Job Interviewing The Video Project Introduction to Psychological Type Theory Come On Down Understanding Facilitation for Development and Continuous Learning: A Micro-Workshop Leadership and Empowerment: An Experiential Exercise in Decision Making Experiential Exercises and Pedagogy Track Workshop: Selecting a Manager for Maquiladora, Inc. Experiential Training In Multi-Cultural Corporate Settings The Role of Facilitation as an Aid to Complete Learning An Experiential Exercise to Illustrate Difference in Information Processing Behaviors and Styles How to Deliver Accessible Survey Results Age Diversity in the Workplace- Family Feud Style Nafta Standoff: A Cross-Cultural negotiating Role-Play Three Strikes and You're Out!: A Downsizing Experiential Exercise