TOPSIM

General Management II
Teilnehmerhandbuch
Scenarios
Version
Version12.0
3.0

Copyright TATA Interactive Systems GmbH D-72070 Tbingen

TOPSIM - General Management II

Scenario for
6 Periods

BASE SCENARIO

TOPSIM - General Management II

The Companys Potential for Growth

Forecast for the Next Six Periods

Period 1

Business as usual

Period 2

Development of a successor (Product

1-new) for Copy I (Product 1-old) can
begin.

Period 3

Re-launching Product 1-old is

possible.
Product 1-new can be produced and
marketed if it has been fully
developed.
Market 2 can be supplied from now on.
(FCU = Foreign Currency Unit).
The development of a color-copier
(Product 2) can begin.

Period 4

It may be possible to launch Product 2

on Market 1 provided that it has been
developed to the extent that it would
be well-received on the market.

Period 5

From this point onward, the colorcopier can be sold on Market 2.

Period 6

Business as usual

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TOPSIM - General Management II

Economic Forecast for Period 1
After last years economic slump, experts are predicting that this year will be one of
recovery. It is assumed that

In real terms the gross national product will increase by 2%,

In real terms investments will increase by 2%,
The cost of living will stagnate, and
Wages and salaries will increase by 7%.

Nevertheless, companies are still a bit reluctant to invest. However, neither the central bank
nor the government is expected to take action on this matter.
At their most recent OPEC meetings, oil-producing nations did not agree to fix the supply
and price of oil. Therefore, it is expected that prices on the crude oil-market will fall and
reduce the costs of factory materials to 46 Euro for Product 1 (the black and white
photocopier).
The following information is available about demand for black and white photocopiers:
The dual effect of falling prices on the market for black and white photocopiers and
economic recovery indicates that a small increase in demand is in order for the shortterm and a larger increase in demand is likely over the medium-term.
A buyer from the well-known commercial chain MEGRO is interested in Product 1.
MEGRO is prepared to purchase any quantity between 1 and 5,000 copiers per company
at the price of 2,500 Euro per copier.

The following figures change between Period 0 and Period 1:

Period 0
Bulk buyers

Quantity
Price (EUR)

Wages
Purchasing
Administration
Production
Research and Development (R & D)
Marketing
Factory materials for Product 1-old

Period 1

0
0

5,000
2,500

thEUR

30
28
30
44
40

32
30
32
46
42

EUR

50

46

thEUR
thEUR
thEUR
thEUR

BASE SCENARIO

TOPSIM - General Management II

Economic Forecast for Period 2
As expected, stable economic recovery occurred. In order to promote the propensity to
invest and thus accelerate growth, the central bank reduced the key interest rate on the
money market by approximately 0.5%. For this year, research establishments expect:

The gross national product to increase in real terms by 2%,

Investment to increase in real terms by 1%,
The cost of living to rise by 2%, and
Wages and salaries to increase by 0%.

Despite high levels of unemployment, it is difficult to find good employees. Therefore, the
average costs for hiring an employee increase by 14,000 Euro per employee. The maximum
number of people who can be dismissed in this period is 100.

The companys supplier of input materials/parts announces a general increase in prices of

3%. For Copy I, an increase in demand also emerges. An increase in the market for Copy
I of 8 - 12 % is expected as long as the copiers price increases at what is perceived to be
a reasonable rate.
The federal governments Ministry of Science and Arts wishes to purchase Product 1 and
has made a request for bids. The request is for 3,000 copiers. The company that bids
the lowest price will win the contract. Delivery and invoicing will follow during Period 3.
The buyer from MEGRO is also willing to purchase any amount of Product 1 up to a
maximum of 8,000 copiers per company in Period 2. The price has been fixed at 2,450
Euro per copier.
Marketing consultants are of the opinion that the market is ready for a new generation of
black and white photocopiers (with higher speed performance).
Companies can immediately start to develop a new successor for Product 1-old. Before
being introduced onto the market, the new product should be better than the old one in
terms of technological and ecological aspects. Customers are placing more and more
value on environmentally friendly photocopiers.
As for production capacity, it has been calculated that an employee will be able to
produce 55 units of the new black and white photocopier per period. (For the existing
photocopier, an employee can only produce 50 units within a period). The cost of input
materials/parts for Product 1-new will be around 10% lower than for Product 1-old.

BASE SCENARIO

TOPSIM - General Management II

Economic Forecast for Period 2
Notes on the development of Product 1-new:
The development of a new black and white photocopier can enable the company to gain an
edge over competitors.
This development of Product 1-new can commence in Period 2. Launching the new product
onto the market should only be attempted when the product index ratings for the new copier
are higher than the index ratings for the old product. Otherwise, sales are likely to be lost.
During the period in which the new product (P1 - new) is launched, the old product (P1-old)
is taken off the market.
The previous executive board had already prepared for the development of Product 1-new.
The new black and white copier is currently at the following stages of development (as
measured by the indices):

Technology index
approx. 85
Ecology index
approx. 45
Value analysis index approx. 90

Important points to consider: In the period in which you launch Product 1-new onto the
market, the stock of finished goods of Product 1-old is to be scrapped at the value of the
cost of production. This value is immediately depreciated and shown in the Profit/Loss
Statement under the item "Extraordinary Expenses". However, you can still use input
materials and parts that were available for Product 1-old for producing Product 1-new.
Sometimes the game facilitator is able to find a foreign customer for you who will purchase
Product 1-old. Talk to the game facilitator about the prices you have in mind for such a sale.
Experience has shown that prices for which you can possibly sell Product 1-old to this
foreign customer are below the costs of goods manufactured. If you are able to generate
revenue from the sale, they are shown in the Profit/Loss Statement under the item
"Extraordinary Income".
Data on production and purchasing:
Production:

Product 1-old

Required units of input materials/parts per Copy I

Required units of capacity per Copy I
Production capacity per person (Quantity of Copy
I)
Factory materials (EUR/Copy I)
Purchase of input materials/parts (EUR/Unit)
0
<
30,000
<
50,000
<
70,000 units and up

1.0
1.0
50.0

1.0
0.9
55.0

46.0

40.0

Product 1-old

30,000 units
50,000 units
70,000 units

670
567
464
412

BASE SCENARIO

Product 1-new

Product 1-new
600
500
400
350

TOPSIM - General Management II

Economic Forecast for Period 2
Note: Please take into consideration that Product 1-new can be produced at lower costs
than Product 1-old!

The following figures change between Period 1 and Period 2:

Period 1

Period 2

Request for bids

Amount

3,000

Bulk buyers

Quantity

5,000
2,500

8,000
2,450

100

102

Price (EUR)
Inflation index
Recruitment costs
Interest:

Securities
Loans: Medium-term
Loans: Long-term
Overdraft loans

thEUR

12.5

14.0

%
%
%
%

3.0
8.0
7.0
13.0

3.5
7.5
6.5
12.5

One-time special offer for production lines:

Purchase price for Type C: 22.5 mEuro

The remaining data is the same as in Period 1.

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TOPSIM - General Management II

Economic Forecast for Period 3
The upward trend in the economy exceeded all expectations. At the start of Period 3, the
economy appears to be heading for a prolonged boom. The willingness of companies to
invest can be attributed especially to the sharp increase in demand from abroad. Experts
believe that:
In real terms the gross national product will increase by 3%,
In real terms investment will increase by 2%,
The cost of living will rise by 2%, and
The wages and salaries by 0%.
Unemployment, which has remained consistently high, is causing concern among the public.
Employees rejected an increase in real wages during the last pay negotiations in favor of the
following agreement to ensure employment security and create more jobs:
Employers will not lay off any employees.
In the future, employees will only work 35 hours (instead of 39 hours) per week.
The Association of Photocopier Manufacturers has drawn attention to a new market,
Market 2. A market volume of approximately 10 % of market 1 seems to be realistic for
Period 3 (1 FCU [Foreign Currency Unit] = 1.40 Euro). The same product as provided on
Market 1 will be delivered to Market 2, however delivery to Market 1 has priority over
delivery to Market 2. The transport costs for Market 2 amount to 75 Euro per photocopier.
Some marketing experts think that re-launching the older copier (Product 1-old) might be
a good idea. Others think that the market is now waiting for the new generation, a higher
speed black and white photocopier (such as Product 1-new). What is more, an interesting
survey/study about the marketability of a color photocopier (Product 2) on Market 1
recommends beginning work immediately on the development of a new color photocopier.
Bulk buyers are prepared to purchase up to 9,000 copiers at a price of 2,475 Euro, and
the federal government is requesting offers for 14,000 photocopiers (Product 1).

The following figures change between Period 2 and Period 3:

Period 2

Period 3

Request for bids

Amount

3,000

14,000

Bulk buyers

Quantity

8,000

9,000

Price (EUR)

2,450

2,475

102

104

Units
Units

50
55

45
50

Number

100

Inflation index
Production capacity of employees
Product 1-old
Product 1-new
Maximum dismissals of production staff

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TOPSIM - General Management II

Economic Forecast for Period 3
Re-launch:
In Period 3, or later, you can re-launch Product 1-old.
Re-launch means that Product 1-old is presented in a new way with the aid of
specific marketing techniques in order to boost sales.
The product undergoes cosmetic changes (a face-lift) and in terms of advertising is
presented somewhat differently from how it was previously marketed. A re-launch requires
additional advertising expenses in order to make Product 1-old known as something
"new".
The launch of Product 1-new onto the market rules out a re-launch of Product 1-old .
However, if Product 1-old is re-launched in one period, Product 1-new can be launched later
in a following period.

Studies on color photocopiers:

There is a great deal of excitement in the photocopier industry due to a new technological
breakthrough in the development of color photocopiers. As a result, it is now possible to
produce cheaper color photocopiers.

Forecast for the color photocopier (Product 2), "Copy II":

Studies on color photocopiers indicate that in Period 4 a market volume of perhaps 20
mEuro per competitor can be expected on Market 1. The prices that customers expect to
pay are around 7,500 8,500 Euro.
For periods 5 and 6 a growth rate of over 50% per period is forecasted.
From Period 5 onwards it will be possible to sell the new color photocopier on Market 2
also with slightly smaller market volume for colour than for black and white. The
prices, which customers will expect to pay, are around 5,600 FCU per copier.
In Period 6, it is expected that just as in Market 1 - the growth rate will be over 50% in
Market 2.
In Period 3, it is possible that the color photocopiers development will be complete.
However, the product can only be launched onto the market in Period 4. When production
bottlenecks occur, the production of Product I has priority over that of Product II.
Market experts point out that if technological and ecological index ratings of 100 are not
achieved then this will lead to irreparable damage to the companys image.

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TOPSIM - General Management II

Economic Forecast for Period 3
Information on Product 2, "Copy II", the color-copier:
1. Production

Input materials/parts (Units)

1.0

Capacity required per copier (Units)

2.0

Production capacity per person (Units)

18

Factory materials (EUR/Copier)

2. Purchase of

140

<

30,000 units

2,250

Input

30,000

<

50,000 units

2,150

Materials

50,000

<

70,000 units

2,050

(EUR/Unit)

70,000 units and up

3. Purchase
of external
production

4. Transport costs
(EUR/Unit)

and

<

5,000 units

5,000

<

7,000 units

7,000

<

20,000 units

5,750
5,250
4,900

Up to a maximum of 30,000 units

(EUR/Unit)

5. Purchasing

1,975

4,550

Market 1

123

Market 2

225

Purchas-

Turnover (mEUR)

ing

Employees

25

40

50

75

100

125

150

10

13

15

17

19

admin. costs Admin.

Turnover(mEUR)

25

40

50

75

100

125

150

Product 2

Employees

40

60

70

90

105

115

120

6. R&D: State of Product 2 (End of Period 2 and start of Period 3)

Technology:
Ecology:
Value analysis:

Index 80
Index 45
Index 90

Note: Even if you purchase from an "external producer" you must still complete the
development of the color-copier within your company. The external producer will then
produce according to your specifications.

BASE SCENARIO

TOPSIM - General Management II

Economic Forecast for Period 4
To avoid overheating of the economy, the central bank switches to a restrictive monetary
policy. It raises the discount rate by 0.5%. The federal government announces that future
expenditures will be restrained. In view of this restrictive economic policy, research
establishments predict an economic turnaround by the middle of the year. It is forecasted
that:
In real terms the gross national product will decrease by 1%,
In real terms investments will decrease by 1%,
The cost of living will rise by 3%, and
Wages and salaries will increase by 3%.
The Association of Photocopier Manufacturers has both good and bad news.
On Market 1, a decrease in demand of approximately 10% for Product 1 is to be
expected.
However, on Market 2 an increase in sales volume of 20 to 30 % is to be expected.
Fr den Markt fr Farbkopiergerte (Produkt 2, Markt 1) drfte sich in den kommenden
Periode 4 wie erwartet entwickeln. Die Kunden erwarten Preise um 8.000 Euro pro Gert.
Research on color-copiers (for Product 2) affirm previous estimates for the market volume
on Market 1. The price expected by clients is around 8000 Euro per copier. However,
supplying Product 1 still takes precedence over supplying Product 2.
Bulk buyers again wish to purchase up to 7,000 photocopiers (Product 1) and pay 2,650
Euro per copier.
A foreign government requests bids for 9,000 photocopiers (Product 1).

The following figures change between Period 3 and Period 4:

Period 3
Request for bids
Bulk buyers

Amount

14,000

9,000

Quantity
Price (EUR)

9,000
2,475

7,000
2,650

104

108

Inflation index
Exchange rate EUR/FCU
Interest rates
Wages

Purchasing
Administration
Production
R&D
Marketing

Maximum dismissals in production

Period 4

1.40
%

1.50
+ 0.5

thEUR
thEUR
thEUR
thEUR
thEUR

31
29
31
46
42

32
30
32
48
44

Number

100

All other data is the same as in Period 3.

BASE SCENARIO

TOPSIM - General Management II

Economic Forecast for Period 5
During the second half of the year, particularly in the fourth quarter, the much feared
economic decline actually occurred. Although the federal government initiated programs to
support the economy, experts are of the opinion that, at best, the decline is likely to continue
until late in the year at which point it will stop. For the fifth business period they predict the
following figures:
In real terms the gross national product will decrease by 0.3%,
In real terms investments will decrease by 1.4%,
The cost of living will increase by 1.2%, and
Wages and salaries will increase by 0.0%.
Furthermore, the following news is reported:
Product 1:
Demand on Market 1 decreases further by 10-20%, but demand on the second market is
stable. Experts believe that a third generation of COPY I could increase market share by
approximately 2%. A technological breakthrough is expected to be made once cumulative
expenses for technology amount to 30 mEuro. Costs for Product 1-olds input
materials/parts rise sharply (up to 15%).
Product 2:
An increase of 50% is expected with a high degree of certainty on Market 1. The color
photocopier could be a great success. Clients of Market 2 hope that the color-copier will
be available there also. Discussion takes place about the possible market volume of 70
MFCU. Customers await a price of 5,600 FCU per photocopier.
Transport costs:
The Association of Transport Contractors has announced drastic price increases after the
federal government introduced a tax specifically targeting the trucking industry.
Bulk buyers are nowhere to be seen. The City of Whitehill however, requests inexpensive
offers for 50 black-white photocopiers.
The Federal Environment Office:
Due to a new environmental law (KWA II, Paragraph 4), environmental standards are
raised which affects how the companys production lines are classified along the index
with respect to how much damage they cause the environment. The former environmental
ratings of the machines are lowered by 15 points, and this reduction also applies to
production lines acquired in the current period. However, new instruments used by the
company prevent emissions so that these new lines are initially rated higher on the index.
Labor arbitrations:
There is a freeze on overtime until further notice. 6% is allocated to the pension reserve
from now on.
The following figures change between Period 4 and Period 5 (other data remains the same):
Request for bids
Bulk buyers

Amount
Quantity
Price (EUR)

Inflation index
Costs: Input materials/parts, Product 1-old
Transport costs Product 1, Market 1
(Per unit)
Product 1, Market 2
Product 2, Market 1
Product 2, Market 2

EUR
EUR
EUR
EUR

BASE SCENARIO

Period 4
9,000
7,000
2,650
108
25
75
123
225

Period 5
50
0
0
109
+ 10 - 15%
70
165
255
340

TOPSIM - General Management II

Economic Forecast for Period 6
A slight upward trend in demand continues, but costs increase sharply. Because of its
restricted
budget
this
year,
the
government
is
increasing
taxes
to
55 %. This time, experts are of the opinion that :

The gross national product could increase by 1.0 to 1.8%,

The cost of living is likely to rise by 4.0%, and
Wages and salaries will increase by 3.0%

Within the photocopier industry, the following is reported:

Product 1:
In Period 6, a slight upward trend is likely to occur in Market 1. Market 2 might increase
by 20-50% again.
Product 2 (Markets 1 and 2):
There is no new market research data, but an increase in both markets of up to 40-50 %
is expected.
Bulk buyers:
Up to 7,000 units can be sold at a price of 2,700 Euro per item.
Requests for bids:
The national railway wishes to copy its new timetables and requests offers for 9000
copiers (Product 1).
The Federal Environmental Office:
One of the companys purification plants for industrial waste needs to be repaired so nonrecurring production costs of 6.0 mEuro are incurred.
Note:
The ecology index ratings of the newly bought production lines reflect the changes
resulting from the new environment law.
The following figures change between Period 5 and Period 6:
Period 5
Request for bids
Bulk buyers

Amount

50

9,000

Quantity
Price (EUR)

0
0

7,000
2,700

108

111

Inflation index
Exchange rate (EUR/FCU)
Interest rates
Wages

Period 6

1.50
%

1.35
+ 1.0

Purchasing

thEUR

32

33

Administration

thEUR

30

31

Production

thEUR

32

33

R&D

thEUR

48

50

Marketing

thEUR

44

46

1,200

200

Maximum recruitment in Production

Number

Other data remains the same as in the previous period.

BASE SCENARIO