ASTUTE BUSINESS POLICY: A SIMULATION OF THE AUTOMOBILE INDUSTRY Development In Business Simulation & Experiential Exercises, Volume 21, 1994 170 ASTUTE BUSINESS POLICY: A SIMULATION OF THE AUTOMOBILE INDUSTRY Steven C. Gold, Rochester Institute of Technology Harvey I. Gold, Johnson & Johnson ABSTRACT This presentation provides a hands-on introduction and demonstration of the Astute Business Policy simulation, published by SHR Associates and co- authored by Steven Gold and Harvey Gold. The simulation involves managing a company in the automobile industry and trying to achieve the objectives of the firm. Participants will be shown how to use the software to set objectives for the firm, enter tactical decisions, and run the program. After learning how to do this, participants will have the fun of trying it on their own and competing against firms managed by the computer program. The Astute simulation is best suited to teach strategic management and business policy concepts. THE DEMONSTRATION The purpose of the activity is to discuss and illustrate the use of the Astute software package to teach, experientially, introductory and advanced business policy and strategy concepts. The demonstration will include: 1. an explanation of the Astute Business Policy simulation and how it may be used in the classroom. 2. a live demonstration of Astute using the software. 3. a brief review of the student manual and instructor manual which accompany the software. 4. bands-on use of the software by session attendees. A 5-minute game will be proposed which will allow session attendees to sit at a computer and try using the program to see how it works first hand. SIMULATION DESCRIPTION Astute refers to “A Strategic Tool for Understanding The Environment” and is an interactive business simulation designed to help students gain a better understanding of the entire business environment. The simulation allows students to manage one of the six real-world automobile companies including: GM. Ford. Chrysler, Honda, Toyota and Nissan. The Participants version of the software can be used by an individual or group to compete against the computer, while the Administrator’s version lets students compete directly against each other. To use the simulation, students enter the objectives they want to achieve and their operating decisions. A Gap Analysis report is provided showing the students how well they are doing in meeting their own targets. The Astute Manual carefully explains both the mechanics of using the program and the likely consequences of the decisions. Students decide what price to charge; how many cars to produce next quarter and how much to keep in inventory; whether to invest in plant and equipment, and if so, how much; the marketing budget; research and development expenditures; whether to buy or sell marketable securities; dividend policy; whether or not to make an acquisition; cash transfers between parent and subsidiary; and the amount of market research to purchase. With the Participant versions students may execute the simulation on their own and print reports summarizing their performance. The reports include: income statement, balance sheet, technical reports on production and operating capacity, gap analysis, and market research reports on the economy, industry, and competition. DISTINGUISHING FEATURES There are several unique features to the simulation: 1. Team vs. Computer. Students may compete against the computer and execute the simulation on their own. In this case the performance of each student/team is independent of the other teams in the class. Alternatively, students may compete in teams against each other. In this case, the decisions of each team will effect the simulated market and the performance of their colleagues. 2. On line objective setting. Students may enter the objectives and priorities of the firm. A Gap Analysis report measures the performance of the firm against the goals it has established. 3. Realistic environment and market. The simulation modals the real-world automobile industry. The firms in the market include: GM, Ford, Chrysler, Honda, Toyota, and Nissan. Each firm in the market begins with a different demand and cost structure. GM starts with 40% of the market while Nissan has a market share of only 6%. 4. What-if analysis. Each student has their own software and may do what- if analysis. This involves returning to the prior period and entering different decisions to see what would have happened. In the what-if mode the rival decisions, economy, and market factors do not change. In this way the student can observe the partial effect of changing price or other operating decisions. 5. Acquisition decision. The simulation allows a firm to purchase a second company in a related industry. This allows for diversification. 6. Easy to understand and use. The software is menu driven and the student’s manual is clearly written. The software has been upgraded several times based on student and instructor feedback. Version 4.1 is currently available. EQUIPMENT REQUIREMENTS Any IBM compatible PC with DOS 2.0 or higher RAM of 640K is sufficient. To install on the hard disk requires only 340 bytes for the student’s simulation (participant version) and 370 bytes for the instructor’s simulation (administrator version); combined this uses less than 1 MB. Using an IBM PS/2 computer the simulation will execute in 40 seconds. Any printer will work graphics or laser. Two pages of hard copy printouts are generated for each firm, plus a two-page instructor’s summary report. AVAILABILITY The simulation is commercially available through SHR Associates, 20 West Main Street, High Bridge, New Jersey 08829; (908-638-4490) For questions on simulation content you may content one of the authors, Dr. Steven Gold, College of Business, Finance Discipline, R.I.T., Rochester, NY 14623; (716-475-2318 or 716-475-5157)1 Table of Contents Volume 21, 1994 ABSEL: The Way We Were and Need to Be The Intellectual Structure of ABSEL: A Bibliometeic Study of Author Cocitatons Over Time Activity-Driven Time in Computerized Gaming Simulations An Assessment Framework for Determing the Effectiveness of Total Enterprise Simulations Attributes of Learning Organizations: Simulating the Relationships Business Policy/Strategy Case Extension using Pro-Forma Planning: A Computer Based Model Complexity: Is it really that Simple? A Random-Strategy Criterion for Validity of Simulation Game Participation Enhancing a Computer Simulation with a Structured Reporting Environment Experiencing a Foreign Culture: A Cross-Cultural Simulation Group Cognitive Style and Computerphobia in Functional Business Simulations Human Issues in Technology Implementation Management Simulator Incorporating Advertising Strategy into Computer-Based Business Simulations: A Validation Study Increasing the Effectiveness of Performance Evaluation Through the Design and Development of Realistic Finance Algorithms The Packer-Feeder Game: A Commodity Market Simulator Relationships Between R&D and Profitability: An Exploratory Comparison of Two Business Simulations with Two Real-World, Technology Intensive Industries Simulation of the Predictive Value of Mammography Simulation Performance and Learning Revisited Strange Bedfellows: Competency Models and ACBSP Accreditation Standards Using a Business Simulation to Study the Determinants of Ethical Behavior What Simulation Users Think Players Should be Learning from the Simulations ADA and its Implications for Experiential Training Boss/ Subordinate Perceptions of Instrumental and Supportive Leadership Behaviors in Relation to Myers-Briggs Thinking Type Cluster Analyses of American Universities' Business Core Curricula Structures Utilized to Satisfy Fifteen Curriculum Areas Cooperative Learning or Learning to Cooperate Experiential Learning: Constraining Students with Time Budgets How Different Workplace Experiences Affect Different Worker Values Implications of the Trend Toward Relationship Marketing for Experiential Learning The Increasing Cultural Diversity of the American Workforce: Management's Challenge of the 21st Century Information and Uncertainty as Strange Bedfellows: A Model and Experiential Exercises Leadership as a Medium: It's Emergence and Effect on Performance in Small Leaderless Groups Speed, Depth, and Breadth: Assessing Learning in Learning Organizations Teaching Strategic Planning, Problem Solving, and Decision Making with Envisionary Experiential Exercises Validating an Instrument for Student Evaluation of Teachers: Some Noteworthy By-Products Don't Teach Ethics to Business Students Emotional Reactions Toward a Simulated Layoff: Before and After the Manipulation Enhancing Communication Using a Presentation Package Implementing Marketing Policies through a Business Management Simulation Integrating Action-Based Learning into Executive Development Programs On the validity of using the Microsegmentation Principle in Media Simulationsm Participatory Systems Analysis Some Relationships between Cultural, Organizational, and Educational Experience and Perceptions of Influence The Use of Decision Support Systems with a Marketing Simulation: The Future is Now Astute Business Policy: A Simulation of the Automobile Industry The Business Policy Game CEO II: A Gaming Simulation for Assessment Computer Paced Project Management Simulation Computerized Tutor Support Systems DEAL & GEO: Progressively Integrating Gaming Simulations for Entrepreneurship and International Business An Interactive Simulation Game for Competitive Decision-Making International Operations Simulation/Mark 2000 (INTOPIA) Multimedia Simulation Cuts Training Costs for Anderson Consulting Concepts of Total Quality Management: An Active Learning Exercise Cooperative Learning: The Extended Jigsaw Managing Diversity--Values and Attitudes: An Experiential Exercise in Awareness Navigating the Shoals of International Management Development Evaluating Student Performance in the Use of Computer Simulation Entrepreneurial Simulation Program