ASCERTAINING PERFORMANCE VARIABLES FOR USE IN DETERMINING STUDENTS’ GRADES IN COURSES EMPLOYING A BUSINESS SIMULATION Development In Business Simulation & Experiential Exercises, Volume 18, 1991 150 ASCERTAINING PERFORMANCE VARIABLES FOR USE IN DETERMINING STUDENTS’ GRADES IN COURSES EMPLOYING A BUSINESS SIMULATION Walter J. Wheatley, The University of West Florida Raid W. Amin, The University of West Florida E. Nick Maddox, Stetson University Chantele T. VanderLinde, The University of West Florida INTRODUCTION Presently, educators utilizing business simulations, are faced with many decisions to make in regards to simulation selection, computer support, decision support systems, spread sheet packages, and a host of other important aspects related to the simulation experience. One of these decisions that falls in the other important aspects category, is the selection of the business simulation performance variables to be used to determine the students grades. A comprehensive review of the gaming literature revealed that the number of variables employed in the past by a variety of simulation researchers is quite extensive. The question of which performance variables to enter into research models is not one of a trivial nature. No where in the literature is there sufficient evidence to suggest which performance variables are the most robust in determining simulation performance. Even the once very popular DuPont profitability formula which incorporates ROA and ROS has come under strong scrutiny in today’s dynamic business environment. Thus the purpose of this study was to better understand what variables, or combination of variables, that account for the major portion of variation in student performance in business simulations. The eight performance variables that were chosen for this study were selected because of their frequency of use in prior studies. Furthermore, since many simulations are started up in an in—process mode or are continued over more than one semester, the positive percent of change in these variables were included in the research design. Thus the study examined a total of sixteen simulation performance variables. These variables and their corresponding positive percent of change used in the study are sales, net income, ROS, ROE, ROA, dividends, market share, and stock value. RESEARCH DESIGN Sample Population Data were collected from 142 graduate students seeking a Masters of Business Administration degree from a medium, South-eastern university. Students enrolling in the graduate capstone course Business Policy and Planning took part in the research project and were organized into groups of, on average, 7 students per team thus yielding a sample of 19 teams. The Simulation The simulation employed in this research project is a modified version of the original Carnegie--Mellon game. It is one of the most complex simulations of business enterprises in a competitive industry known to exist today. It is designed to provide students with a compressed and integrative, but realistic experience in the management and operations of a medium sized, multinational, publicly held corporation. In this two semester, intensive course, the students are exposed to the problems, uncertainties, stress and opportunities, which arise in managing a company for a simulated period of two v ears. RESULTS Thus, this research project was an attempt to examine as many vital simulation performance variables as possible that would contribute to the overall, long-term health of an on— going business enterprise. Then an attempt was made to see if a simple yet valid model could be developed to assist instructors in evaluating student performance. The model obtained from this study indicates strong evidence that the most important measure of simulation performance is a ratio reflecting an adequate profit return on investment such as ROA and/or ROE. This finding, serendipitous or not, is consistent with the simulation literature. The second most important set of simulation performance variables suggested by the model is absolute amounts of sales and net income. This combination implies that it is the quantity of these amounts that are important and as they rise simultaneously the implicit result would be a % positive change in ROS that was important in the first factor. However, it is apparent that the vastness of the sales and net income must be considered together and just not ROS by itself. Finally, to accomplish the above, strong market share growth is important. Like all research, this one too has its boundaries and limitations. Different simulations have different algorithms that generate the sensitivity of simulated variables. The fact that the simulation employed in this study is an on—going simulation probably has some bearing on the results. And obviously the extensive private sector experience of the authors may have some unknown bearings on the interpretations of the findings. However, due to the large number of students involved in this study, their very mature and experienced demographics, the complexity of the Cargnie—Mellon simulation, and the extensive amount of analysis that was put into this research project, the result should be reasonably valid. Thus assuming that this study was a valid one, then it is important to note that it is the combination of these factors that allowed this model to fit the data being analyzed so well and to provide for its robust performance predicting capability. Thus it is suggested that a return on investment ratio, ROA and/or ROE, absolute amounts of sales and net income, and the amount of market share growth be utilized in combination to better evaluate students performance in business simulations. Table of Contents Volume 18, 1991 Personality Types and Total Enterprise Simulation Performance Using DIS 'n DAT as a Decision Support System for a Marketing Simulation Game Theoretical Derivation of a Market Demand Function for Business Simulators The Ethnographic Case Study: An Experiential Approach to Teaching Retail Management Electronic Bulletin Board Systems (BBS): Support Software for Computer Simulations The New Budget Game Negame: A Cross-Cultural Role-Play to Introduce Students to the Familiarization Stage of Negotiations Modeling Short-Run Cost and Production Functions Using Sheppard's Lemma in Computerized Business Simulations Increasing Simulation Realism through the Modeling of Step Costs Predicting Simulation Performance: Differences Between Groups and Individuals A Facility Location Case to Stimulate Classroom Interaction Educational Effectiveness of Business Simulation Gaming: A Comparative Study of Students and Practitioner Perspective Ethical Dilemmas in Experiential Learning: Issues and Strategies A Critical Review and Assessment of ABSEL's Award-Winning Procedures and Protocols Political Risk: A Simulation for Business Practitioners Upside Down: A Cross-Cultural Game in Experiential Learning Gorby's Dilemma: From Communism to Free Enterprise in Two Hours Strategic Market: Planning with the COMPLETE Product Portfolio Analysis Package: A Marketing Decision Support System Career Concepts and Total Enterprise Simulation Performance Experiential Learning in Human Resources: A Performance Appraisal Application Managerial Motivation and Realism Among MBA Student as Viewed through The Looking Glass, Inc. Simulation An Experiential Approach to Teaching Data Analysis Using MYSTAT: Rationale, Procedures and Results Practicing What Was Preached: A Sequential Learning Model put to the Test Student Attitudes about Policy Course Simulations An Investigation of the Relationship Between Simulation Play, Performance Level and Recency of Play on Exam Scores The Effect of Leadership and Cognitive Processing Styles upon Peer Performance Evaluation: Implication for the Utilization of Simulations in Business Pedagogy On the Transfer of Market Oriented Business Games to Socialist Cultures An Application of Financial Analysis of the Business Firm in a Simulated Competitive Environment Collective Bargaining Simulation: An Exercise based on a Familiar Theme Making Business Policy a Strategic Management Experience A Student Exercise for Intergrating the Concepts of Power and Motivation The Boundaries Extended: An Experiment Comparing Dialectical Inquiry, Devil's Advocacy and Consensus Using the Executive Game Using a Simulation Package to Develop a Simulation Exercise in Cost Accounting Success Factors in Experiential Training for Creative Problem-Solving Teams An Experiential Approach for teaching Quality management Critical Success Ratios: A Comparison of Two Business Simulations in a Multi-Year Environment Stocklogs: A Classroom Exercise for Teaching the Logistical Relationship of Location and Inventory The Organizational Leadership Program Simulating Business Decision-Making: Using Statistical Cases for Classroom Exercises Scripting for the Classroom Upgrading the Business Strategy and Policy Game Developing Student Team-Building and Leadership Skills Using Computer-Aided Experiential learning Strategies Organizing and Outward Bound Field Trip An Architecture for Extensible Simulation Games Performance in the Capstone Business Course: What is the effect of Pedagogy, Learning Styles, and Student Motivation? Operational Strategy with Participant-Modifiable Parameters An Example of a Personal Selling Case Transformed into a Role Play Scenario Instructional Software: It's Evolution and Current State of the Art in the Business Curriculum Ascertaining Performance Variables for use in Determining Student's Grades in Courses Employing a Business Simulation Designing Management Seminars Using Business Simulations The Accounting Information Systems Course: Bridging the Gap between the Classroom and the Real World The Good Cooks Guide to Training Excellence: Working with Passion A Demonstration on Multiple Data Collection Methods: Seeing Strategic Issues Through the Looking Glass Simulation Systems Analysis and Design: Why Undergraduate Education gets a Failing Grade Accommodating Organizational Culture: An Evaluation of Management Development Delivery Modes in Varying Organizational Cultures Modeling Total Quality into Business Simulations The Political Futures Game Meeting Meeting Objectives