Mike Bike

Topics: Marketing, Stock market, Stock Pages: 8 (2303 words) Published: June 22, 2013
Quickstart Guide
MikesBikes-Intro (MB-I) is an Online Business Simulation that will give you the opportunity to run your own company, managing all the key functional areas of a Firm. It is used as an interactive tool to enhance the integration and learning of the basic concepts of business in a real life context: the Bicycle Manufacturing Industry. You will get hands on experience at making critical price, marketing, operations, product development, and financial decisions. Your team will take over an existing Bike Company. You start as Brand Managers, but the company President has announced his/her intention to retire in 3 years time. Your team has been selected to be the Executive Officers that will be gradually given full control over the company. Each year you will be given more control over the business. There are two variants of MB-I, the Single-Player and the Multi-Player. The main differences between the two are detailed below: Single-Player • Practice version of MB-I, no Internet connection required. • You are able to roll forward into the next decision period/year, or roll back as you wish in order to test and change your decisions. • One competitor firm, in the form of a computer robot. You will start from a weaker market position and should give you a challenging competitive experience for up to 10 years (rollovers). Multi-Player • In the Multi-Player version, you will compete against other student teams within a 4 to 7 Firm Industry competing for the highest Shareholder Value (SHV). • The Multi-Player requires an Internet connection to be open before logging in. Your decisions are updated immediately and saved on our servers. • Moving from one year (decision period) to the next is done by automatic rollover on preset dates. Before each of these scheduled times your team needs to have all decisions for the upcoming year entered into the Multi-Player version. • MikesBikes Multi-Player version can also be used in Offline Mode (Offline button at top of screen) for making practice decisions. You will be able to roll forward and roll back as you wish to give you an indication how your decisions may result. • All members can login, view their Firm, take an Offline copy, and make decisions at any time. However we recommend that you select one team member to enter your final decisions to avoid confusion.

Your Goal – Creating Shareholder Value (SHV)
As the Managers/Executive Officers of your MikesBikes Firm, the primary goal for your company is to enrich its shareholders (owners) by paying Dividends and increasing Share Price. The measurement of this total return to shareholders is known as Shareholder Value (SHV), so the success of your company is measured by the amount of Shareholder Value you create compared to your competitors. Shareholder Value is a measure of the current Share Price, including all past dividends paid, plus interest accumulated on these past dividends. It is the value to an investor over time of owning a single share in your firm. (If you never pay dividends then SHV is the same as Share Price).

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Your Share Price is driven by: • Profitability and Earnings Per Share (EPS) E.g. Firm A has 2 million shares issued and made $1 million profit, EPS = $0.50 E.g. Firm B has 20 million shares issued and made $10 million profit, EPS = $0.50 E.g. Firm C has 2 million shares issued and made $2 million profit, EPS = $1.00 Debt to Equity (D/E) Ratio A higher D/E ratio means higher risk which results in a lower share price A lower D/E ratio means lower risk which results in a higher share price



Decision Areas
All of your decisions will have a direct or indirect effect on Shareholder Value. The 5 major areas you will make decisions in are: • • • • • Product Marketing (available from the first year) The marketing mix for each of your products, including design, price and promotion. Firm Marketing (becomes available from year two) The branding budget and distribution strategy for your firm....
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