Help Guideline

GLO-BUS
Participant’s Guide
Created by
Developing Winning Arthur A. Thompson, Jr.

Competitive Strategies The University of Alabama
Gregory J. Stappenbeck
GLO-BUS Software, Inc.
2020 Edition Mark A. Reidenbach

Ira F. Thrasher
Christopher C. Harms
GLO-BUS is published and marketed exclusively

by McGraw-Hill Education, Inc., 1333 Burr Ridge
Parkway, Burr Ridge, IL 60527
Copyright © 2020 by GLO-BUS Software, Inc. All rights reserved.
No part of this document may be reproduced or distributed in any form or by any means,
or stored in a database or retrieval system, without the prior written consent of GLO-BUS
Software, Inc., including, but not limited to, in any network or other electronic storage or
transmission, or broadcast for distance learning.
GLO-BUS: Developing Winning Competitive Strategies Participant’s Guide
GLO-BUS
This Participant’s Guide provides you with information about GLO-BUS and suggestions for successfully
managing your camera and drone company. Here is a quick reference to the contents:
How the GLO-BUS Exercise Works...................................................................................................... 3

Your Company’s Operations................................................................................................................. 3
The Worldwide Market for Action-Capture Cameras ......................................................................... 6
The Worldwide Market for UAV Drones ............................................................................................... 6
Performance/Quality (P/Q) Ratings of AC Cameras and UAV Drones ............................................. 7
The Retailers and Buyers of Action-Capture Cameras and UAV Drones ........................................ 8
The Competitive Factors that Determine AC Camera Sales and Market Share .............................. 9
The Competitive Factors that Determine UAV Drone Sales and Market Share ............................ 13
The Importance of the Competitive Factors that Determine Sales and Market Share ................. 16
Crafting a Strategy to Be Competitively Successful ........................................................................ 17
Making Decisions ................................................................................................................................. 19
Product Design Decisions ............................................................................................................ 20
AC Camera Marketing Decisions ................................................................................................. 21
UAV Drone Marketing Decisions.................................................................................................. 24
Compensation, Training, and Facilities Decisions ....................................................................... 26
Corporate Social Responsibility and Citizenship Decisions ........................................................ 29
Finance and Cash Flow Decisions............................................................................................... 29
Decision-Making Procedures ....................................................................................................... 31
What the Board of Directors Expects: Results in Five Key Areas................................................. 32
Scoring Your Company’s Performance ............................................................................................. 34
Important Advice .................................................................................................................................. 35
What You Can Expect to Learn ........................................................................................................... 36
Welcome to GLO-BUS. You are taking over the operation of a company that is in a neck-and-neck
race for global market leadership in two product categories: action-capture cameras (comparable to
those designed and marketed by global industry leader GoPro) and unmanned aerial view (UAV)
drones that incorporate a company designed and assembled action-capture camera. Your company
competes against rival companies that design, assemble, and market these same two products and
that are run by other members of your class. All makers of these two products—action-capture (AC)
cameras and UAV drones—compete head-to-head in four market regions across the world—Europe-
Africa, Asia-Pacific, Latin America, and North America, and all companies currently have the same unit
sales volumes, revenues, and global market shares in both product categories.
In the most recent year, your company had worldwide sales of 840,000 action-capture cameras and
140,000 UAV drones. Prior-year revenues were $334.1 million and net earnings were $15 million,
equal to $0.75 per share of common stock. The company is in sound financial condition, is performing
well, and its cameras and drones are well-regarded by buyers. Your company’s board of directors has
charged you with developing a winning competitive strategy—one that capitalizes on growing consumer
interest in action-capture cameras and UAV drones and improves the company’s overall performance
year-after-year.
Your first priority as a GLO-BUS participant should be to absorb the contents of this Participant’s Guide
and get a firm grip on the character of the market for action-capture cameras and UAV drones, the
operations of your company, the cause-effect relationships affecting various aspects of your company’s
operations, and the procedures for participating in the exercise.
Copyright © GLO-BUS Software, Inc. Back to Top 2

How the GLO-BUS Exercise Works

GLO-BUS is a PC-based exercise, modeled to reflect the real-world character of the globally
competitive market for AC cameras and UAV drones. The operations of your company and the
companies run by other students in your class are patterned after those of actual enterprises that
design, assemble, and market AC cameras and UAV drones. Cause-effect relationships and revenue-
cost-profit relationships are based on sound business and economic principles. GLO-BUS enables you
and your co-managers to apply what you have learned in business school and to practice making
reasoned, businesslike decisions aimed at improving your company’s overall performance. Everything
about your company and the competitive environment in which your company operates has been made
“as realistic as possible” in order to provide you with a close-to-real-life managerial experience.
Each decision period in GLO-BUS represents a year. The first set of decisions you will make is for
Year 6. You will make decisions each period relating to the design and performance of your company’s
two products (21 decisions), assembly operations and workforce compensation (up to 8 decisions for
each product), pricing and marketing (7 decisions for cameras and 6 for drones), corporate social
responsibility and citizenship (up to 6 decisions), and the financing of company operations (up to 8
decisions). In addition, there are 9 entries for cameras and 8 entries for drones involving assumptions
about the competitive actions of rivals; these entries help you to make useful forecasts of your
company’s unit sales (so you have a good idea of how many cameras and drones will need to be
assembled each year to fill customer orders). Plus, there is accounting and cost data to examine,
import duties and exchange rate fluctuations to consider, and shareholder expectations to satisfy.
Video Tutorials for each decision page will help you get started. And there are Help sections for
each page that provide valuable information about each decision entry, important cause-effect
relationships, and decision-making tips.
Complete results of each decision period become available online about 15 minutes after the deadline
for each decision round. Detailed information and feedback provided in the Camera & Drone Journal,
the Competitive Intelligence Report, and the Company Operating Reports provide essential information
about each company’s performance, assorted industry outcomes, updated demand forecasts, your
company’s competitive standing vis-à-vis rivals, and other statistics that enable you to determine what
actions to take to improve your company’s performance in upcoming decision rounds.
The decision round schedule developed by your instructor indicates the number of decision periods that
you will be running the company. You should use the practice round(s) to become familiar with the
software, digest all the information provided on the decision pages and in the reports, and get a glimpse
of what to expect before your management team’s decisions start to count.
The Corporate Lobby page functions as your “gateway” for all GLO-BUS activities—click the buttons at
the top to see everything that is available. Plus, the Corporate Lobby page reports the latest interest
rates and exchange rate impacts. Take a couple of minutes to familiarize yourself with the features and
information on your Corporate Lobby page, all of which will come into play during the exercise. The
Recommended Decision Procedures link (Participant’s Materials button) is especially worth a few
minutes of your attention.
Your Company’s Operations

Your company began operations five years ago and maintains its headquarters in Taiwan. It
assembles wearable or mountable video cameras smaller than a teacup and camera-equipped drones
at recently-constructed facilities in Taiwan. The company’s action-capture camera models deliver
stunning video quality and have powerful photo capture capabilities. Once the cameras are assembled
and tested, they are shipped directly to multi-store chains and online retailers that sell electronics
products and to a wide variety of local retail shops selling cameras or sporting goods equipment or
outdoor adventure trips in Europe-Africa, Asia-Pacific, Latin America, and North America. For example,
shops selling or renting snow skis, snowboards, snowmobiles, all-terrain vehicles, go kart racers, water
skis, surf boards, bicycles, hunting and fishing equipment, sky-diving gear, and scuba diving gear often
sell or rent miniature, wearable action-capture cameras to customers wanting to video their

experiences; likewise, the providers of white-water rafting trips, sky-diving and parasailing flights, deep
sea fishing trips, helicopter rides, nature trips, and other outdoor action experiences frequently sell or
rent action-capture cameras to their customers.
The unmanned aerial view (UAV) drones assembled at the Taiwan plant are sold directly to buyers at
the company’s website and to other online retailers of commercial drones. These drones are much
more sophisticated and multi-featured than inexpensive toy drones sold for recreational use. Indeed,
the company you will manage and the drone-makers you will be competing against produce copter
drones as wide as four-feet that can be used for a variety of commercial and business purposes and
retail in the $850 to $2,000+ range. UAV drones are commonly used by professional photography
enterprises movie studios and to capture often stunning shots (panoramic scenery, hovering over an
open shark’s mouth, explosive action scenes) from heights and angles not feasible with handheld or
tripod cameras. Network and local TV stations use UAV drones to take videos of fires, storm damage,
a live volcano, sporting events (golf and football), and other newsworthy events where film footage
taken from particular angles or heights or distances is more revealing. Insurance companies use UAV
drones to document damage to homes and buildings inflicted by hurricanes, tornadoes, hail, and floods,
thereby expediting the process of paying claims; drones are particularly useful in helping insurers
inspect areas that are hard to access (such as roofs and condemned buildings). Fire departments use
camera drones to monitor fires in large buildings and direct where fire hoses and other firefighting
efforts need to be aimed. Large commercial farms use camera drones to monitor crops and crop
harvesting; ranchers use drones to track the location and well-being of farm animals. Construction
companies use daily drone flights to gather data and 3-D images showing progress at project sites and
identify areas where the project might be falling behind schedule. Companies use periodic drone flights
to help protect against theft and vandalism at plant sites and remote facilities. Indeed, unmanned
drones equipped with professional quality, action-capture cameras are being used by growing types of
private and public enterprises for a growing variety of purposes, resulting in rapidly-growing market
demand for UAV drones across the world.
The two product categories your company competes in consists of as few as 4 or as many as 12
companies, as determined by your instructor. All companies begin the GLO-BUS exercise in the
same competitive position—equal sales volumes in each of the world’s four geographic regions,
equal global market shares in both cameras and drones, and equal revenues, profits, costs, product
quality and performance, brand recognition, and so on. All competing companies are thus presently on
an equal footing in all respects.
In upcoming years, the managers of all companies will undertake strategic actions to boost the
performance of their respective companies—these actions will involve altering prices, product
performance and quality, advertising, and other competitively-relevant factors that impact buyer choices
of which company’s brand to purchase. The differing actions of competing companies will almost
certainly result in substantially different cross-company unit sales volumes and market shares in all
regions of the world because the actions of some companies will prove more effective in attracting
buyers than the actions of other companies. Companies that succeed in outcompeting rivals in the
sales of either cameras or drones or both will gain sales and market share at the expense of rivals.
Some companies will suffer losses of sales and market share in cameras and/or drones in one or more
geographic regions—despite striving (or hoping) to do the opposite—because they are outcompeted by
one or more rivals offering what buyers consider to be more attractive products.
Bigger sales and market shares, of course, do not necessarily equate to better profitability and overall
performance than below-average sales volumes and market shares—firms that sell top-quality products
at premium prices often have smaller unit sales volumes and smaller revenues, yet their profits and
returns on investment may well be greater than those of firms selling less expensive, lower-performing
products to the mass market. Moreover, each competing company’s production and other operating
costs for cameras and drones are certain to change over time, as managers of the competing
companies pursue different actions to operate efficiently and build a competitive advantage linked to
lower costs or better product quality or some other factor that yields competitive advantage. It remains
to be seen which companies will end up being the most profitable and achieving the best overall
performance.

The company has regional facilities in Milan, Italy; Singapore; Sao Paulo, Brazil; and Dallas, Texas to
conduct the company’s marketing efforts in the four geographic regions of the world market, to support
the merchandising efforts of regional retailers who stock the company’s action cameras and UAV
drones, and to process camera/drone warranty claims (including making needed repairs).
Assembly and Shipping. The company assembles cameras and drones usually within two weeks of
receiving an order and strives to ship an order no later than 2-3 days after assembly. No camera
models or drone models are assembled in advance, warehoused in company facilities, and then used
to fill incoming orders.
The company has a staff of people engaged in product R&D; this group has the capability to develop
new and improved models of cameras and drones as directed by top management. Once company co-
managers settle on the desired specifications and performance features for the company’s line-up of
camera and drone models, the needed parts and components are obtained from suppliers having the
capabilities to make deliveries to the company’s Taiwan assembly site on a just-in-time basis, thus
eliminating the need to maintain inventories of parts or components.
The company has two buildings for assembling products at its Taiwan site—one for cameras and one
for drones (the drone assembly process also includes assembly of an action-camera model having
features and specifications suitable for use in camera-equipped drones). Both cameras and drones are
assembled by four-person product assembly teams (PATs), with each PAT performing the needed
tasks at its own assigned workstation. Shipping department personnel package orders for shipment
and stack them on the loading dock for pickup by independent freight carriers. The cameras are
delivered to buyers anywhere from 3 days to 3 weeks later, depending on a retailer’s location and the
means of transportation—shipments to distant retailers are shipped via a combination of air and ground
freight and those to customers in select parts of Asia are shipped by ground freight. The cost of boxing
cameras, packaging them for shipment, and freight averages $5 per camera. Shipping costs for
drones, most of which are air freighted to customers and delivered within 5 to 10 business days after
receipt of the order, average $60 per unit.
Many countries have opted to impose import duties on cameras and drones sourced from Taiwan.
Going into Year 6, import duties equal 4% of the average price the company charges customers in
Europe-Africa, and 6% of the average price being charged to customers in both Latin America and the
Asia-Pacific; there are no import duties on either cameras or drones shipped to customers in North
America. Import duties in all four regions of the world market are subject to change in upcoming years.
Competitive Efforts. To capitalize on ongoing technological advances and the pipeline of product
enhancement capabilities flowing from the company’s expenditures for product R&D, each year the
company typically changes the specs for important components, adds/modifies performance features,
upgrades the internal software, makes assorted other design-related changes, and introduces new
and/or improved models. In addition, strong competition from rival companies pushes management to
make price and marketing adjustments to improve buyer appeal for the company’s camera/drone
models and to enhance the company’s ability to compete more effectively.
Stock Listings. The company’s stock is publicly traded on the NASDAQ exchange in the United
States. The closing price in Year 5 was $12 per share. The company’s financial statements are
prepared in accord with generally accepted accounting principles and are reported in U.S. dollars. The
company’s financial accounting is in accord with the rules and regulations of all authorities where its
stock is traded.
The Worldwide Market for Action-Capture Cameras

Worldwide unit sales of wearable and/or mountable, miniature action-capture cameras are reliably
projected to grow 6-8% annually for the next five years (Years 6-10) and then to grow at a slower 4-6%
annual rate during the following five years (Years 11-15). However, the projected growth rates differ by
geographic region, as shown below.

Projected Growth of Unit Sales of Action-Capture Cameras
Worldwide North America Europe-Africa Latin America Asia-Pacific

Years 6-10 6.0%-8.0% 4.5%-6.5% 4.5%-6.5% 8.5%-10.5% 8.5%-10.5%
Years 11-15 4.0%-6.0% 2.5%-4.5% 2.5%-4.5% 6.0%-8.0% 6.0%-8.0%
Note: Actual growth within the forecast 2% range varies from region to region. In one region the
actual growth rate may be near the high end of the forecasted range, in another region in the
same year it may be near the low end, and in still another region it may be near the midpoint of
the range. Moreover, the forecast growth rates are all based on the assumption that in future
years the competitive efforts of rival companies will, on the whole, not differ significantly from the
levels prevailing at the end of Year 5. Future growth rates may turn out to be higher than forecast
in the event more buyers are attracted to purchase action-capture cameras because of a
dramatic decline in camera prices and/or significantly higher camera quality/performance and/or
sharp and sustained increases in the marketing and competitive efforts of rival companies to grow
camera sales volumes. Conversely, factors that can drive away potential buyers and cause the
growth in buyer demand to fall below the forecast amounts include sharply higher camera prices
and/or a strong downward trend in camera quality/performance and/or complacent efforts on the
part of rival companies to please buyers and capture the available growth opportunities. In other
words, the forecast growth rates, while reliable, are not guaranteed in the event the competitive
efforts in the industry become significantly stronger or weaker than the levels prevailing in Year 5.
Because the growth rate in four geographic regions can be anywhere within the forecast 2
percent range, company managers have to deal with uncertainty about where within the projected
growth range the actual growth rate in camera demand for a particular geographic region in a
particular year will turn out to be. Bear in mind here that the managers of real-world companies
do not operate with certainty about what their industry’s growth rate in unit volume for the
upcoming year will turn out to be, correct to the first decimal place—a forecast somewhere within
a 2-percentage-point range is really a pretty good forecast!
Competition. Competition in the worldwide market for action-capture cameras revolves around price,
product quality and performance, the number of models offered, the number and types of retailers that
stock and merchandise each brand of camera, the amount of merchandising support companies
provide to these retailers, advertising, sales promotion activities (the duration of sales promotion
campaigns and the sizes of the price discounts offered to retailers during these promotional
campaigns), the length of warranties, and brand reputation.
The Worldwide Market for Unmanned Aerial View Drones

Worldwide unit sales of unmanned aerial view (UAV) drones are reliably projected to grow 15.5%-
17.5% annually during Years 6-7, 12.0-14.0% annually during Years 8-9, 9.0%-11.0% annually in Years
10-11, 6.0% -8.0% annually in Years 12-13, and 3.75%-5.75% annually during Years 14 and 15.
However, the projected growth rates differ considerably by geographic region, as shown below.
Projected Growth of Unit Sales of Unmanned Aerial View Drones
Period Worldwide North America Europe-Africa Asia Pacific Latin America
Years 6-7 15.5%-17.5% 15.0%-17.0% 15.0%-17.0% 17.0%-19.0% 17.0%-19.0%

Years 8-9 12.0%-14.0% 11.0%-13.0% 11.0%-13.0% 14.0%-16.0% 14.0%-16.0%
Years 10-11 9.0%-11.0% 8.0%-10.0% 8.0%-10.0% 11.0%-13.0% 11.0%-13.0%
Years 12-13 6.0%-8.0% 5.0%-7.0% 5.0%-7.0% 8.0%-10.0% 8.0%-10.0%
Years 14-15 3.75%-5.75% 3.0%-5.0% 3.0%-5.0% 5.0%-7.0% 5.0%-7.0%

Note: As noted above in regard to the growth rates of action-capture cameras, actual growth of
for UAV drone sales within the forecast ranges varies from region to region. The forecast growth
rates, while reliable, are not guaranteed in the event the competitive efforts in the industry
become significantly stronger or weaker than the levels prevailing in Year 5.
Again, while company managers have to deal with uncertainty about where within the projected 2%
growth range the actual growth rate for drones for a particular geographic region in a particular year will
turn out to be, a forecast somewhere within a 2-percentage-point range is really a pretty good forecast!
Competition. Competition in the worldwide market for UAV drones differs somewhat from that for
action-capture cameras and is centered on price, product quality and performance, the number of
models offered, the relative appeal of rival company websites as concerns providing complete
information about different models and the ease of placing orders, the comparative amounts
competitors elect to spend on search engine advertising to help draw shopper traffic to their website
(where a big percentage of drone sales are transacted), the length of warranties, the relative success
competitors have in attracting third-party online retailers to display and merchandise their brand of UAV
drones (and thereby broaden their access to potential purchasers of drones), and brand reputation.
Performance/Quality (P/Q) Ratings of AC Cameras and UAV Drones

P/Q Ratings for Action-Capture Cameras. The World Digital Video Federation (WDVF), a well-
respected affiliation of camera industry trade groups and camera experts, tests the performance and
quality of the action-capture camera models of all competitors and assigns a performance-quality or
P/Q rating ranging from a low of 1.0 stars to a high of 10.0 stars to each company’s line of action-
capture cameras—each company’s star rating is reported to the nearest tenth of a star (i.e. 2.3, 4.7,
6.5). The WDCF’s P/Q ratings are based on an array of factors: (1) image sensor size, (2) size of the
LCD display screen, (3) image quality of the pictures/video, (4) number of modes for videos and still
photos, (4) camera housing, (5) editing/sharing capabilities, (7) included accessories (such as capacity
of flash memory card, rechargeable batteries, a plug-in battery-charger, and carrying case) (8) number
of extra performance features, (9) the number of camera models a company offers, (10) a company’s
cumulative spending on product R&D, and (11) the amount a company spends annually on training for
each of its camera-related PATs and improving its camera-related assembly methods (since such
spending can affect defects encountered and the need for repairs). Ratings are updated annually.
Currently, the action-capture camera lines of all competitors have a 4.0-star P/Q rating. Competition
among rivals is, however, likely to result in different P/Q ratings for the camera offerings of different
companies in forthcoming years. This is because all buyers both within a geographic region and across
the four geographic regions do not prefer to buy precisely the same quality camera with precisely the
same performance features and pay precisely the same price. Diverse buyer preferences thus make it
highly that some camera companies will opt to cater to buyers shopping for low-priced action cameras
having basic features (and perhaps a P/Q rating of 1-3 stars), while other camera makers may decide
to design cameras to satisfy buyer preferences for a premium-priced, full-featured action camera (with
perhaps a 7-star to 10-star rating), and still other camera-makers may choose to target “middle market”
buyers content with a medium-priced camera having a P/Q rating in the 4-6 star range.
P/Q Ratings for UAV Drones. Three years ago, the Global Alliance for Safe and Responsible Use of
Commercial Drones was formed to help lobby government authorities responsible for regulating
airspace to establish drone-use regulations that would enable commercial enterprises to benefit from
the rapidly-advancing capabilities of aerial drones to provide valuable pictures and data. Membership
quickly grew to include drone manufacturers, the suppliers of materials and components used in the
production of drones, a wide variety of commercial enterprises and trade associations with interest in
using drones for various purposes, and organizations engaged in drone technology research. Two
years ago, members of the Global Alliance voted overwhelmingly to develop a methodology for rating
the performance and quality of the hundreds of brands and varieties of drones available for sale
worldwide, but most especially UAV drones suitable for a variety of commercial uses. Eighteen months
ago, the first performance-quality or P/Q ratings of UAV drones were released for posting on the Global
Alliance’s website, along with the methodology for determining the ratings. Ratings are a function of (1)

the caliber of the built-in action-capture camera, (2) the caliber of the built-in GPS/Wi-Fi/Bluetooth
components, (3) battery life (maximum flight time per charge), (4) number of rotors, (5) rotor
performance and flight controller features/capabilities, (6) body frame construction, (7) the caliber of the
obstacle sensors, (8) quality of the camera stabilization device, (9) number of extra performance
features, (10) the number of drone models a company offers, (11) a company’s cumulative spending on
product R&D, and (12) the amount a company spends annually on training its each of its drone-related
PATs and improving its drone-related assembly methods (since such spending can affect defects
encountered and the needs for repairs). Each brand of UAV drones was assigned a P/Q rating of 1.0
to 10.0 stars, with each company’s star rating being reported to the nearest tenth of a star. Ratings are
updated annually.
As of Year 5, the UAV drone offerings of all competitors in your industry group had a 4.0-star P/Q
rating. However, given the expected rapid advances in drone technology and the many new features
and improvements that are expected to be incorporated in UAV drones in upcoming years, it is likely
that the P/Q ratings of competing brands of UAV drones will quickly diverge. Drone buyers across the
world are not looking for drones with the very same features, performance, and quality because the
purposes for which they intend to use UAV drones vary greatly, thus creating a market for drones with
varying combinations of features—which, in turn, results in drones with varying costs being sold at
varying prices. Consequently, it is likely that some drone makers will opt to cater to buyers shopping
for low-priced drones having basic features (and perhaps a P/Q rating of 1-3 stars), others will elect to
target buyers willing to pay well above-average prices for a more full-featured drone (with perhaps a 7-
star to 10-star rating), and still other drone-makers opting to compete for the patronage of “middle
market” buyers whose performance-quality requirements equate to P/Q ratings in the 4-6 star range.
The Retailers and Buyers of Action-Capture Cameras and UAV Drones

Action-Capture Camera Retailers. Worldwide, there are some 50,000 retailers of wearable (or
mountable/attachable), teacup-size video cameras scattered across the world—each of the four major
geographic regions of the world market has 12,500 retailers of action-capture cameras, some of which
are multi-store retail chains (100 per region), online electronics retailers (400 per region), and local
retail enterprises that sell or rent these cameras (12,000 per region). Retailers with store locations that
also sell cameras on their websites are not included in the online category. Multi-store chains account
for the biggest percentage of action-capture camera sales, with online retailers second and small local
retailers third. Retail markups over the wholesale prices run 50% to 100%; thus, the models of a
company with 4-star-rated action-capture cameras wholesaling for an average of $200 could retail for
an average of $300-$400. Such markups allow retailers to put selected models or brands of cameras
on sale from time-to-time at 10% to 20% off regular price and still make a decent profit margin.
Retailers typically carry anywhere from 2-4 brands of action-capture cameras and stock only certain
models of the brands they do carry, but in all four geographic markets there are around 20 “full-line”
action camera retailers that stock most all brands and models. Most all chain-store retailers carry at
least 2 and often 3-4 of the best-selling brands. The makers of weak-selling brands of action cameras
have difficulty convincing major retail chains to devote much display space and merchandising efforts to
their models. Online retailers are, however, more amenable to merchandising low-volume brands,
especially those with relatively high P/Q ratings (favored by buyers concerned about camera
performance and quality) and/or minimal performance features but ultralow prices (which are favored
by bargain-hunting shoppers).
Online Retailers of UAV Drones. There are 100 online retailers of UAV drones in each of the four
geographic regions. Because your company sells its UAV drone models at the company’s own website
in direct competition with other online retailers of UAV drones, these online retailers are inclined to
stock and display your company’s brand of drones only if they can purchase your drone models at an
attractive percentage discount to the price being charged on your website. In other words, if you offer
to sell online retailers your models of UAV drones at say 20% off the price being charged on your
website, then a greater number of online retailers will be inclined to stock and merchandise your drone
models than if you only offer them a 10% price discount. Moreover, the bigger the percentage discount
you offer to these online retailers, the bigger the sales they will generate—discounts of 15% to 20%

may result in 3rd-party online retailers accounting for 25% to 35% of your company’s total sales volume.
Generally, if your company’s price discounts are under 10%, very few online retailers will purchase your
drone models for resale on their websites because their profit opportunities are minimal (even if they
charge prices higher than your company’s website prices in hopes of attracting buyers who have never
visited your company’s website).
The Buyers of Action-Capture Cameras. People interested in purchasing a wearable video camera
in order to record their action adventures for personal viewing and also to share their experiences with
others (perhaps on Facebook or other sites) are generally quite aware that there can be big differences
in the prices and performance of the various brands of action-capture cameras. Many do extensive
internet research to educate themselves about the features, performance, and prices of different action-
capture camera brands and models. The World Video Camera Federation’s much publicized P/Q
ratings are trusted by people who are shopping for action cameras or already own one, and the
Federation’s frequently-visited website has detailed information concerning the results of its
performance tests and the basis for its P/Q ratings of each action-capture camera brand. Moreover,
both the makers of these cameras and online electronics retailers have extensive information on their
websites about currently available models. There are also assorted websites and publications that
publish/post information about and reviews of new and improved camera models. Consequently, it is
easy for most potential buyers of action cameras to do considerable comparison shopping before
deciding which camera brand to buy—they tend to be quite aware of the prices and P/Q ratings of
different brands, the various retail locations and websites where action cameras can be purchased, the
warranties of competing brands, and the fact that retailers have periodic weekly sales promotions that
feature sizable discounts off the regular retail price. Potential buyers also pay at least some attention to
the media ads they see for various action cameras brands and their purchasing decisions are to some
degree influenced by these ads. Many price-sensitive consumers shopping for their first action-capture
camera are inclined to wait to make a purchase until the retailers of these cameras in their geographic
area have weekly sales promotions featuring discounted prices.
The Buyers of UAV Drones. Individuals and enterprises interested in purchasing a UAV drone for
commercial use are generally quite aware that there can be big differences in the prices and
performance of the various brands of UAV drones. many do extensive Internet research to educate
themselves about the features, performance, and prices of different brands and models of UAV drones.
The readily available P/Q ratings for various brands of drones compiled by the Global Alliance for Safe
and Responsible Use of Commercial Drones are considered trustworthy, and the Global Alliance’s
frequently-visited website has detailed information concerning the results of its performance tests and
the basis for its P/Q ratings of each drone brand. Moreover, both drone-makers and third-party online
electronics retailers of drones have extensive information on their websites about the currently available
models they offer for sale. Because of mushrooming interest in the features and capabilities of UAV
drones, a growing number of websites and media publications have begun posting/publishing articles
about the features and capabilities of newly-available drones and newsworthy developments in the
drone industry. Consequently, it is common for likely drone purchasers to do considerable comparison
shopping before deciding which drone brand to buy—they are familiar with the P/Q ratings of rival
brands, the retail prices and information posted at company websites and the websites of other online
retailers of drones, and the warranties of rival brands. Potential buyers also pay at least some attention
to the search engine advertising they encounter when browsing for information about UAV drones, and
their decisions to ultimately purchase this or that brand are affected by these ads.
The Competitive Factors that Determine AC Camera Sales and Market Share
Competition among rival makers of action-capture cameras centers around 11 factors:
1. Average Wholesale Price to Retailers— The most important price-related consideration affecting
a company’s camera sales/market share is the extent to which its average wholesale price for the
camera models it sells to retailers in each region is above/below the region’s industry (all-company)
average. A company whose average wholesale price is above the industry (or “all-company”)
average in a region is burdened by a price-based competitive disadvantage. The bigger the
percentage by which a company’s average wholesale price is above the regional average, the

bigger is the company’s price-based competitive disadvantage and the bigger is the resulting
negative impact on its cameras sales and market share in the region. Conversely, the bigger the
percentage by which a company’s average wholesale price is below the regional average, the
bigger is the company’s price-based competitive advantage and thus the bigger is the positive
impact on its cameras sold and market share in the region. In other words, the further a company's
average wholesale price is above the regional average, the bigger the number of action-camera
shoppers who will opt to buy lower-priced rival brands whereas the further a company's average
wholesale price is below the regional-average, the bigger the fraction of action-camera shoppers in
the region a company can attract to buy its lower-priced brand.
However, the size of any company’s pricing disadvantage/advantage versus rivals (and the
resulting loss/gain in camera sales and market share) can be decreased/increased by its
competitive standing versus rivals on the other 10 competitive factors. Any company whose
wholesale price exceeds the regional average can partially offset or even overcome its price
disadvantage when it has competitive edges over rivals on some/many other relevant buyer
considerations—such as an above-average P/Q rating, more models for buyers to select from, or
longer-than-average warranties. But the further a company's average wholesale price to retailers is
above the regional average prices, the harder it is for a company to use non-price enticements to
overcome rising buyer resistance to the company’s higher priced camera models.
Similarly, any company whose price to retailers is below the average prices of its regional rivals can
widen its price-based advantage over rivals when it also has a competitive edge over these rivals
on some or many of the other 10 competitive factors that influence camera sales and market share
in a region. In addition, the further a company’s price is below the average being charged by
regional rivals, the easier it becomes to offset any competitive disadvantages relating to a below-
average P/Q rating, shorter-than-average warranties, a below-average number of models, and
other competitively relevant factors.
One other price-related factor is also relevant. The buyers of action cameras in Latin America
and the Asia-Pacific region are more sensitive to cross-brand price differences than are
camera buyers in North America and Europe-Africa. Thus when camera-makers raise their
wholesale prices to retailers in a region this quickly translates into higher retail prices in the region
because retailers mark up the wholesale price they pay camera-makers by 50% to 100%.
Consequently, when the product offerings of competing companies entail only minor differences in
P/Q ratings (and other factors that shape buyers’ brand preferences), then cross-brand differences
in wholesale price will have a bigger impact on unit sales and market shares in Latin America and
the Asia-Pacific than in North America and Europe-Africa.
2. P/Q Ratings—The vast majority of action-capture camera shoppers consider the widely-available
and much-publicized annual P/Q ratings compiled by the World Digital Video Federation to be a
trusted measure of the performance and quality of competing brands of AC cameras. Market
research indicates buyers worldwide consider the P/Q ratings of competing brands of AC cameras
to be one of the two most important factors (along with price) in shaping their choice of which
action-camera brand to purchase. A company whose P/Q rating is above the regional average P/Q
ratings of rivals in a region enjoys an important competitive advantage on the performance-quality
aspect of its camera models. Likewise, a below average P/Q rating constitutes an important
performance-quality-based competitive disadvantage. The more a company's P/Q rating is above
the industry average, the more that camera shoppers in the region are attracted to purchase the
company’s camera brand—unless the company’s higher P/Q rating is undermined by (1)
unfavorable comparisons against rivals on such other buyer-relevant features as comparatively few
models for buyers to choose among, a significantly weaker brand reputation, or a much shorter-
than-average warranty or (2) charging a price premium for the added performance-quality that
buyers consider “too high” or “not worth the extra cost.”
Market research further reveals that the buyers of action cameras in North America and
Europe-Africa are more sensitive to cross-brand differences in P/Q ratings than are camera
buyers in the Asia-Pacific and Latin America regions. Thus, when two brands of action
cameras have slightly different prices and P/Q ratings (and all other buyer considerations are, on
balance, virtually identical between the two brands), then a bigger percentage of buyers in North

America and Europe-Africa will purchase the brand with the higher P/Q rating while a bigger
percentage of buyers in Latin America and the Asia-Pacific will purchase the cheaper-priced
brand—resulting in bigger sales for the camera brand with the higher P/Q rating in the North
America and Europe-Africa regions and bigger sales for the lower-priced camera brand in the Latin
America and Asia-Pacific regions.
However, beware of assuming the differing cross-region sensitivities to price and P/Q ratings mean
buyers in North America and Europe-Africa care little about price or that buyers in Latin America
and the Asia-Pacific care little about P/Q ratings. Camera prices and P/Q ratings matter greatly
in all geographic regions.
3. Number of Models—Companies offering buyers a bigger selection of models than rivals enhance
their company’s competitiveness by giving camera buyers more opportunity to find a model well
suited to their preferences. Companies offering comparatively fewer models than rivals risk losing
sales and market share to competitors offering greater selection, unless they offset their narrower
selection with other appealing competitive attributes (such as a lower price, higher P/Q rating,
longer warranties, and so on).
4. Advertising Budget—Media advertising is used to inform the public of the prices and features of
newly introduced models, to tout the merits of buying the company’s brand, and to inform shoppers
of special sales promotion campaigns and discounted sales prices. Even though retail dealers act
as an important information source for customers and actively push the brands they carry,
advertising on the part of camera-makers (often done in conjunction with the advertising efforts of
retailers stocking its brand) strengthens brand awareness, helps pull buyers into retail stores
carrying the brand, and informs the public about the features and prices of a company’s latest
action camera models. The competitive impact of advertising depends on the size of your
company’s current-year advertising budget in each region. Companies whose advertising is above
the all-company regional-average gain an advertising-based competitive edge that positively
impacts their company’s regional sales volume and market share; the bigger the percentage
competitive advantage, the bigger the positive impact. Companies whose spending is below the
regional average suffer from an advertising-based competitive disadvantage that negatively impacts
their regional sales and market share; again, the bigger the percentage competitive disadvantage,
the bigger the negative impact.
5. Sales Promotions (number of weeks)—Rival companies can run from 0 to 20 week-long sales
promotion campaigns annually to tout their action-capture cameras—all such campaigns involves
offering retailers a discount of some size off the regular price. Periodic sales promotion campaigns
are of interest to retailers stocking the company’s models because they call attention to the brand,
spur consumer interest and store traffic, and help increase unit sales. Market research indicates
that the competitive impact of sales promotions depends on whether the number of sales promotion
events a company has annually is above/below the industry average in each region. Companies
having above-average number of sales campaigns gain a promotion-based competitive edge that
positively impacts their regional sales volume and market share. Conversely, a below-average
number of weekly promotions results in a competitive disadvantage that negatively impacts a
company’s regional sales volume and market share. The bigger the percentage competitive
advantage/disadvantage, the bigger the positive/negative impact.
6. Sales Promotions (% discount)—Retailers that are offered, say, a 15% discount off regular
wholesale price on units sold during a sales promotion event can be counted on to pass the savings
along to consumers in the form of corresponding sale prices of 15% off the regular retail price. In
the camera business, just as in most other businesses, bigger sales price discounts attract more
buyers than smaller price discounts. Thus, promotional campaigns involving sale prices of 15% to
20% off the regular price have substantially greater sales-enhancing impact than promotions
offering only 5 or 10% discounts, even if a company holds more sales with such small discounts. In
other words, the size of the discounts off regular price a company offers during sales promotion
events is a very crucial factor in determining the sales-enhancing impact of its promotional
campaigns, more so than the number of promotional events. Companies offering discounts above
the regional average gain a competitive advantage that positively impacts the company’s regional
sales volume and market share, with the size of the positive impact depending on the size of the

competitive advantage. Companies offering discounts below the regional average have a
competitive disadvantage that negatively impacts the company’s regional sales volume and market
share, with the size of the negative impact depending on the size of the competitive disadvantage.
7. Retailer Support Budget—Support for regional retailers involves providing retailers with in-store
signs, up-to-date product-information brochures, and engaging video-enabled point-of-purchase
(POP) displays that showcase uses of the company’s camera models and accessories. A portion of
the retailer support budget is also used to support the trips of company marketing personnel to visit
the stores of high-volume retailers and work with store managers/clerks in expanding/improving the
footprint of the company’s POP displays. Companies whose retailer support expenditures are
above the regional average gain a competitive edge in attracting retailers to stock their brand
compared to companies providing below-average amounts of retailer support—the bigger a
company’s retailer network in a region, the stronger is its brand exposure to camera shoppers and
the stronger the resulting positive impact on its regional sales and market share.
8. Website Product Displays / Info—The level of expenditures for website displays and information
is a proxy for the time, effort, and creativity that a company puts into (1) posting periodically
refreshed and visually appealing displays of its various camera models, along with ample and
useful information about each model’s features, capabilities, and specifications, (2) providing site
visitors with the capability to create side-by-side model comparisons, (3) enabling site visitors to
post their reviews of particular models, and (4) providing good after-the-sale product support to
customers. Many potential buyers make a point of visiting the company’s website to gather
information about the company’s models and research how the features, capabilities, and
specifications of its models compare against those of rival brands. The product displays,
informational content, and customer reviews at each company’s website, along with the website’s
visual appeal and functionality, is thus an important element in prompting buyers to visit a nearby
retailer of the company’s brand, personally inspect the company’s various models, and perhaps
make a purchase. Visits to a company’s website also enable customers to obtain needed after-the-
sale technical support, download apps and software updates for previously-purchased camera
models, browse product manuals, discover how to file a warranty claim, and use the chat function to
pose questions to online personnel.
9. Retail Outlets—A company’s sales and market share in a geographic region are strongly
influenced by the number and type of retailers (multi-store chains, online electronics retailers, and
local retail shops) it can convince to stock its brand and display its models. In general, having more
of each type of retailer selling the company’s brand is better than having fewer retailers because of
the added display exposure and the added convenience to camera buyers of being able to buy a
given brand at more locations. Companies with an above-average number of retailers in a region
enjoy a competitive edge that positively impacts their regional sales volume and market share.
Companies with a below-average number of retailers in a region suffer from a competitive
disadvantage that negatively impacts their regional sales volume and market share. In the last two
months of each year, camera retailers decide whether to stick with the camera brands they are
currently stocking or whether to make some adjustments based on five considerations: (1) which
camera brands in their region are growing in popularity and declining in popularity among buyers
(as measured by changes in each company’s market share in the region), (2) each camera maker’s
P/Q ratings for its line of action cameras as compared to the regional average, (3) the number of
week-long sales promotion campaigns each company undertook as compared to the regional
average, (4) the size of the promotional discount each company offered during these weekly sales
promotions relative to the regional average, and (5) each company’s expenditures to support the
merchandising efforts of camera retailers in the region relative to the regional average.
10. Warranty Period—Camera buyers, of course, find longer warranties more appealing than shorter
warranties. A company whose warranty period exceeds the regional average gains a competitive
edge that positively impacts its regional sales/market share, whereas a company whose warranty
period is below the regional average suffer a competitive disadvantage that negatively impacts its
regional sales volume and market share. The further a company’s warranty period is above/below
the regional average, the bigger the positive/negative impact.

11. Company Image (brand reputation)—The “image rating” for each company in the industry that is
based on its P/Q rating for action-capture cameras, its P/Q rating for UAV drones, its global market
share of action camera sales, its global market share of UAV drone sales, and its actions to display
corporate citizenship and conduct operations in a socially responsible manner over the past 4-5
years—a total of 5 factors. All companies had an overall worldwide image rating of 70 at the end of
Year 5. Image ratings/brand reputations are updated at the end of each year, using the existing
P/Q ratings, year-end global market shares, and information relating to the social responsibility
efforts of rival companies. Newly-released brand image ratings are widely-publicized and become
quickly known to buyers considering the purchase of action cameras and UAV drones.
Market research confirms that the prior-year company image ratings (brand reputations) of rival
companies have a moderately strong influence on the brand choices of camera buyers in the
upcoming twelve months. Thus, companies with prior-year image ratings above the industry
average have a meaningful competitive edge over rivals with below-average image ratings in
attracting camera buyers to purchase their brand and in recruiting additional retailers to stock and
merchandise their camera models for a period of 1 year (at which time new end-of-year company
image ratings/brand reputations are released). The importance of a strong brand reputation in
attracting camera buyers is big enough that companies with comparatively weak reputations must
exert enough extra effort on the other 10 competitively relevant factors to boost overall buyer
appeal for their brand and overcome their image/reputation disadvantage. When weak image
companies significantly improve the overall buyer appeal and competitiveness of their camera
models from one year to the next, they can definitely win market share from strong image rivals
despite having an image rating disadvantage. Should companies with once-weak brand reputations
continue to improve their overall image ratings over a period of several years, they can definitely
turn the liability of a weak brand reputation into a strong brand reputation and competitive asset.
The Competitive Factors that Determine UAV Drone Sales and Market Share
Competition among rival makers of UAV drones centers around 9 factors:
1. Average Direct-Sale Price to Online Customers—Companies charging a price that is below the
regional average gain a price-based competitive advantage that positively impacts their regional
sales and market share, whereas companies charging a price that is above the regional average
results in a price-based competitive disadvantage. The bigger the percentage by which a
company’s average retail price is below/above the regional average, the bigger the resulting
positive/negative impact on its regional sales volume and market share.
However, any company whose retail price is above the industry average in a region can partially
offset or even totally overcome its price disadvantage when it has a competitive edge over rivals on
some or many other important sales-determining factors—such as a P/Q rating that is above the
industry average P/Q rating, an above-average number of models, longer-than-average warranties,
an above-average number of third-party online retailers, above-average expenditures for search
engine advertising, and an above-average brand reputation. Price disadvantages become
progressively easier to overcome as a company’s P/Q rating rises further above the industry
average. P/Q ratings that are 1-2 stars (or more) above the industry average can command prices
hundreds of dollars above the industry average because a sizable fraction of the commercial
enterprises that purchase UAV drones place a high value on the added performance of drones with
P/Q ratings of 7 stars and higher—perhaps as many as 5% of the world’s drone buyers can be
enticed to pay prices perhaps as high as $2,000-$2,500 for UAV drones with 9-star or 10-star P/Q
ratings. But the further a company's price to retailers is above the industry average in a region, the
harder it is for a company to use enticements other than higher P/Q ratings to overcome rising
buyer resistance to higher retail prices for its drone models. Likewise, the further a company’s price
is below the industry average in a geographic region, the easier it becomes to offset any
competitive disadvantages relating to lower P/Q ratings, shorter warranties, fewer models, and so
on.
One other price-related factor is also relevant. The purchasers of drones in Latin America and
the Asia-Pacific regions are more sensitive to price differences than are drone purchasers in
North America and Europe-Africa. In other words, when the drone offerings of competing

companies entail only minor differences in P/Q ratings (and other factors that shape buyers’ brand
preferences), then price differences will have a bigger impact on unit sales and market share in
Latin America and the Asia-Pacific than in North America and Europe-Africa.
2. P/Q Rating—The vast majority of drone shoppers consider the widely-available and much-
publicized annual P/Q ratings compiled by the Global Alliance for Safe and Responsible Use of
Commercial Drones to be a trusted measure of the performance and quality of competing brands of
drones. Market research indicates buyers worldwide consider the P/Q ratings of competing drone
brands to be one of the two most important factors (along with price) in shaping their choice of
which brand to purchase. A company whose drones have a P/Q rating above the industry average
thus has an important competitive advantage over rivals, whereas a below-average P/Q rating
constitutes an important competitive disadvantage. P/Q ratings that are more than 1 star above or
below the industry average result in particularly strong competitive advantages or disadvantages
and thus have strong positive or negative impacts on sales volumes and market shares in each
region. The competitive advantage that attaches to an above-average P/Q rating can make a
company’s drone brand even more appealing to buyers (and thus translate into even bigger sales
volume and market share) if it is supplemented by charging an attractively small price premium for
the added performance-quality, by also offering a longer-than-average warranty and/or an above-
average number of models to choose from, and so on. Likewise, a company selling drones with an
above-average P/Q rating can erode its performance-quality advantage by charging a price that
buyers consider “unreasonably high” for the added performance and quality or by weakening the
competitiveness of its product offering with other subpar characteristics (a short warranty or a weak
brand reputation or an unappealing website) that undercut the P/Q rating advantage.
Market research further reveals that when two brands of drones have slightly different prices and
P/Q ratings (and all other buyer considerations are, on balance, an even tradeoff between the two
brands), then a slightly bigger percentage of buyers in North America and Europe-Africa will
purchase the brand with the higher P/Q rating while a slightly bigger percentage of buyers in
Latin America and the Asia-Pacific will purchase the cheaper-priced brand.
3. Number of Models—An above-average number of models enhances a company’s competitiveness
in the marketplace by giving drone buyers wider product selection and thus more opportunity to find
a model with the features and specifications that best matches how they plan to use the drone.
Companies with a below-average number of models risk losing sales and market share to
competitors offering greater selection, unless they offset their narrower selection with other
appealing competitive attributes (a lower price, a higher P/Q rating, a longer warranty, etc.).
4. Retailer Recruitment / Support Budget—This expenditure covers the costs of calling on
prospective online retailers to (1) personally communicate the expected rapid growth of the UAV
drone market, the advantages of a company’s drone models, and the R&D effort the company is
making to improve future models of its drones, (2) build a relationship with these prospects via a
face-to-face visit, and (3) explain the kinds and amount of merchandising support the company
provides. Retailer support includes providing periodically-refreshed pictures of the company’s
various drone models for online retailers to display in their webstores, supplying comprehensive
and up-to-date information about each model, and engaging in collaborative efforts to service buyer
requests for various kinds of after-the-sale product support (filing warranty claims, downloading
product manuals, obtaining software updates and useful apps, and so on).
Companies whose expenditures for website displays are above the regional average have website
display-based competitive edge that positively impacts their regional sales volume and market
share. Conversely, below-average expenditures for website displays results in a competitive
disadvantage that negatively impacts a company’s regional sales volume and market share. The
bigger the percentage competitive advantage/disadvantage, the bigger the positive/negative impact.
5. Discount Offered to 3rd-Party Online Retailers—While exerting efforts to recruit third-party

retailers and support their efforts to merchandise the company’s drone models is important, the
crucial inducement to securing the commitment of 3rd-party online retailers to market a
company’s drones is the size of the percentage discount off the price that a drone-maker is
selling drone models at its website. Understandably, third-party online retailers have zero

interest in buying a drone-maker’s models at the same price the drone-maker is charging at its
website, then marking the purchase price up by some percentage (10% or more to cover their own
costs and allow for an attractive profit) and trying to secure orders at prices above a drone maker’s
website prices. Hence, a drone-maker wanting to gain wider buyer access and additional sales
volume through 3rd-party online retailers can do so only by offering to sell its drones to these online
retailers at an attractively large percentage discount off its own website price. The bigger the
percentage discount offered, the greater the number of 3rd-party retailers that will agree to stock and
merchandise a drone-maker’s brand. But, as should be expected, the bigger the amount by which a
drone-maker’s percentage discount offer exceeds the industry regional average, the bigger the
number of 3rd-party online retailers it will attract to sell its brand of drones in that region and the
greater will be the resulting regional sales volume and market share it achieves.
6. Search Engine Advertising—Search engine ads are a means of attracting more drone shopper
traffic to a company’s website and thereby helping achieve a bigger unit sales volume and market
share in a region. A company whose expenditures for search engine advertising is above the all-
company regional-average gains a search engine advertising-based competitive edge that
positively impacts its regional sales volume and market share; the bigger the percentage
competitive advantage, the bigger the positive impact. A company whose expenditures are below
the regional average suffers from a search engine advertising-based competitive disadvantage that
negatively impacts its regional sales and market share; again, the bigger the percentage
competitive disadvantage, the bigger the negative impact.
7. Website Product Displays / Info—The level of expenditures for website enhancement is a proxy
for the time, effort, and creativity that a company puts into (1) posting periodically refreshed and
visually appealing displays of its various drone models, along with ample and useful information
about each model’s features, capabilities, and specifications, (2) providing site visitors with
capability to create side-by-side model comparisons, (3) enabling site visitors to post their reviews
of particular models, (4) making it easy and quick for buyers to place orders and pay for their
purchase via credit card or wire transfer, and (5) providing good after-the-sale product support to
customers. Bigger than average expenditures for website expenditures attract more website
visitors because of the resulting enhanced visual appeal, functionality, features and information.
Many potential buyers make a point of visiting the company’s website to gather information about
the company’s models and research how the features, capabilities, and specifications of its models
compare against those of rival brands. Visits to a company’s website also enable customers to
obtain needed technical support, download apps and software updates for previously-purchased
drone models, browse product manuals, and discover how to file a warranty claim.
Companies whose expenditures for website displays are above the regional average have website
display-based competitive edge that positively impacts their regional sales volume and market
share. Conversely, below-average expenditures for website displays results in a competitive
disadvantage that negatively impacts a company’s regional sales volume and market share. The
bigger the percentage competitive advantage/disadvantage, the bigger the positive/negative impact.
8. Warranty Period—Shoppers for UAV drones find longer warranties more appealing than shorter
warranties. A company whose warranty period exceeds the regional average gains a competitive
edge that positively impacts its regional sales/market share, whereas a company whose warranty
period is below the regional average suffers a competitive disadvantage that negatively impacts its
regional sales volume and market share. The further a company’s warranty period is above/below
the regional average, the bigger the positive/negative impact.
9. Company Image (brand reputation)—Just as with action-cameras, market research confirms that
the prior-year company image ratings (brand reputations) of rival drone-makers have a moderately
strong influence on the brand choices of drone buyers in the upcoming twelve months. Thus,
companies with prior-year image ratings above the industry average have a competitive edge over
rivals with below-average image ratings in attracting drone buyers to purchase their brand for a
period of 1 year (at which time new end-of-year brand image ratings become available and are
widely publicized). The bigger a company’s image rating advantage or disadvantage, the bigger the
positive or negative impact on its sales of drones in the upcoming year.

Companies with comparatively weak brand reputations must exert enough extra effort on some (or
many) of the other 8 competitive factors to overcome a weak image disadvantage and boost overall
buyer appeal in order to increase sales and market shares above prior-year levels. Winning big
chunks of sales and market share away from rivals with strong image ratings in a single year is
difficult. But it is certainly feasible for drone-makers with below-average image ratings to nibble
away at the business of strong-image rivals, gaining 1 or 2 points of market share in a single year,
(maybe more) if they significantly improve the overall buyer appeal and competitiveness of their
drone models relative to the models of rivals. Should companies with once-weak brand images
continue to improve their image ratings over a period of several years, they can definitely turn the
liability of a once-weak brand image into a strong brand image and competitive asset.
The Importance of the Competitive Factors that Determine Sales and Market Share
Just as in the real world, the 11 competitive factors for action cameras have differing impacts—some
carry more weight than others in a company’s sales volumes and market shares in each geographic
region. As indicated above, the prices and P/Q ratings of camera rivals are the two most
important competitive factors affecting buyer decisions of which camera brand to purchase.
Moreover, buyer decisions to purchase one brand instead of another are more influenced by brand
reputation, number models, number of retail outlets, advertising, the warranty period, and the size of
promotional discounts than by differences in the number of promotional campaigns, in retailer support
expenditures, and in website expenditures. The weight for brand reputation falls somewhere in
between the weights for the most and least important competitive factors.
Similarly, the 9 competitive factors for UAV drones have differing impacts on which drone brands have
more buyer appeal than other. The prices and the P/Q ratings of rival brands are usually the two
most influential competitive factors affecting buyer decisions of which UAV drone brand to
purchase. Furthermore, the brand preferences of drone shoppers are likely to be more influenced by
such competitive factors as brand reputation, the number of models, and warranty periods than they
are by search engine ads and the efforts of rival companies to enhance their websites (where many
sales transactions occur) and market their drones at the websites of other online electronics retailers.
The influence of brand reputation falls somewhere in between the importance for the most and least
important competitive factors.
The Weighting of Each Competitive Factor Is Not a Fixed Amount. The weighting placed on the 11
competitive factors for action cameras and the 9 competitive factors for drones closely mirror what is
believed to actually prevail in real-world marketplaces. While knowing precisely the weighting used
for each competitive factor might seem helpful, such knowledge is not as useful as you might
think.
Price is most definitely a very influential competitive factor. Big price differences in a region matter a
lot in accounting for differences in sales/market share. But as the spread between the highest-priced
company and the lowest-priced company becomes smaller and smaller, the weaker is the unit
sales/market share impact of price differences and the greater is the role of the differences on other
competitive factors in causing the sales and market shares to differ. For example, in the rare instance
that all companies should happen to charge the same price in a region, then price becomes a total
competitive non-factor and has zero impact on buyer appeal for one brand versus another—in such a
case, 100% of the regional sales and market share differences among rivals will stem directly from
differences on the other competitive factors. So how much price matters in determining a company’s
unit sales/market share in a region is not a fixed amount but rather is an amount that varies from
“big” (when price differences are also “big) to “small” (when prices differences are “small”) to “zero”
(when the prices of rivals are identical). Precisely the same is true for the other competitive factors. So
while it is true that some competitive factors affect buyer brand preferences more than others, what
matters most in determining sales and market shares is the sizes of the differentials on each
competitive factor. Big differences on a less important competitive factor like the length of warranty
periods can end up having a bigger sales/market share impact than very small/insignificant differences
on more important competitive factors (like price and P/Q rating).

Essential understanding: The more that a company’s brand appeal to buyers on any one competitive
factor (whether it be price, P/Q rating, brand reputation, number of models to choose from, length of
warranty, and so on) is above/below the industry average in a region, the bigger is the weighting/impact
of that factor in accounting for why its regional net sales/market share is above/below the industry
average. Conversely, the closer to the industry regional average is a company’s price or P/Q rating or
brand reputation or number of models and so on, the smaller is the weighting/impact of that factor in
accounting for why its unit sales/market share is above/below the industry average. When a company’s
competitive effort on each of the various competitive factors approximates the industry averages in a
region, then its resulting unit sales volume/market share will also approximate the region’s industry
average. So which particular competitive factors actually turn out to be most important all
depends on how that company’s competitive effort stacks up against the industry average
competitive effort, factor by factor. All unit sales and market share outcomes in all regions are thus
100% competition-based and are a function of the size of each company’s competitive advantage or
disadvantage versus the industry averages for all the competitive factors.
Special Note: After each decision round, you can review a Comparative Competitive Efforts
Report (1-page for each geographic region) showing each company’s competitive effort on each
of the competitive factors for action cameras and UAV drones. It is imperative that you review
this information to determine how well your company’s competitive effort on each factor
compares to the industry averages—on which factors does your company have a competitive
advantage and on which factors is your company at a competitive disadvantage? This
information puts you in position to correct any important competitive disadvantages and to
consider ways to further exploit any competitive advantages in the upcoming decision round.
Ignoring the information in the Comparative Competitive Efforts report puts your
company in the risky position of heading into a market contest with little or no clue as to
competitors’ prior-year prices, P/Q ratings, brand reputations, models, warranties, and so forth
and the extent to which your company was or was not outcompeted by rivals.
Crafting a Strategy to Be Competitively Successful

With so many competitive factors determining unit sales and market shares of and with the sales and
market share impacts of these factors varying from year-to-year because of shifts in each company’s
competitive advantage/disadvantage versus rivals on all these factors, you have wide-ranging options
for crafting a strategy capable of producing good overall company performance and competing
successfully in the AC camera and UAV drone market segments. For example, you can:
• Employ a low-cost leadership strategy and pursue a competitive advantage keyed to
operating more cost-efficiently than rivals and thereby being in a strong position to profitably
sell action cameras and/or drones at prices below those of rivals.
• Employ a strategy to differentiate your company’s cameras and/or drones from rival brands
based on such attributes as product performance and quality, number of models, warranties,
and other competitive factors that matter to buyers—and thereby outcompete rivals with a
product offering that has greater overall appeal to a highly profitable number of buyers.
• Employ a “more value for the money” strategy (for example, selling 8-star cameras and
drones at lower prices than other 8-star brands) where your competitive advantage is an
ability to incorporate “upscale” product attributes with high buyer appeal at a lower cost than
rivals—and thereby underprice rival brands having comparable attributes and P/Q ratings.
• Focus your strategic efforts on being the clear market leader in either action-capture
cameras or UAV drones.
• Focus your company’s competitive efforts on gaining sales and market share in those
geographic markets where your company already has high sales and/or attractively large
profit margins (as compared to other regions) and putting less emphasis on winning sales in
those regions where your company has a low market share or small profit margins and
regions where competition is especially fierce (as compared to other regions).

• Pursue essentially the same strategy and competitive advantage across all four regions or,
instead, craft regional strategies tailored to improve the company’s competitiveness region-
by-region and counteract/overcome the strategic actions and competitive maneuvers of
specific rivals in specific regions.
There’s a very big window of opportunity for you to craft some version of the above strategic
approaches. And because GLO-BUS has no built-in bias that favors any one strategy over all the
others, there are multiple strategic approaches and sets of competitive efforts/action that, if properly
designed and well-executed, are capable of producing competitive success in the global market for
cameras/drones, provided they are not overpowered or thwarted by even more potent strategic
approaches and competitive actions/efforts that are well-executed by rival companies.
No One Strategy for Competing “Guarantees” Success. Because the sales and market share
outcomes for a company are 100%-based on the competitiveness and overall buyer appeal of its brand
versus the competitiveness and overall buyer appeal of rival brands, it is neither conceptually nor
competitively possible for there to be some preselected surefire strategy or competitive approach or
some undefeatable combination of competitive efforts/actions that is “guaranteed” to propel a company
into the ranks of the top-performing companies, irrespective of the strategies and competitive efforts
undertaken by rival companies. Consider the following:
• Are the companies that are being outperformed by the company pursuing a so-called
surefire strategy going to sit idly, do nothing, and watch that company overwhelm them,
decision round after decision round thereby running the risk of a poor grade? Not likely. It
is unreasonable to expect any company to passively accept competitive defeat and
unconditionally surrender.
• Do managers of rival companies whose performance is suffering have strong incentives to
aggressively pursue actions to boost the performance of their companies? Certainly.
• Do all the managers of rival companies lack the capacity figure out why their companies are
being outcompeted and outperformed? Very unlikely.
• Aren’t the reasons fairly obvious? Don’t these reasons revolve around prices and/or P/Q
ratings and/or number of models offered and/or warranties and/or assorted marketing efforts
that are not sufficiently competitive with those of the high-performing company and that have
resulted in weak buyer appeal? Most certainly.
• Might part of the reason for their underperformance also be due to “high” unit costs that are
squeezing profitability? Yes—at least for some companies.
• Can one or more of the companies being outcompeted and outperformed be reasonably
expected to launch a strong counterattack and initiate new and potentially potent
competitive efforts to improve their company’s performance? Yes. There is nothing to
prevent any company from reducing prices and/or increasing P/Q ratings and/or adding
models and/or lengthening warranties and/or boosting its marketing efforts (perhaps by
significant amounts), and there is plenty of reason for underperforming companies to pursue
such actions aggressively.
• Might such actions prove effective in bolstering the competitiveness and overall buyer
appeal of their brands, thereby narrowing the competitive gap and the performance gap
between the underperforming companies and the industry leader? Definitely. It is common
for underperforming companies to reverse their fortunes by undertaking actions that
succeed in boosting buyer appeal for their product offerings and greatly improving their
overall performance—this occurs both in GLO-BUS and in the real world.
• Is there a reasonable chance that one or more companies could even overtake the industry
leader by devising a potent strategy and series of competitive actions/maneuvers that
enable it to outcompete the former industry leader in the marketplace and become the best-
performing company in the industry? It should come as no surprise—there are many
instances, both in GLO-BUS and the real-world, where well-managed trailing companies
have overtaken industry leaders.

There is no such thing as an “unbeatable” strategy and competitive approach that will always
overpower and outperform all other strategies, irrespective of the strategies and competitive
efforts employed by rival companies. What drives the sales/market share success/failure of any one
company’s strategy for competing in the marketplace is always how well the overall buyer appeal and
competitiveness of its cameras/drones matches up in each decision round with the overall buyer appeal
and competitiveness of the cameras/drones of rival companies on each of the competitive factors. As
long as your company’s competitive efforts/actions and operating decisions produce an overall buyer
appeal for your camera/drone product line as compared to the offerings of rival companies and so long
as your company exerts sufficiently aggressive competitive efforts, then you can expect a satisfactory
percentage of buyers to prefer purchasing your cameras/drones over rival company brands.
While it is important to win attractive sales/market shares in each region, such outcomes are
not sufficient to produce the best profit outcomes. For a company to rank among the industry’s
top-performers, its net revenues must cover costs by an amount sufficient to produce good-to-excellent
profitability. This requires not only sufficient competitive success in the marketplace to produce
attractively large revenues but also consistent managerial success in operating the company cost-
efficiently—operating inefficiencies and wasteful spending impair a company’s profitability and overall
performance.
Just as in real-world companies that operate in competitive marketplaces, your company’s strategy
and competitive actions/efforts will need to evolve as the decision rounds unfold in order to
respond and adjust to the shifting strategies and competitive efforts of rival companies. So
even if your company’s performance in the year just completed is quite good, do not expect to lock your
competitive efforts and decisions entries in concrete—some adjustments (maybe many adjustments)
will almost certainly be needed to counter the freshly initiated competitive efforts/actions of rivals.
Be Very Wary about Following the Advice of Outside Sources. You are well-advised to be highly
skeptical about following any advice and tips regarding what to do that comes from prior
participants in the GLO-BUS exercise at your school or from sources you discover from internet
searches. While you might be tempted to view such anecdotal information as “helpful” or “important to
know” or “worth considering,” just bear in mind that your company will be competing against companies
run by students in your class—any information you run across about the experiences of companies run
by other teams of students in other industries at your school or elsewhere in the near or distant past are
of dubious relevance. Why? Because the chance that the head-to-head competition and outcomes in
whatever past industries produced the tips and advice you have gotten will closely match the exact
levels of competitive effort in each region that the companies in your industry have already undertaken
and will undertake in the future is very small (most likely close to zero). So, following such advice
carries significant risk of being “off the mark” or even “dead wrong” in helping you identify what levels of
competitive effort are needed to compete effectively against the rival companies in your class. The
most accurate and dependable source of information for guiding your efforts to compete successfully is
always found in the Competitive Intelligence Report you receive after every decision round.
Making Decisions
As indicated earlier, there are 56 different types of decision entries and 17 entries involving
assumptions about the competitive actions that rivals are likely to take. In some cases, entries for the
same decision type (like selling price or advertising and the length of warranties) are required for each
of the four geographic regions of the world market. Each of the decision pages displays the projected
outcomes of your decision entries. These projections appear instantaneously as soon as each decision
is entered, allowing you to isolate the incremental impacts of each decision entry. Also, on each
decision page are calculations showing projections of earnings per share (EPS), return on average
equity investment (ROE), credit rating, image rating, revenues, net profit, and year-end cash balance.
These, too, are instantly updated with new entry, allowing you to see the probable impacts of each new
decision entry on company performance. You will find these built-in decision support calculations
invaluable in evaluating alternative decisions and deciding what to do. You can easily try out any
number of “what if we do this” decision alternatives, review the projected outcomes, and thereby search

for a combination of decision entries that appears to offer the best overall performance and meets with
the consensus approval of your company’s management team.
The first time you visit a decision entry page, you will need to take time to explore the page and digest
all the information. If you feel the need for additional information while you are working on a
particular page, click the Help button at the top-right. The Help sections provide detailed entry-by-
entry guidance, including important cause-effect relationships, explanations of all on-screen
calculations, and decision-making tips. Totally ignoring the Help information is unwise. Most likely,
you will find the information valuable in making wiser decision entries and avoiding the desperation of
entering “some number” in hopes that the outcome will be “good” or “okay.”
Upon visiting a decision entry page, the numbers you see in the entry boxes represent either (1) the
decisions made in the prior year or (2) the latest decision entries you and/or your co-managers saved
while previously working on the current decision round. No decision entry for the upcoming year is
considered final until the deadline (set by your instructor) for entering decisions arrives. GLO-BUS
considers the last set of decision entries saved prior to the decision round deadline as “final”. It is
critical that you and your co-managers save your entries for the decision round before the deadline passes.
Product Design Decisions

The product design page involves deciding on the components, enhancements, and extra performance
features to incorporate in your cameras/drones, the number of models to have in each product line, and
how much to spend on product R&D. Initially the numbers appearing in the decision entry fields (or
beside the decision filed for product R&D) are the entries from the prior round (year). The Product
Design entries are important because they determine the P/Q ratings assigned to your cameras/drones.
The better the design-related specifications and the greater the number of extra performance features,
the better the resulting performance and quality (but the higher the associated production costs). As
decisions are entered, you can review the on-screen calculations of the expected P/Q ratings and the
associated costs to determine which combination of design specifications is “best” for implementing the
strategy you have chosen to pursue.
All parts, product enhancements, accessories, and components needed for extra performance features
are purchased from outside suppliers; these suppliers sell essentially the same items at the same
prices to all companies. The costs of extra performance features increase as the number incorporated
into the designs of cameras/drones increases (the cost impacts are shown in the Production Costs
section of the page).
Number of Models. Prior management elected to have a product line-up consisting of 3 action camera
models and 2 drone models. While there is considerable merit in trying to expand sales by adding
more models, the addition of more models introduces quality control difficulties that negatively impact
P/Q ratings and warranty claims and that also reduces the number of cameras/drones that product
assembly teams (PATs) can assemble annually. PATs cannot assemble 5 models of cameras/drones
as proficiently and as problem-free as they can assemble 3 models. Model increases reduce
camera/drone PAT productivity by some percentage that depends on whether the model increase is 1
model, 2 models, 3 models, or 4 models. The addition of more models also tends to increase warranty
costs because of faulty assembly and/or components that prematurely become defective. Reducing
the number of models has the reverse effects. It is easy enough to track the effects of increasing or
decreasing the number of models by observing the changes in the on-screen calculations of the P/Q
rating, warranty costs, and labor costs.
Product R&D Expenditures. In Year 5, prior management spent $20 million on product R&D for
cameras and $15 million on product R&D for drones. Substantial R&D spending is required to improve
product performance, discover and test easier-to-assemble camera/drone designs, develop new and
improved models, and program more sophisticated software capabilities for both cameras and drones.
The R&D challenges for improving drone performance are more formidable than for action cameras,
partly because video camera technology is better understood and more mature, partly because drones
are a relatively new product, and partly because the company just recently entered the drone

marketplace and has yet to fully develop its drone designs. Drone buyers, of course, are highly
interested in drones that can stay up in the air longer than the current maximums of 15-30 minutes, fly
distances well beyond the view of the person operating the flight controller, and avoid crashing into
obstacles in their flight path—such capabilities present formidable R&D challenges that will require
sustained R&D efforts.
The combination of current year spending and cumulative spending over time for product R&D (1)
provide a pipeline of tested ways to add more features, improve performance, and build the company’s
proficiencies in designing new and improved camera/drone models, (2) improve a company’s
camera/drone P/Q ratings—higher P/Q ratings are realized as soon as current and cumulative R&D
spending reach levels sufficient to produce better camera/drone performance and quality, (3) reduce
warranty claims and costs (these two benefits stem from the positive impact of R&D expenditures on
P/Q ratings), (4) increase the productivity of PATs in assembling camera/drone models—productivity
gains occur as soon as current and cumulative R&D spending reach levels sufficient to identify and
develop easier to assemble product design, and (5) reduce the costs of components, accessories, and
enhancement features used in assembling cameras/drones.
AC Camera Marketing Decisions

At the top of this second decision page is a section displaying the 7 marketing-related decisions your
company will make for action cameras. Just below the entry fields for the 7 marketing decisions is a
section labeled Market Segment Statistics. The first two lines show your company’s (1) actual sales of
cameras in the prior year and projected sales in the current year and (2) camera market share in the
prior year and projected market share in the current year. The last three lines of this section report the
numbers of multi-store chains, online retailers, and local retail shops in each region stocking and
merchandising your brand of action cameras in the prior-year and the current year—the current year
numbers were updated at the end of the prior year to reflect the year-end appeal of your company’s
camera models, and there’s nothing you can do in the current year to attract additional retailers (the
updated numbers of retailers willing to stock each company’s camera brands are reported in the
Competitive Intelligence Reports). The company’s regional sales offices (Milan, Singapore, Sao Paulo,
and Dallas) are staffed with people who help recruit and service the accounts of retailers in the region.
Each time you enter a different value for any of the marketing decisions, you will see the effects on
projected unit sales and projected market share. In addition, you will see on-screen calculations
showing the projected price-cost-profit outcomes associated with the marketing decision entries.
The decision entries on the page are pretty much self-explanatory, but click on the Help button at the
top-right if you have questions, want additional information, or need guidance.
There are several things you need to keep in mind as you make entries for the marketing decisions:
• All seven marketing decisions (along with your company’s P/Q rating and number of models
offered, both of which are determined by your entries on the Product Design page) will
largely determine the degree to which your company’s camera products are competitive with
the camera products of rival companies and whether your company’s brand will be
sufficiently appealing to buyers to generate net sales revenues big enough to cover
operating costs and yield attractive operating profits and operating profit margins.
• The accuracy of the on-screen projections of your company’s unit sales and market shares
is a function not just of your company’s competitive efforts but also the competitive efforts of
rival companies (which will almost certainly include adjusting their P/Q ratings, number of
models, wholesale prices, advertising, sales promotion efforts, and so forth). At the bottom
of this page is a section labeled Competitive Assumptions containing entry fields for the
competitive factors affecting sales and market share in each region. The first time you visit
this page these entries represent the prior-year average competitive efforts of rival
companies. Unless these are updated, the on-screen projections of your company’s unit
sales/market shares will be based on how your company’s competitive effort for the current
year compares against the competitive conditions your company faced last year.

Note: The reason there are entry boxes for only 9 of the 11 competitive factors is that the
two missing competitive factors—number of retailers and brand reputation—are already
known for the current year because they are updated at the end of every decision round
and are reported in the Competitive Intelligence Report.
Needless to say, the managers of rival companies can be counted upon to alter aspects of
their competitive effort in all four regions as they prepare their current-year decisions and
seek to boost the performance of their respective companies. This means that the on-
screen projections of your company’s unit sales and market share in each region are of
questionable validity because they are based on how your company’s competitive effort in
the current year stack up against the prior-year competitive efforts of rival companies, not
their forthcoming competitive efforts.
If you believe that rival companies are likely to alter their competitive efforts by raising or
lowering prices, P/Q ratings, models offered, advertising, and so on, then you will definitely
need to enter your anticipated changes in the some/all of the industry average marketing
efforts in the Competitive Assumptions section. The whole purpose of updating the prior
year industry-average levels of competitive effort is to obtain projections based on the
forthcoming-year industry-average levels of competitive effort in each region. Make a point
of consulting the historical data in the Regional Average Competitive Efforts selection in the
Competitive Intelligence menu which shows the historical changes of the regional averages
for all year completed to date—this information will prove highly valuable in making your
updates.
Consequently, before you get very far along in making entries for the 7 marketing decisions,
it makes sense to first enter your anticipated updates of the industry averages for the 9
competitive factors. Yes, especially for Year 6, these are likely to be “guesstimates” or
“approximations”, but sales/market share projections based on reasonable assumptions of
what rivals are likely to do may be more reliable than projections based on what rivals did a
year ago. The updates will be easier to make in later years, as more historical information
becomes available. It is reasonable for you to expect that the competitive efforts of rivals
will, on average, be stronger than in the prior year, if only because poorly-performing
companies that were outcompeted last year have strong incentive to initiate actions to boost
their competitiveness and because all competitive have incentives to correct any competitive
disadvantages and to try to improve their overall financial performance.
Even if you overestimate the strength of competition from rivals in the upcoming year (which,
in turn, will lower the projected sales/market shares for a given level of marketing effort on
the part of your company) and actually end up with bigger sales/market shares than were
projected, your company will still assemble, ship, and sell the unexpected units demanded
provided your company has sufficient idle workstation capacity to assemble the unexpected
orders. It is far better to have the pleasant surprise of selling more than the projected sales
volume (and enjoying the accompanying extra revenues and profits) than having the
unpleasant surprise of selling less than the projected sales volume because you
underestimated the strength of the competitive efforts from rivals.
Trying different decision entries and experimenting with different assumed changes in the industry
average levels of competitive effort for the current year, enables you to evaluate the merits of different
decision entries and arrive at a consensus of what strategic actions to take in striving to combat the
anticipated strategies and competitive maneuvering of rivals.
Exchange Rate Adjustments. In the section labeled Price-Cost-Profit Breakdown, you will notice that
in the Revenue Projection entries just under selling price is a line labeled “± Exchange Rate
Adjustment.” Exchange rate adjustments result from the fact that (1) the exchange rate of one currency
for another fluctuates on a daily basis and (2) the company assembles, ships, and sells action cameras
in Taiwan (where the local currency is Taiwan dollars) to buyers in other parts of the world (where local
currencies are different). Further, the orders tend to occur at some agreed price in a period when
exchange rates are one value while buyer payments are not received until some later period (when
exchange rates are very likely a different value). There’s a second reason for exchange rate

adjustments: the local currency payments the company receives from buyers over the course of a year
must be converted into Taiwan dollars and ultimately into U.S. dollars (since the company reports its
financial statements in U.S. dollars and the company’s stock is traded on a U.S. stock exchange).
Thus, the company’s business is one with potentially significant foreign exchange risks.
To help manage these risks, company officials have negotiated a long-term currency exchange
agreement with the Global Community Bank through which the company does most of its business.
The agreement calls for the bank’s foreign currency department to handle the company’s many foreign
currency transactions. For simplicity, the agreement entails combining both of the reasons for currency
adjustments (enumerated in the above paragraph) into a single adjustment whereby the net revenues
the company actually receives on cameras assembled and shipped from its Taiwan assembly facility
and sold to buyers in various parts of the world to be adjusted upward or downward is based on the
real-world currency swings during the period from one decision round to the next as concerns the U.S.
dollar against the Taiwan dollar, the euro against the Taiwan dollar, the Brazilian real against the
Taiwan dollar, and the Singapore dollar against the Taiwan dollar. Specifically:
• The net revenue per camera the company actually receives from camera sales to retailers in
North America is a result of adjusting the company’s average wholesale price up or down for
exchange rate changes between the U.S. dollar and the Taiwan dollar.
Europe-Africa is a result of adjusting the company’s average wholesale price up or down for
exchange rate changes between the euro and the Taiwan dollar.
the Asia-Pacific is a result of adjusting the company’s average wholesale price up or down
for exchange rate changes between the Singapore dollar and the Taiwan dollar.
Latin America is a result of adjusting the company’s average wholesale price adjusted up or
down for exchange rate changes between the Brazilian real and the Taiwan dollar.
In making sales to buyers in Europe-Africa, the company provides price quotes in terms of both the
buyer’s local currency and in euros. Buyers, while making payment in their local currency (which can
be either euros or some other denomination), agree when the order is placed to tie the amount of their
local currency payment per camera to the local currency equivalent of that number of euros per
camera—the company’s global bank handles converting the local currency payments of Europe-Africa
buyers into the equivalent of euros and then into Taiwan dollars at the appropriate exchange rates.
Should the exchange rate of euros per Taiwan dollar fall from one decision period to the next, say from
0.0250 to 0.0249 euros per Taiwan dollar, then buyer payments of the agreed number of euros per
camera at the time the order was placed equate to more Taiwan dollars at the time of payment and an
upward adjustment in the company’s revenues. Conversely, when the exchange rate of euros per
Taiwan dollar rises, say from 0.0250 to 0.0251 euros per Taiwan dollar (meaning that a specified
number of euros equate to fewer Taiwan dollars), then the company does not receive as many Taiwan
dollars in payment for the cameras sold and shipped to Europe-Africa buyers and net revenue is
accordingly adjusted downward. The size of the Europe-Africa revenue adjustment is equal to 5 times
the actual period-to-period percentage change in the exchange rates of euros to Taiwan dollars
(multiplying the actual % change by 5 is done so as to translate the exchange rate change over a few
days into a change that is more representative of what might realistically occur over a full year). Thus,
if the exchange rate between euros and Taiwan dollars should change by −0.40% from one decision
period to the next, the size of the exchange rate adjustment will be −2.0% (−0.40% x 5 = −2.0%).
Because actual exchange rate fluctuations are occasionally quite volatile over a several day period, the
maximum exchange rate adjustment during any one year is capped at 20%, thus limiting the size of
gains and losses from exchange rate adjustments.
The procedures for adjusting revenues on sales to retailers in Latin America, Asia-Pacific, and North
America are handled in like fashion. All the pertinent calculations are done automatically, thus relieving
you from mastering the intricacies of the exchange rate adjustments. Since the sizes of the expected
exchange rate adjustments in dollars per camera/drone are known during the course of making the

current-year decisions, you can pursue actions to mitigate the adverse effects of unfavorable (those
with a minus sign) exchange rate adjustments. One option is to adjust sales and marketing efforts in a
manner that results in (1) added sales in those areas where the exchange rate adjustments are positive
(favorable) and (2) somewhat smaller sales in the regions where the exchange rate adjustments are
negative (unfavorable). Another option is to raise the selling prices in a particular region to help offset
negative revenue adjustments and realize higher net revenue per camera sold. Because all competing
companies have assembly facilities in Taiwan and are thus subject to comparable exchange rate
impacts on net revenues per camera sold, you may be able to make offsetting price adjustments
without much risk of putting your company at a price disadvantage. Consult the information in the Help
section for more details on the mechanics of the exchange rate adjustments and their managerial
relevance in making decisions.
There will be no exchange rate adjustments in Year 6. The prevailing real-world exchange rate
values at the beginning of Year 6 and the real-world rates at the beginning of Year 7 will serve as the
base for calculating the Year 7 exchange rate adjustments. The real-world changes in the exchange
rates between the beginning of Year 7 and the beginning of Year 8 serve as the basis for exchange
rate adjustments in Year 8. And so on throughout the exercise.
Since the company’s financial statements are reported in U.S. dollars, company accountants go
through the necessary accounting procedures to accurately record and report the revenues collected in
Taiwanese dollars in U.S. dollars and to otherwise accurately portray the company’s financials in U.S.
dollars. The procedures are in full compliance with generally accepted accounting procedures and
have been approved by the company’s auditors.
UAV Drone Marketing Decisions

At the top of this third decision page is a section displaying the 6 marketing-related decisions for UAV
drones. Initially the numbers appearing in the decision entry fields (or beside the decision filed for
product R&D) are the entries from the prior round (year). Just below the entry fields for marketing
decisions is a section labeled Market Segment Statistics. The first two lines show your company’s (1)
actual sales of drones in the prior year and projected sales in the current year and (2) drone market
share in the prior year and projected market share in the current year. The last line of this section
displays the number of third-party online retailers marketing your drone models at their websites in the
prior-year and the current year—the current-year number was updated at the end of the previous year
to reflect the year-end appeal of your company’s drone models and there’s nothing you can do in the
current year to attract additional 3rd-party online retailers (the updated numbers of 3rd-party online
retailers willing to stock and merchandise each company’s drone brands in the current year are
reported in the Comparative Competitive Efforts report). Each time you enter a value for any of the
marketing decisions, you will see the effects on projected unit sales and projected market share.
The third section of the UAV drone marketing page shows price-cost-profit breakdowns flowing from the
marketing decision entries and the projected sales volumes in each region. At the bottom of the
decision page is a section for entering your anticipated changes in the industry averages for 8 of the 10
competitive factors affecting each company’s sales/market shares in each region. The current-year
industry averages for 2 of the 10 competitive factors—the number of third-party retailers merchandising
each company’s drone models and company brand reputation—are already known (and can always be
viewed in the Comparative Competitive Efforts report).
Just as was the case with the AC Camera Marketing Decision page, before you get very far along in
making entries for the 6 drone marketing decisions, it makes sense to first enter your anticipated
updates of the industry averages for the 8 competitive factors in the Competitive Assumptions section
at the bottom of the page. Again, your will be entries are “guesstimates” (especially in Year 6), but
starting in Year 7 and thereafter, the historical changes in the regional averages shown in the Regional
Average Competitive Efforts report will prove very valuable in entering updates for the regional
averages for the forthcoming year. Bear in mind that sales/market share projections based on your best
judgment of the forthcoming-year industry-average levels of competitive effort in each region may be a
less risky basis for evaluating the profit prospects of alternative marketing decision entries than relying

on sales/market share/ profitability projections based on the prior-year regional average levels of
competitive effort. Furthermore, it is wise to expect that the competitive efforts of rivals will, on
average, be stronger in the current year than in the prior year, because of the incentives that all
companies (and most especially poorly-performing companies) have to correct their competitive
disadvantages, strengthen their overall competitiveness and thereby improve company performance.
Again, even if you overestimate the strength of competition from rivals in the current year (which, in
turn, will lower the projected sales/market shares for a given level of marketing effort on the part of your
company) and actually end up with bigger sales/market shares than projected, your company will still
assemble, ship, and sell the unexpected units demanded provided your company has sufficient idle
workstation capacity to fill the unexpected orders from buyers. You will quickly find it is better to have
the pleasant surprise of selling more than the projected sales volume (and enjoying the accompanying
extra revenues and profits) than having the unpleasant surprise of selling less than the projected sales
volume because you underestimated the strength of the competitive efforts from rivals.
Note: In the first several decision rounds, updating the regional average levels of competitive efforts
in the Competitive Assumptions section admittedly involves more guesswork than insightful
judgement because there’s little hard evidence about what actions rivals will take. Thus, it is usually
wise to be cautious and make relatively small adjustments in the averages. But making reasonably
accurate guestimates become easier as the number of completed decision rounds increases; this is
because with more data points in the Regional Average Competitive Efforts report, trends in one or
more of the industry averages become more evident and because careful analysis of the data in the
Time Series Competitive Efforts report for specific companies will help you judge what moves
industry-leading companies and companies you consider as close competitors may make next.
Your task on this decision page is to try out a variety of combinations of the 6 market decisions in each
region and search for a set of entries which, in conjunction with your company’s P/Q ratings for drones
and number of drone models (as determined from your entries on the Product Design page), number of
3rd-party online retailers, and prior-year brand reputation, produces an overall competitive effort versus
rival companies with appealing projected outcomes for unit sales, market shares, operating profits, and
operating profit margins.
Exchange Rate Adjustments. Exchange rate adjustments in the company’s selling prices for drones
have to be made for all the same reasons as for action cameras and the adjustment procedures are
identical. The adjustments appear in the section labeled Price-Cost-Profit Breakdown on the line just
under selling price labeled “± Exchange Rate Adjustment.” As explained earlier, a negative adjustment
represents an unfavorable shift in exchange rates that results in the company receiving net revenue per
drone sold that is below the company’s selling price in the region. A positive adjustment represents a
favorable exchange rate shift that causes net revenue per drone sold to be higher than the posted
selling price.
It is up to you to decide whether to just ignore favorable/unfavorable exchange rate shifts or whether to
make proactive adjustments. One option is to adjust sales and marketing efforts in a manner that
results in (1) added sales in regions where the exchange rate adjustments are positive (favorable) and
(2) somewhat smaller sales where the exchange rate adjustments are negative (unfavorable). Another
option is to raise the selling prices in regions with negative revenue adjustments by amounts sufficient
to recover the lost revenue and preserve the company’s profit margins.
There will be no exchange rate adjustments in Year 6. The prevailing real-world exchange rate
values at the beginning of Year 6 and the real-world rates at the beginning of Year 7 will serve as the
base for calculating the Year 7 exchange rate adjustments. The real-world changes in the exchange
rates between the beginning of Year 7 and the beginning of Year 8 serve as the basis for exchange
rate adjustments in Year 8. And so on throughout the exercise.

Compensation, Training, and Facilities Decisions
This page contains 4 decision entry fields for compensating workers engaged in assembling action
cameras and 4 decision entry fields for compensating workers engaged in assembling drones. The
compensation decisions are the same for both types of workers: (1) how much to raise/lower the base
pay of PAT members, (2) whether and by how much to change each PAT’s assembly quality incentive
payment per unit assembled, (3) whether and by how much to alter the annual bonus for perfect
attendance, (4) whether and by how much to raise/lower payments for fringe benefits. It is up to you
whether to establish identical or different compensation packages for the two types of workers.
PAT Productivity. Just under the compensation-related decisions is a field for entering the amount
management wishes to spend for training PAT members and improving PAT productivity. The
productivity of each four-person PAT (how many units they can assemble in a given year) is
influenced by 8 factors:
• Annual base wage increases—Annual increases in base pay of 2% or more lead to higher
levels of productivity, chiefly because higher annual base wages help attract and retain
workers with better skills and work habits and because higher base wages make workers
feel better about their jobs and enable higher standards of living for them and their families.
The maximum annual base pay increase is 10%. Cuts in base pay are allowed, up to a
maximum of 15% in any one year; as might be expected, base pay reductions act to reduce
PAT productivity. Small pay cuts do not entail a “big” drop in productivity but cuts of 5-15%
will have a major negative impact.
• The assembly quality incentive—Experience indicates that bigger assembly quality
incentive payments per unit increase productivity and reduce warranty claims. PATs have
responsibility for fully testing the functioning of each action camera/UAV drone assembled
and correcting any performance problems, including replacing malfunctioning components—
the costs of replacing defective or malfunctioning parts/components are borne by suppliers.
Prior management instituted the practice of paying each PAT an assembly quality incentive
for each unit assembled, the thesis being that such incentives spurred PAT members to
propose ways to cut assembly and testing times while still accurately assembling and
thoroughly testing each camera or drone after assembly. Thus far, PAT members in the
assembly facilities have taken pride in coming up with better and more efficient procedures
that help reduce warranty claims and boost productivity. In Year 5, the incentive payments
were $2.40 per camera per PAT and $4.80 per drone per PAT; these payments are divided
equally among all PAT members.
• Attendance bonus—Absenteeism on the part of PAT members has a strong negative
impact on the functioning and performance of the remaining team members. When team
members fail to show up for work a team’s assembly procedures are disrupted; and
substitutes must be assigned to fill-in for the person(s) absent or else the team must try to
assemble units as best it can. To discourage absenteeism, prior management instituted the
practice of paying an $800 year-end bonus to each PAT member with a record of perfect
attendance (defined as working 2000 hours per year—50 weeks at 40 hours per week, with
2 weeks off for holidays and personal leave); missing as much as ½ day during a 2000-hour
work year constituted disqualification for the bonus. Prior management believed the
attendance bonus was successful in keeping absenteeism at a tolerable minimum, thereby
enabling most PATs to operate at full-strength and assemble at least a reasonable number
of cameras/drones each shift. However, you have the authority to discontinue the practice
of paying a bonus for perfect attendance, to continue the program as is, or to raise the size
of the bonus periodically as you see fit. It is up to you to determine whether diverting the
$800 bonus per PAT member to other types of compensation (such as bigger incentives or
higher base pay or bigger fringe benefits) could lead to even better PAT productivity.
• Fringe benefits package—PAT members and other company personnel view a generous
company-paid fringe benefits package (health insurance, disability insurance, term life
insurance, and retirement plans) as an important element of a “good job” because the
components of fringe benefit packages add to an employees’ overall well-being.

• Total compensation—How well your company’s PAT members are being compensated
relative to rival companies with regard to base pay, assembly quality incentives, the perfect
attendance bonus, and fringe benefit packages is a major factor in the company’s ability to
attract/retain better-caliber, more productive employees. The best, most productive workers
are inclined to leave jobs at lower-paying companies for jobs at higher-paying companies.
Likewise, job seekers that exhibit motivation, pride of workmanship, good work habits, and
aptitudes for teamwork are drawn to work for those companies having the best overall
compensation package. Thus, PAT productivity tends to be higher at the companies with
the highest total compensation packages per PAT member.
• Best Practices / productivity improvement budget—The productivity of PATs is
enhanced by training PAT members in better assembly techniques, post-assembly product
testing, ways to reduce warranty claims, and overall productivity improvement. You have the
authority to raise/lower annual spending per PAT for such training. While spending greater
amounts per PAT increases productivity, the benefits from greater annual training
expenditures per PAT are subject to diminishing marginal returns (that is, the benefits
become smaller and smaller, eventually reaching a point where the added costs outweigh
the added benefits). A company can always reduce annual training expenditures per PAT
without losing the previous productivity gains.
• Product R&D expenditures (cumulative)—A portion of R&D expenditures is always
devoted to improving the designs of all camera/drone models in ways that reduce the
amount of time it takes PATs to assemble and test them, thus increasing the annual
productivity of PATs.
• Number of models—Increasing the number of models will reduce PAT productivity, due to
lower PAT proficiency in assembling more models and increased model change-over time.
Reducing the number of models boosts productivity because PATs have fewer assembly
and post-assembly product testing procedures to master and less model change-over time.
• The total compensation of camera PATs versus drone PATs—A small difference
between the compensation packages of a company’s camera and drone PATs will be
tolerated by PAT members. However, a significant disparity in the compensation packages
of camera and drone PATs can cause dissatisfaction among the PAT members receiving
the smaller compensation package, thus negatively affecting productivity. In Year 5, the
compensation packages of camera and drone PATs were identical.
At the end of year 5, the productivity of PATs assembling action cameras was 3,000 units annually.
There is reason to believe that over the next several years the productivity of camera PATs can be
increased to 3,500 to 4,000 cameras annually. Productivity could go even higher, if managers
aggressively pursue productivity gains via attractive compensation, additional training, and robot-
assisted assembly techniques.
At the end of year 5, the productivity of PATs assembling drones was 1,500 units annually (drone
assembly is more complicated and involves assembling the built-in action camera, as well as the drone
itself; moreover, thoroughly flight testing all the performance features of a UAV drone is considerably
more time-consuming). The productivity of drone assembly PATs could rise to perhaps 2,000 units
annually, if company managers are willing to invest in attractive compensation packages, additional
training, robot-assisted assembly methods, and more time-efficient flight-testing (via product R&D).
Assembly Capacity, Facilities Expansion, and Workstation Additions. The remainder of this
decision page is devoted to decision entries and on-screen calculations that enable you to (1) fill
growing buyer demand for your company’s cameras/drones by having PATs work overtime—the
maximum number of cameras/drones that can be assembled at overtime is 20% of annual PAT
productivity (the number of units a PAT assembles each year), (2) add additional workstations as may
be needed to fill incoming orders for cameras/drones during the current year, (3) initiate projects to
expand the size of the assembly facility for cameras and/or drones whenever additional workstation
space is needed, and (4) order a robotics upgrade for all existing camera and/or drone workstations
that enables the size of PATs to be reduced from 4 persons to 3 persons and that also.

Your company’s AC Camera assembly facility for currently has space for 300 workstations, but only
280 workstations have been installed (thus, there is enough vacant space to add 20 more
workstations). The UAV Drone assembly facility currently has 110 workstation spaces, but only 100
drone workstations have been installed and 10 spaces are vacant (which can be filled with workstations
whenever you see fit). New camera/drone assembly workstations can be installed at a cost of
$125,000 each for cameras and $175,000 each for drones; adding workstations can be done quickly
(usually during a single weekend) at the beginning of each year. Your company will in all likelihood
need to expand both the camera and drone assembly facilities in the years to come in order to have
enough workstations for PATs to assemble the numbers of cameras and drones it will take to meet
growing buyer demand. Additional space for camera/drone workstations can be built at a cost per
space that declines as the size of the space expansion increases. Space expansions are undertaken
at the beginning of a year and take several weeks to complete; however, both the camera and drone
assembly facilities have enough extra storage area to accommodate the immediate delivery of
additional workstations and set them up temporarily in the extra storage space until a facility expansion
is completed. This gives you the ability to gain full-year assembly capability for newly-purchased
camera/drone workstations pending completion of a workspace expansion project.
The capital costs of new workstations, facilities expansions, and robotics upgrades are paid in full in the
year they occur. The company has enough land at its Taiwan plant site to permit expansion of the
camera assembly facility to accommodate 1000 workstations and expansion of the drone assembly
facility to accommodate as many as 800 workstations (although it is highly improbable that you would
ever need this many workstations). Fixed assets (primarily facilities, workstations, robotics upgrades,
office equipment, and furnishings) are depreciated over 20 years at the rate of 5% annually.
The two big camera/drone assembly-related decisions that have to be made each year concern (1) how
many new workstations to add and (2) whether additional facility space for workstations is needed and,
if so, how many workstation spaces to add. Just below these decision entry fields are several on-
screen calculations that will be of assistance. There is a line showing the number of units that can be
assembled with and without the use of overtime (given the projected productivity of PATs). There’s a
second line showing projected unit sales (which could prove too high if you have underestimated the
strength of rivals’ competitive efforts or too low if you have overestimated the strength of rivals’
competitive efforts) and a third line showing whether you will be unable to assemble the number of units
to fill expected orders.
It is up to you to determine whether it is more economic to have PATs work overtime to fill incoming
orders from buyers (which can have the benefit of delaying the purchase of additional workstations
and/or the expansion of assembly facilities) or whether it is more economical to always have in place
sufficient workstations/workstation space to avoid paying PATs 1.5 times the regular hourly rate for
overtime assembly. It is a quick exercise to view the on-screen projected cost-profit outcomes of using
overtime, then make the “what if we add workstations/expand facilities by amounts sufficient to avoid
overtime” entries, view the projected cost-profit outcomes, and decide which option is “best.” If the on-
screen calculations show a shortfall in the number of units assembled (meaning that projected buyer
demand for your company’s brand of cameras/drones exceeds assembly capability with maximum use
of overtime, then more workstations and/or workstation space will definitely be needed (assuming you
wish to be able to fill all of the projected orders), and it is your responsibility to enter numbers for any
new workstations and/or workstation spaces.
The GLO-BUS system will automatically employ the “optimum” number of PATs needed to fill
actual incoming orders for cameras/drones. Here is how it works:
1. If actual orders turn out to be less than assembly capability without the use of overtime then
the GLO-BUS system will “right-size” the workforce, staffing only the number of workstations
needed to assemble the units ordered.
2. If actual orders are greater than assembly capability without the use of overtime, then the
GLO-BUS system will have PATs work overtime (up to the maximum 20% of annual PAT
productivity) to assemble enough additional units to satisfy buyer demand.

3. If actual orders for cameras/drones exceed assembly capability of all installed workstations
with maximum use of overtime, then your company is stuck with a shortfall in assembly
capability and orders in the amount of the shortfall will go unfilled (forcing the affected
buyers to purchase rival brands).
The company maintains an updated list of several hundred appropriately-skilled workers living within
commuting distance of the company’s assembly plant that it can draw upon to form new PATs to staff
any idle workstations that are needed to fill incoming buyer orders. These workers have sufficient
experience and qualifications that they can be adequately trained in a matter of days to assemble
cameras/drones at productivity rates equal to the company average.
Robotics Upgrades. You have the option to shift to robotics-assisted assembly of cameras and/or
drones—there is a section near the bottom of this page for entering decisions to shift to robot-assisted
assembly. The manufacturers of robots have recently developed small robots capable of performing
some of the tasks in assembling both action cameras and UAV drones. Installing one of these robots
at each workstation enables the size of PATs to be cut from 4 members to 3 members. These robots
cost $150,000 each. If the company decides to shift from manual assembly to robotics-assisted
assembly, all existing workstations in a camera or drone assembly facility must be upgraded to include
the use of a robot at a cost of $150,000 each, and all future workstations the company purchases for
that facility must include use of a robot (which means that the capital cost of each additional camera
workstation will increase from $125,000 to $275,000 and each additional drone workstation will
increase from $175,000 to $325,000). Robot-assisted assembly can be used in one facility and manual
assembly can be used in the other facility, either indefinitely or until such time as management decides
to shift over to robot-assisted assembly. Once robot-assembly has been adopted for a facility, it is not
feasible to revert back to manual assembly.
The on-screen calculations will help in evaluating the cost impact of a robotics upgrade. Cash outlays
for capital costs associated with robotics upgrades of existing workstations and any new robot-
equipped workstations are incurred in the year of purchase. Depreciation of these assets occurs over
20 years at the rate of 5% annually. As with all types of capital expenditures, the associated cash
outlays can be paid for from cash on hand, by issuing new shares of stock, or by borrowing. Shifting to
robot-assisted assembly also results in added annual maintenance costs of $9,000 per workstation,
pushing the total maintenance cost per workstation from $6,000 annually to $15,000 annually.
Corporate Social Responsibility and Citizenship (CSRC)
This decision page concerns spending for such things as charitable contributions, “green” initiatives to
promote environmental sustainability, the use of renewable sources of energy, improved working
conditions for plant personnel, and institution of a supplier code of conduct and compliance monitoring
of supplier factories. The decisions on this page are straightforward, and you will find ample
information and calculations on this page and in the Help section to guide your entries. The degree to
which your company displays good corporate citizenship and conducts operations in a socially
responsible manner affects your company’s image rating. However, the image gains are minimal
unless your company’s actions are “comprehensive” (involve several, but not necessarily all, of the
optional citizenship and social responsibility programs), entail more than token efforts (as indicated by
how much money is being spent), and represent an ongoing effort of at least 4-5 years.
Finance and Cash Flow Decisions
The Finance and Cash Flow decision page involves 8 decision entries and provides projections of cash
inflows and cash outlays for the current year, along with projections of other important year-end
financial statistics. Going into Year 6, your company has a B credit rating and a reasonably strong
balance sheet. At the end of Year 5, the company’s total assets were financed with 59% debt and 41%
equity, putting the company in good position to cover its interest and principal payments on loans
outstanding to the Global Community Bank (GCB), with which the company does all of its banking,
financing, and foreign exchange transactions.

Interest Rates. Officials at GCB, under terms of the long-term banking agreement with your company,
have agreed to lend the company additional monies should you elect to use debt to help finance growth
and other financial needs. The interest rate on such loans is tied to the company’s credit rating and the
going rates of interest in world financial markets. Just as interest rates in real-world financial markets
change intermittently and unpredictably, there is no way to predict in advance what future interest rates
will be. The interest rate on 1-year (short-term) loans for companies with an A+ credit rating can range
from a low of 4% to a high of 7%; the interest rate on 1-year loans for companies with a C− credit rating
can range from a low of 10% to a high of 13%. Going into Year 6, the interest rate on 1-year loans for
companies with an A+ rating is 4.5%; C− rated companies pay 11% interest on 1-year loans. The
GCB’s present interest rate for 1-year loans carrying a B rating is 6.5%. Longer-term loans are
available at somewhat higher interest rates—a 5-year loan carries a 0.50% interest rate adder and a
10-year loan carries a 1.0% interest rate adder; these adders apply to 5-year and 10-year loans granted
at all credit ratings. New interest rates for 1-year, 5-year, and 10-year loans are announced at the
beginning of each year and appear in the Interest Rates table on the Corporate Lobby page.
The company's banking arrangement with GCB calls for the company to be paid interest on any
positive cash balance in the company’s checking account at the beginning of each year. The agreed-
upon interest rate is set at 3.5 percentage points below the prevailing interest rate for short-term loans
carrying an A+ credit rating. Going into Year 6, the interest rate of A+-rated 1-year loans is 4.5%, which
means the money market rate paid on cash balances will be 1.0%. If the company overdraws its
checking account, GCB will automatically issue your company a 1-year “Overdraft” loan in an amount
sufficient to bring your ending cash balance up to zero. The interest rate charged on overdraft loans
carries a 2% adder (i.e. 8.5% if your B credit rating carries a 6.5% short-term interest rate). The
potential for overdrawing your checking account is signaled by a negative “Ending Cash” number in the
Projected Performance box at the left of each decision page (however, even a very small positive
Ending Cash number runs the risk of having an overdraft loan, since there is always uncertainty that
sales volumes, revenues, and cash inflows will be as high as projected).
Factors Determining the Company’s Credit Rating. Analysts at independent credit rating agencies
review the company’s financial statements annually and assign the company a credit rating ranging
from A+ to C−. A company’s credit rating is a function of three factors: (1) its debt-to-equity
percentages (defined as the percentage of total assets financed by debt and the percentage financed
by shareholder equity investment in the business); (2) its interest coverage ratio (defined as annual
operating profit divided by annual interest expense); and (3) its current ratio (defined as current assets
divided by current liabilities). Your company’s prior-year and projected performance on these three
credit rating measures is shown in the section at the bottom right of the Finance Decisions page. This
allows you to see when actions are needed to maintain a good credit rating. (See the Help section for
full details about how the three factors combine to determine the company’s credit rating.)
Financial Decisions. Finance decision entries should always come last in the decision-making
process. Until all of the other decision entries have been finalized there is no way to get reliable
projections of cash inflows and outflows for the year and estimate the company’s projected year-end
cash balance. The eight finance-related decision entries revolve around the following issues:
• Borrowing money—To finance operations the company may take out loans with 1-year, 5-
years, and/or 10-year terms. One-year loans are granted at interest rates corresponding to
the company’s current credit rating; 5-year loans carry an additional 0.50% and 10-year
loans carry a full 1% interest rate adder. In addition to a lower interest rate, a 1-year loan
has the advantage of quicker debt pay-down and smaller total interest costs, but also has
the disadvantage of having to re-finance the debt in the following year at perhaps less
favorable interest rates should cash flows not be sufficient to fully fund a 1-year loan
repayment. Longer 5 or 10-year loans have the advantages of locking in what may be an
attractive long-term interest rate and lowering annual principal payments; however, 5-year or
10-year loans, in addition to their higher interest rates, have the further disadvantage of
paying out bigger sums for interest over the life of the loan (which, in turn, depresses the
company’s interest coverage ratio over a longer period of time).

• Issuing shares of stock—Additional capital may be raised by issuing new shares of

common stock. New issues of common stock have the effect of diluting earnings per share
and ROE and should be done cautiously. From time to time, you may determine that the
company needs to raise additional equity capital to (1) help pay down a portion of the
outstanding loans (because of burdensome interest costs or because lowering debt is the
best way to improve the company’s credit rating) or (2) help pay for added assembly
capacity and/or robotics upgrades. The company’s board of directors has established a 40-
million share maximum on the total number of shares outstanding and there’s an on-screen
calculation showing the maximum number of shares that can be issued in any one year
(given the company’s financial condition). The company cannot issue new shares in the
same year that it elects to buy back (retire) outstanding shares. At the end of Year 5 the
company had 20 million shares outstanding. Each time you make an entry specifying how
many shares are to be issued, there are accompanying calculations showing the total
amount of new equity capital raised (see the cash inflows section) and the price at which
investors will agree to buy the newly-issued shares (the price declines as more shares are
issued because additional shares dilute earnings per share). In deciding how many shares
to issue, you can try several “what if” entries and check out the effects on earnings per
share, return on equity, and the amount of money raised.
• Early repayment of long-term bank loans—You have the option of accelerating debt
retirement (or refinancing high interest debt) by using excess cash on hand, new issues of
stock, or proceeds from new loans to pay off the outstanding principal on up to 2 of the
outstanding 5 and 10-year loans. This is accomplished by simply selecting the loan number
of the loan you want to pay off (loan numbers are indicated in Note 8 to your company’s
balance sheet). All such loan repayments are considered end-of-year repayments; thus, the
company will still make the current-year annual principal payment and interest payment on
any long-term loan that is repaid early.
• Paying dividends—The company paid no dividend to shareholders in Year 5. You have
the authority to declare a dividend, subject to certain conditions. The maximum allowable
dividend entry is 2 times projected earnings per share; moreover, projected total
shareholder equity must always remain at or above $100 million after any and all dividend
payments. No dividend can be paid should projected total shareholder equity fall below the
$100 million minimum established by the company’s board of directors (a policy that won the
enthusiastic approval of credit rating agencies). Higher dividends are welcomed by share-
holders and have a positive effect on the company’s stock price (unless dividend payments
exceed earnings per share and can’t be sustained at present levels).
• Repurchasing shares of stock—Using cash on hand to repurchase and retire outstanding
shares has the advantage of increasing earnings per share, returns on equity investment, and
the company’s stock price. While you have the authority to initiate stock repurchases, the
Board of Directors has reserved the right to limit the number of shares repurchased in
any given year—such limits vary from year to year and are shown on the Finance Decisions
page just below the stock repurchase entry field. The company must maintain a minimum of
15 million shares outstanding and a minimum total shareholder equity of $100 million.
The company cannot repurchase outstanding shares in the same year that it elects to issue new
shares. Each time you enter a number for share repurchases, you are provided calculations
showing the total cost of the repurchased shares (see the cash outlays listings) and the price at
which investors will agree to sell the shares you want to buy back (the price rises as more
shares are repurchased because of the upward impact on earnings per share and the bigger
fraction of ownership that fewer shares represent).
Decision-Making Procedures
It is feasible (often normal) for co-managers to log-on simultaneously and each be engaged in entering
decisions. In the communication section at the bottom-left of all decisions/reports pages there is a
microphone button that connects teammates to audio mode (live voiceover internet communication).
The adjacent button (with the arrows) enables collaboration mode, synchronizing each connected

team member so that all see the same page at the same time. You will find it highly desirable to work
jointly in “audio mode” and “collaboration mode”.
Any time a co-manager clicks the Save button (upper-right), all of the entries on all decision entry
pages are written to the GLO-BUS server. Any and all co-managers can enter save decisions, and all
entries can be changed and resaved as many times as desired prior to the decision round deadline set
by the course instructor. The last set of decision entries saved (by any team member) before the
decision round deadline are the entries used to generate the results for the round. Coordination
and consensus on the decision entries is strongly urged but is left as a matter for you to work out with
your co-managers.
What the Board of Directors Expects: Results in Five Key Areas

The Board of Directors has charged you with developing a strategic direction and crafting a
strategy that delivers consistently good results. Board members have set five clear-cut performance
objectives for the company’s management team:
1. Grow earnings per share from $0.75 at the end of Year 5 to $1.25 in Year 6, $2.00 in Year
7, $3.00 in Year 8, $4.25 in Year 9, $5.50 in Year 10, $7.00 in Year 11, $8.50 in Year 12,
$10.50 in Year 13, $12.50 in Year 14, and $14.50 in Year 15.
2. Grow average return on equity investment (ROE) from 14.0% at the end of Year 5 to
17.5% in Year 6, 20% in Year 7, 25% in Year 8, 30% in Year 9, 35% in Year 10, 40% in
Year 11, and by an additional 2.5% annually in Years 12 through 15 (thus reaching 50% in
Year 15). Average ROE is defined as net income divided by the average of total
shareholder equity balance at the beginning of the year and the end of the year. Average
ROE for each company is reported on page 2 of the Camera & Drone Journal. Data for
calculating your company’s average ROE appears on page 4 of the Company Operating
Reports in the notes to the company’s Balance Sheet.
3. Achieve stock price gains from $12 at the end of Year 5 to $20 in Year 6, $35 in Year 7,
$60 in Year 8, $100 in Year 9, $150 in Year 10, $200 in Year 11, $250 in Year 12, $300 in
Year 13, $330 in Year 14, and $350 in Year 15. Board members believe these stock price
gains are within reach if the company meets or beats the annual EPS targets, achieves the
targeted rates of return on shareholders’ equity (ROE), rewards shareholders with growing
dividends, and from time to time prudently uses its financial capabilities to repurchase
shares of stock. The company’s stock price was $12 per share at the end of Year 5.
Note: Stock price is a function of revenue growth, earnings per share growth, average
ROE, credit rating, the rate of growth in the annual dividend paid to shareholders, and
management’s ability to consistently deliver good results (as measured by the
percentage of each year’s 5 performance targets that your company achieves).
4. Maintain a healthy credit rating, defined as B+ or higher in Years 6 and 7, at least A- in
Year 8 through Year 10, and at least A in Year 11 through Year 15. The company’s credit
rating was B at the end of Year 5.
5. Achieve an image rating (brand reputation) of 70 or higher in Year 6, 72 in Years 7-8, 75 in
Years 9-10, 77 in Years 11-12, and 80 in Years 13-15. The image rating is a function of (1)
your company’s P/Q ratings for action cameras and UAV drones, (2) your company’s global
market shares for both action cameras and UAV drones (as determined by your market
shares in the four geographic regions), and (3) your company’s actions to display corporate
citizenship and conduct operations in a socially responsible manner over the past 4-5 years.
Your company had an image rating of 70 at the end of Year 5.
Board members believe all of the performance targets for Years 6-15 are reasonable and
achievable by company managers, given the strong growth and profit opportunities that exist in
the global market for action cameras and UAV drones during the Year 6 to Year 15 period.

The Board of Directors has given you broad strategy-making and operating authority to pursue the
achievement of these 5 performance objectives, subject to two primary constraints: (1) your company
may not merge with another company—the Board wishes the company to remain independent, and (2)
company co-managers are expected to comply fully with all legal and regulatory requirements and to
conduct the company’s business in an ethical manner. Furthermore, the Board has made all of the
above performance targets publicly available to all shareholders and to the investment community;
thus, investors are expecting the company to achieve these annual targets.
Reporting the Results

When the deadline for a decision round passes, the GLO-BUS system processes the decision entries
of all companies in the industry and sends an e-mail notification that the results for the round are ready
(usually less than 20 minutes after the deadline). The results are presented in the form of three reports:
• The Camera & Drone Journal which contains (a) a 3-page company performance
scoreboard, (b) a 1-page statistical overview of the global market for cameras and drones
and unit sales forecasts of cameras and drones for the next two years—with breakouts by
geographic region, (c) 1 page of comparative financial statistics for all companies, and (d) 2
pages of data containing comparisons of how certain costs and profitability measures for
your company compare against industry low, average, and high benchmarks.
• The Competitive Intelligence Report which has highly useful three menu selections: (1) a
Comparative Competitive Efforts report that shows the levels of competitive effort exerted by
each company on all 11 competitive factors for AC cameras and all 9 competitive factors for
drones, plus unit sales and market share outcomes, for each company in each region; (2) a
Regional Average Competitive Efforts report that shows the all-company regional-average
levels of competitive effort in each region for all years completed to date, and (3) a Time
Series Competitive Efforts report for any company of interest that enables you to easily track
the competitive maneuvering of any rival company for all years completed to date.
• A set of Company Operating Reports consisting of 1-page showing your company’s
assembly and facilities operations, 1-page detailing the performance of your company’s
action camera business in each of the four geographic regions and worldwide, 1-page
showing the performance of your company’s UAV drone business in each of the four
geographic regions and worldwide, and 1-page with your company’s financial statements.
You will find the information in these reports essential in guiding your decisions for the current year.
You are strongly urged to click on the Help button at the top of each report page to see
discussions of (a) how to use each report and what some of the numbers mean, (b) cause-effect
relationships, and (c) analysis recommendations and decision-making tips. When you receive e-mail
notification that the results for a round are ready, the first thing you should do is review the three
reports. You may access the current-year and all prior-year reports through the Decisions/Reports
program at any time, but you may also find it advantageous to have printed copies of the reports during
decision-making.
It is especially important to evaluate how well your company fared on the company performance
scoreboard (the first three pages of the Camera & Drone Journal). Also, you should review the
benchmarking data on pages 6 and 7 of the Camera & Drone Journal to determine whether some of
your company’s costs are out-of-line with those of rivals. Further, always make a point of carefully
scrutinize the information on all four pages of the Comparative Competitive Efforts report to discover
the competitive factors where your company had a competitive advantage versus rivals and where your
company suffered from a competitive disadvantage. Do not fail to read the Help pages for this
report for guidance about how to properly interpret the information and for decision-making
suggestions. Also, you should use the data in the Regional-Average Competitive Efforts report to help
make you make informed updated competitive assumptions entries on the AC camera marketing and
UAV marketing decision screens. Finally, you should study pages 2 and 3 of the Company Operating
Reports to discover how your company’s camera and drone businesses performed in the four
geographic regions. Then you can begin to assess what corrective actions need to be taken to improve
company profitability and consider the changes you want to make in the next decision round.

Scoring Your Company’s Performance

Your instructor has placed weighted the relative importance of the five scoring variables: Earnings
Per Share (EPS), Return on Average Equity (ROE), Stock Price, Credit Rating, and Image Rating.
These weights translate into some number of points for each of the scoring variable, with the sum of the
points adding to 100. Your company’s performance on the five scoring variables is measured using two
different scoring standards:
1. The Investor Expectations (I.E.) Standard. This scoring standard involves calculating an
annual “Investor Expectation Score” based on your company’s success in meeting or
beating the performance targets for EPS, ROE, stock price, credit rating, and image rating.
There is also a Game-to-Date Investor Expectation Score that measures your company’s
success in achieving or exceeding the five expected performance targets over all years of
the exercise completed so far. Meeting each expected performance target is worth some
percentage of 100 points, as determined by your instructor. For example, if the scoring
weight for EPS is 20% or 20 points, meeting the EPS target earns a score of 20 on the EPS
scoring variable. Beating a target results in a point award of 0.5% for each 1% the annual
target is exceeded (up to a maximum of 20%). So, if achieving the EPS target is worth 20
points, a company can earn a score of 24 points if it exceeds the annual EPS target by 40%
or more. Failure to achieve a target results in a score equal to a percentage of that target’s
point total (based on its weight out of 100 points). If your company earns an EPS of $2.00
at a time when the EPS target is $4.00 and achieving the investor-expected ROE target is
worth 20 points, then your company’s EPS score would be 10 points (50% of the 20 points
awarded for meeting the EPS target). Exactly meeting each of the 5 performance targets
results in an Investor Expectation Score of 100. With potential point awards of up to 20% for
exceeding each performance target by 40% or more, it is possible to earn an Investor
Expectation Score as high as 120.
2. The Best-In-Industry (B-I-I) Standard. This scoring standard is based on how your
company’s performance compares (1) to the industry’s best performing company on EPS,
ROE, Stock Price, and Image Rating and (2) to the ultimate Credit Rating of A+. After each
decision round, company performances on EPS, ROE, Stock Price, and Image Rating are
arrayed from high to low. The Best-In-Industry performer on each of these 4 scoring
variables earns a perfect score (the full number of points for that measure as determined by
the weights chosen by your instructor)—provided the industry leader’s performance equals
or exceeds the investor-expected performance target established by the company’s Board
of Directors. Each remaining company earns a fraction of the points earned by the Best-In-
Industry performer that is equal to its performance divided by the performance of the
industry-leading company. For instance, if ROE is given a weight of 20 points, an industry-
leading ROE performance of 25% (that is above the investor-expected ROE) gets a score of
20 points and a company with an ROE of 20% (which is 80% as good as the industry
leader’s ROE) gets a score of 16 points (80% of 20 points). Likewise, if EPS is given an
instructor-assigned weight of 20 points, a company with an industry-leading EPS
performance of $4.00 gets a score of 20 points and a company with an EPS of $3.00 (which
is 75% as good as the industry leader’s EPS) gets a score of 15 points (75% of 20 points).
The procedure for assigning best-in-industry scores for credit rating is a bit different. Each
credit rating from A+ to C− carries a certain number of points that scales down from the
maximum for an A+ credit rating to 1 point for a C− rating.
Each company’s combined point total on the five scoring variables is its score for the Best-
In-Industry standard. Your company will receive an annual Best-In-Industry score as well as
a B-I-I score for all years completed. In order to receive a score of 100, a company must (1)
be the best-in-industry performer on EPS, ROE, stock price, and image rating, (2) achieve
the investor-expected targets for EPS, ROE, stock price appreciation, and image rating set
by the company’s Board of Directors, and (3) have an A+ credit rating.

After each decision round, you will be able to review all company performance scores for both the
Investor Expectations and the Best-In-Industry standard, along with an overall “game-to-date” (G-T-D)
score for each standard. The annual and game-to-date Overall Scores are determined by combining
the I-E Score and the B-I-I Score into a single score using whatever weighting your instructor has
chosen (often 50-50). All scores are reported on the first 3 pages of each issue of the Camera & Drone
Journal, and you can read the full scoring details by clicking on the Help button for each of these pages.
Important Advice
In making decisions, you are strongly encouraged to manage your company in a serious,
professional manner. Running a GLO-BUS company entails practicing and experiencing what it
takes to develop winning strategies in a globally competitive marketplace and being held fully
accountable for the results of your actions—just as managers in the real-world are held accountable for
the performance of the companies they run. Be wary of trying something that is highly risky,
managerially irresponsible, or un-businesslike (things that might get a manager fired in a real
company)—operating a GLO-BUS company like a daring adventurer with no regard for the dangers of
“shoot-from-the hip” decision-making can result in poor company performance. The odds of success
are better when you assume the role of a business professional who is trying to achieve the best
possible company performance using managerially prudent and competitively astute business
approaches.
Also, be alert to the dangers and risks of following the advice of friends or acquaintances (who have
previously participated in the GLO-BUS exercise) or relying on tips from Internet sources regarding
what to do to “win” or get a good grade. The GLO-BUS exercise is very much a contest where the
success of your company’s competitive efforts and overall performance depends on competing
effectively against the rival companies in your particular industry—whatever went on in other
industries at other times and places has little bearing on the competitive circumstances of your industry.
So following tips and advice recommended by outsiders carries significant risk of being “wrong” or “off
the mark” when it comes to figuring out what your company needs to do to combat the specific actions
and decisions that other companies in your class are.
Stay focused on the fact that the upcoming decision rounds involve a series of head-to-head battles
among the strategies, competitive maneuvering, and operating decisions of the companies competing
in your particular industry. At the same time your company’s management team is crafting maneuvers
to outcompete and outperform rivals, rival company managers are scheming to outcompete and
outperform your company. Consequently, it is critically important for you to (a) use the information in
the 4-page Comparative Competitive Effort Report to learn exactly how the attributes of rivals’ product
offerings stack up against the attributes of your company’s brand of cameras/drones, (b) try to match
wits with rivals and anticipate their next moves (to raise/lower prices, increase/decrease their P/Q
ratings, and so on), and (c) make competitive moves and decisions of your own that you believe hold
good prospect for delivering good profitability and achieving other investor-expected outcomes. Just as
in sports where it is customary for every team to scout its next opponent thoroughly and develop a
game plan to defeat them, so also in GLO-BUS you are called upon to scout the strategies and
competitive maneuvering of rivals, try to judge what moves they will make next, and then craft a
competitive strategy of your own aimed at “defeating” their strategies and boosting your company’s
overall performance.
Therefore, our recommended recipe for success in becoming one of the top-performing companies in
your industry is to stay on top of changing market and competitive conditions, try to avoid being
outmaneuvered and put into a competitive bind by the actions of rival companies, strive to price and
market your brand of cameras/drones in ways that produce acceptable revenues and profits, be diligent
in operating your company cost-efficiently, and observe sound financial management practices.
When the exercise is over, the only thing separating high-performing companies from those with
weaker performances will be the caliber of the strategies and decisions of each company’s manage-
ment team. All that the GLO-BUS system does in processing the decision entries is to referee the
competitive contest and declare whose decision entries produced the best results.

What You Can Expect to Learn

GLO-BUS is a hands-on, learn-by-doing exercise designed to:
• Connect directly to the material in your textbook and give you practice in applying basic
strategy concepts, using the tools of strategic analysis, and crafting strategies. GLO-BUS
provides the opportunity to put into play much of what you have read and gain some
proficiency in utilizing the concepts and tools of strategic analysis. You will have to assess
industry developments and competitive conditions in the different market segments, chart a
long-term direction for your company, set and achieve strategic and financial objectives,
craft strategies that produce good results and perhaps lead to competitive advantage, and
adjust strategic plans in response to changing conditions. You will be provided with
competitive intelligence on what rivals are doing and anticipate what moves they are likely to
make next. You will be responsible for doing the strategic thinking needed to successfully
lead your company in a globally competitive marketplace. Learning these things and
understanding of why they matter are the heart and soul of a business strategy course.
• Draw together the information and lessons of prior courses, consolidate your knowledge
about the different aspects of running a company, and provide a capstone for your business
school education. GLO-BUS incorporates a wealth of material covered in earlier business
courses. Wrestling with accounting and financial data, production operations, workforce
compensation, marketing, and financial management issues will give you a stronger
understanding of how all the different functional pieces of a business fit together and teach
you the importance of looking at decisions from a total-company perspective and unifying
functional area decisions to create a cohesive strategy. You will see why and how decisions
made in one area spill over to affect outcomes in other areas of the company. GLO-BUS is
very much a capstone learning experience that ties together material from other core
courses and gives you a better grasp of what running a business is all about.
• Deepen your understanding of revenue-cost-profit relationships and build your confidence in
utilizing the information contained in company financial statements and operating reports.
The numbers-oriented nature of GLO-BUS, where you repeatedly make decisions and
immediately see their impacts on revenues, cost, profits, cash flow, and other important
factors, and where you are confronted with all kinds of statistical information about your
company and your industry, has the beneficial result of helping you gain command of “all the
numbers” that surround the tasks of managing a company’s operations. The power of
having the computer instantaneously calculate the consequences of each decision will make
you appreciate the importance of basing decisions on solid numbers instead of the
quicksand of "I think", "I believe", and "Maybe it will work out okay." Moreover, because you
will have frequent occasion to review all kinds of operating data, identify costs that are out-
of-line and take corrective action, try to boost the profitability of the company’s business in
under-performing geographic regions, and pursue proactive approaches to take to improve
your company’s performance, you will see why you cannot hope to make prudent decisions
without full command of the numbers—you won’t have to participate in the GLO-BUS
exercise very long to appreciate why shooting from the hip is a sure ticket for disaster.
• Provide valuable decision-making practice and help you develop better business judgment.
While making the strategic and operating decisions that arise in GLO-BUS, you will get
practice in deciding what to do. You will experience the thrill of “good” decisions (good in
the sense they contributed to above-average or superior company performance) and the
consequences of “bad” decisions (bad in the sense that the company’s performance turned
out worse than expected). Repeatedly making decisions on the factors that make up GLO-
BUS will sharpen your sense of business judgment. With of all this decision-making
practice, you will get to test your ideas about how to run a company, and there will be
prompt feedback on the caliber of your decisions.
The bottom line is that being an engaged participant in the GLO-BUS exercise will make you better
prepared for a career in business and management. Further, we predict that GLO-BUS will make your
competitive juices flow and that you will have a lot of fun.

Copyright © GLO-BUS Software, Inc. Product Design Decisions Help
Product Design Decisions

Explanations – Cause-Effect Relationships – Suggestions and Tips
This two-part decision page—the left-side for AC cameras and the right side for UAV drones—involves
specifying (1) the components, design elements, and extra performance features to be incorporated in your
company’s cameras/drones, (2) the number of models to have in each line, and (3) how much to spend on
product R&D. The numbers showing in the decision entry boxes are those made in the prior year until your
company’s management team enters changes. The decisions here are important because they
determine the P/Q ratings that will be assigned to your cameras and drones and because they also
have a major bearing on production/assembly costs.
Each time you make a new decision entry on this screen, an assortment of on-screen calculations will instantly
show the projected effects on P/Q ratings, the costs of components and features, total production costs, and
production costs per unit. All of these on-screen calculations are there to help you evaluate the relative
merits of one decision entry versus another. The challenge here is to arrive at product designs and
specifications that will result in the desired P/Q rating and entail acceptably low total production/assembly costs
per camera/drone.
Use the links below to quickly access the topic on which you want explanations, guidance, and suggestions.
Parts, Components, and Product Specifications

Extra Performance Features
Number of Models
Product R&D
P/Q Ratings
Projected Production Costs
Parts, Components, and Product Specifications Decision Entries

The better the caliber and performance capabilities of the parts and components used for action cameras
(image sensor size LCD display screen, image quality/resolution, camera housing, software editing/picture
sharing, and included accessories) and for drones (the built-in camera, GPS/WiFi/Bluetooth, battery pack,
body frame, rotor performance/flight controller, and so on) the better the product’s performance and quality (but
the higher the production costs per unit assembled).
All of the needed parts and components are purchased from outside suppliers; these suppliers sell essentially
the same items at the same prices to all companies. Suppliers have ample capabilities to furnish whatever
quantities are needed; no shortages will be encountered.
Impacts on Product P/Q Ratings. Each time you make an entry for a particular part or component, the
resulting effect on the P/Q rating is shown on the line just below the section containing the decision entries. As
you can observe, upgrading/downgrading some parts/components/specifications has a bigger effect on the
P/Q rating than upgrading/downgrading other parts/components/specifications, indicating that some design-
related features have a bigger impact on product performance and quality (P/Q ratings) than others.
There is a whole universe of different combinations of decision entries on this page that will produce a given
P/Q rating (say 5.0-stars or 6.7-stars or whatever), but the different combinations of achieving a given P/Q
rating typically have different production costs per unit, often significantly different costs—as you can see from
the on-screen calculations in the section labeled “Projected Production Costs.” So, expect to spend some time
Copyright © GLO-BUS Software, Inc. Page 1

GLO-BUS Product Design Decisions Help
trying out different decision-entry combinations to discover the lowest cost combination of achieving the
desired P/Q rating.
Special Note: The number of units your company is projected to sell in the upcoming year is almost
certain to differ from the prior year number. How many cameras/drones your company is projected to
sell is determined based on the entries your management team makes on the decision pages for AC
Camera Marketing and UAV Drone Marketing. After you complete your decision entries for these two
pages, there is much merit in returning to this Product Design page to view the updated projected
production costs and searching for a combination of decision entries that yields lower production costs
per unit.
Decision-Making Tip: It is normal, indeed necessary, to cycle back-and-forth through the decision
screens a number of times in order to arrive at a cohesive, well-aligned set of decision entries with
credible prospects of achieving good profitability.
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Extra Performance Features

You can have up to 10 extra performance features for action-capture cameras and up to 15 special features for
UAV drones. The extra performance features for action-cameras include such things as media ports, touch
screen menus, appealing built-in GPS/Wi-Fi/Bluetooth capabilities, and enhanced autofocus. Extra
performance features for drones include spare battery packs for rapid battery swapping, mapping software that
converts digital camera images into two-dimensional maps and/or 3D models, assorted industry-specific
applications, and such capabilities as position hold, automated return-to home, follow-me flight path, just-land-
this-thing, programmable flights, camera angle adjustment capability, additional automatic flight modes,
transmission of live video feeds, and the ability to lock the drone’s camera on a moving target.
The number of extra performance features has a major impact on product P/Q ratings. The costs of extra
performance features vary with the number selected—the costs of the first five features are considerably lower
than the costs of the last five features. You can try various numbers of extra performance features entries,
observe the impact on the P/Q rating and the per unit cost consequences and then settle on what number of
extra performance features is acceptable in terms of P/Q contribution and unit cost.
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Number of Models
While there’s certainly merit in trying to expand sales by adding more models to better satisfy diverse buyer
preferences and user requirements, increasing the number of models is not cost-free.
• Increasing the number of models negatively impacts the P/Q rating because of increased
opportunities for faulty assembly and increased chances for parts/components defects during the
warranty period (as can be seen by watching what happens to the P/Q rating when the number of
models is increased). Newly-designed models are likely to have design and/or performance
shortcomings/flaws that have to be worked out over time. In addition, the increased number of
different parts and components that the company must purchase to accommodate the differing
designs and specifications associated with a wider model line-up means increased chances for
parts/components defects to appear during the warranty period, which raises warranty claims. All
of these factors are considered in determining the upcoming year’s P/Q rating.
The negative impact on P/Q ratings of increasing the number of models can, however, be
countered by upgrading certain parts/components, adding more extra performance features, and/or

increased spending on product R&D. But such countermeasures, of course, have costs—as can be
tracked by checking the projected production costs per unit displayed in the Projected Production
Costs section of the screen.
• Increasing the number of models raises warranty costs—Because a greater number of models is
accompanied by higher warranty claims (due to increased opportunities for faulty assembly/testing
and greater frequency of defective parts/components), warranty costs are also higher. The effects
of increasing/decreasing the number of models on warranty costs are displayed in the section on
Projected Production Costs—see the line labeled “Allowance for Warranty Repairs.”
• Increasing the number of models reduces the number of units that PATs can assemble annually—
PATs cannot assemble and fully test 5 models as proficiently and as problem-free as they can
assemble and fully test 3 models. This is because different models use somewhat different parts
and components, different assembly and testing procedures are required for different models, and
PATs lose some work time in switching from assembly/testing of one model to assembly/testing of
another. Observe the changes to “Assembly Labor Costs” displayed in the Projected Production
Costs section that occur when the number of models is increased/decreased.
Reducing the number of models has the reverse effects—higher P/Q ratings, lower warranty costs, and better
PAT productivity. It is easy enough to track the effects of increasing/decreasing the number of models by
observing the changes in the on-screen calculations of the P/Q rating, warranty costs, and labor costs.
Projected warranty claim rates associated with different number of models are shown on the Marketing
Decisions screens for cameras and drones.
The Benefits of Increasing the Number of Models. Increasing the number of models will definitely have a
positive impact on a company’s unit sales and market share in each geographic region. But the sizes of
benefits of a wider product selection are not readily discernible from this decision page—the benefits (higher
sales and revenues and potentially higher profitability) are best evaluated in conjunction with the decision
entries and projected outcomes shown on the marketing decision entry pages for cameras and drones.
It is up to the company’s management team to weigh the pros and cons of increasing the number of models.
This will probably involve some cycling back-and-forth between this page and the two marketing decision
pages. How many cameras/drones your company is projected to sell in the decision round for which you are
now making decision entries is based on the P/Q rating and number of models shown on this page plus the
entries your management team makes on the two marketing pages: (1) the Marketing Decisions and
Competitive Assumptions for Action Cameras and (2) the Marketing Decisions and Competitive Assumptions
for Drones. Thus,
Suggestion: After you complete your Marketing/Competitive Assumptions decision entries, there is much
merit in returning to this page to view the updated projected production costs and perhaps searching for a
different combination of product design-related decision entries that entails lower projected
production costs per unit.
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Product R&D
The combination of current year spending and cumulative spending over time for product R&D acts to:
1. Provide a pipeline of tested ways to (a) add more features, (b) improve product performance, (c)
build the company’s proficiencies in designing new and improved camera/drone models, and (d)
make the company’s camera/drone models easier and quicker to assemble.
2. Reduce the costs of components, accessories, and enhancement features used in assembling
cameras/drone because company R&D personnel work closely with suppliers to identify ways to

reduce such costs without impairing their quality, durability, and performance—cost reductions are
realized as soon as current and cumulative R&D expenditures reach levels sufficient to produce
greater cost savings.
3. Increase a company’s camera/drone P/Q ratings (higher P/Q ratings are realized as soon as current
and cumulative R&D spending reach levels sufficient to produce better camera/drone performance
and quality).
4. Gradually increase the productivity of PATs in assembling camera/drone models (because some of
the company’s product R&D effort goes into developing product designs for the company’s
camera/drone models that are easier/quicker for PATs to assemble)—productivity gains are
realized as soon as a company’s R&D effort reaches a level sufficient to discover and test easier-to-
assemble product designs and to implement faster camera/drone assembly methods.
5. Reduce warranty claims and costs (because of the positive impact of product R&D expenditures on
camera/drone P/Q ratings).
There are separate spending entries for product R&D for cameras and drones so that you can place more/less
R&D emphasis on one product versus the other in achieving the desired P/Q ratings.
Be aware that a company’s cumulative spending on new product R&D (shown on the page just under the
decision entry field for new product R&D expenditures) is the chief driver of the benefits of R&D expenditures,
not current year spending—the value of current year spending comes mainly from the contribution it
makes to cumulative spending for product R&D.
Substantial R&D spending is typically required to improve product performance/quality and to develop more
sophisticated and useful software capabilities for both cameras and drones. The R&D challenges for
improving drone performance and user benefits are more formidable than for AC cameras, partly
because video camera technology is better understood and more mature, partly because drones are a
relatively new product with wide open opportunities for improving drone technology/performance and software
analysis of the video data collected during drone flights, and partly because the company just recently entered
the drone marketplace and has yet to fully develop its drone designs and discover how best to enhance the
performance and quality of its drones. Drone buyers, of course, are highly interested in drones that can stay
up in the air longer than the current norms of 15-20 minutes, fly distances well beyond the view of the person
operating the flight controller, are equipped with obstacle sensors to avoid crashing into obstructions in their
flight path, and have a bigger variety of performance-enhancing features and capabilities—such capabilities
present formidable R&D challenges that cannot be conquered without substantial and sustained R&D efforts.
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P/Q Ratings
P/Q ratings for AC cameras are based on an array of factors: (1) image sensor size, (2) size of the LCD
display screen, (3) image quality of the pictures/video, (4) number of modes for videos and still photos, (4)
camera housing, (5) editing/sharing capabilities, (7) included accessories (such as capacity of flash memory
card, rechargeable batteries, a plug-in battery-charger, and carrying case) (8) the number of extra performance
features, (9) the number of camera models a company offers, (10) a company’s cumulative spending on new
product R&D, and (11) the annual amount a company spends on training each PAT in the use of best practice
assembly methods, post-assembly product testing, and ways to reduce warranty claims.
P/Q ratings for UAV drones are a function of (1) the caliber of the built-in action-capture camera, (2) the
caliber of the built-in GPS/Wi-Fi/Bluetooth components, (3) battery life (maximum flight time per charge), (4)
number of rotors, (5) motor-prop performance and flight controller features/capabilities, (6) body frame
construction, (7) obstacle sensor capabilities and performance, (8) quality of the camera stabilization device,
(9) the number of extra performance features, (10) the number of drone models a company offers, (11) a

company’s cumulative spending on new product R&D, and (12) the annual amount a company spends on
training each PAT in the use of best practice assembly methods, post-assembly product testing, and ways to
reduce warranty claims.
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Projected Production Costs

The lower section of the page showing the projected production costs for cameras/drones contains two
columns of cost numbers. The first column shows total dollars and the second shows cost per unit. Both
calculations are based on the number of cameras/drones to be assembled and shipped to buyers displayed at
the bottom of the decision page.
Decision-Making Tip: Bear in mind that the assembly numbers are updated by the entries your
management team makes on the AC Camera Marketing and UAV Drone Marketing decision pages.
Thus, after you make decision entries for the two marketing pages and obtain current-year projections
of the number of cameras/drones that buyers are likely to purchase (and which will need to be
assembled and shipped), there is much merit in returning to this page to view the updated projected
production costs and searching for a combination of decision entries that yields both the desired P/Q
ratings and the lowest achievable projected production costs per unit.
What follows is an explanation of how these cost projections on this page are calculated:
• The total cost number for each of the parts/components/design elements is simply the cost per
component multiplied by the annual number of cameras/drones that need to be assembled and
shipped to fill the expected number of buyer orders (as displayed on the last line of the screen).
The unit costs for each of the parts/components/design elements are based on the price that is paid
to suppliers for the particular grade of part/component/design element you have entered in the
respective decision entry boxes. If you think the cost per unit for one or more design elements is
too high, then you can alter your decision entries and search for a lower-cost combination (or cut
back on the target P/Q rating).
• Total production costs for extra performance features are determined by multiplying the cost of
each extra performance feature by the projected number of cameras/drones to be assembled and
summing these amounts for all the extra performance features you have decided to incorporate; the
cost per unit number for extra performance features represents the average cost of all the extra
performance features that are to be incorporated in each camera/drone. The unit costs of extra
performance features vary with the number selected—there not a specific cost per utility feature,
rather the incremental cost of each additional feature is a variable that rises gradually for each
added feature.
The total cost number for extra performance features is simply the cost per camera for extra
performance features multiplied by the annual number of that type of camera scheduled to be
assembled and shipped.
• The total dollar and cost/unit calculations for “total cost of product components and features” equal
the sum of all the costs for all parts/components/design elements and extra performance features.
• The projected total costs and costs/unit numbers for “Assembly Labor Costs” are based on decision
entries on the Compensation, Training, and Product Assembly screen. They represent the
projected compensation costs for base wages, assembly quality incentives, perfect attendance
bonuses, fringe benefits, and overtime pay for all of the camera/drone PATs that will be needed to
assemble the numbers of cameras/drones it will take to satisfy projected buyer demand.
• The projected total costs for “Product R&D Expenditures” are equal to the amounts entered in the
decision entry fields for product R&D expenditures. The cost per unit number is equal to total R&D

expenditures for cameras/drones divided by the total number of cameras/drones projected to be

assembled.
• The projected total costs and costs/unit numbers for “Allowance for Warranty Repairs” represent the
costs of handling expected warranty claims for cameras/drones. Projected annual warranty costs
in both the total dollars and per camera columns are a function of the warranty period entry on the
marketing decisions page for cameras/drones, the anticipated warranty claim rate on
cameras/drones to be assembled and shipped, and the warranty claim cost per defective
camera/drone ($50 for cameras and $300 for drones).
• The projected costs for “Maintenance of Plant and Equipment” for the action-capture camera
assembly facility represent $4 million annually for exterior and grounds-related maintenance of the
facility itself, plus interior maintenance costs that average $8,500 for each camera assembly
workstation space, plus $7,500 in annual maintenance and refurbishment costs for each
workstation that has been installed to assemble cameras. The projected costs for “Maintenance of
Plant and Equipment” for the drone assembly facility represent $4,000,000 annually for exterior and
grounds-related maintenance of the facility itself, plus interior maintenance costs that average
$7,500 for each drone assembly workstation space, plus $6,000 in annual maintenance and
refurbishment costs for each workstation that has been installed to assemble drones.
• The company’s annual depreciation costs for camera-related plant and equipment and drone-
related plant and equipment are always equal to 5% of the gross fixed asset investments the
company has made over the years in its camera assembly facility and its drone assembly facility.
These facility-related investments include capital expenditures for land, facility space for
workstations, installed workstations, other assembly-related equipment, office furnishings, servers,
computers, and so on for each of the two products. Companywide gross investment in plant and
equipment is reported on the company’s balance sheet (the amount as of the end of Year 5 was
$250 million), but company accountants always allocate capital expenditures for plant and
equipment to either camera operations or drone operations. At the end of Year 5, gross investment
in camera operations was $150 million and gross investment in drone operation was $100 million,
which resulted in annual depreciation costs for cameras of $7,500,000 and annual depreciation
costs for drones of $5,000,000. Depreciation costs per unit are equal to annual depreciation costs
divided by the total number of units projected to be assembled (as shown on the last line of the
Product Design decision screen)
• The projections of “Total Production Cost” equal the sum of the above-listed costs, with the $/unit
number being the total production cost amount divided by the total number of units projected to be
assembled.
The last line on the Product Design decision page displays the number of units expected to be
assembled at regular time, the number at overtime, and the total. The total number of units is always
equal to the number that buyers are projected to purchase during the upcoming year. This total is divided
between the assembly at regular time and assembly at overtime according to how many workstations the
currently has available for assembly. Units are assembled at overtime only if there are insufficient workstations
to assemble all of the needed units at regular time. On a later decision page (Compensation, Training, and
Product Assembly), there are entries for increasing assembly capacity by adding workstation space and
workstations as may be needed to avoid (if you desire) overtime assembly and to be in position to fill all of the
projected buyer orders (should projected buyer demand exceed assembly capacity with maximum use of
overtime).
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GLO-BUS AC Camera Marketing Decisions Help
Action-Capture Camera Marketing Decisions

All seven marketing decisions for action cameras, together with your company’s P/Q rating for cameras and
the number of camera models offered (both of which are determined by entries on the Product Design
page) and your company’s brand reputation (determined at the end of the prior year) combine to determine
the strength of your company’s competitive efforts to compete successfully against rival companies and
capture an attractively profitable sales volume and market share in the AC Camera Market Segment in each
region.
Each time you make a decision entry on this page, the on-screen calculations in the Market Segment Statistics
section and in the Price-Cost-Profit Breakdown section will instantly show the projected effects, by geographic
region, on unit sales, market share, revenues, unit operating costs, operating profit, and operating profit
margin, as well as updated projections of overall company performance (in the box under the
Decisions/Reports menu). All of these on-screen calculations are there to help you evaluate the relative
merits of one decision entry versus another. As always, no decision entry is "final" until the decision
deadline passes, so you can try out many different entries in each of the 7 marketing-related decision boxes for
each geographic region and also try out as many different decision combinations as you wish in searching for a
"winning" strategy and combinations of marketing-related decision entries that offer the “best” or “most
attractive” projected outcomes across the four geographic regions.
Competitive Factors affecting AC Camera Sales/Market Share

Average Wholesale Price to Retailers
Retailer Support Budget
Advertising Budget
Website Displays/Info
Sales Promotions
Warranty Period
Halting Camera Sales in a Region
Market Segment Statistics
Price-Cost-Profit Breakdown
Competitive Assumptions
More Details about Exchange Rate Adjustments
Competitive Factors Affecting AC Camera Sales/Market Share

The top section of this page shows 9 of the competition-related factors that combine to determine the
buyer appeal and overall strength of your company’s competitive efforts to compete successfully
against the AC camera offerings of rival companies and thereby win an attractively profitable sales volume
and market share in each region.
 Your company's P/Q rating and number of models are determined by decision entries on the Product
Design decision page. Both can be increased or decreased, should you wish to make changes, by
returning to the Product Design page and making the desired adjustments.

 Your company’s brand reputation, the 10th relevant competitive factor, was determined by outcomes at
the end of the prior year and, thus, is a given. You can see how your company’s brand reputation
compares against the brand reputations of rivals (and thus whether your company has a brand reputation-
based competitive advantage or disadvantage on this competitive factor in the upcoming year) by
consulting the image rating data on p. 3 of the most recent Camera & Drone Journal.
 The seven AC camera marketing decision entries for each region on this page combine to determine the
overall competitive strength of your company’s marketing efforts vis-à-vis those of rival companies and thus
will have a significant positive/negative impact on your company’s camera sales and market share in each
region.
Tip #1: Experiment with different combinations of the AC camera marketing entries and try to discover a
combination with the most appealing performance projections. If the most appealing combination in one or
more regions entails a projected shortfall of cameras assembled (see the Compensation and Facilities screen),
then you can increase assembly capabilities or curtail your competitive efforts.
Tip #2: The first time you visit the AC Camera Marketing decision page, the entries you see in the Competitive
Assumptions section at the bottom of the page represent the prior-year regional average competitive efforts of
all companies. These prior-year competitive efforts in the Competitive Assumptions boxes for each region,
along with your company’s entries on this screen, are used to generate the projections of units sold, market
share, operating profits, and operating profit for each region, plus the overall company performance projections
in the box under the Decisions/Reports menu. But using the prior-year regional averages to calculate
these projections is problematic because rival companies are virtually certain to make changes in their
competitive efforts as they prepare their decisions for the upcoming year.
You should beware of putting much faith in projections partly based on backward-looking prior-year industry
averages of the competitive efforts of all the various companies in the industry when, in truth, it is highly
probable that, on average, rival companies will make some kind of upward/downward changes in their
competitive efforts in each region. In other words, the nature and strength of the competitive efforts your
company will face from rival camera-makers in the current or upcoming year is likely going to differ
from the previous year.
Recommendation: Consider updating the Competitive Assumptions entries at the bottom of this screen
before you start making your entries for the seven AC camera marketing decisions for the upcoming year
because any updates will most definitely impact all of the projected outcomes on this screen. Thoughtful,
analysis-based updates will make the resulting on-screen projections more “forward-looking” or “credible” or
“reliable” than “backward-looking” projections based on “out-of-date” prior-year industry averages. See the
Competitive Assumptions section of this Help document for guidance in making the updates.
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Average Wholesale Prices to Retailers. You have the flexibility to set different average wholesale prices for
your camera models for each region. There are several reasons to charge different prices in different regions:
1. Because competitive conditions and maneuvering of rivals (with regard to price or other competitive
factors) are different from region to region.
2. Because the buyers of action cameras in Latin America and the Asia-Pacific regions are more
sensitive to cross-brand price differences than are camera buyers in North America and Europe-
Africa.
3. Because you and your co-managers wish to stake out different market positions in each region and
pursue different strategies for competing in each region.

4. Because import duties are not the same for all regions.
5. Because exchange rate adjustments vary from region to region.
Alternatively, you have complete discretion to pursue a mostly global pricing strategy and charge identical (or
much the same) wholesale prices to retailers in each region—your company always markets the same camera
models having the same P/Q ratings and the same production costs in all four geographic regions of the world
(although other marketing-related costs, as well as the competitive efforts of rivals, tend to vary by region).
How the average wholesale price of your company's action-capture cameras in a given region compares to the
industry average price in that region has a major bearing on your company’s unit sales and market share in the
region. You can see the projected effect on unit sales and market share in a region of a change in the average
wholesale price to retailers by watching how much projected unit sales and market share change (see the
Market Segment Statistics section just below the marketing decision entries) when you enter a higher or lower
price. A higher/lower wholesale price translates into a higher/lower retail price, since retailers try to maintain a
fairly constant markup over the wholesale prices they have to pay digital camera makers.
Tip: Before attempting to enter a wholesale price to retailers always consult the most recent
Comparative Competitive Efforts section of the Competitive Intelligence Report to see whether your
company’s prior-year wholesale price in each region resulted in a price-based competitive advantage or
disadvantage and the percentage size of this advantage/disadvantage. A large percentage competitive
disadvantage in one or more regions should automatically trigger strong consideration of corrective
action—to at least narrow the disadvantage, if not eliminate it altogether. retailers compared against
those of rivals region by region. This, along with your entries of the anticipated industry averages of
wholesale prices to retailers in each region (see the “price to retailers” in the Competitive Assumptions
section at the bottom of the page), should provide helpful guidance in arriving at what average
wholesale price to retailers to enter for each region.
Each time you make alternative decision entries for average wholesale price, use the resulting changes in the
on-screen calculations to help zero in on what you and your co-managers consider, at least temporarily, to be
an "optimal" or at least "acceptable" decision entry for price. After you enter the other marketing decisions, you
can always come back to the decision entry for price in a particular region and make further adjustments.
Expect to recycle through the marketing decision entries for each region several times.
While lower average wholesale prices to retailers tend to boost unit sales/market shares (assuming you and
your co-managers do not undercut the effects of a lower price by reducing your company's competitiveness in
other areas), lower wholesale prices can narrow operating profit margins and lead to a decline in total profit
(because the gain in revenue attributable to a higher unit volume is insufficient to overcome the revenue
erosion associated with a lower price on all units sold). So as you try out different entries for average
wholesale price, it is important to look beyond just the effects on projected unit sales/market share for the
region and also check out the projected effects on (1) a region’s operating profit and operating profit margin
and (2) overall company performance.
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Retail Outlets. Observe that the last three lines of the Market Segment Statistics section show the number of
multi-store chains, online retailers, and local retail shops in each region that decided at the end of the prior
year to stock and display your brand of AC cameras in the upcoming year. In the last two months of each
year, camera retailers decide whether to stick with the camera brands they are currently stocking or whether to
make some adjustments based on five considerations:
1. Which camera brands in their region are growing in popularity and declining in popularity among
buyers (as measured by changes in each company’s market share in the region).
2. Company P/Q ratings relative to the industry average.

3. Each camera company’s expenditures for retailer support in the region relative to the regional
average
4. Each camera company’s number of weekly sales promotions in the region
5. The size of each company’s promotional discount during these weekly sales promotions.
The number of retailers willing to stock and merchandise each camera brand in each region in the upcoming
year are always updated when the prior-year decision entries are processed and are reported in the
Comparative Competitive Efforts section of the Competitive Intelligence Report.
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Retailer Support. Decisions on how much to spend on retailer support have to be made for each geographic
area. It is normal to spend different amounts on retailer support in different geographic areas because your
company has a different number of retailers in each region (as shown on the last three lines of the Market
Segment Statistics section) and also because unit sales vary considerably from region to region. It is normal to
spend different amounts on retailer support in different geographic areas because your company has a
different number of retailers in each region (as shown on the last three lines of the Market Segment Statistics
section) and also because unit sales vary considerably from region to region.
Retailer support expenditures in each region involve providing retailers with in-store signs, up-to-date product-
information brochures, and point-of-purchase (POP) displays that showcase engaging video samples and that
attractively present the company’s camera models and accessories. A portion of these expenditures are also
used to support the trips of company marketing personnel to visit the stores of high-volume retailers and work
with store managers/clerks in expanding/improving the footprint of the company’s POP displays.
The size of your company's retailer support budget in each geographic region is one of the factors determining
the competitiveness of your brand of cameras vis-à-vis the offerings of rivals and also has a major effect on
how many retailers in the region will be attracted to merchandise your cameras (this number is always updated
at the end of each decision round). Companies providing greater retailer support per unit sold gain a
competitive edge in attracting retailers to stock their brand compared to companies spending a lesser
amount on retailer support per unit sold. The bigger a company’s network of multi-store retailers, online
retailers, and local retail shops in a region, the stronger is its brand exposure to camera shoppers and the
better chance it has to win sales and market share in the region.
Consult the Comparative Competitive Efforts report to determine whether your company had a competitive
advantage or disadvantage on retailer support in each region in the prior year. The sizes of competitive
advantages or disadvantages, along with your entries of the anticipated industry averages of retailer support
expenditures in each region in this decision round, should provide adequate guidance for helping arrive at how
many dollars to spend for retailer support in each region.
Each time you make alternative decision entries for the retailer support budget, you can use the resulting
changes in the on-screen calculations to help zero in on what you and your co-managers consider to be an
"optimal" or at least "acceptable" decision entry.
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Advertising. It is normal to spend different amounts on advertising in different geographic areas since unit
sales and market share differ widely across each region. Decisions of how much to spend on advertising in
each region always need to be made with an eye toward how much rivals are likely to spend on advertising in
the upcoming year. It is very risky to arbitrarily decide to spend only so many dollars on advertising when rival
companies are spending double or triple your amounts. But this does not mean that you have to be drawn into
a contest with rivals on who-can-outspend-whom on advertising—rather it means you have to be alert to the
effect of advertising expenditures on your company's overall competitiveness against rivals.

If your company's advertising budget exceeds the industry average amount of advertising in a geographic
region, then your company will enjoy a competitive edge over rivals on advertising in that region—a condition
that positively impacts sales and market share. If your company's advertising expenditures are below the
industry-average in a geographic region, then your company’s advertising-based competitive disadvantage will
result in selling fewer cameras than would be the case at higher advertising levels. Consult the most recent
Comparative Competitive Efforts report to see how your company’s prior-year advertising expenditures
compared against those of rivals, region by region; these comparisons, along with your anticipated industry
averages of advertising expenditures in each region in this decision round, should provide adequate guidance
for helping arrive at how much to spend on advertising in each region.
Note: Bear in mind that there is no pre-determined value (say, 100,000 cameras) that has been
programmed into GLO-BUS specifying that if a company increases its advertising by $1 million annually
then its camera sales will rise by x units. Rather, the size of the impact of a $1 million increase in ad
spending always depends on the actions of competitors. The reason "it all depends" is perfectly logical
and realistic in a competitive marketplace.
Suppose, all other things remaining equal, your company increases its advertising in the Asian-Pacific
market by $1 million and your rivals change none of their prior year's competition-related decisions.
Your company's unit sales would rise by, say, x units (based on algorithms contained in the simulation).
But, if in the same year several rivals decide to raise their advertising by $500,000 in the Asian-Pacific
market, then your company's sales will rise by a lesser amount, say, only y units. And, should all rivals
elect to boost their adverting in the Asian-Pacific by $2 million (all other things remaining equal), your
company's $1 million advertising increase would be accompanied by a decline in unit sales (albeit a
smaller decline than if you had failed to increase advertising at all). So, just how many extra units your
company will sell as a result of increasing advertising by $1 million "all depends" on the full range of
competitive efforts of rivals and this includes actions not only with respect to their advertising levels but
also with respect to wholesale price, number of models, promotional activities, and so on. The "Well, it
all depends" answer also applies to the impacts on unit sales and market share for all other moves you
and your co-managers might make—raising/lowering prices, adding/deleting models, warranties,
producing cameras with a higher/lower P/Q rating, and so forth.
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Website Displays/Info. The timeliness, creativity, and effectiveness of the product displays, informational
content, and customer reviews at each company’s website, along with the website’s visual appeal and
functionality, is an important element in prompting buyers to visit a nearby retailer of the company’s brand,
personally inspect the company’s various models, and perhaps make a purchase. Visits to a company’s
website also enable customers to obtain needed after-the-sale technical support, download apps and software
updates for previously-purchased camera models, browse product manuals, discover how to file a warranty
claim, and use the chat function to pose questions to online personnel.
Spending different amounts in different regions is normal because (1) unit sales differ widely by region, (2) your
company’s management team may wish to put more emphasis on gaining sales/market share in some regions
versus others, and (3) rivals in some regions may be spending considerably more/less than your company on
this competitive factor. As should be the case for all the marketing decision entries, consult the most recent
Comparative Competitive Efforts report to see whether your company’s prior-year expenditures for website
displays/info resulted in a competitive advantage or disadvantage. The percentage sizes of these regional
competitive advantages or disadvantages, along with your entries of the anticipated industry averages of
website product displays/info expenditures in each region in this decision round in the Competitive
Assumptions section, should provide adequate guidance for helping arrive at how much to spend in each
region this upcoming decision round.
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Sales Promotions and Promotional Discounts. Rival companies can run from 0 to 20 week-long sales
promotion campaigns annually to tout their action-capture cameras—all such campaigns involve offering
retailers a discount of some size off the regular price. You will quickly see (by trying out different decision
entries for the number of weekly sales promotion campaigns and the percentage size of the price discounts
during these campaigns) that these two decisions can have a positive and profitable impact on the projections
of unit sales, market share, revenues, and operating profits. As a consequence, they are very important
marketing decisions. Promotional campaigns involving sales prices of 15% to 20% off the regular price have
substantially greater sales-enhancing impact than promotions offering only 5 or 10% discounts, even if a
company holds more weekly sales promotions with such small discounts.
Retailers like for the company to have periodic sales promotion campaigns because they call attention to the
brand, spur consumer interest and store traffic, and help increase unit sales. Both the number of promotional
campaigns annually and the size of the discounts off regular price are factors that impact the decisions of
retailers (multi-store chains, online retailers, and small local retailers) to stock and merchandise your brand of
cameras.
Again, make it a point to consult the most recent Comparative Competitive Efforts report to see whether your
company’s prior-year number of promotional campaigns and the percentage discount off regular price
compared against the regional averages. Were the percentage sizes of the resulting competitive advantages or
disadvantages “large” or “small.” A large percentage competitive disadvantage in one or more regions should
automatically trigger strong consideration of corrective action—to at least narrow the disadvantage, if not
eliminate it altogether. The percentage sizes of the competitive advantages or disadvantages, together with
your competitive assumption entries (in the bottom section of the page) of the anticipated upcoming-year
industry averages of (1) the number of promotional discounts and (2) the percentage discount off regular price
in each region, should help your management team decide on the two decision entries for sales promotions.
The effects of the promotional discounts are automatically considered in calculating the projections of the
company’s net revenues (after allowing for the revenue erosion associated with promotional discounts) and
operating profits in each region—see the on-screen calculations in the Price-Cost-Profit Breakdown section.
Net revenues per unit refer to the amount the company receives per unit sold after the effects of price
discounts during sales promotion campaigns are considered.
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Warranty Period. Lengthening the warranty period for cameras, while making your camera models more
appealing to buyers, also has the effect of boosting warranty repair costs because of (1) the increased
number of sales associated with offering buyers a longer warranty and (2) having warranty claims come in
over a longer period of time. Different warranty periods can be offered in different geographic regions.
 The expected warranty claim percentage and the projected warranty repair costs associated with
whatever length of the warranty period is entered are shown just under the warranty period decision
field. The cost of handling a warranty claim for your action cameras is $50 per claim.
 The percentage of expected warranty claims declines as your company’s P/Q rating for cameras
rises. (Your company’s management team can also opt to reduce the warranty claim percentage
by increasing the size of the “assembly quality incentive” paid to camera PATs—this means of
cutting warranty claim costs is discussed in the Help section for the Compensation, Training, and
Product Assembly Decision page.)
 As you can see from making different entries for the warranty period and observing the on-screen
projections for warranty claim costs, longer warranty periods can increase future warranty costs
significantly. Keep in mind that projected warranty claims repair costs are indeed projections, since
the actual number of cameras sold can turn out to be higher/lower than projected in the likely event
that the competitive efforts of rivals are weaker/stronger than anticipated.
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Halting Camera Sales in a Region. If, for whatever reason, you want to withdraw entirely from selling
cameras in a particular geographic region for one or perhaps more decision rounds, just enter the region’s
wholesale price as $0. Then also eliminate the dollar expenditures for retailer support, advertising budget, and
website product displays/info (in order to avoid paying costs for these items when you are not striving to secure
buyers and thus have no sales in the region). You can reenter a region and resume sales whenever you wish.
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AC Camera Demand (Unit Sales) and Market Share. The first two lines of the Market Segment Statistics
section for AC Camera Demand and Market Share display how prior-year actual unit demand and market
share compare against the projected unit demand and market share for the upcoming year, region by region.
As has been emphasized above, the upcoming year projections are based on (1) the entries currently showing
in the marketing decision boxes (and entries on all the other decision pages) and (2) the prior-year competitive
efforts of rival companies, as measured by the prior-year industry-averages (all-company averages) for selling
prices, advertising, promotions, P/Q ratings, and so on. The retail sales and market share projections can turn
out to be different from the actual outcomes the more that your judgments about whether the upcoming year
all-company averages for the various competitive factors for action cameras in each geographic region will
prove to be about the same, a little stronger/weaker, slightly stronger/weaker, somewhat stronger/weaker, or
much stronger/weaker prove to be off-the-mark.
Numbers of Retail Outlets. The last three lines of this section compare the number of multi-store chains,
online retailers, and local retail shops in each region that stocked and displayed your brand of action cameras
in the prior-year and the number that have decided to stock and display your brand of action cameras in the
upcoming year—there’s nothing you can do in the current year to attract additional retailers (the number
of retailers who decide to stock and merchandise your cameras this upcoming year make their decisions at the
end of the prior-year).
Gaining/Losing Retailers. How many retailers in a region that will decide at the end of the current year to
stock and merchandise your company’s brand of cameras the following year is based on five factors:
1. Your brand’s share of action-capture camera sales this upcoming year in that region. Other things
being equal, action-camera retailers are more attracted to stock and merchandise high-share
brands than low-share brands.
2. Your company’s P/Q ratings for its line of action cameras this upcoming year. Other things being
equal, camera retailers are more attracted to merchandise brands with high P/Q ratings as opposed
to brands with low P/Q ratings.
3. The number of week-long sales promotion campaigns your company undertakes this upcoming
year as compared to the regional all-company average. Retailers like a bigger number of sales
promotion campaigns because of the added store traffic and sales volume such campaigns
generate.
4. The size of the discount offered to camera retailers during the weekly sales promotion campaigns.
Obviously, camera retailers in each region view discount percentages that are above the regional
average more favorably than discounts that are below the regional average.
5. How much your company spends this upcoming year to support the merchandising efforts of your
retailers in each region as compared to the regional average of all camera-makers. Not
surprisingly, camera retailers consider relatively high or above-average amounts of merchandising
support as a positive factor as compared to lesser amounts of support.
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The following items in the Price-Cost-Profit Breakdown section are linked directly to the projections of how
many action cameras are expected to be sold in each region.
Wholesale Price — This number for each region always corresponds exactly to the price entered in the
decision box for “Average Wholesale Price to Retailers” at the top of the page.
Promotional Discounts — Some of the company’s camera sales are, of course, made during those weeks
when sales promotion campaigns are underway in a region and when the company has discounted its price to
retailers to enable retailers, in turn, to discount their regular retail selling price to camera buyers. The size of
the downward adjustment for promotional discounts for a region is governed by the number of weeks your
company opted to conduct sales promotion campaigns in that region and by the size of the promotional
discount offered to retailers in that region.
Exchange Rate Adjustment — The size and direction of the exchange rate adjustment for each region
typically varies in accordance with whatever real-world exchange rate fluctuations occurred between the
beginning of the prior-year decision round and the beginning of this upcoming year’s decision round.
 The company’s sales price for cameras sold to retailers in North America is adjusted up or down for
exchange rate changes between the U.S. dollar and the Taiwan dollar.
 The company’s sales price for cameras sold to retailers in Europe-Africa is adjusted up or down for
exchange rate changes between the euro and the Taiwan dollar.
 The company’s sales price for cameras sold to Asia-Pacific retailers is adjusted up or down for
exchange rate changes between the Singapore dollar and the Taiwan dollar.
 The company’s sales price for cameras sold to retailers in Latin America is adjusted up or down for
exchange rate changes between the Brazilian real and the Taiwan dollar.
Remember that the sizes of the exchange rate adjustment each year are always equal to 5 times the actual
period-to-period percentage change in the real-world exchange rates for US$, €, Brazilian real, Sing$, and
Taiwan$ (multiplying the actual % change by 5 is done so as to translate exchange rate changes over the few
days between decision periods into changes that are more representative of a potential full-year change).
However, because actual exchange rate fluctuations are occasionally quite volatile over a several-day period,
the maximum exchange rate adjustment during any one period is capped at 20% (even though bigger
changes over a 12-month period are fairly common in the real world). The GLO-BUS system accesses all the
relevant real-world exchanges rates and does all the pertinent calculations, thus relieving you and your co-
managers from mastering the intricacies of the exchange rate adjustments.
Options for Dealing with Favorable/Unfavorable Exchange Rate Adjustments. While you do not have to
worry with the mechanics of calculating exchange rate adjustments, you do need to concern yourself with what
actions, if any, to take to mitigate the unfavorable/negative exchange rate impacts and to capitalize on the
favorable/positive exchange rate adjustments shown on the decision page. There are several ways to counter
the adverse effects of unfavorable (those with a minus sign) exchange rate adjustments. One option is to
adjust sales and marketing efforts in a manner that results in (1) added sales in those areas where the
exchange rate adjustments are positive (favorable) and (2) somewhat smaller sales in the regions where the
exchange rate adjustments are negative (unfavorable). Another option is to raise the selling prices in a
particular region to help offset negative revenue adjustments and realize higher net revenue per camera sold.
Because all competing companies have assembly facilities in Taiwan and are thus subject to much the same
favorable/unfavorable exchange rate impacts on net revenues per camera sold, you may be able to make
offsetting price adjustments without much risk of putting your company at a price disadvantage.

Net Revenue Per Unit — The net revenue numbers in each region equal the average wholesale price to
retailers (as entered in the box on the first row of the page) adjusted downward for the effects of the price
discount during weekly sales promotions (see the two entries for sales promotions) and then adjusted
upward/downward for the effects of shifting exchange rates. Net revenue per unit, in effect, is the “actual cash”
amount in US dollars that the company is projected to receive on each action camera projected to be sold in
each region.
Cost of Units Assembled — the $/Unit number is calculated by dividing the projected total production costs of
the cameras that will need to be assembled and shipped to retailers in the region by the number of cameras
projected to be sold in the region (see the first row in the Marketing Statistics section).
Delivery Costs — the $/Unit number represents the costs per camera sold that will be incurred for shipping
($5 per camera in all regions) and import duties (import duties are $0 for North America, 4% of the average
wholesale price to retailers in Europe-Africa, and 6% of the average wholesale price to retailers in both Latin
America and the Asia-Pacific).
Both shipping costs and import duties are subject to change by your instructor (you will be notified of such
changes).
Marketing Costs — the $/Unit number equals all marketing costs incurred in the region (as a direct
consequence of the decisions entered on this page) divided by the projected number of cameras to be sold to
retailers in the region.
Administrative Expenses — your company’s camera-related administrative expenses are allocated to each
region based on that region’s projected percentage of total cameras sold worldwide. The $/Unit number
represents the total amount of the company’s administrative expenses for its camera assembly facility
allocated to each region divided by the projected number of cameras to be sold to retailers in the region. This
generally accepted accounting procedure for allocating a company-level expense to different geographic
regions results in the same administrative cost per camera sold in all four regions.
Total Operating Cost — the $/Unit number equals net revenues per unit less all projected operating expenses
per camera sold (cost of units assembled, delivery costs, marketing costs, and administrative costs). Interest
payments and taxes are not part of operating expenses, as per general accounting principles.
Operating Profit — the $/Unit number for projected operating profit is calculated by subtracting projected total
operating cost per camera sold from projected net revenues per camera sold.
Operating Profit Margin — the projected percentage for operating profit margin equals projected operating
profit per camera sold divided by projected net revenue per camera expected to be assembled, shipped and
sold to retailers in each region.
Projected negative operating profits per camera sold and the associated projected negative operating
profit margins in any region are red flags that company managers should address/correct immediately.
The same can be said of operating profits per camera sold and operating profit margins that, while positive, are
nonetheless “too small” to produce attractive profitability.
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The role of the Competitive Assumptions is to provide you with a means of improving the accuracy of the
projections of your company’s unit sales, market shares, and operating profits in each region as well as the
seven projections of your company’s overall performance in the box under the Decisions/Reports menu. You
should be wary of performance projections that are based on the backward-looking prior-year regional average

levels of competitive efforts when the regional-average levels of competitive effort in the current year will most
probably differ from those in the prior-year.
There are multiple reasons to expect that the competitive efforts of rivals will, on average, not just be
different from prior-year levels but will be somewhat stronger than the previous year:
1. Poorly performing companies that were outcompeted last year have strong incentive to strengthen their
competitive efforts (particularly those where they suffered from competitive disadvantages).
2. High-performing rivals may well try to open up a wider competitive advantage on certain competitive
factors to further enhance their prior-year’s performance.
3. Companies that were surprised by unexpectedly strong competitive efforts by one or more of their close
rivals and, as a consequence, suffered a loss of sales and market share in one or more regions, may
well retaliate with much strengthened competitive efforts of their own to recapture their former market
share(s)—or even increase them.
4. Ambitious companies, intent on overtaking the industry leader, might well opt to boost their competitive
efforts on one or two competitive factors by significant amounts and thus achieve a big competitive
advantage that they hope will propel them into an industry-leading position.
5. Some (most?) companies are likely to try to enhance their camera sales and market shares in those
particular regions where their sales/market share performance was weakest and/or where their
operating profits were lowest.
6. Industry-leading companies have a strong incentive to strengthen their own competitive efforts—they
will not remain industry leaders for long by sticking with status quo competitive efforts across the board.
It is not farfetched for an industry leader to boost its competitive efforts on a competitive factor where
they have had a big competitive advantage—and thus try to widen their competitive advantage over
rivals.
7. All firms have an incentive to adjust their competitive efforts in one or more regions to improve their
company’s overall performance and thereby meet or beat the periodic and sometimes annual increases
in the investor-expected performance targets.
A good argument can be made, therefore, that company managers should expect competition to intensify in
the current/upcoming year and in later years, thus resulting in higher regional-average levels of competitive
effort in at least some, perhaps many, of the competitive factors governing regional sales and market shares.
After all, if you are considering making different marketing decision entries (or increasing/decreasing the P/Q
rating of your cameras or changing the number of models offered) to improve your company’s profitability and
performance, then the co-managers of most other rival companies are also likely to be considering how to alter
the makeup of their competitive efforts in order to improve their company’s profitability and performance.
Updating the Competitive Assumptions. Adjusting the regional averages definitely involves much
speculation and guesswork in Year 6 because there is no track record to go on in judging what rival
companies, on average, will do differently. It is a bit easier in Year 7 to make updates because you at least
know how much the regional averages changed from Year 5 to Year 6 (see the 4-page Regional-Average
Competitive Efforts selection on the Competitive Intelligence Report menu). Updating gets a bit easier still
headed into Year 8 because you have two years of history about the changes in the regional averages. As a
rule, as you become more familiar with strategies and competitive maneuvering of rival companies and as the
historical record of changes in the regional averages becomes larger (as reported in the Regional-Average
Competitive Efforts selection on the Competitive Intelligence Report menu), the task of updating the regional-
average competitive assumptions can be done quicker and usually with greater accuracy.

Beginning with your decision entries for Year 7 and every year thereafter, make it a point to review the year-
to-year historical changes in the Regional Average Competitive Efforts report in the Competitive
Intelligence Reports menu to see the trends in how each of the regional average competitive factors
have changed for all years/decision rounds to date. Make a printout of all four pages to have at your
fingertips when you start to update the prior-year regional averages for both AC cameras and UAV drones.
But be alert to the fact that historical trends should not be relied on 100% relied on for anticipating the actions
of competitors—historical trends may or may not be a reliable basis for projecting the future actions of rival
companies.
For your updates to have a forward-looking element, you need to consult the information in the
Comparative Competitive Efforts section of the most recent Competitive Intelligence Report and specifically try
to identify which companies are likely to make changes in which competitive efforts.
 Check out the competitive factors where poorly-performing were at a big competitive disadvantage
against the industry average, region-by-region. Poorly-performing companies (easily identified by their
low scores on the five performance measures on pp. 2-3 of the Industry Scoreboard in the Camera &
Drone Journal) have a big incentive to correct (or at least narrow) their big competitive disadvantages
and boost their overall competitive efforts by enough to improve their company’s profitability and
meet/beat the five investor-expected performance targets.
 Check out which other rivals were also burdened by one or more competitive disadvantages that give
them good reason to consider at least narrowing and maybe totally eliminating some (many? or all?) of
these disadvantages on the various competitive factors in all four regions. Do you see any reason to
suspect that several companies may try to turn one or more of these former competitive disadvantages
into competitive advantages. You are urged to use the Time Series Competitive Efforts report on the
Competitive Intelligence Report menu to easily track the competitive maneuvering of an industry leader
or close rival or any other company of interest for all years completed to date to try to anticipate what
moves a company may make in the upcoming year.
Thoughtful analysis of the information on the four pages of the most recent Comparative Competitive Efforts
report, used in conjunction with the year-to-year changes in the regional-average competitive factors, will help
you decide how much to raise/lower (or leave unchanged) the prior-year industry averages. On balance, you
should usually find reasons to expect that competition will intensify somewhat in the upcoming years
as all companies undertake efforts of one kind or another to improve their profitability and overall
performance.
Recommendation #1: Probably the safest or most conservative assumption about the prior-year averages is
that the overall competitive efforts of rivals will, on average, be "a little stronger" or "slightly stronger.” This
does not automatically mean that the regional averages of all 9 of the competitive factors will change in ways
that produce stronger competition. Slightly stronger competition could mean adjusting the prior-year industry
averages downward in the case of the average wholesale price to retailers by, say, $2 to $5, upward by 0.1 to
0.3 in the case of P/Q rating and number of models, and perhaps $100 to $250 in the cases of advertising and
website spending, 1-3 weeks in the case of sales promotions, a couple of percentage points in the case of
price discounts during sales promotions, and maybe as much as a 30-day jump in the warranty period in Years
6-8 because some companies are likely to boost the length of the warranties to 90 days or 120 days or even to
180 days (but changes are likely to drop to the 5 to 15-day range in later years as fewer companies make
warranty period changes). Be cautious about adjusting the regional industry averages up or down by
“large” percentage amounts. “Big year-to-year changes” in the industry averages occur infrequently, mainly
because all rivals are unlikely to make competitive changes in the same direction.
 However, in Years 8-12, should a price war break out or if several camera-makers aggressively step up
their marketing efforts for advertising, website displays, retailer support, and /or sales promotions to win
bigger sales/market share in a region, then "somewhat bigger" adjustments in some/many of the
regional averages may be appropriate.

 On the other hand, if competition in the prior year or two has been especially brutal, such that profits
across the industry have plunged, there may be reason to assume some/many companies will not
further intensify their aggressive and costly marketing efforts to pursue "profitless" gains in unit sales
and market shares, in which case you may leave many of the prior-year industry averages unchanged
(or possibly even assume that a few companies will cut back on certain competitive efforts, like
advertising or website displays or warranties, in an attempt to trim losses/restore profitability.
Recommendation #2: Try out graduated adjustments in the Competitive Assumptions (most especially for
price to retailers and for P/Q rating because they are such important competitive factors) and observe the
different impacts on the on-screen projections. Then see what changes in your own company’s competitive
efforts may be needed to counteract/defeat the potential changes in the competitive efforts (small or large) of
rivals in order for your company to achieve the desired levels of company performance you are targeting. This
will give you a better feel for what entries to make in the marketing decisions boxes and perhaps whether to
return to Product Design page and make changes in the number of models offered and/or P/Q rating.
Achieving increased unit sales and market shares in an industry environment where competitive conditions are
growing stronger will take a stronger competitive effort on your company's part (in the form of lower price,
higher P/Q rating, more advertising and promotional efforts, and so on) than if competitive intensity remains
about the same or grows weaker.
Tip: Slightly overestimating the amount by which the overall regional-average competitive efforts of
rivals will grow stronger can often result in better performance outcomes for your company than
underestimating how much the overall regional-average levels of competitive effort will rise in the
current/upcoming year. This is because if competition is weaker than expected, your company will
have stronger-than-projected demand for AC cameras and will actually end up with bigger sales/market
shares than were projected, provided your company has sufficient idle workstation capacity to
assemble and fill the unexpected orders from buyers. It is easy enough for your management team to
make it standard practice in your camera assembly facility to always have several more installed
workstations than needed to supply projected demand, just in case buyer demand in the upcoming year
turns out to be higher than expected. On the other hand, if you underestimate the strength of rivals’
competitive efforts, sales/market shares will turn out to be lower-than-expected and the company’s
overall performance will be worse than projected.
Consequently, when the results come out, it is far better to have the pleasant surprise of discovering
your company actually sold more than the projected sales volume in one or more regions rather than
experiencing the unpleasant surprise of learning that your company sold less than the projected sales
volume because you and your co-managers underestimated the strength of the competitive efforts from
rivals, and they captured some of the sales and market shares you were expecting to get. You can live
happily with the good surprise of better-than-expected results, but the bad surprise of weaker-than-
expected results is obviously something your company should try to avoid.
Remember: Improving the accuracy of the projections of upcoming-year performance by thoughtfully

assessing what levels of competitive effort that rivals, on average, are likely to undertake in the
upcoming year and using these assessments to update entries for the 9 competitive factors in the
Competitive Assumptions section has the added benefit of helping your company win score-
boosting Bull’s Eye awards (see page 3b of each year’s Camera & Drone Journal).
Is It “Absolutely Necessary” to “Update” the Prior-Year Regional Averages? The short answer is “no.”
How you run your company is your responsibility. Just be sure you are content to accept and deal with
whatever inaccuracy may exist in the region-by-region projections of unit sales, market shares, unit costs, and
operating profit that are calculated on the basis of how your company’s competitive efforts this upcoming year
stack up against last year’s overall competitive efforts of rival companies. So, if you don’t want to take the time
and trouble to develop your own reasoned judgments about the likely overall competitive efforts from rivals
your company will face in this upcoming year), then you can most definitely skip the task of updating the values
in the Competitive Assumptions boxes (but doing so is definitely not recommended).

Important: How far off the on-screen projections of unit sales, market shares, unit costs, and operating
profit will turn out to be from the actual results depends on the extent to which the adjusted or
unadjusted values for the various Competitive Assumptions differ from the actual industry averages that
appear in the upcoming year’s Competitive Intelligence Reports—the smaller the differences, the closer
the projections will be to the actual results; the bigger the differences (especially as concerns wholesale
price and P/Q rating), the greater the projections will differ from the actual results.
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More Details about the Exchange Rate Adjustments

As discussed earlier, exchange rate adjustments result from producing cameras in Taiwan (where the local
currency is Taiwan dollars) and selling them to retailers in other parts of the world (where local currencies are
different). These adjustments stem from two things:
1. Camera orders, camera shipments, and retailer payments for cameras all occur on different dates,
and currency exchange rates on these different dates are almost certainly going to be different.
2. The local currency payments of camera retailers have to be converted into Taiwan dollars and
ultimately into U.S. dollars (since the company reports its financial statements in U.S. dollars).
Thus the company’s business is one with potentially significant foreign exchange risks. To help manage these
risks, company officials have negotiated a long-term currency exchange agreement with the Global Community
Bank through which the company does most of its business; the agreement calls for the bank’s foreign
currency department to handle the company’s many foreign currency transactions. The agreement is complex
but the essence of the arrangement calls for the net revenues the company actually receives on cameras
assembled and shipped from the Taiwan assembly facility to retail dealers in various parts of the world to be
subject to exchange rate fluctuations in four local currencies (the U.S. dollar, the euro, the Brazilian real, and
the Singapore dollar) against the Taiwan dollar. For simplicity, both of the reasons for currency adjustments
are combined into a single adjustment based on the real-world currency swings during the period from one
decision round to the next as concerns the U.S. dollar against the Taiwan dollar, the euro against the Taiwan
dollar, the Brazilian real against the Taiwan dollar, and the Singapore dollar against the Taiwan dollar). More
specifically:
 The net revenues received from sales to North American retailers are adjusted up or down for
exchange rate changes between the U.S. dollar and the Taiwan dollar. Should the exchange rate
of U.S. dollars per Taiwanese dollar fall, say from 0.250 to 0.245 U.S. dollars per Taiwan dollar,
then retailer payments of the agreed upon number of U.S. dollars per camera at the time the order
was placed equate to more Taiwanese dollars at the time of payment and an upward (favorable)
adjustment in the company’s revenues. Conversely, when the exchange rate of U.S. dollars per
Taiwanese dollar rises, say from 0.250 to 0.255 U.S. dollars per Taiwan dollar (meaning that a
specified number of U.S. dollars equate to fewer Taiwanese dollars), then the company does not
receive as many Taiwan dollars in payment for the cameras sold and shipped to North American
retailers and the revenue adjustment is downward (unfavorable).
 The net revenues the company receives from sales to retailers in Europe-Africa are adjusted up or
down for exchange rate changes between the euro and the Taiwan dollar. Should the exchange
rate of euros per Taiwanese dollar fall from one decision period to the next, say from 0.250 to 0.245
euros per Taiwan dollar, then retailer payments of the agreed upon number of euros per camera at
the time the order was placed equate to more Taiwanese dollars at the time of payment and an
upward (favorable) adjustment in the company’s revenues. Conversely, when the exchange rate of
euros per Taiwanese dollar rises, say from 0.250 to 0.255 euros per Taiwan dollar (meaning that a
specified number of euros equate to fewer Taiwanese dollars), then the company does not receive
as many Taiwan dollars in payment for the cameras sold and shipped to Europe-Africa retailers and
the revenue adjustment is downward (unfavorable).

 The net revenues received from sales to Asia-Pacific retailers are adjusted up or down for
exchange rate changes between the Singapore dollar and the Taiwan dollar. Should the exchange
rate of Singapore dollars per Taiwanese dollar fall say from 20.40 to 20.35 Singapore dollars per
Taiwan dollar, then retailer payments of the agreed number of Singapore dollars per camera at the
time the order was placed equate to more Taiwanese dollars at the time of payment and an upward
(favorable) adjustment in company revenues. Conversely, when the exchange rate of Singapore
dollars per Taiwanese dollar rises, say from 20.40 to 20.45 Singapore dollars per Taiwan dollar
(meaning that a specified number of Singapore dollars equate to fewer Taiwanese dollars), then the
company does not receive as many Taiwan dollars in payment for the cameras sold and shipped to
Asia-Pacific retailers and the revenue adjustment is downward (unfavorable).
 The net revenues received from sales to Latin American retailers are adjusted up or down for
exchange rate changes between the Taiwan dollar and the Brazilian real. Should the exchange
rate of Brazilian real per Taiwanese dollar fall, say from 10.65 to 10.60 real per Taiwan dollar, then
retailer payments of the agreed upon number of Brazilian real per camera at the time the order was
placed equate to more Taiwanese dollars at the time of payment and an upward (favorable)
adjustment in the company’s revenues. Conversely, when the exchange rate of real per Taiwanese
dollar rises, say from 10.65 to 10.70 real per Taiwan dollar (meaning that a specified number of
Brazilian real equate to fewer Taiwanese dollars), then the company does not receive as many
Taiwan dollars in payment for the cameras sold and shipped to Latin American retailers and the
revenue adjustment is downward (unfavorable).
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GLO-BUS UAV Drones Marketing Decisions Help

The six drone marketing decisions (along with your company’s P/Q rating for drones and number of drone
models offered, both of which are determined by your management team’s entries on the Product Design
page) will largely determine the degree to which your company’s drones are competitive with the drones of
rival companies in this decision round.
Each time you enter a new decision on this page, the calculations in the Market Segment Statistics section and
in the Price-Cost-Profit Breakdown section will instantly show the projected effects, by geographic region, on
unit sales, market share, revenues, unit operating costs, operating profit, and operating profit margin, as well
as updated projections of overall company performance (in the box with the blue background on the middle-
left of the page). All of these on-screen calculations are there to help you evaluate the relative merits of
one decision entry versus another. As always, no decision entry is "final" until the decision round deadline
passes, so you can experiment with many different entries in the marketing-related decision fields in searching
for a “winning” marketing strategy and combinations of marketing-related decision entries that offer the “best”
or “most attractive” projected outcomes across the four geographic regions.
Competitive Factors affecting UAV Drone Sales/Market Share

Average Direct-Sale Price at Company Website
Discount to 3rd Party Online Retailers
Website Displays/Info
Search Engine Advertising
Retailer Recruitment
Warranty Period
Halting Drone Sales in a Region
More Details about Exchange Rate Adjustments
Competitive Factors Affecting UAV Drone Sales/Market Share

The top section of this page shows 8 of the competition-related factors that combine to determine the
buyer appeal and overall strength of your company’s competitive efforts to compete successfully
against the UAV drone offerings of rival companies and thereby win an attractively profitable sales volume
and market share in each region.
 Your company's P/Q rating and number of models are determined by decision entries on the Product
Design decision page. Both can be increased or decreased, should you wish to make changes, by
returning to the Product Design page and making the desired adjustments.
 Your company’s brand reputation, the 9th relevant competitive factor, was determined by outcomes at the
end of the prior year and, thus, is a given. You can see how your company’s brand reputation compares
against the brand reputations of rivals (and thus whether your company has a brand reputation-based

competitive advantage or disadvantage on this competitive factor in the upcoming year) by consulting the
image rating data on p. 3 of the most recent Camera & Drone Journal.
 The six UAV drone marketing decision entries for each region on this page combine to determine the
overall competitive strength of your company’s marketing efforts vis-à-vis those of rival companies and thus
will have a significant positive/negative impact on your company’s drone sales and market share in each
region.
Tip #1: Experiment with different combinations of the UAV drone marketing entries and try to discover a
combination with the most appealing performance projections. If the most appealing combination in one or
more regions entails a projected shortfall of drones assembled (see the Compensation and Facilities screen),
then you can increase assembly capabilities or curtail your competitive efforts.
Tip #2: The first time you visit the UAV Drone Marketing decision page, the entries you see in the Competitive
Assumptions section at the bottom of the page represent the prior-year regional average competitive efforts of
all companies. These prior-year competitive efforts in the Competitive Assumptions boxes for each region,
along with your company’s entries on this screen, are used to generate the projections of units sold, market
share, operating profits, and operating profit for each region, plus the overall company performance projections
in the box under the Decisions/Reports menu. But using the prior-year regional averages to calculate
these projections is problematic because rival companies are virtually certain to make changes in their
competitive efforts as they prepare their decisions for the upcoming year.
Beware of putting much faith in projections partly based on backward-looking prior-year industry
averages of the competitive efforts of all the various companies in the industry when, in truth, it is
highly probable that, on average, rival companies will make some kind of upward/downward changes
in their competitive efforts in each region. In other words, the nature and strength of the competitive efforts
your company will face from rival drone-makers in the current or upcoming year is likely going to differ from the
previous year.
Recommendation: Consider updating the Competitive Assumptions entries at the bottom of this screen
before you start making your entries for the six UAV drone marketing decisions for the upcoming year because
any updates will most definitely impact all of the projected outcomes on this screen. Thoughtful, analysis-
based updates will make the resulting on-screen projections more “forward-looking” or “credible” or “reliable”
than “backward-looking” projections based on “out-of-date” prior-year industry averages. See the Competitive
Assumptions section of this Help document for guidance in making the updates.
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Pricing Decisions. You have the flexibility to set different direct-sale prices at each of your company’s
regional website. There are several reasons to charge different prices in different regions:
1. Because competitive conditions and maneuvering of rivals (with regard to their website prices or
other competitive factors) are different from region to region.
2. Because the buyers of drones in Latin America and the Asia-Pacific regions are more sensitive to
cross-brand price differences than are drone buyers in North America and Europe-Africa.
3. Because you wish to stake out different market positions in each region and pursue different
strategies for competing in each region.
4. Because import duties are not the same for all regions.
5. Because exchange rate adjustments vary from region to region.

Alternatively, you have complete discretion to pursue a mostly global pricing strategy and charge identical or
much the same direct-sale retail prices in each region—your company always markets the same models
having the same P/Q ratings and the same production/assembly costs in all four geographic regions of the
world (although other marketing-related costs, as well as the competitive efforts of rivals, typically vary by
region).
Tip: Before deciding what direct-sale website prices to enter, always consult the 4-page Comparative
Competitive Efforts section of the most recent Competitive Intelligence Report to see how your company’s
prior-year prices compare to those of rivals region by region, and whether your company had a price-based
competitive advantage or disadvantage. The bigger the percentage size of any price-based competitive
advantage/disadvantage in a region, the bigger the positive/negative impact on your company’s regional drone
sales/market share. These competitive advantages or disadvantages, along with your entries of the
anticipated industry averages in each region (see the “price to retailers” in the Competitive Assumptions
section at the bottom of the page), should provide helpful guidance in arriving at what direct sale price to enter
for each region. Use the info in the Comparative Competitive Efforts report to guide your entries for the other
marketing decisions as well.
How the direct-sale website price of your company's camera-equipped drones compare to the industry average
direct-sale price in each region has a major bearing on your company’s unit sales and market share in that
region. A large percentage price-based competitive disadvantage in one or more regions should automatically
trigger strong consideration of corrective action—to at least narrow the disadvantage, if not eliminate it
altogether. You can see the projected effect on unit sales and market share in a region of a change in the
direct-sale price to online buyers by watching how much projected unit sales and market share change (see
the Market Segment Statistics section just below the marketing decision entries) when you enter a higher or
lower price.
Each time you make alternative decision entries for the direct-sale website price, use the resulting changes in
the on-page calculations to help zero in on what you consider to be, at least temporarily, an "optimal" or at
least "acceptable" decision entry for price, region-by-region. After you enter the other marketing decisions, you
can always come back to the decision entry for price in a particular region and make further adjustments.
Expect to recycle through the marketing decision entries for each region several times to arrival at what
appears to be the most “optimal” combination of the six marketing entries.
While lower website prices tend to boost unit sales/market shares (assuming you do not undercut the effects of
a lower price by reducing your company's competitiveness in other areas), lower prices can narrow operating
profit margins and lead to a decline in total profit (because the gain in revenue attributable to a higher unit
volume is insufficient to overcome the revenue erosion associated with a lower price on all units sold). So as
you experiment with different website price entries, while the effects on projected unit sales/market share for
the region are certainly relevant, you should always check out the resulting projected effects on (1) a region’s
operating profit and operating profit margin and (2) overall company performance.
Note: Bear in mind, as you make entries for retail prices (and the other marketing factors on this page)
and evaluate all the revenue-cost-profit projections, that the projections for unit sales, revenues, market
share, and profit on this page will change (perhaps drastically) if you should later return to the product
design page and make changes in the decision entries that alter (1) the company's P/Q rating for
drones and/or (2) the number of drone models offered (both of which are drivers of unit sales and
market share) and/or (3) unit costs (which, along with prices, also affect profitability).
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Discount Offered to 3rd-Party Online Retailers. Decisions on what discount off the company’s regular direct-
sale price to offer 3rd-party online retailers have to be made for each geographic region. You have complete
discretion on whether to offer the same percentage discount in each region or to offer different discounts in
different regions.

The size of the percentage discount is really the crucial inducement to securing the commitment of 3rd-party
online retailers to market a company’s drones—the higher the discount, the more drones they will sell.
Understandably, third-party online retailers have zero interest in buying a drone-maker’s models at the same
price the drone-maker is charging drone shoppers at its website, then marking the purchase price up by some
percentage (say 10% or more to cover their own costs and allow for an attractive profit) and trying to secure
orders at prices (10% or more) above a drone maker’s website prices. Hence, a drone-maker wanting to gain
wider buyer access and additional sales volume via the merchandising efforts of 3rd-party online retailers can
do so primarily by offering to sell its drones to these online retailers at an attractively large percentage discount
off its own website price. The bigger the amount by which a drone-maker’s percentage discount offer
exceeds a region’s industry average in this decision round, the bigger the positive impact on its
regional drones sales and market share and the bigger the number of 3rd-party online retailers it will
attract in the next decision round to sell its brand of drones in that region. The advantage to a drone-
maker of having more 3rd-party online retailers selling its drones than rivals have is enhanced ability to grow its
sales volume and market share in the region.
To help decide what percentage discount to offer 3rd-party online retailers, consult the most recent
Comparative Competitive Efforts section of the most recent Competitive Intelligence Report to see how your
company’s prior-year discount compared against those of rivals region by region and the resulting discount-
based competitive advantage or disadvantage which your company had. A large percentage discount-based
competitive disadvantage in one or more regions should automatically trigger strong consideration of corrective
action—to at least narrow the disadvantage, if not eliminate it altogether. These percentage sizes of the
discount-based competitive advantages and disadvantages, along with your entries of the anticipated
upcoming year industry averages for the percentage discount in each region, will help you evaluate different
size discounts and arrive at a percentage discount entry that is projected to generate both attractive unit
sales/market share and attractive operating profits/operating profit margins in each region.
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Website Product Display/Info. The timeliness, creativity, and effectiveness of the product displays,
informational content, and customer reviews at each company’s website for drone sales, along with the
website’s visual appeal and functionality, is an important element in facilitating buyer purchases. When
prospective drone buyers visit the company’s website, they expect to see displays of all the various drone
models, along with ample and useful information about each model’s features, capabilities, and specifications.
Many drone shoppers make a point of visiting the websites of several drone-makers to compare the features,
capabilities, and specifications of their drone models and to read buyer reviews. And they expect to (1) be able
to easily place orders and pay for their purchase via credit card or wire transfer, (2) obtain good after-the-sale
product support, and (3) be able to use a chat function to pose questions to online personnel.
As should be the case for all the marketing decision entries, consult the 4 pages of the most recent
Comparative Competitive Efforts report to see how your company’s prior-year expenditures for website product
displays/info compared against those of rivals region by region and the resulting website display-based
competitive advantages or disadvantages. A large percentage display/info-based competitive disadvantage in
one or more regions should automatically trigger strong consideration of corrective action—to at least narrow
the disadvantage, if not eliminate it altogether. The percentage sizes of the competitive advantages or
disadvantages, along with your entries of the anticipated upcoming-year industry averages of website product
displays/info expenditures in each region and the on-page projections of alternative decision entries for website
display expenditures, should help you zero in on a decision entry you are comfortable with.
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Search Engine Advertising. Spending different amounts on search engine advertising in different regions is
normal because (1) unit sales differ widely by region, (2) industry-average expenditures for search engine
advertising can vary considerable from region-to-region, and (3) there may reasons your company’s

management team wants to put more/less emphasis on using search engine advertising in certain regions as a
means achieving “acceptable” sales/market share and other performance outcomes.
Consult the most recent Comparative Competitive Efforts report to see how your company’s prior-year search
engine advertising expenditures compared against those of rivals, region by region. If your company's search
engine advertising expenditure in a region exceeds the industry average, then your company enjoyed a
competitive edge over rivals on advertising in that region—a condition that positively impacts unit drone sales
and market share. If your company's search engine advertising expenditures were below the industry-average
in a geographic region, then your company’s advertising-based competitive disadvantage negatively impacted
drone sales and market share in the region. The bigger the percentage size of the advertising-based
competitive advantage or disadvantage in a region, the bigger the resulting positive/negative impact on
regional drone sales and market share. A large percentage search engine advertising-based competitive
disadvantage in one or more regions in the prior year should automatically trigger strong consideration of
corrective action—to at least narrow the disadvantage, if not eliminate it altogether. result in selling fewer
drones than would be the case at above-average advertising levels. The prior-year competitive advantages or
disadvantages, along with your Competitive Assumptions about regional-average search engine advertising in
the upcoming year, should provide adequate guidance for helping arrive at how much to spend on search
engine advertising in each region.
It is very risky to arbitrarily decide to spend only so many dollars if rival companies are spending double or
triple your amounts (unless you expect have competitive advantages over rivals on other competitive factors to
offset being outcompeted on this factor). But this does not mean that you have to be drawn into a contest with
rivals on who-can-outspend-whom on search engine advertising—rather it means you have to be alert to the
effect of search engine advertising expenditures on your company's overall competitiveness against rivals.
Furthermore, it is critical that you understand there is no set value of how many more drones your company
can expect to sell in the North American market if spending for search engine ads is increased, for example, by
$1 million annually. There is no pre-determined value (say, 6,000 drones) that has been programmed into
GLO-BUS specifying that if a company increases its advertising by $1 million annually then its drone sales will
rise by x units. Rather, the size of the impact of a $1 million increase in ad spending "all depends" on the
actions of competitors.
Suppose, all other things remaining equal, your company increases its spending for search engine ads in the
North American market by $1 million and your rivals change none of their prior year's decisions. Then, indeed,
your company's unit sales will rise by, say, x units (based on algorithms contained in the GLO-BUS software).
But, if in the same year when your company increases advertising by $1 million, several rivals decide to raise
their advertising by $500,000 (all other competitive factors remaining the same), then your company's sales will
rise by a lesser amount, say, only y units. And, should all rivals elect to boost their adverting in North America
by $2 million (all other things remaining equal), your company's $1 million advertising increase would be
accompanied by a decline in unit sales (albeit a smaller decline than if you had failed to increase advertising at
all). So, just how many extra units your company will sell as a result of increasing advertising by $1 million "all
depends" on the full range of competitive efforts of rivals and this includes actions not only with respect to their
expenditures for search engine advertising but also with respect to price, number of models, length of
warranties, and so on. The "Well, it all depends" answer also applies to the impacts on unit sales and market
share for all other moves you and your co-mangers might make—raising/lowering prices, adding/deleting
models, lengthening/shortening warranties, increasing/decreasing the P/Q rating, and so forth.
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Recruitment/Support of 3rd-Party Online Retailers. Expenditures for recruiting/supporting 3rd-party online

retailers cover the costs of calling on prospective online retailers to (1) personally communicate the expected
rapid growth of the UAV drone market, the advantages of a company’s drone models, and the R&D effort the
company is making to improve future models of its drones, (2) build a relationship with these prospects via a
face-to-face visit, and (3) explain the kinds and amount of merchandising support the company provides. This

support includes providing periodically-refreshed pictures of the company’s various drone models, supplying
comprehensive and up-to-date information about each model, and engaging in collaborative efforts to service
buyer requests for various kinds of after-the-sale product support (filing warranty claims, downloading product
manuals, obtaining software updates and useful apps, and so on).
Such expenditures definitely help secure the commitment of 3rd-party online retailers in a region to
stock and merchandise a company’s drone models, but they are considerably less important than the
size of the percentage discounts off a company’s own direct-dale website price that is offered to the
region’s 3rd party online retailers.
As is the case with other competitive factors, if your company's expenditures for recruiting/supporting 3rd-party
online retailers exceed the industry average amount in a given geographic region, then your company will
enjoy a competitive edge over rivals on this particular competitive factor in that region. If your company's
expenditures for recruiting/supporting 3rd-party online retailers are below the industry average in a geographic
region, then your company is at a competitive disadvantage on this competitive factor and will sell fewer units
than would be the case at higher expenditure levels.
Again, make it a point to consult the most recent Competitive Intelligence Report to see how your company’s
prior-year expenditures for recruiting/supporting 3rd-party online retailers compared against the expenditures of
rivals region by region. These comparisons, together with your competitive assumption entries (in the bottom
section of the page) of the anticipated upcoming-year industry average expenditure for recruiting/supporting
3rd-party online retailers and the on-page calculations for alternative decision entries for expenditures for
recruiting/supporting 3rd-party online retailers, should help your management team decide how much to spend.
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Warranty Period Decisions. Drone warranties cover only the built-in action camera, the GPS, and the
flight controller; the warranty specifically excludes coverage of damage to the drone itself stemming from
pilot error or crashing into an obstacle. Lengthening the warranty period for camera-equipped commercial
drones, while making your drone models more appealing to buyers, also has the effect of boosting
warranty repair costs because (1) offering buyers a longer warranty tends to boost unit sales volume (thus
exposing the company to greater risk of malfunction or a defective part in the camera, the GPS, or the flight
controller) and (2) a longer warranty period translates into a greater number of warranty claims due to the
added time the company is exposed to risk of a parts failure or malfunction in the camera, the GPS, and
the flight controller. Different warranty periods can be offered in different geographic regions.
 The expected warranty claim percentage and the projected warranty repair costs associated with
whatever length of the warranty period is entered are shown just under the warranty period decision
field. The cost of handling a warranty claim for drones is $300 per claim.
 The percentage of expected warranty claims declines as your company’s P/Q rating for drones
rises. (Your company’s management team can also opt to reduce the warranty claim percentage by
increasing the size of the “assembly quality incentive” paid to drone PATs—this means of cutting
warranty claim costs is discussed in the Help section for the Compensation, Training, and Product
Assembly Decision page.)
 As you can see from making different entries for the warranty period and observing the on-page
projections for warranty claim costs, longer warranty periods can increase future warranty costs
significantly. Keep in mind that projected warranty claims repair costs are indeed projections, since
the actual number of drones sold can turn out to be higher/lower than projected in the likely event
that the competitive efforts of rivals are weaker/stronger than anticipated.
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Halting Drone Sales in a Region. If, for whatever reason, you want to withdraw entirely from selling drones in
a particular geographic region for one or perhaps more decision rounds, just enter the region’s price as $0.
Then also eliminate the dollar expenditures for website product displays/info, search engine advertising, and
retailer recruitment/support in that region (in order to avoid paying costs for these items when you are not
striving to secure buyers and thus have no sales in the region). You can reenter a region and resume sales
whenever you wish.

Drone Demand (Unit Sales) and Market Share. The first portion of the Market Segment Statistics section for
Drones display how prior-year actual unit demand and market share compare against the projected unit
demand and market share for the upcoming year, region by region, with unit sales broken out by sales at the
company’s website and sales by 3rd-party online retailers. As has been emphasized above, keep in mind that
the upcoming-year projections are based on (1) the entries currently showing in the drone-related marketing
decision boxes (and entries on all the other decision pages) and (2) the prior-year competitive efforts of rival
companies, as measured by the prior-year industry averages for selling prices, P/Q ratings, search engine
advertising, warranties, and so on. The amounts by which the projected unit sales and market share for
drones turn out to be different from the actual outcomes depends upon the extent to which the upcoming year
industry averages for the various competitive factors for drones in each geographic region turn out to be about
the same, a little higher/lower, somewhat higher/lower, or much higher/lower than the prior-year averages.
Number of 3rd-Party Online Retailers. The last line of this section shows the number of 3rd-party online
retailers in each region that stocked and displayed your brand of drones in the prior year and the for the current
year. There is nothing you can do in the current year to attract additional online retailers for the current
year because their decisions of which drone brands to market were made at the end of the prior year . In the
last two months of each year, 3rd-party online retailers decide whether to stick with the drone brands they are
currently displaying and marketing on their websites or whether to make some adjustments based on (1) the
percentage discount drone-makers are currently offering to 3rd-party online retailers and (2) growing popularity
of some brands of drones and declining popularity of other brands. The number of retailers who decide to
display and market your drones this upcoming year make their decisions at the end of the prior-year.
What 3rd-Party Retailers Consider in Deciding Which Brands to Merchandise. The number of online
retailers in a region that decide to display and market your company’s brand of drones in the following year is
determined by four factors:
1. Your brand’s share of drone sales this upcoming year in that region. Other things being equal, 3rd-
party online retailers are more attracted to high-share brands than low-share brands because of
their greater sales potential.
2. Your company’s P/Q rating for drones this upcoming year. Other things being equal, online retailers
are more attracted to merchandise drone brands with high P/Q ratings as opposed to brands with
low P/Q ratings.
3. The extent to which the percentage discount off regular price your company offers to third-party
online retailers in a region is above/below the average percentage discount offered by all drone-
makers in the region. Drone-makers offering “high” or above-average percentage discounts as
opposed to relatively small or below-average discounts typically have strong ability to attract greater
numbers of 3rd-party online retailers.
4. How much your company spends this upcoming year to recruit more 3rd-party online retailers and to
support their marketing efforts in each region as compared to the regional average of all drone-
makers. Obviously, 3rd-party retailers consider relatively strong marketing and merchandising
support as a positive factor, but this factor is typically not as important as the other three factors.
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The Price-Cost-Profit Breakdown section contains two columns of data for each region: the first column shows
price-cost-profit projections of drone sales made to customers at the company’s website; the second column
shows the company’s price-cost-profit projections on the sales of the company’s drones made by 3rd-party
online retailers.
Selling Price — The number in the first column corresponds exactly to the price entered in the decision box
for average retail price at the top of the page. The selling price number for 3rd-party retailers in the second
column is equal to the net price the company receives on the drones it sells to 3rd-party retailers—it is always
equal to the average retail price of the company’s drone models in the region adjusted downward for the
percentage discount at which the company sells its drones to 3rd-party retailers (the size of this percentage
discount is, of course, the number entered in the decision box labeled “discount offered to 3rd-party retailers”).
Exchange Rate Adjustment — The size and direction of the exchange rate adjustment for each region
typically varies from region to region in accordance with whatever real-world exchange rate fluctuations
occurred between the beginning of the prior-year decision round and the beginning of this upcoming year’s
decision round.
 The company’s sales prices for drones sold at its North American website and to 3rd-party online
retailers in North America are adjusted up or down for exchange rate changes between the U.S.
dollar and the Taiwan dollar.
 The company’s sales prices for drones sold at its Europe-Africa website and to 3rd-party online
retailers in Europe-Africa are adjusted up or down for exchange rate changes between the euro and
the Taiwan dollar.
 The company’s sales prices for drones sold at its Asia-Pacific website and to 3rd-party online
retailers in the Asia-Pacific are adjusted up or down for exchange rate changes between the
Singapore dollar and the Taiwan dollar.
 The company’s sales prices for drones sold at its Latin America website and to 3rd-party online
retailers in Latin America are adjusted up or down for exchange rate changes between the Brazilian
real and the Taiwan dollar.
Remember that the sizes of the exchange rate adjustment each year are always equal to 5 times the actual
period-to-period percentage change in the real-world exchange rates for US$, €, Brazilian real, Sing$, and
Taiwan$ (multiplying the actual % change by 5 is done so as to translate exchange rate changes over the few
days between decision periods into changes that are more representative of a potential full-year change).
However, because actual exchange rate fluctuations are occasionally quite volatile over a several-day period,
the maximum exchange rate adjustment during any one period is capped at 20% (even though bigger
changes over a 12-month period are fairly common in the real world). The GLO-BUS system accesses all the
relevant real-world exchanges rates and does all the pertinent calculations, thus relieving you and your co-
managers from mastering the intricacies of the exchange rate adjustments.
Special Note — Options for Dealing with Favorable/Unfavorable Exchange Rate Adjustments. While you do
not have to worry with the mechanics of calculating exchange rate adjustments, you do need to concern
yourself with what actions, if any, to take to mitigate the unfavorable/negative exchange rate impacts and to
capitalize on the favorable/positive exchange rate adjustments shown on the decision page. There are several
ways to counter the adverse effects of unfavorable (those with a minus sign) exchange rate adjustments. One
option is to adjust sales and marketing efforts in a manner that results in (1) added sales in those areas where
the exchange rate adjustments are positive (favorable) and (2) somewhat smaller sales in the regions where
the exchange rate adjustments are negative (unfavorable). Another option is to raise the selling prices in a
particular region to help offset negative revenue adjustments and realize higher net revenue per drone sold.
Because all competing companies have assembly facilities in Taiwan and are thus subject to much the same

favorable/unfavorable exchange rate impacts on net revenues per drone sold, you may be able to make
offsetting price adjustments without much risk of putting your company at a price disadvantage.
Net Revenue Per Unit — Net revenue per unit, in effect, is the actual revenue in U.S. dollars that the company
can expect to receive on each drone projected to be sold in the region (at the company’s website or by 3rd-
party online retailers), after taking into account the effects of the relevant exchange rate changes.
Cost of Units Assembled — the $/Unit number is calculated by dividing the projected total production costs of
the drones that will need to be assembled and shipped to retailers in the region by the number of drones
projected to be sold in the region (see the number for “Total Unit Demand” in the Marketing Statistics section).
Delivery Costs — the $/Unit number represents the costs per drone sold that will be incurred for:
 Shipping ($60 per drone sold to online customers at the company’s website and $10 per drone sold
to 3rd-party retailers in all regions).
 Applicable import duties.
Applicable import duties in the case of direct sales to online customers in each region are currently $0 for North
America (because North American countries currently do not impose duties on imports of drones), 4% of the
average retail price to online customers in Europe-Africa, and 6% of the average retail price to online
customers in both Latin America and the Asia-Pacific.
Applicable import duties in the case of sales to 3-party online retailers in each region are currently $0 for North
America (because North American countries currently do not impose duties on imports of drones), 4% of the
price at which 3rd-party online retailers in Europe-Africa purchase drones from the company, 6% of the price at
which 3rd-party online retailers in the Asia-Pacific purchase drones from the company, and 6% of the price at
which 3rd-party online retailers in Latin America purchase drones from the company.
The price at which 3rd-party online retailers in a region purchase drones from the company equals the
company’s average retail price to online-customers in that region (the number you have entered in the decision
box for “Average Retail Price to Online Customers” at the top of the page) less the percentage discount the
company offers to 3rd-party online retailers in the region (see the percentage appearing in the decision box
labeled “Discount Offered to 3rd-Party Online Retailers”); these prices are shown in the Price-Cost-Profit
Breakdown section on the line labeled “Selling Price.”
Both shipping costs and import duties are subject to change by your instructor (you will be notified of such
changes).
Marketing costs — the $/unit number for direct sales to online customers in each region equals the costs
appearing in the decision boxes for website product displays/info and search engine advertising in each region
plus the projected warranty costs associated with the warranty period in the decision box for each region
divided by the projected number of drones to be sold to online customers in the region.
The $/unit number for marketing costs for sales made by 3rd-party online retailers in each region equals the
number in the decision box for retailer recruitment/support divided by the projected sales of 3rd-party online
retailers merchandising the company’s drone brand in each region (this is the same number showing just
under the decision box for “Retailer Recruitment /Support Budget” in each geographic region.
Administrative Expenses —the company’s drone-related administrative expenses are allocated to each
region based on that region’s projected percentage of the total number of drones sold worldwide. The drone-
related administrative expenses for each region are then allocated between direct online sales and sales by
3rd-party online retailers according to their respective projected share of drone sales within each region. The
$/Unit number is calculated by dividing the total amount of the company’s drone-related administrative
expenses allocated to each region/distribution channel by the projected number of drones to be sold in each

region/distribution channel. This generally accepted accounting procedure for allocating a fixed company-level
expense to different market segments results in the same administrative cost per drone sold in all four regions
and in both distribution channels (direct sales and sales through 3rd-party online retailers) within regions.
Total Operating Cost — the two $/Unit numbers equal net revenues per unit less all projected operating
expenses per drone sold (cost of units assembled, delivery costs, marketing costs, and administrative
costs).Interest payments and taxes are not part of operating expenses, as per general accounting principles.
Operating Profit — the two $/unit numbers for projected operating profit are calculated by subtracting
projected total operating cost per drone sold (at the company’s website or by 3rd-party online retailers) from
projected net revenues per drone sold (by either the company at its website or by 3rd-party online retailers). It
is normal for the operating profit on drones sold direct to customers at the company’s website to be greater
than for drones it sells to 3rd-party online retailers because the company’s selling price to online customers is
higher than the price at which it sells to 3rd-party online retailers.
Operating Profit Margin — the two projected percentages for operating profit margin equal projected
operating profit per drone sold (at the company’s website or by 3rd-party online retailers) divided by the
projected net revenue per drone sold (from sales to online customers or sales to 3rd-party retailers).
Projected negative operating profits per drone sold and the associated projected negative operating
profit margins in any region are red flags that company managers should address/correct immediately.
The same can be said of operating profits per drone sold and operating profit margins that, while positive, are
nonetheless “too small” to produce attractive profitability.
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The role of the Competitive Assumptions is to provide you with a means of improving the accuracy of the
projections of your company’s drone sales, market shares, and operating profits in each region, as well as the
seven projections of your company’s overall performance in the box under the Decisions/Reports menu. You
should be wary of performance projections that are based on the backward-looking prior-year regional average
levels of competitive efforts when the regional-average levels of competitive effort in the current year will most
probably differ from those in the prior-year.
There are multiple reasons to expect that the competitive efforts of rivals will, on average, not just be
different from prior-year levels of competitive effort but will be somewhat stronger than the prior year:
1. Poorly-performing companies that were outcompeted last year have strong incentive to strengthen their
competitive efforts (particularly those where they suffered from competitive disadvantages).
2. High-performing rivals may well try to open up a wider competitive advantage on certain competitive
factors to further enhance their prior-year’s performance.
3. Companies that were surprised by unexpectedly strong competitive efforts by one or more of their close
rivals and, as a consequence, suffered a loss of drone sales and market share in one or more regions,
may well retaliate with much strengthened competitive efforts of their own to recapture their former
market share(s)—or even increase them.
4. Ambitious companies, intent on overtaking the industry leader, might well opt to boost their competitive
efforts on one or two competitive factors by significant amounts and thus achieve a big competitive
advantage that they hope will propel them into an industry-leading position.

5. Some (most?) companies are likely to try to enhance their drone sales and market shares in those
6. Industry-leading companies have a strong incentive to strengthen their own competitive efforts—they
will not remain industry leaders for long by sticking with status quo competitive efforts across the board.
It is not farfetched for an industry leader to boost its competitive efforts on a competitive factor where
they have had a big competitive advantage—and thus try to widen their competitive advantage over
rivals.
7. All firms have an incentive to adjust their competitive efforts in one or more regions to improve their
company’s overall performance and thereby meet or beat the periodic and sometimes annual increases
in the investor-expected performance targets.
A good argument can be made, therefore, that company managers should expect competition to intensify in
the drone segment in the current/upcoming year and in later years, thus resulting in higher regional-average
levels of competitive effort in at least some, perhaps many, of the competitive factors governing regional sales
and market shares. After all, if you are considering making different marketing decision entries (or
increasing/decreasing the P/Q rating of your drones or changing the number of models offered) to improve
your company’s profitability and performance, then the co-managers of most other rival companies are also
likely to be considering how to alter the makeup of their competitive efforts in order to improve their company’s
profitability and performance.
Updating the Competitive Assumptions. Adjusting the regional averages definitely involves much
speculation and guesswork in Year 6 because there is no track record to go on in judging what rival
companies, on average, will do differently. It is a bit easier in Year 7 to make updates because you at least
know how much the regional averages changed from Year 5 to Year 6 (see the 4-page Regional-Average
Competitive Efforts selection on the Competitive Intelligence Report menu). Updating gets a bit easier still
headed into Year 8 because you have two years of history about the changes in the regional averages. As a
rule, as you become more familiar with strategies and competitive maneuvering of rival companies and as the
historical record of changes in the regional averages becomes larger (as reported in the Regional-Average
Competitive Efforts selection on the Competitive Intelligence Report menu), the task of updating the regional-
average competitive assumptions can be done quicker and usually with greater accuracy.
Beginning with Year 7 and every year thereafter, make it a point to review the year-to-year historical
changes in the Regional Average Competitive Efforts report in the Competitive Intelligence Reports
menu to see the trends in how each of the regional average competitive factors have changed for all
years/decision rounds to date. Make a printout of all four pages to have at your fingertips when you start to
update the prior-year regional averages for both AC cameras and UAV drones. But be alert to the fact that
historical trends should not be relied on 100% relied on for anticipating the actions of competitors—historical
trends may or may not be a reliable basis for projecting the future actions of rival companies.
For your updates to have a forward-looking element, you need to consult the information in the
Comparative Competitive Efforts section of the most recent Competitive Intelligence Report and specifically try
to identify which companies are likely to make changes in which competitive efforts.
 Check out the competitive factors where poorly-performing were at a big competitive disadvantage
against the industry average, region-by-region. Poorly-performing companies (easily identified by their
low scores on the five performance measures on pp. 2-3 of the Industry Scoreboard in the Camera &
Drone Journal) have a big incentive to correct (or at least narrow) their big competitive disadvantages
and boost their overall competitive efforts by enough to improve their company’s profitability and
meet/beat the five investor-expected performance targets.

 Check out which other rivals were also burdened by one or more competitive disadvantages that give
them good reason to consider at least narrowing and maybe totally eliminating some (many? or all?) of
these disadvantages on the various competitive factors in all four regions. Do you see any reason to
suspect that several companies may try to turn one or more of these former competitive disadvantages
into competitive advantages. You are urged to use the Time Series Competitive Efforts report on the
Competitive Intelligence Report menu to easily track the competitive maneuvering of an industry leader
or close rival or any other company of interest for all years completed to date to try to anticipate what
moves a company may make in the upcoming year.
Thoughtful analysis of the information on the four pages of the most recent Comparative Competitive Efforts
report, used in conjunction with the year-to-year changes in the regional-average competitive factors, will help
you decide how much to raise/lower (or leave unchanged) the prior-year industry averages. On balance, you
should usually find reasons to expect that competition will intensify somewhat in the upcoming years as all
companies undertake efforts of one kind or another to improve their profitability and overall performance.
Recommendation #1: Probably the safest or most conservative assumption about the prior-year averages is
that the overall competitive efforts of rivals will, on average, be "a little stronger" or "slightly stronger.” This
does not automatically mean that the regional averages of all 8 of the competitive factors will change in ways
that produce stronger competition. Slightly stronger competition could mean adjusting the prior-year industry
averages downward in the case of the direct-sale website price by, say, $20 to $100+, up by 0.2% to 0.5% in
the case of the discount to 3rd party online retailers, upward by 0.1 to 0.3 in the case of P/Q rating and number
of models, and perhaps $100 to $250 in the cases of search engine advertising and website expenditures,
perhaps $2.50 to $5.00 for retailer recruitment, and maybe as much as a 30-day jump in the warranty period in
Years 6-8 because some companies are likely to boost the length of the warranties to 90 days or 120 days or
even to 180 days (but changes are likely to drop to the 5 to 15-day range in later years as fewer companies
make warranty period changes). Be cautious about adjusting the regional industry averages up or down
by “large” percentage amounts. “Big year-to-year changes” in the industry averages occur infrequently,
mainly because all rivals are unlikely to make competitive changes in the same direction.
 However, in Years 8-12, should a price war break out or if several drone-makers aggressively step up
their marketing efforts for search engine advertising, website displays, retailer recruitment/support,
and/or length of warranties to win bigger sales/market share in a region, then "somewhat bigger"
adjustments in some/many of the regional averages may be appropriate.
 On the other hand, if competition in the prior year or two has been especially brutal, such that drone
profit margins across the industry have plunged, there may be reason to assume some/many
companies will not further intensify their aggressive and costly marketing efforts to pursue "profitless"
gains in unit sales and market shares, in which case you may leave many of the prior-year industry
averages unchanged (or possibly even assume that a few companies will cut back on certain
competitive efforts, like low direct-sale prices, boosts in P/Q ratings, search engine advertising or
website displays or warranties, in an attempt to trim losses/restore profitability.
Recommendation #2: Try out graduated adjustments in the Competitive Assumptions (most especially for
direct-sale website price, P/Q rating, number of models, and warranty period because they are such important
competitive factors) and observe the different impacts on the on-screen projections. Then see what changes
in your own company’s competitive efforts may be needed to counteract/defeat the potential changes in the
competitive efforts (small or large) of rivals in order for your company to achieve the desired levels of company
performance you are targeting. This will give you a better feel for what entries to make in the marketing
decisions boxes and perhaps whether to return to Product Design page and make changes in the number of
models offered and/or P/Q rating. Achieving increased unit sales and market shares in an industry
environment where competitive conditions are growing stronger will take a stronger competitive effort on your
company's part (in the form of lower price, higher P/Q rating, more advertising, and so on) than if competitive
intensity remains about the same or grows weaker.

Tip: Slightly overestimating the amount by which the overall regional-average competitive efforts of rivals will
grow stronger can often result in better performance outcomes for your company than underestimating how
much the overall regional-average levels of competitive effort will rise in the current/upcoming year. This is
because if competition is weaker than expected, your company will have stronger-than-projected demand for
UAV drones and will actually end up with bigger sales/market shares than were projected, provided your
company has sufficient idle workstation capacity to assemble and fill the unexpected orders from buyers. It is
easy enough for your management team to make it standard practice in your drone assembly facility to always
have several more installed workstations than needed to supply projected demand, just in case buyer demand
in the upcoming year turns out to be higher than expected. On the other hand, if you underestimate the
strength of rivals’ competitive efforts, sales/market shares will turn out to be lower-than-expected and the
company’s overall performance will be worse than projected.
Consequently, when the results come out, it is far better to have the pleasant surprise of discovering your
company actually sold more than the projected sales volume in one or more regions rather than experiencing
the unpleasant surprise of learning that your company sold less than the projected sales volume because you
and your co-managers underestimated the strength of the competitive efforts from rivals, and they captured
some of the sales and market shares you were expecting to get. You can live happily with the good surprise of
better-than-expected results, but the bad surprise of weaker-than-expected results is obviously something your
company should try to avoid.
Also Remember: Improving the accuracy of the projections of upcoming-year performance by thoughtfully
assessing what levels of competitive effort that rivals, on average, are likely to undertake in the upcoming year
and using these assessments to update entries for the 8 competitive factors in the Competitive Assumptions
section has the added benefit of helping your company win score-boosting Bull’s Eye awards (see page
3b of each year’s Camera & Drone Journal).
Is It “Absolutely Necessary” to “Update” the Prior-Year Regional Averages? The short answer is “no.”
How you run your company is your responsibility. Just be sure you are content to accept and deal with
whatever inaccuracy may exist in the region-by-region projections of unit sales, market shares, unit costs, and
operating profit that are calculated on the basis of how your company’s competitive efforts this upcoming year
stack up against last year’s overall competitive efforts of rival companies. So, if you don’t want to take the time
and trouble to develop your own reasoned judgments about the likely overall competitive efforts from rivals
your company will face in this upcoming year), then you can most definitely skip the task of updating the values
in the Competitive Assumptions boxes.
Important: How far off the on-screen projections of unit sales, market shares, unit costs, and operating
profit will turn out to be from the actual results depends on the extent to which the adjusted or
unadjusted values for Competitive Assumptions differ from the actual industry averages that appear in
the upcoming year’s Competitive Intelligence Reports—the smaller the differences, the closer the
projections will be to the actual results; the bigger the differences (especially as concerns wholesale
price and P/Q rating), the greater the projections will differ from actual results.
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More Details about the Exchange Rate Adjustments

As indicated above, exchange rate adjustments result from producing drones in Taiwan (where the local
currency is Taiwan dollars) and selling them to buyers in other parts of the world (where local currencies are
different). These adjustments stem from two things:
1. The orders, shipments, and payments for drones tend to occur on different dates, and currency
exchange rates on these different dates are likely to be different.

2. The local currency payments of buyers have to be converted into Taiwan dollars and ultimately into
U.S. dollars (since the company reports its financial statements in U.S. dollars).
Thus the company’s business is one with potentially significant foreign exchange risks. To help manage these
risks, company officials have negotiated a long-term currency exchange agreement with the Global Community
Bank through which the company does most of its business; the agreement calls for the bank’s foreign
currency department to handle the company’s many foreign currency transactions. The agreement is complex
but the essence of the arrangement calls for the net revenues the company actually receives on drones
assembled and shipped from the Taiwan assembly facility to buyers in various parts of the world to be subject
to exchange rate fluctuations in four local currencies (the U.S. dollar, the euro, the Brazilian real, and the
Singapore dollar) against the Taiwan dollar. For simplicity, both of the reasons for currency adjustments are
combined into a single adjustment based on the real-world currency swings during the period from one
decision round to the next as concerns the U.S. dollar against the Taiwan dollar, the euro against the Taiwan
dollar, the Brazilian real against the Taiwan dollar, and the Singapore dollar against the Taiwan dollar). More
specifically:
 The net revenues received from sales to North American buyers are adjusted up or down for
exchange rate changes between the U.S. dollar and the Taiwan dollar. Should the exchange rate
of U.S. dollars per Taiwanese dollar fall, say from 0.250 to 0.245 U.S. dollars per Taiwan dollar,
then buyer payments of the agreed upon number of U.S. dollars per drone at the time the order was
adjustment in the company’s revenues. Conversely, when the exchange rate of U.S. dollars per
Taiwanese dollar rises, say from 0.250 to 0.255 U.S. dollars per Taiwan dollar (meaning that a
specified number of U.S. dollars equate to fewer Taiwanese dollars), then the company does not
receive as many Taiwan dollars in payment for the drones sold and shipped to North American
buyers and the revenue adjustment is downward (unfavorable).
 The net revenues the company receives from sales to buyers in Europe-Africa are adjusted up or
down for exchange rate changes between the euro and the Taiwan dollar. Should the exchange
rate of euros per Taiwanese dollar fall from one decision period to the next, say from 0.250 to 0.245
euros per Taiwan dollar, then buyer payments of the agreed upon number of euros per drone at the
time the order was placed equate to more Taiwanese dollars at the time of payment and an upward
(favorable) adjustment in the company’s revenues. Conversely, when the exchange rate of euros
per Taiwanese dollar rises, say from 0.250 to 0.255 euros per Taiwan dollar (meaning that a
specified number of euros equate to fewer Taiwanese dollars), then the company does not receive
as many Taiwan dollars in payment for the drones sold and shipped to Europe-Africa buyers and
the revenue adjustment is downward (unfavorable).
 The net revenues received from sales to Asia-Pacific buyers are adjusted up or down for exchange
rate changes between the Singapore dollar and the Taiwan dollar. Should the exchange rate of
Singapore dollars per Taiwanese dollar fall say from 20.40 to 20.35 Singapore dollars per Taiwan
dollar, then buyer payments of the agreed number of Singapore dollars per drone at the time the
order was placed equate to more Taiwanese dollars at the time of payment and an upward
(favorable) adjustment in the company’s revenues. Conversely, when the exchange rate of
Singapore dollars per Taiwanese dollar rises, say from 20.40 to 20.45 Singapore dollars per Taiwan
dollar (meaning that a specified number of Singapore dollars equate to fewer Taiwanese dollars),
then the company does not receive as many Taiwan dollars in payment for the cameras/drones
sold and shipped to Asia-Pacific buyers and the revenue adjustment is downward (unfavorable).
 The net revenues received from sales to Latin American buyers are adjusted up or down for
exchange rate changes between the Taiwan dollar and the Brazilian real. Should the exchange
rate of Brazilian real per Taiwanese dollar fall, say from 10.65 to 10.60 real per Taiwan dollar, then
buyer payments of the agreed upon number of Brazilian real per drone at the time the order was
adjustment in the company’s revenues. Conversely, when the exchange rate of real per Taiwanese

dollar rises, say from 10.65 to 10.70 real per Taiwan dollar (meaning that a specified number of
Brazilian real equate to fewer Taiwanese dollars), then the company does not receive as many
Taiwan dollars in payment for the drones sold and shipped to Latin American buyers and the
revenue adjustment is downward (unfavorable).
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GLO-BUS Compensation, Training, and Assembly Facilities Help
Compensation, Training, and Assembly Facilities

The decision entries for AC cameras and UAV drones on this page are important because of their impacts
on Product Assembly Team (PAT) productivity (the number of cameras or drones a PAT can assemble per
year), total labor costs and labor costs per unit sold, total assembly costs and per unit assembly costs, and,
to a lesser extent, P/Q ratings.
Your first objective for this decision page should be to manage the assembly of cameras/drones in a
very cost-effective manner—this means searching out a decision-entry combination that produces the
lowest total labor cost per camera/drone assembled.
Your second objective is to provide for sufficient workstation space and installed workstations to be
able to assemble the cameras/drones needed to fill projected buyer orders.
At some juncture, you will need to consider whether to shift to robot-assisted assembly of cameras
and/or drones.
Each time you make a new entry in a decision box on this page, an assortment of on-screen calculations will
instantly show the projected effects on the productivity of camera/drone PATs and the labor-related costs of
assembling cameras/drones. For the first couple of years, you'll need to spend a bit of time absorbing all the
data information on the page as you evaluate the relative merits of one decision entry versus another. As is
the case with all the decision pages, the on-screen calculations are there to provide instant feedback on the
projected outcomes of alternative decision entries and to facilitate your search for the decision entry
combination offering the best projected outcomes.
Recommendation: Experiment with a number of “trial” or “what-if” entries to search for a combination of
decision entries that lowers the labor costs per camera/drone assembled and, ideally, results in unit labor costs
below the all-company average (you will find comparisons of your company’s unit labor costs for assembling
cameras/drone to the industry-low, industry-average, and industry-high on pages 6 and 7 of each issue of the
Camera & Drone Journal).
Compensation and Training Decisions

PAT Productivity
Best Practice and Productivity Improvement Budget
Additional Space for Workstations and Installing New Workstations
Workforce Size Is Managed Automatically
The Robotics Upgrade Option
Capital Expenditures for Cameras and Drones
Compensation and Training Decisions

The top section of this page contains 4 decision entry boxes for compensating workers engaged in assembling
action cameras and 4 decision entry boxes for compensating workers engaged in assembling drones. The
compensation decisions are the same for both types of workers:
1. How much to raise/lower the base pay of PAT members—The maximum percentage increase in
any one year is 10% and the maximum percentage cut in any one year is 15%. As might be
expected, base pay reductions act to reduce PAT productivity. Small pay cuts do not entail a “big”

drop in productivity but cuts of 6%-15% will have a major negative impact. Annual increases in
base pay of 2% or more lead to higher levels of productivity, chiefly because higher annual base
wages help attract and retain workers with better skills and work habits and because higher base
wages make workers feel better about their jobs and enable higher standards of living for them and
their families.
2. Whether and by how much to change the assembly quality incentive payment per unit—The
incentive payment is divided equally among all PAT members because all PAT members are
involved in both assembling and testing cameras/drones. Camera/drone PATs have responsibility
for fully testing the functioning of each AC camera/UAV drone assembled and correcting any
performance problems, including replacing malfunctioning parts and components—the costs of
replacing defective or malfunctioning parts/components are borne by suppliers.
Prior management instituted the practice of paying each PAT an assembly quality incentive for each
camera/drone assembled and tested, the thesis being that such incentives spurred PAT members
to propose ways to cut assembly and testing times while still accurately assembling and thoroughly
testing each camera or drone after assembly. The practice of paying assembly quality incentives
was continued by prior management because PAT members in the camera/drone assembly
facilities took pride in coming up with better and more efficient assembly/testing procedures that
helped reduce warranty claims and improve PAT productivity. Currently, the incentive payments
are $1.60 per camera assembled and $3.20 per drone assembled; these payments are divided
equally among all PAT members.
It is up to you to determine whether to continue paying assembly quality incentives and whether to
raise/lower the amount per unit.
3. Whether and how much to change the year-end bonus for perfect attendance—Absenteeism
on the part of PAT members has a negative impact on the functioning and performance of the
remaining team members. When team members fail to show up for work as scheduled, a team’s
assembly procedures are disrupted; either substitutes must be assigned to fill-in for the person(s)
absent or else the team must try to proceed with assembling cameras/drones as best it can. To
discourage absenteeism, prior management instituted the practice of paying an $800 year-end
bonus to each PAT member with a record of perfect attendance (defined as working 2000 hours per
year—50 weeks at 40 hours per week, with 2 weeks off for holidays and personal leave); missing
as much as ½ day during the standard 2000-hour work year constituted disqualification for the
bonus. Prior management believed the attendance bonus was successful in keeping absenteeism
at a tolerable minimum, thereby enabling most PATs to operate at full-strength and assemble at
least a reasonable number of cameras/drones each shift.
Your management team has the authority to discontinue the practice of paying a bonus for perfect
attendance or to continue the program, raising or lowering the size of the bonus periodically as you
see fit. It is up to company managers to determine whether diverting the $800 bonus per PAT
member to other types of compensation (such as bigger incentives or higher base pay or bigger
fringe benefits) could lead to even better PAT productivity.
4. Whether and by how much to change company fringe benefits—PAT members and other
company personnel view a generous company-paid fringe benefits package (health insurance,
disability insurance, term life insurance, and retirement plans) as an important element of a “good
job” because the components of fringe benefit packages add to the overall well-being of them and
their families.
The policy of prior management was to have identical compensation packages for workers assembling
cameras and workers assembling drones. However, your company’s management team has full
discretion to have different compensation packages for the members of camera PATs and the
members of drone PATs. However, pronounced differences between the compensation package for camera
PATs and the compensation package for drone PATs can generate unrest and dissatisfaction among the
group of PATs receiving lower compensation.

The four compensation decisions relating to base wages, assembly quality incentives, attendance bonuses,
and fringe benefit packages are important because a PAT member’s total compensation, not including
overtime pay, impacts PAT productivity (the number of cameras/drones each PAT assembles each year) and
(2) labor costs per camera/drone assembled.
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PAT Productivity
The productivity of each camera/drone PAT is influenced by 8 factors (5 of which are compensation-related):
1. The annual base wage
2. The assembly quality incentive per camera/drone assembled—You can easily track the effect
of higher assembly quality incentives on both PAT productivity and labor costs per camera
assembled by observing the changes that occur when a larger assembly quality incentive is
entered. So long as a higher incentive payment results in lower labor costs per camera/drone
assembled, it makes good economic sense to pay PATs the higher incentive.
3. The annual bonus for perfect attendance
4. The fringe benefits package
5. The total compensation package—not including overtime pay, of camera/drone PAT members
relative to the industry average (or all-company average) compensation levels.
6. Annually spending on training and best practices—Apart from compensation, the productivity of
PATs is affected by the effort the company exerts to train PAT members in the best assembly
practices and to make continuous improvements in assembly methods, post-assembly testing of
cameras/drones, and ways to reduce warranty claims. The amount spent on training also is one of
the factors affecting a company's P/Q rating.
7. Cumulative spending on product R&D—A portion of the amount the company spends for product
R&D is always devoted to designing the company’s cameras/drones in a manner that reduces the
amount of time it takes PATs to assemble and thoroughly test each camera/drone assembled.
8. The number of models assembled—Increasing the number of models in a given year will reduce
PAT productivity, due to lower PAT proficiency in assembling more models and increased model
change-over time. Reducing the number of models boosts productivity because PATs have fewer
assembly procedures to master and less model change-over time.
In Year 5, camera PAT productivity was 3,000 units and drone PAT productivity was 1,500 units annually.
There is reason to believe that over the next several years the productivity of camera PATs and drone PATs
can be increased substantially if company managers aggressively pursue productivity gains. PATs assembling
cameras have roughly double the productivity of PATs assembling drones because (1) drone PATs typically
have to make changes in the cameras used in the company’s drone models, (2) the steps required in drone
assembly are more complex and time-consuming, and (3) it takes drone PATs more time to inspect and flight
test each drone they have assembled than it takes for camera PATs to inspect and test the cameras they have
just finished assembling.
As you enter decisions for base pay, assembly quality incentives, attendance bonuses, and fringe benefits,
there are on-screen projections showing the impacts on (1) PAT productivity (see the last line in the top section
of the page) and (2) the various components of labor costs per camera assembled (see the section labeled
“Unit Assembly and Labor Costs”). You should try out different values for the base wage percentage,
assembly quality incentive, attendance bonus, and fringe benefits, searching for a compensation
package and PAT productivity combination which results in comparatively low labor costs per unit

assembled relative to those of rival companies. It is perfectly acceptable to decrease some compensation
components and increase others, or to make no changes in compensation.
Important: It is wise to reconsider/avoid compensation increases that boost PAT productivity but raise
labor costs per camera/drone assembled—the optimal outcome is PAT productivity increases that
lower labor costs per camera/drone assembled.
You will see information on the page showing the extent to which your company's compensation package is
above/below the prior-year industry average; you can use this information to gauge the competitiveness of
your company's compensation package and signal whether you need to boost one or more compensation
components to boost PAT productivity levels enough to lower labor costs per camera/drone assembled.
Again, bear in mind that putting together a compensation package to drive PAT productivity up to progressively
higher levels over time in and of itself is not an applause-winning achievement. Rather, the most businesslike
approach to workforce compensation is to achieve PAT productivity levels that result in lower labor costs per
camera/drone assembled as compared to rivals and that translates into a cost-based competitive edge.
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Best Practice and Productivity Improvement Budget

The productivity of PATs is enhanced by training PAT members in better assembly techniques, post-assembly
product testing, ways to reduce warranty claims, and overall productivity improvement. You have the authority
to raise/lower annual spending per PAT for such training. While spending greater amounts per PAT boosts
productivity, the benefits from greater annual training expenditures per PAT are subject to diminishing marginal
returns (that is, the benefits become smaller and smaller, eventually reaching a point where the added costs
outweigh the added benefits). A company can always reduce annual training expenditures per PAT without
losing the previous productivity gains.
Suggestion: Experiment with entering different amounts for annual training expenditures per camera/drone
PAT and observe the resulting changes in PAT productivity and overall labor costs per camera/drone
assembled. This will enable you to identify the “optimal” amount to spend on PAT training. Be aware that this
amount could change from one decision round to the next.
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Additional Space for Workstations and Installing New Workstations

Your company will in all likelihood need to expand both the camera and drone assembly facilities at some point
in order to have enough space to install the number of workstations that will be needed for assembling enough
cameras and drones to meet growing buyer demand. It is management’s responsibility to monitor the
need for additional workstation space in the company’s camera/drone assembly facilities and initiate
construction of additional workstation space when needed. And it is management’s responsibility to
install additional workstations in both of these facilities as may be needed to assemble additional
numbers of cameras/drones in order to meet expected buyer demand.
The information needed to make decisions regarding the construction of more camera/drone facility space and
camera/drone workstations is contained in the section labeled “AC Camera Assembly Facility” and “UAV Drone
Assembly Facility.” In these sections, you have information on the number of workstation spaces available and
the number of installed workstations at the end of the prior year. You will also see information relating to
whether your camera/drone assembly facilities have adequate assembly capability to meet projected buyer
demand worldwide without and with the use of overtime.

Special Note: Adding more workstation space increases administrative expenses. Administrative
costs to oversee and maintain the company’s two assembly facilities average $2,700 per workstation
space. In Year 5 administrative costs for the 300 workstations spaces currently in the AC Camera
facility totaled $810,000. Administrative costs for the 110 workstation spaces in the UAV drone facility
totaled $297,000. In future years, administration expenses will increase by $2,700 for each new
workstation space added to the camera assembly facility and the drone assembly facility.
Overtime Assembly. The maximum number of units that can be assembled at overtime is 20% of annual
PAT productivity (the number of units a PAT is able to assemble each year without the use of overtime). PAT
members are paid 1.5 times the hourly base wage for overtime assembly. The hourly base wage is the annual
base wage divided by 2000 hours.
The big issue you have to investigate is whether it is more economical (1) to use overtime to assemble enough
cameras/drones to fill projected buyer orders (which can delay the purchase and installation of more
workstations and the expansion of assembly facilities to provide more workstation space) or (2) to try to
minimize overtime assembly at overtime rates of pay by having in place sufficient workstation space and
workstations to assemble projected buyer orders.
It is a quick exercise to view the on-screen projected labor cost outcomes associated with using overtime (see
the numbers in the “Unit Assembly and Labor Cost” section), then make the “what if we add
workstations/expand facilities by amounts sufficient to avoid overtime” entries and see if the resulting labor
costs per unit assembled are higher/lower.
Special Note: Is the Overtime Cost per Camera/Drone Really 50% Greater than the Regular Time
Cost? Overtime costs per camera (or drone) assembled are calculated as follows: Suppose a
company's base wage is $21,000 annually per camera PAT member and that camera PAT productivity
is 3,000 units per year. A base wage cost of $21,000 per year per PAT member equates to base pay of
$84,000 for a 4-person PAT. Dividing a PAT’s $84,000 base pay by 3,000 units assembled annually
equals a regular-time labor cost of $28.00 for assembling one camera. Since overtime pay is 1.5 times
the regular-time cost, the labor costs of assembling one camera at overtime would be $28.00 x 1.5 or
$42.00.
Now how does this compare with the regular time cost? Suppose that a PAT member’s total
compensation (base wage + assembly quality incentive + attendance bonus + fringe benefits) is
$27,000 annually, which equates to annual total compensation costs of $108,000 for a 4-person PAT.
Then, if PAT productivity is 3,000 units annually, the full regular-time labor cost of assembling one unit
is $108,000 divided by 3,000 units or $36.00—which is $6.00 under the overtime cost of $42.00 per
unit.
The reason why the overtime labor cost of assembling one camera is only modestly greater than the full
regular-time cost per camera assembled is that a company's costs for quality incentives, attendance
bonuses, and fringe benefits are not a part of calculating overtime pay whereas they are included in
calculations of total labor costs per unit assembled.
Adding More Workstation Space. Should there not be sufficient unused workstation space in the company’s
camera/drone facility, then you will have to decide whether to initiate construction of additional workstation
space.
Additional space for camera/drone workstations can be built at a cost per space that declines as the
size of the space expansion increases—facility expansions can be as small as 10 spaces or as large as
150 spaces. Space expansions are undertaken at the beginning of a year and take several weeks to
complete. However, both the camera and drone assembly facilities have enough unused space to
accommodate the immediate delivery of additional workstations and set them up temporarily in the unused
space until a facility expansion is completed; thus, your company has the ability to gain full-year assembly

capability for newly-purchased camera/drone workstations even when permanent workstation space is
temporarily lacking in either the camera or drone assembly facilities pending the completion of whatever
workspace expansion projects you have initiated.
Remember: Administration expenses increase by $2,700 for each new workstation space added to the
camera assembly facility and each new workstation space added to the drone assembly facility.
The capital costs of facilities expansions are paid in full in the year they occur and are depreciated over 20
years at the rate of 5% annually.
At the bottom of the page, you can see the capital expenditures your company will have to make this upcoming
year to cover the costs of expanding your company’s assembly facility to accommodate additional numbers of
workstations.
The company has enough land at its Taiwan plant site to permit expansion of the camera assembly facility to
accommodate 1000 workstations and expansion of the drone assembly facility to accommodate as many as
800 workstations (although it is highly improbable that you would ever need this many workstations).
Important Note: All expansions of assembly facilities are permanent — you will not be able to dispose
of unneeded facility space once it has been constructed.
Installing New Workstations. If there is a projected shortfall in assembly capability with full use of overtime
(or if management deems it is economical to avoid use of overtime assembly because of having to pay workers
1.5 times the base wage for overtime assembly), then the company’s management team will have to decide
whether to spend the money to install some number of new workstations in the unused workstations spaces.
New workstations can be installed at a cost of $125,000 for camera workstations and $175,000 for
drone workstations each; adding workstations can be done quickly (usually during a single weekend) at the
beginning of each year. The capital costs associated with installing new workstations are depreciated over 20
At the bottom of the page, you can see the capital expenditures your company will have to make this upcoming
year to cover the costs of the workstations entered in the decision box.
Important Note: All additions of new workstations are permanent — you will not be able to dispose of
unneeded workstations once they have been installed.
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Workforce Size is Managed Automatically

Because every company’s management team is burdened by some amount of uncertainty regarding exactly
how many orders for camera and drones the company will actually receive each year (projected buyer orders
worldwide may be higher/lower than actual buyer orders), it is difficult at the beginning of each year to know
exactly how many PATs will be needed to fill all incoming orders for cameras/drones. To remedy the adverse
consequences that can come from forcing company managers to guess how many PATs to hire at the
beginning of the year (and then living with having hired too few or too many PATs), the GLO-BUS system
automatically employs the “optimum” number of PATs to fill actual incoming orders for cameras/drones. Here
is how it works:
• If actual orders for cameras/drones turn out to be less than the assembly capability of all installed
workstations without the use of overtime, then GLO-BUS will “right-size” the workforce and staff
only the number of workstations needed to assemble the units ordered worldwide.

• If actual orders are greater than the assembly capability of all installed workstations without the use
of overtime, then GLO-BUS will have PATs work overtime (up to the maximum 20% of annual PAT
productivity) to assemble enough additional units to satisfy buyer demand.
• If actual orders for cameras/drones exceed the assembly capability of all installed workstations with
maximum use of overtime, then your company is stuck with a shortfall in assembly capability, and
orders in the amount of the shortfall will go unfilled (causing the affected buyers to switch their
purchases to rival brands).
Why Does GLO-BUS Make These Automatic Adjustments for Your Company? These adjustments are
made on your behalf to keep things as realistic as possible. If you were running the company in real time, you
would simply adjust the number of cameras/drones assembled up or down on a daily or weekly basis (by hiring
or laying off PATs) to match assembly volume to actual incoming buyer orders over the course of the year. But
in GLO-BUS you have to settle on decisions of how many to assemble in advance of knowing what the exact
number of incoming orders will be. So, automatically adjusting units assembled to match buyer orders
(provided sufficient installed workstations are available) is cost-effective, helps avoid lost sales, and is in your
company’s best interest.
The company maintains an updated list of several hundred appropriately-skilled workers living within
commuting distance of the company’s assembly plant that it can draw upon to form new PATs to staff any idle
workstations that are needed to fill incoming buyer orders. These workers have sufficient experience and
qualifications that they can be adequately trained in a matter of days to assemble cameras/drones at
productivity rates equal to the company average.
Tip: There are going to be decision rounds when your company’s actual sales of cameras/drones
come in below what was projected (because of stronger than expected competitive efforts from rivals),
and there are going to be times when buyer demand for your company’s cameras/drones turns out to
be greater than projected (because of weaker than expected competitive efforts from rivals). One
thing for you to consider is to make it standard practice to have a few more installed
workstations than needed to meet projected buyer demand just in case unit demand turns out
be higher than projected; then there will be no shortfall in assembly capacity to fill buyer orders and
no lost revenues/profits. There is little risk to such a practice because unit demand for both cameras
and drones is reliably projected to grow over time—in other words, any unused assembly capacity in
one year is likely to be needed the following year.
Special Note: The company incurs administrative expenses associated with managing the PATs
needed to assemble cameras/drones. Experience indicates that administrative expenses associated
with workforce management (hiring new PATs when needed, laying off PATs when needed, and
supervising PATs in assembling cameras/drones) average $5,500 per PAT employed. Thus,
administrative expenses associated with workforce management each year vary according to the total
number of camera/drone PATs needed each year to assemble the needed cameras/drones. For
example, should your company’s total number of camera/drone PATs employed increase from 400 in
the prior year to 420 in the current year, then your company’s workforce-related administrative
expenses will increase by $110,000 (20 x $5,500) to a total of $2,310,000 (420 x $5,500). Should the
number of PATs employed drop from 400 to 390, then workforce-related administrative expenses will
decrease by $55,000 (10 x $5,500) to a total of $2,145,000.
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The Robotics Upgrade Option

You have the option to upgrade the assembly process by installing robots at each camera and/or drone
workstation. Whether it makes good economic sense to shift to robotics-assisted assembly of cameras and/or
drones is a matter for company managers to evaluate.

Robotics manufacturers have recently developed small robots capable of performing some of the tasks/work
steps in assembling both AC cameras and UAV drones. Installing robotics at each camera/drone workstation
enables the size of PATs to be cut from 4 members to 3 members. These robots cost $150,000 each. If the
company decides to shift from manual to robotics-assisted assembly, all existing workstations in the camera or
drone assembly facility must be upgraded to include robotics at a cost of $150,000 each, and all future
workstations the company installs for that facility must include use of a robot (which means that the capital cost
of each additional camera workstation will increase from $125,000 to $275,000 and that the capital cost for
each drone workstation will increase from $175,000 to $325,000).
Shifting to robot-assisted assembly also results in added annual maintenance costs of $9,000 per
workstation, pushing the total maintenance cost per camera/drone workstation from $6,000 annually to
$15,000 annually. The robots require monthly maintenance and also, from time to time, break down and have
to be repaired. Moreover, annual maintenance costs per robot-equipped camera/drone workstation increase
by an average of 1% for each 1% that PATs work overtime. Thus, if a robotics upgrade is undertaken and if
PATs work the maximum 20% overtime in assembling cameras/drones, then maintenance costs per installed
robot-equipped camera/drone workstation will rise 20% from $15,000 annually to $18,000 annually.
The cash outlays for capital costs associated with robotics upgrades of existing workstations and any new
robot-equipped workstations are incurred in the year of purchase; depreciation of these assets occurs over 20
Do not be alarmed if electing to do a robotics upgrade causes projected year-end cash balance to be
negative. As with all types of capital expenditures, the associated cash outlays can be partially or wholly paid
for the proceeds of new issues of common stock or borrowing (unless management has previously undertaken
unfortunate actions that have crashed the company’s credit rating).
Robot-assisted assembly can be used in one facility and manual assembly can be used in the other facility,
either indefinitely or until such time as management decides to shift over to robot-assisted assembly for both
products. Once robot-assisted assembly has been adopted for a camera/drone facility, it is not feasible to
revert back to all-manual assembly.
The page contains calculations that assist in evaluating the cost impact of a robotics upgrade. To explore the
economics of instituting robotics-assisted assembly, enter a trial decision to “upgrade” and review the cost
impacts just below, along with the capital costs of the upgrade at the bottom of the page. How your company
opts to finance the upgrade cost affects the economics. You have four options for paying the capital costs of
the upgrade: (1) pay cash for the upgrade (assuming you have a sufficiently large cash balance), (2) issue new
shares of stock to raise enough equity capital to pay for the upgrade, (3) borrow the money by taking out a 1-
year, 5-year, or 10-year loan, and (4) some combination of the first three options. Borrowing some portion of
the capital costs for the robotics upgrade will create interest costs; the impact of the interest cost will be
calculated if you enter the percent of the upgrade cost to be financed with debt. Bear in mind that interest
costs will disappear when the loan is repaid (your company always has the option to pay down loan principal
early if sufficient internal cash flows later become available).
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Capital Expenditures for Cameras and Drones

Adding more workstation space, installing more workstations, and/or upgrading to robotics-assisted assembly
all involve capital expenditures (fixed asset investments) that must be paid for in full in the year initiated.
Expenditures for these types of fixed assets are depreciated over 20 years at the rate of 5% annually.
Whenever your company undertakes a significant amount of capital expenditures, your company’s
projected year-end cash balance may turn out to be negative (see the Company Performance Projections

box). Raising money via new stock issues and/or borrowing is a normal and perfectly acceptable way
of financing capital improvements—especially when your company has a B+ or better credit rating.
When you get to the Finance Decisions page (typically the last page you need to visit because making
changes on all the other decision pages will affect the size of the projected year-end cash balance), you can
finance any capital expenditures in any of 4 ways: (1) pay cash (a positive projected year-end cash balance
indicates your company is expected to have sufficient internal cash to cover all operating expenditures and all
capital expenditures) (2) issue a sufficient number of shares of stock to raise enough equity capital to end up
with a positive year-end cash balance, (3) borrow enough money by taking out a 1-year, 5-year, or 10-year
loan to end up with a positive cash balance, and (4) use some combination of cash, stock issues, and debt.
Back to top

GLO-BUS Special Contracts Help
Special Contracts to Supply Cameras to Chain-Store Retailers

Beginning in year 9, there is an opportunity to obtain special contracts from large chain-store camera
retailers in each region to supply them with AC cameras at a discount price. The cameras to be supplied
are the company’s regular models, not a stripped-down or lower-quality version. The payoff for winning
bidders is a contract to supply a large retailer in the region with a unit volume equal to 10% of your
company’s actual total unit sales volume in the region in the current decision round/year.
Chain retailers use a Value Index to determine which of the camera-makers’ offers to accept. The Value
Index is a composite of three factors: (1) the net wholesale price the retailer will pay after the price discount
offered by the bidder, (2) the P/Q rating of the bidder’s action cameras, and (3) the numbers of models in the
bidder’s line of cameras. Multi-store chain retailers consider the Value Index as the best indicator of how many
action camera buyers they can attract to their stores, given the sales prices they can offer, the P/Q ratings of
the cameras, and the number of models that buyers can choose from. Your company’s Value Index appears
as an on-screen calc as soon as you enter a percentage discount offer.
Why Do Chain Retailers Use a “Value Index” to Evaluate Offers? Chain retailers do not believe it is in their
best interest to choose a winner simply based on “the lowest discounted price” because this would fail to
account for better quality and greater model selection advantages of higher-priced cameras. Such a “price-
only” procedure for selecting winners would restrict big retail chains to having special sales promotions that
would only appeal to people shopping for low-end camera brands. Rather, chain retailers believe it is in their
best interest to hold discount sales promotions to draw in people willing to consider a broad range of action
camera brands if offered “a good deal.”
Hence, they have constructed a “Value Index” that puts most all AC camera companies in position to compete
for special order contracts. Their Value Index methodology enables a maker of high-performing, premium-
quality cameras sold at premium prices to achieve a competitive Value Index score because its necessarily
higher net price offer is justified by higher P/Q ratings (and perhaps a bigger selection of models). Likewise,
the Value Index methodology makes it feasible for a camera-maker selling mid-priced cameras with mid-level
P/Q ratings and 4-5 models to put together an offer with a Value Index that can be competitive with those of
companies selling high-priced cameras or low-priced cameras, cameras with high P/Q ratings or low P/Q
ratings, and a big selection of models or a small selection of models.
In the instance where two or more companies make offers with the same highest Value Index, the
contract is awarded to the company with the highest prior-year image rating/brand reputation.
All interested camera-makers can make offers for these contracts—offers are taken in each of the four
geographic regions. The number of offers that are accepted in each region depends on the number of
companies in the industry:
• In industries with 5 or fewer companies, there is 1 special contract awarded in each region.
• In industries with 6-8 companies, there are 2 special contracts awarded in each region.
• In industries with 9-12 companies, there are 3 special contracts awarded in each region.
Special Note: In the Competitive Intelligence Report for each geographic region contains three lines of
data (at the bottom of the AC Camera Segment data) relating to the Special Contract offers made by
companies in the industry. The first line reports each company’s discount price offer. The second line
reports the Value Index associated with each company’s offer. The third line shows the company or
companies whose offers were accepted and the number of cameras they sold under the special
contracts accepted by multi-store chain retailers. You will find this information very valuable in
helping prepare your offers for special contracts.

The Percentage Discount Offer

Enter a percentage discount for each geographic region where you wish to make an offer for a contract and
observe the resulting Value Index. While bigger percentage discounts will produce a higher Value Index
(which boosts your chance of winning a special contract), it will also result in a lower contribution margin and
smaller gains in EPS, ROE, and cash flow (which reduces the payoff from winning a contract). So this tradeoff
the basic problem you have to resolve, assuming you want to submit a offer in one or more regions.
What should the compromise be between making an aggressive offer (a big enough price discount to produce
a Value index deemed high enough to give your company an excellent chance of being awarded a special
contract) and making a conservative offer (so as not to leave money on the table with a Value Index bid of,
say, 75 when a Value Index offer of 71 would have been high enough to beat the offers of rival companies)?
Tip: Ideally, you want to submit an offer with a Value Index that is just high enough to win, yet that
involves a price discount low enough to yield the biggest contribution margin and biggest gains in EPS,
ROE, and cash flow. Winning a contract that entails a bare-bones contribution margin merits nothing
more than polite applause for keeping a rival company from winning a contract.
Note that each time a percentage discount is entered, you are instantly able to see the resulting discount price
offered to chain retailers on the line just below the decision entry field and also the resulting Value Index on the
line labeled “Value Index of AC Camera Units Offered.”
Important Rule: The company Board of Directors strictly prohibits management from submitting an
offer which is projected to result in a negative contribution margin and thus negatively impact the
company’s EPS, ROE, cash flow, and overall performance. Any such offers will be automatically
“disallowed” and not considered by chain retailers.
Projected Outcomes
Each time you enter a percentage discount, the Projected Outcomes section in the bottom half of the page
displays projections of:
• The incremental revenues your company will receive from winning a contract.
• The incremental costs that will be incurred from assembling and delivering the projected number of
cameras to be supplied.
• The resulting “contribution margin” (defined as incremental revenues minus incremental costs).
• The incremental profitability—the projected gain in EPS, the projected percentage boost to ROE,
and the projected increase in cash flow.
These projected outcomes of alternative price discounts provide you with the feedback needed to quickly
search out a percentage discount for each region that produces an “attractive” Value Index offer and
“attractive” increases in the company’s projected performance.
Incremental Revenue Projections. The projections of incremental revenues are adjusted for favorable (+) or
unfavorable (-) exchange rate effects. The incremental revenues are calculated by multiplying the net price
your company will receive (after taking into account the price discount offered and any exchange rate
adjustments) by the projected number of cameras to be supplied (10% of your company’s projected camera
sales volume in the region) should your company win the offer you submit.
Note: Because all special contract agreements and transactions occur in the first three quarters of the
year, 100% of special contract revenues are collected in the current year. Therefore, special contract
sales have no impact on accounts receivable in the balance sheet at the end of the year.

Variable Production Costs and Delivery Costs Projections. Bear in mind that the cost consequences of
winning a special contract from a large camera retailer involve only the incremental costs associated with:
• Variable Production Costs—(1) camera components, (2) the labor needed to assemble the
cameras (assembly for some of the cameras ordered may have to be outsourced to nearby contract
assemblers if the company lacks the needed in-house capacity).
• Delivery Costs—(1) shipping and (2) applicable import duties.
All other camera-related costs (for marketing, administration, maintenance, depreciation, PAT training, and so
forth) are “fixed” in a total dollar expenditure sense (since they will not change up or down as a consequence of
winning or not winning a special contract). Because there is no guarantee that your company will be awarded
a contract, it is a generally accepted accounting practice to always fully allocate all such “fixed costs” to the
company’s “regular” camera business.
Note: Because all special contract agreements and transactions occur in the first three quarters of the
year, 100% of all associated costs are incurred in the current year. Therefore, special contract sales
have no impact on accounts payable and in the balance sheet at the end of the year.
Contribution Margin Projections. Incremental revenues minus incremental costs equals the total dollar
contribution your company is projected to earn on the special contract. These monies can then can be used
for (1) the payment of any “fixed costs” (for depreciation, maintenance, administrative costs, interest payments,
and so forth) which might not be fully covered by the company’s ”regular” sales of cameras (or drones) and (2)
boosting profitability. The bigger the projected contribution margin earned on special contracts, the bigger the
projected impact on your company’s bottom line, EPS, ROE, and internal cash flows.
Assembly of Special Contract Units. If your company wins one or more special contracts, then the needed
cameras will be assembled in the following order of priority:
1. Any workstation capacity left over after assembling regular camera orders will be used to assemble
cameras to fulfill the special contracts won by the company. The labor costs for assembling these
cameras at regular time will be the same as the labor costs for regular time assembly of cameras
sold and shipped to camera retailers across the four geographic regions.
2. Any overtime assembly capacity left over after assembling regular camera orders will be used to
assemble cameras to fulfill the special contracts won by the company. The labor costs for
assembling these cameras at overtime will be the same as the labor costs for overtime assembly of
cameras sold and shipped to camera retailers across the four geographic regions.
3. Once the company’s in-house assembly capacity has been exhausted, all remaining cameras
needed to fulfill the special contracts will be outsourced for assembly by nearby contract
assemblers for an assembly price/cost of $50 per camera.
All such assembly costs are included in the projections of “Variable Production Costs.”
Outsourcing the assembly of a big fraction of the cameras required to fill the special orders is highly likely when
you are already using overtime to assemble cameras for “regular” sale to camera retailers across the world.
Including Special Contract Projections in the Overall Projections

At the very bottom of the page, you are given the option of checking a box to include all of the projected
outcomes for special order contracts in the company’s overall performance projections for the year.
Suggestion: It is recommended that you temporarily check all the boxes just to see what the company
performance outcomes would be if your company wins all the offers it submits. Later, consider whether you
want to uncheck the boxes for those offers you believe are less likely to be successful.

GLO-BUS Corporate Social Responsibility and Citizenship Decisions Help
Corporate Social Responsibility and Citizenship Decisions

Explanations — Cause-Effect Relationships — Tips/Suggestions
This decision entry page displays the various optional programs and initiatives that can be employed to
create a “social responsibility strategy” for your company and thereby demonstrate a commitment to
operating your camera/drone business with a “social conscience.” Aside from the fact that being a good
corporate citizen and operating your company in a socially responsible manner is considered by some
people as “morally correct” or the “right” thing to do, a good business reason to consider pursuit of a social
responsibility strategy is the positive contribution that such a strategy can have on your company’s Image
Rating. Aggressive and astute pursuit of social responsibility/citizenship initiatives over a 5-year
period can potentially increase your company’s Image Rating by as much as 15 to 20 points.
Nonetheless, it is completely up to your company’s management team to decide whether and to what extent
to spend money on social responsibility and citizenship initiatives. You have the authority to spend
aggressively, to spend moderately, to spend token amounts, or to spend nothing.
Five Important Things to Understand Regarding CSRC Initiatives

1. Your company can perform at a high level and have a good Image Rating without spending any
money on the social responsibility and citizenship initiatives. Your company’s image rating is based
on three factors: (1) your company’s P/Q ratings for action-cameras and UAV drones, (2) your company’s
market shares for both action cameras and UAV drones in each of the four geographic regions, and (3)
your company’s actions to display corporate citizenship and conduct operations in a socially responsible
manner over the past 4-5 years. An attractively high Image Rating can be achieved by performing well on
just the first two factors. So, you should not feel “pressured” or “obligated” to undertake any of the
actions on this page if the company’s management team really does not wish to do so. Prior to your
taking over company operations at the end of Year 5, your company spent no money for any of the social
responsibility and citizenship initiatives shown on this page.
2. Your company’s Image Rating will not be reduced in the event you and your co-managers elect not
to spend any money for social responsibility and citizenship.
3. The positive Image Rating gains are minimal unless your company’s actions are “comprehensive”
(involve several, but not necessarily all, of the citizenship and social responsibility initiatives),
entail more than “token” efforts (measured by how much money is being spent), and represent an
ongoing effort of at least 4-5 years. Expect it to take time for a company’s CSRC strategy to produce
much impact on a company’s Image Rating—annual expenditures of x dollars for 1-2 years will have a
substantially smaller impact than expenditures of x dollars for 4-5 years. You will thus have to be patient in
expecting sizable Image Rating benefits from social responsibility/citizenship expenditures—it takes time
for your company’s “good deeds” to become widely known and to cause the general public to view your
company as one that is genuinely committed to being a good corporate citizen and that believes in
contributing positively to the well-being of society.
4. It is not necessary to spend money on all the different CSRC initiatives in order to “maximize” the
image rating gains; however, you will need to spend money on more than just one or two initiatives
to substantially increase the image rating. Some social responsibility and citizenship actions have a
bigger positive impact on your company’s Image Rating than do others. The biggest impacts relate to
charitable contributions and “green” initiatives to promote environmental sustainability, not so much
because they are “more important” than the others as because they are more visible to the public (and can
often entail bigger dollar expenditures).
5. Company co-managers have the flexibility every year to alter the company’s social responsibility
strategy by ceasing expenditures for some initiatives, beginning expenditures for other initiatives,
and/or contributing more or less money to charitable causes. Once initiated, the programs to promote
Copyright © 2018 GLO-BUS Software, Inc. Page 1

renewable energy, to employ “green” initiatives to promote environmental sustainability, to improve working
conditions for plant personnel, and to institute a code of conduct for suppliers may be discontinued and
then later restarted. For example:
• You can spend money for renewable energy initiatives for 2 years, stop such spending for 3 years,
and then restart spending for renewable energy—the same goes for charitable contributions, green
initiatives to promote environmental sustainability, and instituting a supplier code of conduct and
compliance monitoring of suppliers.
• You can shift spending for charitable contributions from a specified amount of dollars to a specified
percentage of operating profit—or vice versa. You can decide to curtail spending for charitable
contributions (by reducing either the annual dollars contributed or lowering the percentage of
operating profits donated to charity) and perhaps shift some of the dollars formerly contributed to
charitable causes over to instituting a supplier code of conduct and compliance monitoring of
suppliers or some other initiative.
• You can decide to build cafeteria and on-site child care facilities (which entails capital expenditures
of $3.0 million and added administrative costs of $600,000 annually), then in later years decide to
discontinue/close down these facilities to save the $600,000 annual operating costs. Later, you can
decide to reopen these facilities and once again begin paying the $600,000 added administrative
costs every year—your company will not have to pay another $2.5 million in capital investment
costs to reopen the cafeteria and child care facilities. The 50 units per year increase in camera
PAT productivity and 25 units per year in drone PAT productivity realized by improving working
conditions for plant personnel will, of course, be lost if the cafeteria and child care facilities are shut
down, but the PAT productivity gains will reappear if and when the facilities are reopened.
• You can decide to acquire additional safety equipment and improve plant lighting/ventilation to
improve working conditions for plant personnel for an initial capital investment of $2.5 million and
added annual administrative costs of $500,000, then in later years decide to discontinue this
program in order to save the annual $500,000 in administrative costs (the capital investment of $2.5
million is not recoverable). Later, if you wish, you can reinstitute this program and once again begin
paying the $500,000 annual administrative costs—your company will not have to pay another $2.5
million in capital investment costs to reinstitute the use of additional safety equipment and return to
the use of improved lighting and ventilation equipment previously installed. The 50 units per year
increase in camera PAT productivity and 25 units per year in drone PAT productivity realized by
using better safety equipment and improved lighting and ventilation will be lost if the program is
discontinued, but the PAT productivity gains will reappear if and when the program is reinstituted.
Beginning in Year 6 and continuing each year thereafter, you will be provided benchmarking data at
the bottom of Page 3 of the Camera & Drone Journal showing the industry high, low, and average
expenditures for prior-year social responsibility and citizenship programs as well as the number of
Image Rating points such efforts are generating. This data will help you gauge the benefits and costs of
social responsibility/citizenship expenditures at your company.
Entering Decisions for the Various CSRC Initiatives

In the middle of the page are the different types of CSRC initiatives that you can employ to create a social
responsibility/citizenship strategy for your company. Brief explanations of each of the initiatives are shown on
the page. Click on the white decision entry boxes to see the different decision options at your disposal.
The combined cash outlays of your decision entries for the initiatives are shown on the line headed “Cash
Outlays for Corporate Social Responsibility and Citizenship” which is just below the decision entry panel.
You should always make a point of watching the numbers in the Performance Projections box showing the
projected effects of the expenditures for the various CSRC initiatives on Net Profit, Earnings per Share, Return

on Equity, Credit Rating, and Image Rating (all decision pages have a Performance Projections box showing
the incremental impacts of each decision entry). You should pay particular attention to the sizes of the impacts
of your decision entries on the projections for Net Profit, Earnings per Share and Image Rating. Remember,
however, that these projections are “incomplete” and, at best, “rough approximations” until you have settled
on entries for all the decision boxes on all the decision pages. Nonetheless, you will want to keep a close
eye on whether each decision entry is causing the projections to look better or worse—the size and the
direction of the incremental changes is something you will find enormously useful in deciding the merits of one
decision entry versus another.
Note: Expenditures for CSRC initiatives will not have much impact on your company’s projected Image
Rating in the first year or two or maybe three (although you should see some differences between
spending a little or a lot and spending more on some initiatives than others). A company’s Image
Rating does not blossom and mushroom overnight just because its management team one day decides
to demonstrate more of a “social conscience” and begins to spend some money on being a good
corporate citizen. Building a reputation for operating in a socially responsible manner and being
a model corporate citizen requires years of effort where the sincerity of management’s
intentions and the depth of a company’s commitment are measured in large part by sustained
and meaningfully large expenditures of money and. This is why it will take aggressive and astute
pursuit of the CSRC initiatives over a 5-year period before you can expect to realize Image Rating
gains in the 15 to 20-point range.
Warning: Beware of spending so much on the various CSRC initiatives that you unduly impair the
company’s profitability and overall financial performance. While your company can afford to undertake
such spending, the amount spent does matter. It is definitely possible to “overspend” CSRC
initiatives such that any resulting Image Rating gains are outweighed by the adverse impact that
heavy spending on CSRC initiatives can have on operating profit, net income, EPS, ROE, credit rating,
and stock price. In other words, aggressively spending large sums on CSRC initiatives to try to drive
up your company’s Image Rating can have the unintended consequence of reducing your company’s
overall performance because of the dampening effect that such costs can have on EPS, ROE, stock
price, and credit rating. It is overall performance on the five scoring variables that matters, not just your
company’s image rating performance.
Suggestions for Year 6 Decision Entries

In making decision entries for Year 6, there is merit in being “cautious” or “conservative” about how much
money you spend for CSRC initiatives—at least the first time you visit the decision page. This is because your
company spent no money for any of these items in Year 5—hence all such expenditures for Year 6 (shown on
the line headed “Cash Outlays for Corporate Social Responsibility and Citizenship” just under the decision
entry panel) will represent an increase in costs over the prior year and could adversely impact your company’s
achievement of the Year 6 targets for EPS, ROE, and credit rating—shown in the Projected Performance box
on the left of this page.
Later on, once you have gone through all the decision pages the first time, then revisited all the other decision
pages to fine-tune your initial entries, and see that your company’s projected EPS, ROE, and credit rating
performances look acceptable, you may want to come back to this page and consider spending additional
sums on one or more of the CSRC initiatives.
The Information Appearing at the Bottom of this Decision Entry Page

The box at the bottom left of the page shows information on the actions you have taken for each of the CSRC
initiatives for the five most recent years.

At the bottom-right of the page, a box showing industry-wide benchmarking data with (1) the industry high, low,
and average expenditures for all the different initiatives combined and (2) the industry high, low, and average
cash outlay per unit sold.
TIP #1: Use the historical data for your company shown in the left side columns to review the actions
your company has taken in past years and to guide decision entries for the upcoming year.
TIP #2: Use the benchmarking data on the right side of the section showing highest, lowest, and
average expenditures of companies in the industry (both the total amounts and the per unit sold
amounts) as further guides for your decision entries and further to compare with your “Cash Outlays for
Corporate Social Responsibility and Citizenship” for the upcoming year—this line appears on the page
just below the decision entry panel.
TIP #3: Be sure to scrutinize the data at the bottom of Page 3 of the most recent year’s Camera &
Drone Journal showing (1) industry outlays for CSRC initiatives and (2) the Image Rating points
generated from such outlays. This information will be a valuable assist in determining (1) whether your
company’s efforts should be increased, decreased, or remain unchanged in the upcoming year or (2)
whether to cease further efforts altogether or (3) whether to continue with no CSRC effort if that, in fact,
has been your past practice.
The Corporate Responsibility Award (for Exemplary Corporate Citizenship). Beginning in Year 9 and
continuing each year thereafter, the World Council to Promote Exemplary Corporate Citizenship will present a
Corporate Responsibility Award to the company in your industry demonstrating the greatest commitment to
operating its business in a socially responsible manner and being a model corporate citizen. The World
Council’s Board of Directors has decided that its annual award will be presented to the company with the
highest CSRC cash outlay as a percent of revenues—the Council opted to base its award on percentage of
revenues rather than total dollars spent because a total dollar number is “biased” in favor of companies with
high revenue streams (the use of a % of revenues measure is size-neutral and a more valid measure of
“company effort”). An award for 2nd place will also be announced.
The annual Corporate Responsibility Award should be viewed as a company honor and as a means of giving
special recognition to companies that are striving to be exemplary corporate citizens and to conduct their
business operations in a socially responsible manner. But such awards do not in any way increase the
company’s Image Rating or otherwise improve its performance scores. Companies failing to receive a
Corporate Responsibility Award incur no special penalty of any kind.

Finance Decisions and Projected Cash Flows
Explanations — Cause-Effect Relationships — Tips/Suggestions
Your company’s management team is 100% responsible for having sufficient funds available to pay
all of the required cash outlays for the upcoming year.
This screen involves as many as 8 finance-related decision entries, but just as importantly, provides
you with (1) projections of total cash available and total cash outlays in the upcoming year, (2)
projections of important financial statistics, and (3) projections of the company's performance on the
three credit rating measures at year-end. All of these projections provide you with the feedback and
information needed to evaluate the various options you have to finance the company's operations.
You should try out several different “what-if” financing combinations and use the onscreen
calculations/projections to create a financing strategy that holds the potential for the most favorable
financial outcomes.
Making entries on the finance screen should always come last in the decision-making process
because, until all of the entries on all the other decision screens have been finalized, the projections of
cash available and cash outflows are unreliable. Hence, any finance decisions you might make are
“premature” and will need to be reconsidered later.
Use the links below to quickly access the desired Finance and Cash Flow decision topics.
The Projected Ending Cash Balance

Bank Loans
Issuing Additional Shares of Stock
Early Repayment of Bank Loans
Dividend to Payments to Shareholders
Repurchasing Shares of Stock
Projected Cash Available
Projected Cash Outlays
The Projected Ending Cash Balance

The Company Earns Interest on Cash Balances. Your company earns interest on any positive cash
balance in the company's checking account at the beginning of each year (next year’s beginning-of-the-
year cash balance, of course, is the same as this upcoming year’s ending cash balance). The interest
rate paid on cash balances is always 3.0 percentage points below the prevailing interest rate for short-
term loans carrying an A+ credit rating.
Avoid the Risk of Penalty Interest on Overdraft Loans. If the company overdraws its checking
account to pay all of its upcoming-year required cash outlays, then the Global Community Bank (with
whom the company has a long-term agreement to handle its banking transactions) will automatically
issue your company a 1-year overdraft loan in an amount sufficient to bring your checking account
balance up to zero. The interest rate charged on overdraft loans carries a 2% interest rate penalty
(that is, if your company’s credit rating entitles it to a 6% short-term interest rate, then any overdraft
loan will carry an 8% interest rate). The interest rate your company will have to pay on any
overdraft loans, given its present credit rating, is shown in the bottom left section of this
screen.
The potential for overdrawing your checking account this upcoming year is strongly signaled by
• A projected negative ending cash balance in Company Performance Projection box on the
middle left of each decision screen (a projected negative cash balance on this screen is always
shown in red, as a warning of the need for co-managers' to take action to avoid the 2% penalty
interest adder).
• A small positive projected ending cash balance (because there is always uncertainty/risk that
sales volumes and revenues will not be as high as projected due to unexpectedly tougher
competition from rivals).
In such instances, you may want to consider taking out a 1-year loan sufficient to end the year
with a projected cash balance of at least $10 million (and perhaps more) as a means of
protecting against overdraft loans. Here's why. There's very real potential for “Receipts from Sales”
in the Cash Inflows listing in the “Projected Cash Available” section to be significantly lower than shown
because of stronger-than-anticipated competitive efforts from rivals. Thus, while “Receipts from Sales”
in the Projected Cash Available section might, for example, be $375 million, there is some probability
that actual unit sales of cameras/drones will turn out to be lower than projected and produce revenues
of only $360 million. A cash inflow shortfall of this magnitude, even with a contingency cash reserve of
$10 million in your projected year-end checking account, will produce a $5 million overdraft loan. Since
it is not uncommon for actual “Receipts from Sales” to come up short of what is being projected,
avoiding overdraft loans typically requires maintaining a fairly sizable projected year-end cash balance
cushion. Maintaining a large year-end cash balance has the advantage of generating interest income in
the following year, so there's not much downside to having “ample” or “bigger-than-expected” cash on
hand and keeping a nice balance in your company's checking account.
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Bank Loans
If your company's projected year-end cash balance is negative or just slightly positive (see the
Company Performance projections in the box on the middle left of the screen), indicating your company
could very well have insufficient cash available from all sources to cover all of the required cash
outlays/payments, then one option is to cover any potential cash flow deficiency by borrowing the
needed funds — the other two options are to (1) sell additional shares of stock and raise new equity
capital and (2) cut the company's dividend payment (assuming the company is paying a dividend),
which will reduce cash requirements for dividend payments and provide cash for other purposes.
Officials at the Global Community Bank, under terms of a long-term banking agreement with the
company that also includes foreign currency transactions, have agreed to loan the company additional
monies should company co-managers elect to use debt to help finance growth and capital
expenditures. The interest rate on any such loans is tied to the company's credit rating and the going
rates of interest in world financial markets.
If you opt to borrow the needed monies to cover the projected cash deficiency and provide a cash
reserve buffer of, say, $10+ million, then you and your co-managers will have to decide whether the
term(s) of the loan(s) should be 1 year, 5 years, 10 years, or some combination of these.
One-year loans are granted at interest rates based on the company's current credit rating—the lower a
company’s credit rating, the higher its interest rate on 1-year loans (your company’s interest rate for 1-
year loans is always shown in parentheses beside the decision entry box for 1-year loans). Loans for 5-
year terms carry a 0.50% interest rate adder over your company’s interest rate for 1-year loans, and 10-
year loans carry a full 1% interest rate adder over the 1-year loan rate.
There are pros and cons to each of the 3 terms of loans:

• A 1-year loan has the advantages of a lower interest rate, quicker payback, and smaller total
interest costs over the life of the loan, but the disadvantage/risk of perhaps having to re-finance
some or all of the 1-year loan debt next year at perhaps less favorable interest rates should next
year’s total cash available from internal sources not be sufficient to fully repay the principal due on
the 1-year loan and global interest rates rise.
• Longer 5-year or 10-year loans have the advantages of locking in what may be an attractive long-
term interest rate and lowering annual principal payments.
• However, 5-year or 10-year loans, in addition to their higher interest rates, have the disadvantage
of causing the company to pay out bigger sums for interest over the life of the loan (which, in turn,
causes the company to have a lower interest coverage ratio than it might otherwise have achieved).
A lower interest coverage ratio weakens the company's credit rating. (All three factors determining
your company credit rating are discussed just below.)
Note: If in a given year your company’s interest coverage ratio falls below 2.00, then in the following
year you will be restricted from borrowing long-term (no new 5-year or 10-year loans) until such time as
the coverage ratio at the end of the prior-year rises to 2.0 or higher.
The maximum amount of a 1-year loan in a single year is $250 million; the maximum amounts of
any single 5-year loan and any single 10-year loan are also $250 million — these maximums give
you total borrowing power of $750 million in a single year, which is far in excess of any amount your
company should ever seriously contemplate borrowing. Borrowing anywhere near this $750 million
amount in a single year would almost certainly crush your credit rating and imperil the company's
financial well-being. Just because you have the discretionary authority to borrow large sums doesn't in
any way imply that you should go overboard in the use of debt to finance the company's operations.
Suggestion: Shorter-term loans are usually better from an interest cost standpoint than longer-
term loans if you expect that cash flows will be adequate in a year or two or three to allow you to
pay off the loan. If the cash deficiency is mainly attributable to having invested in new fixed
assets with a 20-year life (workstations, facility space, robots), then a 5-year or 10-year loan is
reasonable—particularly if your company's credit rating is B+ or better and interest rates are
low; locking in a low interest rate for several years to come makes more sense than running the
risk of taking out a series of 1-year loans at potentially higher interest rates (should your
company’s credit rating go down or should global interest rates jump). If, however, your
company's credit rating is currently depressed and/or interest rates are high, then you may be
wise to take out a 1-year loan and then take out a longer-term loan later in hopes that
company's financial condition improves and/or worldwide interest rates drop.
However, you and your co-managers have to guard against overuse of debt to finance the
company's growth and operating requirements. Progressively higher levels of debt will, at some
point, start to negatively impact the company's credit rating.
The Three Factors Determining Your Company's Credit Rating. A company's credit rating is a
function of three measures of creditworthiness and financial strength:
1. The current ratio (defined as current assets divided by current liabilities). A company with a current
ratio below 2.0 is considered to lack adequate financial liquidity because it may have difficulty in
converting enough of its current assets into cash to pay its current liabilities; the further a
company’s current ratio is below 2.0, the bigger the credit rating penalty. Companies with current
ratios in the 2.5 to 5.0 range generally have little difficulty in converting enough current assets into
cash to pay their current liabilities. In general, the higher a company’s current ratio is above 2.0, the
stronger is its short-term financial liquidity—a factor that contributes to a higher credit rating.
Be aware the 1-year loans and overdraft loans adversely affect your company’s current ratio
(because such loans qualify as current liabilities). See your company’s Balance Sheet, which can
be found on page 4 of the Company Operating Report. Note also that the “Current Portion of Long-
Term Loans” shown on the Balance Sheet also is a current liability.
2. The interest coverage ratio (defined as annual operating profit divided by annual interest
payments—this ratio is considered as an income statement ratio because the numbers are always
contained on every company’s Consolidated Income Statement). Your company's interest coverage
ratio is used by credit analysts to measure the “safety margin” that lenders have in assuring that
company profits from operations are sufficiently high to cover annual interest payments. An interest
coverage ratio of 2.0 is considered “rock-bottom minimum” by credit analysts. A coverage ratio of
5.0 to 10.0 is considered much more satisfactory to help buffer against year-to-year earnings
volatility, the potential for unexpectedly intense competitive pressures to suddenly erode a
company's profitability, and the relatively unproven management expertise at each company. It can
take a double-digit times-interest-earned ratio to secure an A- or higher credit rating when a
company’s standing on the other two credit rating measures is not especially strong. The interest
coverage ratio measure is strongly weighted in determining company credit ratings.
3. The debt-to-equity ratio (defined as total liabilities divided by total stockholders’ equity—this ratio
is considered as a balance sheet ratio because both numbers always appear on company balance
sheets). The debt-to-equity ratio concerns the percentage of total assets financed by all types of
creditors (which equates to total liabilities as reported on company balance sheets) and the
percentage financed by shareholders (which equates to total shareholders’ equity as reported on
company balance sheets). The debt-equity ratio is often expressed as a number or a
percentage or a combination of the respective debt-equity percentages. For example, if a
company has total liabilities of $100 million and total shareholders’ equity of $150 million, then the
debt-to-equity ratio would be:
• 0.40 if expressed as a number ($100 million divided by $250 million). A number less than
1.0 signifies that a company is financing its total assets with a bigger fraction of shareholder
money than money provided by creditors. Companies with a debt-to-equity number less
than 1.0 are considered less risky by banks; companies with a debt-to-equity number
greater than 1.0 are considered more risky, especially as the number rises progressively
above 1.0 to 2.0 to 3.0 and higher. A debt/equity ratio of 4.0 signals that the monies being
provided by creditors are 4 times as big as the monies being provided by shareholders—
clearly making the company “very high risk” from the standpoint of bankers who may have
loaned the company sizable amounts. Accordingly, a company’s credit rating is
progressively strengthened as its debt-to-equity number falls progressively below 1.0, and
its credit rating is punished as its debt-to-equity number progressively rises above 1.0.
• 40% if expressed as percentage ($100 million divided by $250 million times 100). Similarly,
the farther the debt percentage is below 100%, the bigger the degree to which shareholders
are financing the company’s total assets and the lower the risk that bank lenders will have in
loaning the company money. Consequently, a company’s credit rating is progressively
strengthened as its debt-to-equity percentage falls progressively below 100%, and its credit
rating is punished as its debt-to-equity percentage progressively rises above 100%.
• 40:60 if expressed as a combination of the debt and equity percentages of total assets. The
first number is always the debt percentage and the second number is always the equity
percentage—GLO-BUS uses the combination of the respective debt/equity percentages
approach. The more the debt percentage is below 50 and the bigger the equity percentage
is above 50, the less risk to lenders that a company will be unable to make interest and
principal payments. Conversely, debt-to-equity percentages of 75:25 would plainly pose a
high risk to bank lenders, because of the borrower’s financial burden in having to make large
annual interest payments and big annual principal payments on outstanding loans that could
soak up a big fraction (perhaps even all or more) of cash flows from operations.
Bear in mind that the only liability which a camera/drone company has other than bank debt
is “accounts payable” which is always small enough to be covered by the “accounts
receivable” component of Current Assets. Thus, the biggest fraction of your company’s total
liabilities tends to be bank loans (unless most of the company’s loans have been repaid).
Thus, insofar as camera/drone companies are concerned, it follows that:

• As a company’s debt percentage falls below 50 and its equity percentage rises above 50,
the debt-to-equity measure helps strengthen its credit rating.
• As a company’s debt percentage rises above 50 and its equity percentage falls below 50,
the debt-to-equity measure of its creditworthiness punishes its credit rating.
In the case of companies in the camera/drone industry, the Global Community Bank tends to view
companies having acceptable current ratios and times interest earned coverages and a debt-to-equity
ratio of up to 50:50 (or 0.5 or 50%) as financially stable and reasonably creditworthy. Companies with
debt-to-equity ratios (or percentages) of 20:80 to 35:65 are considered “financially sound,” while
companies with ratios/percentages of 55:45 to 65-35 are considered “medium to high risk” and
companies with percentages above 70:30 are considered “very high risk” because they are using “too
much” debt and creditor financing in operating their business.
The interest coverage ratio and the debt-to-equity ratio are the two most important measures in
determining a company's credit rating.
Your company's prior-year and projected performance on these three credit rating measures is shown
in the bottom right section of the screen, allowing you to keep close tabs on whether any of the three
measures merit changes in the company’s finance decisions.
As a rule of thumb, it will take a debt-to-equity percentage approaching 15:85 to achieve an A+ credit
rating and debt-equity percentages of 25:75 to 30:70 to achieve an A- credit rating (unless
counterbalanced by an interest coverage ratio in the 7 to 10 range and a current ratio above 3.00).
Debt-to-equity percentages of 50:50 to 60:40 can still produce a B+ or A- credit rating for companies
having strong interest coverage ratios (say 8.0 or higher) and acceptable current ratios of 2.5 to 5.0.
Anything below a B+ (and certainly below a B) credit rating projection is a red-flag warning that
your company’s financial condition and balance sheet strength is projected to be sub-optimal
and merits immediate reconsideration of the finance decisions you have entered.
Recommendation: Exercise caution in borrowing much additional monies when the projected
effect lowers the company’s credit rating below a B rating. You and your co-managers are
well advised to observe prudent financial management practices and avoid actions that
put your company in a big financial hole. Protecting your company's creditworthiness and
ability to borrow at attractive interest rates is particularly crucial if (1) your strategy involves
undertaking heavy capital expenditures for workstations, robots, and bigger assembly facilities
or (2) your company needs to refinance high-interest debt to escape burdensome interest costs.
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Issuing Additional Shares of Stock

At the end of Year 5, the company had 20 million shares of common stock outstanding. The company's
board of directors has established a 40-million share maximum on the total number of shares
outstanding. In addition, the board each year establishes a maximum on the number of shares
that can be issued in the upcoming year—this maximum is shown just below the decision entry
field for stock issues.
The company cannot issue new shares in the same year that it elects to buy back and retire
outstanding shares. This is not much of a handicap because both actions are not really needed at the
same time. If you and your co-managers are issuing new shares to raise equity capital, then obviously
the company lacks the cash needed to pay for any stock repurchases.
New shares of common stock are issued at the prevailing market price less a discount based on
the percentage dilution — the price declines as more shares are issued because additional shares
dilute earnings per share and the percentage of the company owned by the holders of the already
outstanding shares. Each time you make an entry specifying how many shares are to be issued, you
can see the total amount of new equity capital raised and the price at which investors will agree to buy
the newly-issued shares by looking at the line labeled “Stock Issue” in the listing of Cash Inflows in the
“Projected Cash Available” section of the page.
New issues of common stock, of course, have the effect of diluting earnings per share and lowering
ROE (both of which adversely impact the company’s stock price) and thus should be done cautiously
and infrequently. As long as your company's credit rating is strong (B+ or better), your
company’s management team is probably well-advised to cover negative projected cash
balances with new bank loans.
But when the company’s credit rating starts to be impaired by taking on additional debt to fund capital
expenditures, then it can become advisable, if not imperative, for you and your co-managers to
consider raising additional equity capital via new stock issues in order to:
1. Help pay down a portion of the outstanding loans (because of burdensome interest costs or
because lowering debt is the best way to improve the company's credit rating) and/or
2. Help pay for additional workstations, assembly facility space, and robotics upgrades.
In deciding how many shares to issue, you should try several “what if” entries and search for the most
satisfactory combinations of the amount of money raised and the dilution effects on EPS and ROE.
Note: If the company deploys the new equity capital to good advantage and earns a good profit on its
new equity investments, then EPS and ROE should return to their former, or even higher, levels—in
which case the dilution effect of the new stock issue will prove temporary.
The following example takes you through the cash flow and balance sheet implications of issuing new
shares of stock:
Assume the company decides to raise capital by issuing 1 million shares of stock and that the
discounted issue price is $25 per share. The 1 million-share stock issue will then generate $25
million in cash (1 million shares x $25 per share) for immediate use. In the stockholders' equity
portion of the balance sheet, the Common Stock account will increase by $1 million ($1 par
value x 1 million shares issued), and the Additional Capital account will increase by $24 million [
($25 issue price – $1 par value) x 1 million shares issued]. The Additional Capital account
represents the amount shareholders have paid for new shares over and above par value.
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Early Repayment of Bank Loans

There are at least two occasions in which it makes sense to consider early repayment of long-term (5-
year and 10-year) bank loans rather than continuing to make the scheduled annual principal and
interest payments:
1. If your company's credit rating allows you to refinance the outstanding loans at a lower rate of
interest—you can always take out a new loan and use the proceeds to pay off the
outstanding balances on one or two existing loans carrying higher rates of interest than the
new loan.
See Note 8 to your company's balance sheet statement for a listing of the 5-year and 10-year loans
outstanding and the associated interest rates and annual principal payments.
2. If your company's cash flows are healthy and lead to projected year-end cash balances well above
what is needed to protect against overdraft loans, then the excess cash on hand can be used to pay
down the principal on any loans outstanding.
All early loan repayments are considered end-of-year repayments; thus, the company will incur
interest on these loans until repayment occurs at the end of the upcoming year.
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Dividend Payments to Shareholders
Company co-managers have the authority to declare a higher or lower dividend, subject to certain
conditions. Higher dividends are welcomed by shareholders and have a positive effect on the
company's stock price (unless dividend payments exceed earnings per share and can't be sustained at
present levels).
• The maximum allowable dividend entry is 2 times projected earnings per share.
• Projected shareholders' equity must always remain at or above $100 million after any and
all dividend payments.
• No dividend can be paid if projected shareholders' equity falls below the $100 million
minimum established by the company's board of directors (a policy that is enthusiastically
endorsed by the credit rating agencies).
Caution: Paying a per-share dividend that is significantly higher than the actual earnings per share for
the year is alarming to creditors and credit rating agencies, and the company’s Credit Rating for the
year may be penalized by as much as an entire letter (reduced from A+ to B+, for example). Likewise,
paying a dividend greater than actual EPS is badly received by investors/shareholders because it is
unsustainable and will cause the company’s stock price to be below what it would otherwise be.
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Repurchasing Shares of Stock

Using “excess” cash on hand to repurchase and retire outstanding shares has the advantage of
boosting EPS, ROE, and the company's stock price.
The company's board of directors has decreed that:

• No shares may be retired if the share price falls below $12 (since such a price reflects
unacceptably weak financial performance and the need to avoid spending money for share
repurchases).
• The company must maintain a minimum total shareholders' equity of $100 million. Total
shareholders' equity, as reported on the company's balance sheet, equals the sum of Common
Stock plus Additional Capital plus Retained Earnings. Your company's total shareholders' equity
at the end of Year 5 was $114.5 million.
• The company must maintain a minimum of 15 million shares outstanding.
• While you have the authority to initiate stock repurchases, the Board of Directors has
reserved the right to limit the number of shares repurchased in any given year—such
limits vary from year to year and are shown on this screen just below the stock
repurchase entry field, but these limits are also subject to all three conditions above.
• The company cannot repurchase outstanding shares in the same year that it elects to
issue new shares. This is not much of a handicap because both actions are not really needed
at the same time. If the company has the money to repurchase shares, it makes no sense to be
issuing new shares to raise additional equity capital.
Each time you enter a number for share repurchases, you are provided with on-screen calculations
showing the total cost of the repurchased shares (see the cash outlays listings) and the price at which
investors will agree to sell the shares you want to buy back (see the text beside the decision entry box).
The price to repurchase shares rises as more and more shares are repurchased because, with fewer
and fewer shares outstanding, each share is worth more to the owners of those shares (due to the
associated increase in EPS and ROE). The three big benefits of repurchasing shares are the
boost that share repurchases give to EPS, ROE, and the stock price.
In deciding whether and how many shares to repurchase, you should try several “what if”
entries and check out the effects on earnings per share, return on equity, and the amount of
money your company will have to pay for repurchased shares. If your company has a very strong
credit rating (at least A- or higher) and is not planning new capital investment, you may want to
consider even borrowing money to repurchase shares.
The following example explains the cash flow and balance sheet implications of retiring shares of stock:
Assume the company decides to repurchase 1 million shares of stock at a buyback price of
$38.50. The 1 million-share stock repurchase will require $38.5 million in cash ($38.50 per
share x 1 million shares retired). In the stockholders' equity section of the balance sheet, the
Common Stock account will decrease by $1 million ($1 par value x 1 million shares retired) and
the Additional Capital account will decrease by $37.5 million [ ($38.50 repurchase price – $1 par
value) x 1 million shares retired]. Since the Additional Capital account represents the amount
shareholders have paid for new shares over and above par value, this account is always
debited for the full amount the company pays for repurchased shares in excess of par value.
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Projected Cash Available

Projections of the cash your company will have available to pay for operations in the upcoming year are
shown just under the section for the decision entries. A brief explanation of each of these entries
follows:
Beginning Cash Balance — this amount is always equal to the prior-year ending balance in your
company's checking account at the Global Community Bank (and the amount always corresponds to
the “Cash on Hand” entry shown on your company's balance sheet for the prior year). The ending cash
balance in the prior year plainly translates into the beginning cash balance for the upcoming year.
Cash Inflows (projected for the year) — In addition to the beginning cash balance, your company will
have projected cash inflows coming from some or all of 6 sources:
• Receipts from Sales of Cameras/Drones — These receipts are usually your company's
biggest source of cash for the upcoming year. Projected receipts from camera/drone sales
consists of (1) 25% of prior-year worldwide camera sales to retailers and 25% of prior-year 3rd-
party drone sales in the previous year (which were not received from camera retailers and 3rd-
party online drone customers until the upcoming year—because of the company’s practice of
granting these buyers 90-day payment terms on their purchases) and (2) 75% of the revenues
from worldwide camera sales and 75% of 3rd-party drone sales that your company is projecting
for this upcoming year. Cash inflows from worldwide camera/drone sales thus do not
correspond to calendar year revenues because the company does not immediately receive
payment for (1) the action cameras it sells worldwide to camera retailers and (2) the drones it
sells to 3rd-party online retailers sold in the last 90 days of each calendar year. There is an
average 90-day delay in receiving the cash for cameras sold to camera retailers and for the
drones sold to 3rd-party online retailers that have been booked as sold—revenues are booked
when orders are shipped to buyers from the company’s assembly facility in Taiwan, but, on
average, the cash received from these sales to these buyers does not become available for
company use until 90 days later. As has been repeatedly emphasized, there is some
uncertainty surrounding the projection for receipts from camera/drone sales because
while the cash inflows from prior-year sales are certain, unexpectedly strong competitive efforts
by rival companies can cause actual Receipts from Sales to be less than what is shown. On the
other hand, should unit sales of cameras/drones turn out to be greater than projected, then the
projected receipts from sales will be greater than what is shown.
• Cash from 1-Year, 5-Year, and 10-Year Bank Loans — All of the money your company opts
to borrow in the upcoming year—as indicated by your decision entries in the boxes for 1-year, 5-
year, and 10-year loans at the top of this screen—will be available for funding cash outlays in
the year the loans are taken out.
• Proceeds from Stock Issues — Should you and your co-managers elect to raise additional
equity capital by issuing additional shares of common stock, then the full amount of the
proceeds will be available for use in the year the stock is issued. Any cash inflow amount
showing in the Stock Issue line is a direct reflection of any entries in the Stock Issue decision
box.
• Loan to Cover Overdrafts — Any time your year-end cash balance is showing a negative
number, there looms the prospect of an overdraft loan to bring your company's checking
account balance up to zero. The proceeds from this loan appear as a projected cash inflow and
will also appear as a current liability on your company’s projected Balance Sheet.
• Interest Income on Prior-Year Cash Balances — Your company earns interest on any
positive cash balance in the company's checking account at the beginning of each year; the
interest rate paid on cash balances is always 3.0 percentage points below the prevailing interest
rate for short-term loans carrying an A+ credit rating. All interest earned on the prior-year's
beginning cash balance is paid in the upcoming year and will be available for the company's
use.
• Cash Refund — Normally, this amount is zero. However, there may be an occasion when your
instructor, for reasons/circumstances of her/his choosing, may determine to award your
company a refund.
The only one of the cash inflow projections that is uncertain is the Receipts from Sales—all
others are certain, given your decision entries.
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Projected Cash Outlays

The company's finance and accounting department always pays all of the amounts owed in a timely
fashion. It is not permissible for you and your-co-managers to opt to delay any payments due
employees or suppliers, nor is it permissible to delay scheduled principal payments on loans or tax
payments. Hence, you and your co-managers have to be prepared to have sufficient cash in your
company's checking account to cover 100% of the company's bills and financial obligations.
Explanations of each of the items listed in the Projected Cash Outlays section of the screen are
presented below:
• Payments to Components Suppliers — The projected cash outlays for camera/drone
components purchased from suppliers is based on (1) 25% of the previous year’s costs of
camera/drone components—because the company’s suppliers grant the company 90-day
payment terms on all component purchases (thus payments are not due on the costs of the
components used in the 4th-quarter of the previous year until sometime in the 1st quarter of this
upcoming year) and (2) 75% of the component costs of the number of cameras/drones
projected to be assembled this upcoming year at the company’s Taiwan assembly facility. There
is uncertainty regarding this 75% of the components costs of the number of cameras/drones
projected to be assembled this upcoming year because actual buyer demand for the company’s
cameras/drones can turn out to be higher/lower than projected.
• Production and Assembly Expenses — The projected cash outlays for non-component
production and assembly expenses are based on all your decision entries for labor force
compensation, worker training, workstation maintenance, robot maintenance (if any), and any
expenses for “green” initiatives to support environmental sustainability. Depreciation costs are
not included because the charge for depreciation is not a cash outlay.
• Delivery, Marketing and Administration Expenses — Cash outlays for this item include
shipping costs for cameras/drones, import duties, all types of advertising costs, expenditures for
retailer support, the costs of website operations, all types of administrative expenses, and other
corporate overhead.
• Capital Outlays — This item includes all costs for facilities expansion for new camera/drone
workstation space, new camera drone workstations, and robotics upgrades—and are a direct
consequence of your decision entries for these items.
• Principal Repayments on Loans — All payments for 1-year, 5-year, 10-year, and overdraft
loans (overdraft loans are treated as a 1-year loan) must be made on time. The scheduled
principal payments on each of your company's outstanding loans appear in Note 8 on your
company's Balance Sheet Statement. But the number for principal repayments on loans
showing on the screen is an accurate total of the scheduled principal payments on each loan.
• Interest Payments — Cash outlays for interest include the interest due and payable in the
upcoming year for 1-year, 5-year, 10-year, and overdraft loans.
• Stock Repurchases — This amount reflects how much cash it will take to buy back the number
of shares indicated in the Stock Repurchase decision box at the top of this screen.
• Income Tax Payments — The company's tax rate is 30% of pre-tax income—pretax income is
defined as companywide operating profit less interest expenses. The projected cash outlay for
tax payments is a direct function of the amount of profit your company is projected to earn.
However, the company is entitled to carry forward any net losses for one year in calculating its
tax obligations; hence a company that loses money in a year but earns a net profit in the
following year will not pay a full 30% tax rate in the following year due to a "credit" for prior-year
losses against the tax due in the upcoming year.
• Dividend Payments to Shareholders — This outlay is always equal to the annual dividend per
share (as indicated in the decision box for Dividends at the top of this screen) multiplied by the
number of shares outstanding (after the repurchase of any shares). For instance, if your
company has 10 million shares of common stock outstanding and pays an annual dividend of
$1.00 per share, then annual cash outlays for dividends will be $10 million. Should your
company at some juncture find itself in a cash squeeze and company co-managers don't wish to
borrow any additional money or issue shares of stock, then you can generate additional cash
internally by cutting the dividend and curbing the cash outlays for dividend payments to
shareholders.
• Charitable Contributions — This amount is based on your decision entries for charitable
contributions on the Corporate Social Responsibility and Citizenship decision screen.
• Cash Fine — Normally, this amount is zero. However, there may be an occasion when your
instructor decides to fine your company for actions/behavior that he/she considers “out-of-
bounds,” illegal, unethical, or otherwise deserving of punishment.
Several of these projected outlays (payments to components suppliers, production and assembly costs,
shipping costs, import duties, and income tax payments) can turn out to be higher/lower because actual
unit sales of cameras/drones in any or all geographic regions may be higher/lower than projected,
which in turn affects company profitability and thus income tax payments.
Suggestion: The uncertainty surrounding the amounts of the various projected cash outlays is a
further reason to make “adequate” provisions for ending the year with a “comfortable” ending cash
balance cushion.
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GLO-BUS CDJ Page 1 Help
How Your Company’s Performance Is Judged

Page 1 of the Camera & Drone Journal
GLO-BUS tracks each company’s performance annually on 5 performance targets which the Board of
Directors has set for the company’s new management team. These 5 performance targets are as follows:
➢ Grow earnings per share from $0.75 at the end of Year 5 to $1.25 in Year 6, $2.00 in Year 7,
$3.00 in Year 8, $4.25 in Year 9, $5.50 in Year 10, $7.00 in Year 11, $8.50 in Year 12, $10.50 in
Year 13, $12.50 in Year 14, and $14.50 in Year 15.
➢ Grow average return on equity investment (ROE) from 14.5% at the end of Year 5 to 17.5% in
Year 6, 20% in Year 7, 25% in Year 8, 30% in Year 9, 35% in Year 10, 40% in Year 11, and by an
additional 2.5% annually in Years 12 through 15 (thus reaching 50% in Year 15). Average ROE is
defined as net income divided by the average of total shareholder equity balance at the beginning
of the year and the end of the year. Average ROE for each company is reported on page 2 of the
Camera & Drone Journal. Data for calculating your company’s average ROE appears on page 4 of
the Company Operating Reports in the notes to the company’s Balance Sheet.
➢ Achieve stock price gains from $12 at the end of Year 5 to $20 in Year 6, $35 in Year 7, $60 in
Year 8, $100 in Year 9, $150 in Year 10, $200 in Year 11, $250 in Year 12, $300 in Year 13, $330
in Year 14, and $350 in Year 15. Board members believe these stock price gains are within reach if
the company meets or beats the annual EPS targets, achieves the targeted rates of return on
shareholders’ equity (ROE), rewards shareholders with growing dividends, and from time to time
prudently uses its financial capabilities to repurchase shares of stock. The company’s stock price
was $12 per share at the end of Year 5.
o Note: Stock price is a function of revenue growth, earnings per share growth, average ROE,
credit rating, the rate of growth in the annual dividend paid to shareholders, and
management’s ability to consistently deliver good results (as measured by the percentage of
each year’s 5 performance targets that your company achieves).
➢ Maintain a healthy credit rating, defined as B+ or higher in Years 6 and 7, at least A- in Year 8
through Year 10, and at least A in Year 11 through Year 15. The company’s credit rating was B at
the end of Year 5.
➢ Achieve an image rating (brand reputation) of 70 or higher in Year 6, 72 in Years 7-8, 75 in Years
9-10, 77 in Years 11-12, and 80 in Years 13-15. The image rating is a function of (1) your
company’s P/Q ratings for action cameras and UAV drones, (2) your company’s global market
shares for both action cameras and UAV drones (as determined by your market shares in the four
geographic regions), and (3) your company’s actions to display corporate citizenship and conduct
operations in a socially responsible manner over the past 4-5 years. Your company had an image
rating of 70 at the end of Year 5.
Board members believe all of the performance targets for Years 6-15 are reasonable and achievable by
company managers, given the strong growth and profit opportunities that exist in the global market for
action cameras and UAV drones during the Year 6 to Year 15 period.
Your instructor has placed weights on the relative importance of these five performance targets that
translate into some number of points out of 100 for each of the 5 performance measures, with the sum
of the points adding to 100.
The points assigned to each target by your instructor are shown in the gray-shaded narratives on
pages 2 and 3 of the Camera & Drone Journal.

Company Performance Scores Are Based on Two Standards

Using the assigned scoring weights (or number of corresponding points out of 100), your company’s
performance on the 5 performance measures is tracked annually and company performance scores are
calculated based on two standards:
1. The Investor Expectations Standard. The degree to which a company meets or beats the 5 annual
performance targets drives investor confidence in management's ability to deliver good results. Meeting or
beating expectations of investors on each of the five performance measures inspires investor confidence,
while failure to meet investor expectations weakens investor confidence in the company’s management
team. The investor expectations standard involves calculating an annual “Investor Expectation Score”
based on your company’s success in meeting or beating the five expected performance targets each year.
There is also a Game-to-Date or “all-years” Investor Expectation Score that reflects your company’s
success in achieving or exceeding the five expected performance targets over all years of the exercise
completed so far.
Meeting each expected performance target is worth some number of points based on the scoring weight
your instructor selected. For example, if the scoring weight for EPS is 20%, meeting the EPS target earns
a score of 20 on the EPS performance measure.
Beating a target results in a bonus award of 0.5% for each 1% the annual target is exceeded (up to a
maximum bonus of 20%). Thus, if achieving the EPS target is worth 20 points, a company can earn a
score of 24 points by beating the annual EPS target by 40% or more. Failure to achieve a target results in
a score equal to a percentage of that target’s point total (based on its weight out of 100 points). For
instance, if your company earns $3.00 per share of common stock at a time when the EPS target is $4.00
and achieving the $4.00 EPS target is worth 20 points, then your company’s score on the EPS target would
be 15 points ($3.00 divided by $4.00 = 0.75, which times 100 equates to 75%, and 75% of 20 points = 15
points). Exactly meeting each of the 5 performance targets results in an Investor Expectation Score of 100.
With 5 targets whose combined points add up to 100 and potential point bonuses of up to 20% for
exceeding the targeted performance levels, it is possible to earn an Investor Expectation Score of 120.
2. The Best-in-Industry Standard. This standard concerns how well each company performs relative to the
“best-in-industry” performer on 4 measures (EPS, ROE, image rating, and stock price) and how close each
company comes to the ultimate credit rating of A+. Again, the performance scores are based on the
weights/points that your instructor assigned to each of the 5 performance measures, with the sum of the
points on the 5 measures adding to 100.
The best-in-industry standard entails assigning the best-performing company a perfect score (the full
number of points for that measure) and then assigning each remaining company a lesser number of points
according to what percentage of the industry-leading performance they were able to achieve. For instance,
if ROE is given a weight of 20 points, an industry-leading ROE performance of 25% gets a score of 20
points and a company with an ROE of 20% (which is 80% as good as the leader’s 25%) gets a score of 16
points (80% of 20 points). The procedure is slightly different for the credit rating measure—each credit
rating grade is tied to the number of points your instructor assigns to the credit rating (an A+ rating always
gets a best-in-industry score equal to the instructor’s maximum, with the grades for other credit ratings
scaled down all the way to 0 for a C− rating).
Each company’s Best-in-Industry Score is equal to its combined point total on the five performance
measures. In order to receive a score of 100, a company must (1) be the best-in-industry performer on
EPS, ROE, stock price, and image rating, (2) achieve the investor-expected targets for EPS, ROE, stock
price and image rating set by the company’s Board of Directors, and (3) have an A+ credit rating.

The Performance Scoreboards on Page 1 of the CDJ

On page 1 of each issue of the Camera & Drone Journal, there are two industry-wide scoreboards for company
performance—one showing each company’s Investor Expectation (I.E.) Score and the Best-in-Industry (B-I-I)
Score for the most recent year and one showing each company’s Investor Expectation (I.E.) Score and the
Best-in-Industry (B-I-I) Score for all years completed so far—the Game-to-Date Scoreboard.
The “Weighted Average Score” Appearing on the Two Scoreboards. Each company’s Weighted Average
Score is determined by combining the Investor Expectation Score and the Best-in-Industry Score into a single
score using whatever weighting of the two scoring approaches your instructor has chosen, often 50-50. The
instructor-chosen weights used to calculate the Weighted Average Scores for your industry are reported in the
Weighted Average Score narrative at the bottom of this page.
Things to Know About the Investor Expectation Scores

Some important aspects of how the Investor Expectation Score is calculated are summarized below:
• Meeting each performance target is worth some number of points corresponding to the scoring weights
your instructor has placed on each performance measure (see the narrative at the bottom of page 1 of the
Camera & Drone Journal).
• All scores are rounded to the nearest whole number.
• Exactly meeting each of the 5 performance targets results in an Investor Expectation Score of 100.
• Beating the EPS, ROE, stock price, and/or image rating targets are worth point bonuses of 0.5% for each
1.0% that your company’s actual performance exceeds the expected performance for EPS, ROE, stock
price, and image rating, up to a maximum 20% bonus for each measure. Bonus points are also awarded
for credit ratings above B+, with a full 20% bonus being given for an A+ rating.
• Beating the EPS, ROE, stock price, and image rating targets by 20% or more and earning an A+ credit
rating results in an Investor Expectation Score of 120. A score of 120 is the maximum that any company
can receive.
• Failure to achieve the investor-expected target for EPS or ROE or stock price or image rating results in a
score for that performance measure between 0 and the point maximum for that measure, with the score
depending on the percentage of the target achieved. For instance, if your company achieves a stock price
of $20 at a time when the stock price target is $50, then your company’s score on the stock price target
(assuming a 20% weight and thus 20 possible points) would be 8 points (40% of the 20 points awarded for
meeting the stock price target).
• If your company’s EPS is negative, no points are awarded toward meeting investor expectations for
EPS.
• Likewise, if in a given year your company loses money and has a negative ROE, no points are
awarded on the ROE measure.
• If your company achieves the investor-expected target in a given year, your company gets the point
maximum out of 100 points that corresponds to the instructor-assigned weight for the credit rating. If, for
example, the credit rating has a weight of .20 or 20 points, then a company with a B+ credit rating in Years
6-7 or an A- credit rating in Years 8-10 receives 20 points for meeting investor expectations—an A+ credit
rating always gets a 20% or 4-point bonus and a score of 24. If the point weighting for credit rating is 20
(which equates to a maximum of 24 points including the bonus), then the various possible credit rating
scores are as follows:

Credit Rating Year 6 – Year 7 Year 8 – Year 10 Year 11 – Year 15

A+ 24 points 24 points 24 points
A 23 points 22 points 20 points
A– 22 points 20 points 18 points
B+ 20 points 18 points 16 points
B 16 points 15 points 14 points
B– 12 points 12 points 11 points
C+ 8 points 8 points 8 points
C 4 points 4 points 4 points
C– 0 points 0 points 0 points
• The sum of your company’s scores (including bonus points) on each of the 5 investor-expected targets
equals your company’s annual Investor Expectation Score.
What Is a Good Investor Expectation Score for a Given Year? A company that achieves an annual
Investor Expectation Score of 100 or more is clearly demonstrating excellent or superior performance in
meeting and beating the 5 targets established by your company’s Board of Directors and the performance
levels expected by investors. An Investor Expectation Score in the 90 to 100 range is definitely very good (and
certainly is not a cause for concern, despite there being room for improvement). Scores of 80-89 are good,
and scores of 70-79 are fair; yet, there is plainly ample reason for company managers to take actions to
improve company performance. An Investor Expectation Score below 70 is clearly sub-par, calling for prompt,
decisive action to boost company performance and move closer to achieving the five annual performance
targets expected by investors and your company’s Board of Directors.
The Game-to-Date Investor Expectation Score. A company’s Investor Expectation Score for all years
completed so far is based on (1) its average EPS versus the average of the EPS targets for each year
completed, (2) its average ROE for all years completed versus the average of the annual investor-expected
ROE targets, (3) an average of its image rating for the 3 most recent years as compared to an image-rating
target of 70, (4) its most recent year’s stock price versus the most recent year’s stock price target, and (5)
its most recent year’s credit rating versus the ongoing credit rating target of B+, as summarized below:
• Game-to-Date I.E. Scoring for EPS is based on how each company’s weighted-average EPS for all years
completed stacks up against the average of the EPS targets for all years completed. Companies that meet
the all-year weighted-average EPS target receive a score equal to the EPS point weighting; companies that
beat the weighted-average EPS target receive bonus points of up to 20%, and companies that fall short of
the weighted-average EPS target receive scores equal to the fraction of the EPS target that was achieved.
More details are provided in the Help section for p. 2 of the Camera & Drone Journal where game-to-date
EPS scores are reported.
• Game-to-Date I.E. Scoring for ROE is linked to how each company’s weighted-average ROE for all years
completed stacks up against the average of the annual investor-expected ROE targets. Companies that
meet the average investor-expected ROE target receive a score equal to the ROE point weighting;
companies that beat the average investor-expected ROE target receive bonus points of up to 20%, and
companies that fall short of the average investor-expected ROE target receive scores equal to the fraction
of the average investor-expected ROE target that was achieved. More details are provided in the Help
section for p. 2 of the Camera & Drone Journal where game-to-date ROE scores are reported.
• Game-to-Date I.E. Scoring for Stock Price hinges only on each company’s most recent year’s stock
price, not some all-year average. The latest stock prices of companies in the industry are used to measure
the game-to-date I.E. score for stock price because a company’s latest stock price is a function of EPS
growth, ROE, credit rating, dividend per share growth, and management’s ability to consistently deliver
good results (as measured by the percentage of the 5 investor-expected performance targets that each
company achieves over all completed decision rounds) and thus includes a heavy long-term element.
Companies that meet the most recent year’s stock price target receive a score equal to the stock price

point weighting; companies that beat the most recent year’s stock price target receive bonus points of up to
20%, and companies that fall short of the most recent year’s stock price target receive scores based on the
fraction of the stock price target that was achieved. More details are provided on the Help section for p. 2
of the Camera & Drone Journal where game-to-date I.E. scores for stock price are reported.
• Game-to-Date I.E. Scoring for Credit Rating is keyed to how each company’s latest credit rating
compares against the rating of B+. The latest year’s credit rating is used to measure the game-to-date
credit rating score, as opposed to an all-year average credit rating, because a company’s latest credit
rating is largely reflective of its long-term financial condition and the overall balance sheet strength that
management has engineered to date. The game-to-date I.E. scores for credit rating are always the same
as for the current-year scores because both are based on the most recent year’s credit rating. More details
about the credit rating scoring are provided in the Help section for p. 3 of the Camera & Drone Journal.
• Game-to-Date I.E. Scoring for Image Rating is based on how the company's average image rating for
the most recent three years compares to the average target image rating for the most recent 3 years. A 3-
year average image rating is used to measure game-to-date performance, as opposed to an all-year
average, so as not to burden a company's performance by image ratings that may no longer be
representative of the image and reputation it has recently achieved with its strategy. A company whose
average image rating for the most recent 3 years equals the average of the image rating targets receives a
game-to-date I.E. score equal to the image rating point weighting; a company having a 3-year average
image ratings above the 3-year average target receives a score up to 20% greater than the point weight,
and a company having 3-year average image ratings below the 3-year average target receives a score
equal to the fraction of the image rating target that was achieved. More details are provided in the Help
document associated with page 3 of the Camera and Drone Journal.
• Special Note: The Game-to-Date I.E. score is definitely NOT the average of the annual I.E. scores.
Rather, it is the sum of a company’s Game-to-Date scores on each of the five scoring.
Just as with the annual I.E. scores, Game-to-Date I.E. Scores of 100 to 120 are quite excellent, scores
of 90-99 are very good, scores of 80-89 are good, scores of 70-79 are fair, and scores below 70 reflect
consistently “sub-par” results in meeting the targets that investors expect and that your company’s
Board of Directors set for you to achieve.
Things to Know About Your Company’s Best-in-Industry Scores

Some important aspects of how the Best-in-Industry Scores for a given year are calculated are summarized
below:
• The best-in-industry scoring standard is based on a maximum score of 100 points. Your instructor assigns
some number of points out of 100 to each of the 5 performance measures, with the sum of the points
adding to 100. A maximum score of 20 points for EPS thus implies a weighting of 0.20 or 20% for EPS
performance; a maximum score of 15 points for image rating equates to a weight of 0.15 or 15%; and so
on. To get a score of 100, your company has to be the highest performing company—termed the
best-in-industry performer—on all five performance measures during the year, meet or beat the EPS,
ROE, stock price, and image rating targets, and have an A+ credit rating.
• All scores are rounded to the nearest whole number.
• After each decision round, GLO-BUS ranks each company’s performance on each of the five performance
measures—EPS, ROE, stock price, credit rating and image rating. The best-in-industry performer on each
measure earns a perfect score (the full number of points for that measure as determined by your instructor,
provided the industry leader’s performance on that measure equals or exceeds the investor-expected
performance target established by company Boards of Directors). Each remaining company earns a
fraction of the points earned by the best-in-industry performer that is equal to its performance (on EPS,
ROE, stock price, and image rating) divided by the performance of the industry-leading company (on EPS,
ROE, stock price, and image rating). For instance, if ROE is given a weight of 20 points, an industry-

leading ROE performance of 25% gets a score of 20 points and a company with an ROE of 20% (which is
80% as good as the leader’s 25%) gets a score of 16 points (80% of 20 points). Likewise, if EPS is given a
weight of 20 points, an industry-leading EPS performance of $5.00 gets a score of 20 points and a
company with an EPS of $2.00 (which is 40% as good as the leader’s $5.00) gets a score of 8 points (40%
of 20 points).
Special Note: Whenever the best-in-industry performer’s EPS, ROE, stock price, or image rating is
below the corresponding investor-expected target for the year, the industry-leading company is not
awarded a perfect score (the maximum number of points) but rather a percentage of the maximum
score that equals the leader’s EPS, ROE, stock price, or image rating as a % of the corresponding
target for the year. This is done to prevent a company with the highest average EPS, ROE, stock
price, or image rating from being awarded the equivalent of an A+ Best-in-Industry Score when its
performance on EPS, ROE, stock price or image rating actually falls short of the level established
by company Boards of Directors. In all such instances, each remaining company will earn a fraction
of the points earned by the best-in-industry performer, with that fraction being equal to its
performance (on EPS, ROE, stock price, and image rating) divided by the performance of the
industry-leading company (on EPS, ROE, stock price, and image rating).
• The procedure for assigning best-in-industry scores is a bit different for the credit rating measure. Each
credit rating grade from A+ to C− carries a certain number of points that scales down from the maximum
number of points for an A+ credit rating to 1point for a C− rating. If the credit rating weight is 20 points out
of 100, the B-I-I point awards are as follows:
A+ 20 points (or 100% of the point weighting)
A 19 points (or 95% of the point weighting)
A– 18 points (or 90% of the point weighting)
B+ 16 points (or 80% of the point weighting)
B 14 points (or 70% of the point weighting)
B– 11 points (or 55% of the point weighting)
C+ 8 points (or 40% of the point weighting)
C 5 points (or 25% of the point weighting)
C– 1 point (or 5% of the point weighting)
• All companies who lose money in any given year and end up with a negative EPS are automatically
awarded 0 points for their best-in-industry EPS score.
• Similarly, a negative ROE results in a best-in-industry score of 0 for ROE.
Each company’s combined point total on the five performance measures is its score on the best-in-
industry performance rankings for a given year.
The highest possible Best-in-Industry (B-I-I) Score is 100, earned only if a company is the best-in-
industry performer on EPS (with an EPS equal to or above the target), the best-in-industry performer
on ROE (with an ROE of at least 15%), the best-in-industry performer on stock price (with a stock price
equal to or above the yearly target), and the best-in-industry performer on image rating (with an image
rating of at least 70) and also has an A+ credit rating.
What Is a Good Best-in-Industry Score for a Single Year? Annual Best-in-Industry performance
scores of 90-99 are excellent, scores of 80-89 are good to very good, scores of 70-79 are fair to good, scores
of 60-69 are weak to fair, and scores below 60 reflect a performance roughly 40% or more below that of the
industry leaders with scores in the 90s—which says that such companies were outperformed by other
companies in the industry by a significant margin. Companies with annual scores below 60 should consider
revising their strategies and decision entries to bolster their competitiveness and performance versus rival
companies.

The Game-to-Date Best-in-Industry (B-I-I) Score. The Game-to-Date Best-in-Industry scores are based
on all-year measures for EPS and ROE, on a last-three-years average for image rating, and on most-recent-
year measures for stock price and credit rating, as explained below:
• Game-to-Date Scoring for EPS is based on how each company’s average EPS for all years completed
stacks up against the company with the average EPS for all years completed (provided the leader has an
average EPS above the investor-expected average EPS). The company with the highest all-year EPS
average is designated as the best-in-industry performer on EPS and receives the maximum score on this
measure (unless the leader’s all-year EPS average is below the all-year average of the investor-expected
EPS targets, in which case the leader’s score is some lesser number based on its average EPS as a % of
the all-year average of the EPS targets established by company Boards of Directors). The scores of all
other companies are a fraction of the points earned by the best-in-industry performer, with each company’s
fraction being equal to its average EPS values as a percentage of the industry leader’s EPS average.
More details are provided on the Help section for p. 2 of the Camera & Drone Journal.
• Game-to-Date Scoring for ROE is linked to how each company’s average ROE for all years to date
stacks up against the company having the highest average ROE for all years completed (provided the
leaders’ average ROE is 15% or higher). The company with the highest ROE average is designated as the
best-in-industry performer on ROE thus far and receives the maximum score on this measure (unless the
leader’s average ROE is below 15%, in which case the leader’s score is based on its average ROE as a
percentage of the annual 15% target). The scores of all other companies are a fraction of the points
earned by the best-in-industry performer, with each company’s point fraction corresponding to its average
ROE divided by the industry leader’s average ROE. More details are provided on the Help section for p. 2
of the Camera & Drone Journal.
• Game-to-Date Scoring for Stock Price hinges only on each company’s most recent year’s stock price,
not some all-year average. The latest stock prices of companies in the industry are used to measure the
game-to-date best-in-industry score for stock price because a company’s latest stock price is, to some
important degree, a function of past-year earnings, ROE, credit rating, and dividend payments and thus
includes a long-term element. The company with the highest stock price for the latest decision round is
designated as the best-in-industry performer on stock price and receives the maximum score on this
measure (unless the leader’s stock price is below the investor-expected stock price target for the most
recent GLO-BUS year, in which case the leader’s score is based on its stock price as a percentage of the
investor-expected stock price). The scores of all other companies are a fraction of the points earned by the
best-in-industry performer, where each company’s fraction equals its latest stock price divided by the
industry leader’s latest stock price. More details are provided on the Help section for p. 2 of the Camera &
Drone Journal.
• Game-to-Date Scoring for Credit Rating is keyed to how each company’s latest credit rating compares
against the best rating of A+. The latest year’s credit rating is used to measure the game-to-date
credit rating score, as opposed to an all-year average credit rating, because a company’s latest credit
rating is largely reflective of its long-term financial condition and the overall balance sheet strength that
management has engineered to date via its handling of the company’s financial affairs over all years
completed. Each credit rating grade from A+ to C− carries a certain number of points. If the credit rating
weight is 20 points out of 100, the number of points awarded for Game-to-Date B-I-I credit rating scores is
as follows:
A+ 20 points
A 19 points
A– 18 points
B+ 16 points
B 14 points
B– 11 points
C+ 8 points
C 5 points
C– 1 point

More details about the credit rating scoring are provided on the Help section for p. 3 of the Camera &
Drone Journal.
• Game-to-Date Scoring for Image Rating is based on how each company’s average image rating for the
most recent three years stacks up against the company with the highest average image rating over the
most recent three years (provided the leader has a 3-year average above 70, which is the investor-
expected image rating target for each and every year of the GLO-BUS exercise). A 3-year average
image rating is used to measure game-to-date performance, as opposed to an all-year average, so
as not to burden a company’s performance by image ratings that are not representative of the
image and reputation it has recently achieved with its strategy. The company with the highest 3-year
average image rating is designated as the best-in-industry performer on image rating and receives the
maximum score on this measure (unless the leader’s 3-year average image rating is below 70, in which
case the leader’s score is based on its average image rating as a percentage of the average 70-point
image rating target). The scores of all other companies are a fraction of the points earned by the best-in-
industry performer, where the fraction equals a company’s 3-year average image rating divided by the
industry leader’s 3-year average image rating. More details are provided on the Help section for p. 3 of the
Camera & Drone Journal.
The highest possible Game-to-Date Best-in-Industry Score is 100, earned only if a company is the
industry leader on average EPS, average ROE, most recent year’s stock price, and average image
rating for the 3 most recent years, and also has an A+ credit rating.
Game-to-Date Best-in-Industry scores of 90-99 are excellent, scores of 80-89 are good to very good, scores of
70-79 are fair to good, scores of 60-69 are weak to fair, and scores below 60 reflect a performance roughly
40% or more below that of the industry leaders. Companies with scores in the 0 to 50 range are being
outperformed by other companies in the industry by a 2 to 1 margin or more; such companies need to move
without delay to implement a turnaround strategy and boost their annual performance on all 5 measures—
EPS, ROE, stock price, credit rating, and image rating.
Concluding Comment on the Scores Your Company Earns

Bear in mind that it is the size of your Overall Score (the combined I.E. and B-I-I score) that matters, not where
your company ranks first or third or fifth or tenth in the industry. Some company must necessarily be in last
place, but what is truly telling is whether it is in last place with a score of 85 (which clearly signals a
strong performance and a potentially good grade) or in last place with a score of 17 (which clearly
signals an abysmal performance and possibly a very disappointing grade).
The array of information provided on the full 3-page company scoreboard in the Camera & Drone Journal
(pages 1, 2, and 3) makes it easy for you to track the performance of your company and all other companies
over time. You always have all the information you need to determine exactly how well your company is
performing. You know whether your company is in the ranks of the industry leaders or whether the scores
indicate your company is being outcompeted and outperformed.


The scoreboard of company performance on page 2 of the Camera & Drone Journal (CDJ) shows:
➢ The annual performance targets for EPS, ROE, and stock price for each year from Year 6 through Year
15—these are located in parentheses just under the column heads for each year (Y6, Y7, Y8, and so on).
➢ Each company’s Investor Expectation (IE) and Best-in-Industry (B-I-I) scores (both current year and game-
to-date) for EPS, ROE, and stock price. The scoring weights for each of these three scoring measures
appear in the narratives for the three banks of data.
The purpose of this scoreboard page is to show you the details of how the scoring for your company compared
with the scoring of other companies on EPS, ROE, and stock price (details of the scoring for credit rating and
image rating appear on page 3 of the CDJ).
The Earnings Per Share Section

A company’s earnings per share (EPS) equals its net profit divided by the number of shares of common stock it
had outstanding at the end of the report year.
Each company’s EPS values for each year appear under the column heads for each year (Y6, Y7, and so on).
The numbers in parentheses just below the yearly column heads represent the annual EPS performance
targets established by your company’s Board of Directors and expected by investors. Companies having
bolded EPS numbers in each yearly column met or exceeded the investor-expected EPS target.
At the end of the yearly EPS columns, just after the column headed Y15, is a weighted average column
(labeled Wgt. Avg.). This column reports each company’s weighted average EPS for all years completed so
far, where a company’s weighted average EPS is equal to the sum of its net profits for all years completed
divided by the sum of its shares of common stock outstanding for all years completed.
Special Note: This weighted average EPS calculation is often not equal to simply the sum of a
company’s EPS values each year divided by the number of years—calculating a simple arithmetic EPS
average is a “weak” or “invalid” way of calculating an overall EPS average because it fails to account
for the effects of any new stock issues or any repurchases of outstanding shares the company may
have made.
The weighted-average EPS numbers for each company are important because they are used in determining
the Game-to-Date (GTD) scores for both the Investor Expectation (I.E.) and Best-in-Industry (B-I-I) standards
in the last 4 columns of the EPS section at the top of page 2.
The Current Year I.E. Score for EPS. A company that exactly meets the investor-expected EPS target for
a given year earns an Investor Expectation (I.E.) Score for EPS for that year exactly equal to the
corresponding point weighting for EPS. Thus, if the weight for EPS is 20 points out of 100, exactly achieving
the EPS target for a year produces an I.E. Score of 20.
Beating a given year’s EPS target entitles a company to a 0.5% bonus for each 1.0% that the target EPS
is exceeded. However, bonus point awards are capped at 20% (that is, no bonus points are earned once the
annual target has been exceeded by 40%). For example, if your company earns an EPS of $3.60 versus an
investor expectation of $3.00 (which is 20% above the target) and if hitting the EPS target is worth 20 points,
then your I.E. Score for EPS would be 22 points (which is 10% above the 20 points earned by exactly
achieving the EPS target). If your company earns an EPS of $6.00 when the EPS target is $4.00, equal to
50% above the I.E. target, then your company’s I.E. Score for EPS would be 24 (which is the maximum-
allowed 20% above the 20-point weighting for EPS).

Failure to achieve the EPS target results in an I.E. Score for EPS between 0 and the point maximum for
EPS, with a company’s score depending on what percentage of the EPS target it achieved. For
instance, if your company earns $4.00 per share of common stock at a time when the EPS target is $6.00, then
your company’s I.E. Score for EPS (assuming a 20-point weight) would be 13 points ($4.00 divided by $6.00 =
.67, and .67 times 20 points = 13.4 or 13 points, rounded to the nearest whole number).
If a company’s EPS is negative, no points are awarded toward meeting investor expectations, and the
company’s I.E. Score for EPS will be 0.
The Game-to-Date I.E. Score for EPS. A company’s Game-to-Date (G-T-D) I.E. score is a function of
how its weighted-average EPS compares against the average of the investor-expected EPS targets for the
years completed so far; this average for Years 6-15 is shown in parentheses below the Wgt. Avg. column
head. The investor-expected EPS average equals the sum of the investor-expected EPS targets for the years
completed divided by the number of years completed—it is a fair and proper standard for evaluating a
company’s Game-to-Date or average EPS performance because it equals the average EPS value a company
should attain by exactly achieving the investor-expected levels for EPS each year.
A company whose weighted-average EPS exactly equals the investor-expected EPS average earns a Game-
to-Date I.E. Score for EPS exactly equal to the corresponding point weighting for EPS.
A company whose weighted-average EPS exceeds the investor-expected EPS average earns a 0.5% bonus
for each 1.0% that its weighted-average EPS exceeds the industry-wide EPS standard, subject to a
bonus point cap of 20%. For example, if your company has a weighted-average EPS of $6.00 versus an
investor-expected EPS average of $4.00 and if EPS carries a 20-point weighting, then your company’s G-T-D
I.E. Score for EPS would be 24 points (because an EPS that is 50% above the investor-expected EPS average
qualifies for the maximum 4-point or 20% bonus above the 20-point weighting).
If your company’s weighted average EPS is below the investor-expected EPS average, then your
company’s G-T-D I.E. Score will be a fraction of EPS point weighting that equals whatever percentage
of the investor-expected EPS average that your company achieved. For instance, if your company has a
weighted-average EPS of $3.00 versus an investor-expected EPS average of $4.00 and if EPS carries a 20-
point weighting, then your company’s G-T-D I.E. Score for EPS would be 15 points (or 75% of the 20-point
weighting for EPS).
The Current Year Best-in-Industry (B-I-I) Score for EPS. The company with the highest EPS in a
given year is designated the best-in-industry performer and earns the maximum or full number of points for
EPS (provided its EPS is equal to or above the target for EPS established by your company’s Board of
Directors—the number in parentheses just below the yearly column heads). All remaining companies are
assigned a lesser number of points tied to their EPS performance as a percentage of the best-in-industry
performer’s EPS. For instance, if EPS is given a weight of 20 points and if the investor-expected target EPS is
$3.16, a best-in-industry performer with an EPS of $5.00 gets a score of 20 points and a company with an EPS
of $4.00 (which is 80% as good as the leader’s $5.00) gets a score of 16 points (80% of 20 points). If EPS is
given a weight of 20 points and if the target EPS is $3.16, a best-in-industry performer with an EPS of only
$3.00 gets a score of 19 points (because $3.00 divided by $3.16 = .949 and .949 times 20 points = 19 points,
rounded to the nearest whole number) and a company with an EPS of $2.40 (which is 80% as good as the
leader’s $3.00) gets a score of 15 points (80% of 19 points = 15 points rounded to the nearest whole number).
If your company’s current year EPS score under the Best-in-Industry column is the maximum, then your
company was the EPS best-in-industry performer (or very nearly so) for the year—all scores are rounded to
the nearest whole number. If your company’s score is under the maximum, then your company’s current year
B-I-I Score is a fraction of the points earned by the best-in-industry performer (with each company’s fraction
being equal to its respective EPS for the year divided by the leader’s EPS for the year). For example, if your
company’s EPS is 92% of the industry-leader’s EPS, then your current-year B-I-I score will be 92% of the
points earned by the EPS leader rounded to the nearest whole number; if your company’s EPS is 73% of the

industry-leader’s EPS, then your current-year B-I-I score will be 73% of the points earned by the EPS leader
(again rounded to the nearest whole number); and so on.
However, when the best-in-industry performer’s current year EPS performance is below the annual
investor-expected EPS target established by your company’s Board of Directors (shown in
parentheses below the yearly column head), then the best-in-industry performer is not awarded a
perfect score (the maximum number of points) on EPS but rather a percentage of the maximum score
that equals the leader’s EPS as a % of the Board of Directors’ EPS target for the year. This is done to
avoid rewarding a best-in-industry performer for an EPS performance that is below the targeted level
established by your company’s Board of Directors. For example, if the industry leader has an EPS of
$4.50 in a year when the investor-expected target EPS is $4.70 and if achieving the EPS target carries a 20%
or 20-point weighting, then the leader’s B-I-I EPS score will be ($4.50 divided by $4.70 = .957 and .957 times
20-points = 19.14 or 19 points, rounded to the nearest whole number). All other companies receive a scaled-
down number of points for EPS as well, because their B-I-I scores are always a fraction of the points earned by
the industry leader (with each company’s fraction being equal to its respective EPS for the year divided by the
best-in-industry performer’s EPS for the year).
The justification for why all companies receive lower current year B-I-I scores for EPS when the best-in-
industry performer fails to meet the Board of Directors’ target for EPS is the resulting alarm and nervousness
among board members and shareholders when every company in the industry has sub-par earnings per share.
Is there a substantial risk that profits will be unacceptably low for perhaps several years? How long will the
competitive conditions that caused poor EPS performance last? Could dividends be cut? Should shareholders
sell their shares of stock before the stock price declines even further? Is there any reason to be confident that
company managers will turn things around?
The Game-to-Date Best-in-Industry Score on EPS. A company’s Game-to-Date (GTD) score for EPS
on the Best-in-Industry standard is based on how its weighted-average EPS for all years completed (shown in
the Wgt. Avg. column) stacks up against the company with the highest weighted-average EPS for all years
completed.
Note: As explained in the scoring for the Investor Expectations Standard, the weighted average EPS
value for a company is equal to the sum of the company’s net profits for all years completed divided by
the sum of the company’s shares of stock outstanding for all years completed—each company’s
weighted-average EPS is displayed in the column headed Wgt. Avg. The number appearing in
parentheses below the Wgt. Avg. column head is the “Investor Expected EPS average,” calculated by
summing the investor-expected EPS targets established by your company’s Board of Directors for each
year completed divided by the number of years completed. Hence, this I.E. EPS average represents
the game-to-date EPS average that all companies should have attained by exactly meeting the Board
of Directors’ EPS targets each year.
The company with the highest weighted-average EPS for all years to date is designated as the best-in-
industry performer on EPS and receives the maximum score on this measure (provided its weighted-
average EPS is equal to or above the investor-expected EPS average shown in parentheses below the
Wgt. Avg. column head). The scores of all other companies are a fraction of the points earned by the
best-in-industry performer, with each company’s fraction being equal to its EPS average as a
percentage of the best-in-industry performer’s EPS average. Thus, if your company’s EPS average for all
years completed is 85% of the industry leader’s EPS average for all years completed, then your company’s
Game-to-Date (G-T-D) B-I-I Score will be 85% of the points earned by the industry leader (rounded to the
nearest whole number).
However, when the best-in-industry performer’s weighted average EPS is below the investor-expected
EPS average appearing in parentheses below the Wgt. Avg. column head, then the best-in-industry
company is not awarded a perfect score (the maximum number of points) on EPS but rather a
percentage of the maximum score that equals its weighted-average EPS as a % of the Investor

Expectation EPS average shown in parentheses below the Wgt. Avg. column head. Again, this is done
to avoid rewarding a best-in-industry performer for an overall EPS performance that is below the
average EPS a company should have attained by exactly meeting the EPS levels established by
company Boards of Directors.
All other companies are also awarded a scaled-down number of points for EPS because their B-I-I scores are
always a fraction of the points earned by the best-in-industry performer. For instance, if the best-in-industry
performer only earns 16 out of a possible 20 points, the scores of all the remaining companies will be a fraction
of 16 points rather than 20 points (with each company’s fraction in this case being equal to its weighted-
average EPS divided by the best-in-industry performer’s weighted-average EPS). Consequently, all
companies have lower game-to-date B-I-I scores for EPS when the company with the highest all-year EPS
average fails to meet the Investor Expectation EPS average shown in parentheses below the Wgt. Avg.
column head and earns less than the point maximum. The thesis here is that the GTD B-I-I scores of all
companies should be penalized when all companies in the industry fail to meet the investor-expected EPS
targets over a multi-year period. Board member and shareholder confidence in company managers is greatly
weakened by poor industry-wide profitability—in the real world, managers who fail to deliver acceptable
profitability over a period of several years are often “asked” by the Board of Directors to resign and look
elsewhere for employment.
The Return On Equity Section

A company’s return on equity (ROE) is calculated by dividing its net profit by the average of total shareholders’
equity at the beginning of the year and the end of the year.
All of the ROE scores for companies in the industry are shown in the second section on page 2 of the Camera
& Drone Journal. The point weighting for achieving each year’s investor-expected ROE target is contained in
the gray-shaded narrative.
Each company’s average Return on Equity % for each year appears under the yearly column heads (Y6, Y7,
and so on). The number in parentheses just below the yearly column heads represents that year’s ROE
performance target established by your company’s Board of Directors and expected by investors. Observe
that the ROE target is 17% in Years 6 and 7, 21% in Years 8 and 9, 25% in Years 10-11; 30% in Years 12-13;
and 35% in Years 14 and 15.
Companies having bolded ROE numbers in each yearly column met or exceeded the investor-expected ROE.
Special Note: If a company’s average shareholder equity balance is negative the letters n.m. will
appear on the page rather than a ROE percentage (n.m. stands for “not meaningful”). A ROE
percentage cannot be calculated if the denominator (average shareholder equity) is negative. Such an
occurrence is rare but can happen if a company repurchases many shares of stock at high prices or
pays-out dividends that are higher than earnings or has negative earnings (or some combination of the
aforementioned).
The Current Year I.E. Score for ROE. A company that exactly meets the investor-expected ROE target
for a given year earns an Investor Expectation (I.E.) Score for ROE for that year exactly equal to the
corresponding point weighting for ROE in the gray-shaded box just above. Thus, if the weight for ROE is 20
points out of 100, exactly achieving the ROE target for a year produces an I.E. Score of 20.
Beating the annual investor-expected ROE target entitles a company to a 0.5% bonus for each 1.0%
that the ROE target is exceeded. Thus, if your company earns an ROE of 24% in Year 7, thus exceeding the
20% ROE target for Year 7, and if the investor-expected ROE target carries a 20-point weight, then your
company’s I.E. score for ROE for the year would be 22 points. However, as is the case for all five of the
scoring measures, bonus awards for ROE are capped at 20% of the specified number of points for meeting the
ROE target. So, if in Year 7 a company’s annual ROE is 28.0%, which is 40% above the 20% target for Year 7,

its I.E. score for ROE reaches the cap of 24 points and no additional points for ROE can be earned even if the
company’s ROE turns out 32.9%is capped score
Failure to achieve the ROE target for a given year results in an I.E. Score for ROE between 0 and the
point maximum for ROE, with the score depending on what percentage of the investor-expected ROE
target a company achieved. For instance, if your company attains a 16.9% ROE versus the investor-
expected Y8 target of 21%, then your company’s I.E. Score for ROE (assuming a 20-point weight) would be 16
points (16.9% divided by 21% equals .805, and .805 times 20 points equals 16.10).
If a company’s ROE is negative in a given year, no points are awarded for the ROE scoring component
and the company’s I.E. Score for ROE will be 0.
The Game-to-Date I.E Score for ROE. A company’s Game-to-Date (GTD) I.E score is tied to how its
weighted average ROE compares against the investor-expected weighted average ROE (shown in
parentheses below the Wgt. Avg. column head).
Each company’s weighted-average ROE for all years completed is calculated by summing the company’s net
profits for all years completed and dividing by the sum of its average shareholders’ equity amounts in each of
the completed years. Each company’s weighted-average ROE is shown in the column headed Wgt. Avg.
A company whose weighted-average ROE exactly equals the years-completed average investor-expected
ROE target earns a GTD I.E. Score for ROE exactly equal to the corresponding point weighting for ROE.
A company whose weighted average ROE exceeds the investor-expected ROE standard earns a 0.5% bonus
for each 1.0% that its weighted-average ROE exceeds the investor-expected ROE average, subject to a
bonus point cap of 20% of the point weighting for ROE. For example, if your company has a weighted-
average ROE of 27.3% versus the Year 7 investor-expected average of 21% and if ROE carries a 20-point
weighting, then your company’s G-T-D I.E. Score for ROE would be 23 points (because 27.3% ROE is 30%
higher than the investor-expected 21% ROE average and qualifies for 3 bonus points).
If a company’s weighted-average ROE for all years completed is below the investor-expected ROE
target, then its GTD I.E. Score for ROE will be somewhere between 0 and the point maximum for ROE,
depending on what percentage of the investor-expected ROE target the company achieved. For
instance, if your company has a weighted-average ROE of 14.0% in Year 7 against the investor-expected 17%
average for Years 6 and 7 and if ROE carries a 20-point weighting, then your company’s GTD I.E. Score for
ROE would be 16 points (or 14% divided by 17% times 20 points).
The Current Year Best-in-Industry (B-I-I) Score for ROE. The company with the highest ROE in a
given year is designated as the best-in-industry performer and earns the full number of points for ROE
(provided its ROE is equal to or above the investor-expected ROE target). All remaining companies earn a
fraction of the points earned by the best-in-industry performer (with each company’s fraction being equal to its
respective ROE for the year divided by the best-in-industry performer’s ROE for the year). For instance, if
ROE is given a weight of 20 points, a best-in-industry performer with a ROE of 30% in Year 8 gets a B-I-I score
of 20 points and a company with an ROE of 24.5% (which is 81.67% of the leader’s 30% gets a B-I-I score of
16.33 points (81.67% of 20 points) or 16 points rounded to the nearest whole number.
When the best-in-industry performer’s current year ROE performance is below the investor-expected
ROE target, the best-in-industry performer is not awarded a perfect score (the maximum number of
points) on ROE but rather a fraction of the maximum point score that equals the leader’s ROE as a % of
the investor-expected ROE target for the year—for example, an industry-leading 20% ROE in Year 11
would qualify for only 80% (20% divided by 25% = 0.80) of the maximum point weight. Such a smaller
point award prevents a best-in-industry performer from earning the equivalent of an A+ B-I-I score for
ROE when the leader’s ROE performance is below the investor-expected 25% target. All other
companies are awarded a scaled-down number of points for B-I-I ROE performance based on their respective

percentages of the ROE points earned by the best-in-industry performer—in other words if the best-in-industry
performer earns only 16 points out of a possible 20 points for ROE, the points earned by the remaining
companies are a percentage of 16 points (instead of 20 points). Consequently, all companies have lower
current year B-I-I scores for ROE when the company with the highest ROE for the current year fails to meet the
15% ROE target. The justification for smaller point awards across-the-board is the general dismay and lack of
confidence among board members and shareholders regarding poor ROE performance on the part of all
companies in the industry and their heightened concerns about future company profitability and stock prices.
The Game-to-Date Best-in-Industry Score on ROE. A company’s Game-to-Date (G-T-D) score for
ROE on the Best-in-Industry (B-I-I) standard is based on how its weighted-average ROE for all years
completed (shown in the Wgt. Avg. column) stacks up against the company with the highest weighted-average
ROE for all years completed.
The company with the highest weighted-average ROE for all years to date is designated as the best-in-industry
performer on ROE and receives the maximum score on this measure (provided its ROE average is above the
investor-expected EPS average). All remaining companies earn a lesser number of points according to what
percentage of the leader’s ROE they achieved. Thus, unless your company has the industry-leading average
ROE, your company’s B-I-I score for ROE under the Game-to-Date (GTD) Score column will be whatever
fraction of the best-in-industry performer’s point award that corresponds to your company’s ROE average for
all years completed as a percentage of the B-I-I performer’s ROE average for all years completed.
When the industry-leading weighted-average ROE is below the investor-expected ROE weighted
average, the best-in-industry performer does not earn a perfect score (the maximum number of points)
on ROE but rather earns a percentage of the maximum score that equals the leader’s ROE as a % of
the investor-expected ROE weighted average. Thus, the company with the highest average ROE
cannot receive the point maximum for ROE unless it has a weighted-average ROE equal to or above
investor-expected ROE weighted average—this prevents a company with the highest average ROE
from being awarded the equivalent of an A+ game-to-date B-I-I score when its ROE performance falls
short of the investor-expected ROE weighted average standard. All other companies are also awarded a
scaled-down number of points for ROE because their scores always are whatever fraction of the leader’s point
award that corresponds to their weighted average ROE divided by the leader’s weighted-average ROE.
Consequently, all companies have lower game-to-date B-I-I scores for ROE when the company with the
highest weighted-average ROE is below the investor-expected ROE weighted average and earns less than the
point maximum for ROE. Why are the G-T-D best-in-industry ROE scores of all companies penalized when all
companies in the industry have an average ROE for all years completed that is below the investor-expected
ROE average? Because poor ROE performance industry-wide over a multi-year period shakes the confidence
of board members and investors, reduces company stock prices, and raises major doubts about future industry
profitability. Likewise, company Boards of Directors become anxious about whether company co-managers
can turn things around and meet the established performance targets.
The Stock Price Section

All of the Stock Price scores for companies in the industry are shown in the third section on page 2 of the
Camera & Drone Journal. The point weighting for achieving the annual stock price target is contained in the
gray-shaded narrative for the Stock Price section.
Each company’s year-end stock price appears under the yearly column heads (Y6, Y7, and so on). The
number in parentheses just below the yearly column heads represents the annual Stock Price targets
established by your company’s Board of Directors and expected by investors.
Companies having bolded Stock Price numbers in each yearly column met or exceeded the target.
The Current Year I.E. Score for Stock Price. A company that meets the investor-expected Stock Price
target for a given year earns an Investor Expectation (I.E.) Score for Stock Price for that year exactly equal to

the corresponding point weighting for Stock Price. Thus, if the Stock Price weight is 20 points out of 100,
exactly achieving the Stock Price target for a year produces an I.E. Score of 20.
Beating the stock price target is worth a 0.5% bonus for each 1% that your company’s stock price
exceeds the annual investor-expected stock price target, up to a maximum bonus of 20%. Thus, if your
company’s Year 7 stock price exceeds the Year 7 target by 20%), your company’s stock price score would be
22 points if the scoring weight for stock price was set at 20 points.
Failure to achieve the stock price target results in a stock price score between 0 and the maximum
instructor-assigned point total, with the score depending on the percentage of the target achieved.
Thus, if the stock price weight is 15 points out of 100 points and if your company had a stock price of $29.48 in
Year 7 versus the investor-expected $44.00 target, then your company’s score on stock price performance
would be 10 points (67% of the 15 points awarded for meeting the $44.00 target).
The Game-to-Date I.E Score for Stock Price. A company’s Game-to-Date (GTD) I.E score for stock
price is based solely on how its most recent year’s stock price compares against the most recent
year’s investor-expected stock price target. In other words, your company’s GTD score for stock price
depends totally on whether your latest year’s stock price is above, equal to, or below the latest year’s investor-
expected stock price target—no average stock price calculation is involved in the game-to-date scoring
of stock price. This is because a company’s most recent year’s stock price is, to a large degree, reflective of
its past record of earnings, ROE, credit rating, and dividend payments.
A company whose latest year’s stock price exactly equals the investor-expected stock price target earns a
GTD I.E. Score for Stock Price exactly equal to the corresponding point weighting for Stock Price.
A company whose most recent year’s stock price exceeds the most recent year’s stock price target earns a
0.5% bonus for each 1.0% that its stock price exceeds the investor-expected stock price, subject to a
bonus point cap of 20% of the point weighting for stock price. For example, if your company’s Y8 stock
price is $74.34 versus the investor-expected stock price of $59.00 and if stock price performance carries a 20-
point weighting, then your company’s game-to-date I.E. Score for Stock Price would be 23 points (because
your company’s $74.34 stock price is 26% above the investor target and qualifies for a 13% or 2.6 point bonus
award, which rounds upward to 3 bonus points).
Should your company’s most recent stock price be below the year’s investor-expected target, your
company’s game-to-date I.E. Score will be whatever fraction of the stock price weighting corresponds
to your company’s stock price divided by the investor-expected stock price.
The Current Year Best-in-Industry (B-I-I) Score for Stock Price. The company with the highest
current-year stock price is designated as the best-in-industry performer and earns the maximum number of
points for stock price (provided its stock price exceeds the current year investor-expected stock price target).
Each remaining company earns whatever fraction of the stock price weighting corresponds to its stock price
divided by the industry leader’s stock price. Thus, when stock price performance carries a 20-point weight, a
company with an industry-leading stock price of $60 in Year 8 receives a score of 20 points and a company
with a stock price of $40 (which is 67% as good as the leader’s $60) gets a score of 13 points (67% of 20
points rounded to the nearest whole number).
In cases where the company with the highest current-year stock price has a stock price below the
investor-expected level, it does not earn a perfect score (the maximum number of points) on stock
price but rather a percentage of the maximum score that equals the leader’s stock price as a % of the
investor-expected stock price. All other companies are also awarded a scaled-down number of points for
stock price because the best-in-industry scoring standard always entails (a) giving the best-performing
company the highest score and (b) basing the scores of all other companies on whatever fraction of the
leader’s point award that corresponds to their performance as a percentage of the leader’s performance.
Therefore, if the industry leader has a stock price of $80.10 in Year 10 when the investor-expected stock price

is $89 and if the stock price weighting is 20 points out of 100 points, the leader would earn 18 points (90% of
the 20-point maximum); a company with a $40.05 stock price would get only 9 points (half of the 18 points
earned by the company with the highest stock price).
As was the case for EPS and ROE, all companies have lower game-to-date B-I-I scores for stock price when
the company with the highest stock price has a stock price below the investor-expected level. The reasons
are the same—poor performance on stock price by all companies in the industry greatly erodes investor
confidence and casts doubt about whether company managers can actually deliver the investor-expected
levels of performance.
The Game-to-Date Best-in-Industry (B-I-I) Score for Stock Price. A company’s Game-to-Date (GTD)
B-I-I score for stock price is based solely on how its latest year’s stock price compares against the
latest-year stock price of the company whose stock price is the highest in the industry. No average
stock price calculation is involved in the game-to-date B-I-I scoring of stock price. The latest stock
prices of companies in the industry are used to measure the GTD B-I-I score for stock price because a
company’s latest stock price is, to some important degree, a function of earnings, ROE, credit rating, and
dividend payments in prior years and thus includes a long-term element.
The company having the highest stock price in the report year is designated as the best-in-industry performer
on stock price and receives the maximum score on this measure (unless its stock price is below the investor-
expected stock price target established by the company’s Board of Directors, in which case the leader’s score
is a percentage of the maximum score that equals the leader’s stock price as a % of the latest year’s stock
price target). All other companies earn a fraction of the points awarded to the best-in-industry performer that
equals their respective latest-year stock prices divided by the best-in-industry performer’s latest-year stock
price. Thus, unless your company has the industry-leading stock price, your company’s B-I-I score for stock
price GTD Score column will be whatever fraction of the best-in-industry performer’s point award that
corresponds to your company’s latest stock price divided by the B-I-I performer’s latest stock price.
One thing to take note of is that a company’s GTD B-I-I score for stock price and current-year B-I-I score for
stock price are always the same because the latest-year stock prices are used to calculate both scores. This
would, of course, not be the case if—as in the cases of both EPS and ROE where all-year investor-expected
averages come into play in the game-to-date B-I-I scoring—the game-to-date B-I-I score was based on an all-
year average stock price rather than latest-year stock price.


The scoreboard of company performance on page 3 of the Camera & Drone Journal (CDJ) shows
➢ Each company’s scores for credit rating based on the Investor Expectations Standard and the Best-in-
Industry Standard.
➢ Each company’s scores for image rating based on the Investor Expectations Standard and the Best-in-
Industry Standard.
➢ Year-by-year details of industry expenditures for corporate social responsibility and citizenship and the
range of image rating points generated from such expenditures.
If, as you look at the data on page 3, you have any questions about the Investor Expectations Standard or the
Best-in-Industry Standard, then please consult the Help document for page 1 of the CDJ, where these
standards are described in more detail.
The Credit Rating Section of Page 3

All companies are expected to maintain a credit rating of B+ or higher in Years 6 and 7, at least A- in Year 8
through Year 10, and at least A in Year 11 through Year 15.
Each company’s credit rating for each year of the GLO-BUS exercise is displayed below the yearly column
heads (Y6, Y7, and so on). The B+/A-/A in parentheses just below the yearly head is there to remind you of
the target credit rating you are supposed to achieve each year. Bolded credit ratings indicate a company
met or exceeded the credit rating target.
The point weighting for a company’s credit rating performance is contained in the gray-shaded narrative
accompanying the Credit Rating scores at the top of this page; very often, the credit rating weight is 20% or 20
points out of 100 points.
The Current Year I.E. Score for Credit Rating. A company that exactly meets the investor-expected
credit rating earns an Investor Expectation (I.E.) Score for credit rating for that year exactly equal to the
corresponding point weighting for credit rating. Thus, if the credit rating weight is 20 points out of 100, a B+
credit rating in Year 6 translates into an I.E. Score of 20.
Beating the annual credit rating target always earns bonus points, up to a maximum bonus of 20% of
the point weighting.
If the point weighting for credit rating is 20 (which equates to a maximum of 24 points including the bonus),
then the various possible credit rating scores are as follows:
Credit Rating Year 6 – Year 7 Year 8 – Year 10 Year 11 – Year 15

A+ 24 points 24 points 24 points
A 23 points 22 points 20 points
A– 22 points 20 points 18 points
B+ 20 points 18 points 16 points
B 16 points 15 points 14 points
B– 12 points 12 points 11 points
C+ 8 points 8 points 8 points
C 4 points 4 points 4 points
C– 0 points 0 points 0 points

If your company’s current-year I.E. Score for credit rating differs from the points shown above, it is because
your instructor has opted for a point weighting other than 20.
The Game-to-Date I.E. Score for Credit Rating. Game-to-Date scoring for Credit Rating is a function of
how each company’s latest credit rating compares against the best rating of A+, not some all-year average
credit rating. The latest year’s credit rating is used to determine a company’s game-to-date I.E. score
for credit rating because a company’s latest credit rating is, to some important degree, a product of
management’s entire record of finance-related decisions—a company’s current credit rating, financial
condition, and balance sheet strength/weakness is usually years in the making, not something that can be
attributed solely to events is a single year.
As a consequence, a company’s current-year I.E. score for credit rating and its game-to-date I.E. score for
credit rating are identical because both are based on the same credit rating and point awards.
The Current Year Best-in-Industry (B-I-I) Score for Credit Rating. Best-in-industry scoring for credit
rating performance works differently than for the other four performance measures. The “best” credit rating
performance is an A+ credit rating, not so much the highest credit rating achieved by any one company.
Hence, each credit rating grade from A+ to C− carries a number of points based on the credit rating weight
designated by your instructor. A credit rating of A+ is required to receive the maximum number of points.
If the credit rating weight is 20 points out of 100, the number of points awarded for current-year B-I-I credit
rating scores is as follows:
A+ 20 points
A 19 points
A– 18 points
B+ 16 points
B 14 points
B– 11 points
C+ 8 points
C 5 points
C– 1 point
If your company’s current-year B-I-I Score for credit rating differs from the points shown above, it is because
The Game-to-Date Best-in-Industry (B-I-I) Score for Credit Rating. Just as was the case with game-
to-date scoring for credit rating under the Investor Expectations Standard, game-to-date scoring for credit
rating under the Best-in-Industry Standard is keyed to each company’s latest credit rating, not some all-year
average credit rating. Just as was the case for the Game-to-Date I.E. score for credit rating, the latest year’s
credit rating is used to determine a company’s game-to-date B-I-I score for credit rating. The same
reasoning applies: a company’s latest credit rating reflects management’s entire record of finance-related
decisions—a company’s current financial condition and balance sheet strength/weakness, and thus its current
credit rating, incorporates prior-year actions and decisions about how to handle the company’s financial affairs
as concerns the use of 1-year, 5-year, and 10-year loans, the repayment of debt outstanding, dividend
payments, new stock issues and purchases of outstanding shares, and end-of-year current assets, current
liabilities, and cash balances that all affect in one way or another a company’s credit rating.
Best-in-industry scoring for credit rating performance is based on the “best possible” credit rating of A+, not the
highest credit rating achieved by any one company. Each credit rating from A+ to C− carries a certain point
score that ranges from the maximum possible point score for an A+ rating down to 1 point for a C– rating.
If the credit rating weight is 20 points out of 100, the number of points awarded for Game-to-Date B-I-I credit
ratings scores is as follows:

A+ 20 points
A 19 points
A– 18 points
B+ 16 points
B 14 points
B– 11 points
C+ 8 points
C 5 points
C– 1 point
If your company’s game-to-date B-I-I Score for credit rating differs from the points shown above, it is because
The Image Rating Section of Page 3

A company’s image rating is based on (1) its P/Q ratings for action cameras and UAV drones, (2) its market
shares for both cameras and drones in each of the four geographic regions, and (3) its efforts to demonstrate
good corporate citizenship and conduct its business in a socially responsible manner.
All companies are expected to achieve an image rating (brand reputation) of 70 or higher in Year 6, 72 in
Years 7-8, 75 in Years 9-10, 77 in Years 11-12, and 80 in Years 13-15.
Each company’s image rating for each year of the GLO-BUS exercise is displayed below the yearly column
heads (Y6, Y7, and so on). The number in parentheses just below the yearly heads (70 for Year 6, 72 for
Years 7-8, 75 for Years 9-10, 77 for Years 11-12, and 80 for Years 13-15) are there simply to remind you of the
target image rating you are supposed to achieve each year. Bolded image ratings indicate a company met
or exceeded the target.
The point weighting for Image Rating is shown in the gray-shaded narrative accompanying the Image Rating
scores in the middle of this page; very often the image rating weight is 20% or 20 points out of 100 points.
The Current Year I.E. Score for Image Rating. A company that exactly meets the investor-expected
Image Rating target for a given year earns an Investor Expectation (I.E.) Score for Image Rating for that year
exactly equal to the corresponding point weighting. Thus, if the Image Rating weight is 20 points out of 100 in a
year when the target is 75, exactly achieving an Image rating of 75 for that year produces an I.E. Score of 20.
Beating the investor-expected target is worth an additional 0.5% for each 1% that your company’s
image rating exceeds the investor-expected target, up to a maximum of 20% above the instructor-
assigned point total. If your company’s image rating was 77 in a year when the target was 70 (and was thus
10% above the investor-expected target of 70), your company’s current-year I.E. image rating score would be
21 points if the image rating weight is set at 20 points because exceeding the image rating target by 10% earns
an additional 1 point.
Failure to achieve the investor-expected image rating target results in an image rating score between 0
and the maximum instructor-assigned point total, with the score depending on the percentage of the
image rating target achieved. Thus, if the image rating weight is 20 points out of 100 points and if your
company had an image rating of 60 in a year when the target was 75 (and was thus 20% below the expected
75 rating), then your company’s current-year I.E. score for image rating would be 16 points (80% of the 20-
point weight).
The Game-to-Date I.E Score for Image Rating. A company’s Game-to-Date (GTD) I.E score for image
rating is based on how its average image rating for the most recent three years compares against the annual
investor-expected image rating.

A 3-year average image rating is used to measure game-to-date I.E. performance, as opposed to an all-year
average, so as not to burden a company’s performance with early-year image ratings that may not be
representative of the image and reputation it has recently achieved with its strategy.
A company whose 3-year average image rating for a given year exactly equals the 3-year average investor-
expected image rating in that year earns a GTD I.E. Score for image rating exactly equal to the instructor-
assigned point total and percent weighting. A company having a 3-year average image rating above the
corresponding 3-year average target receives a score up to 20% greater than the point weight, and a company
having 3-year average image ratings below the 3-year average target receives a score equal to the fraction of
the image rating target that was achieved.
The Current Year Best-in-Industry (B-I-I) Score for Image Rating. The company with the highest
current-year image rating is designated as the best-in-industry performer and earns the maximum number of
points for image rating (provided its image rating exceeds the investor-expected target). Each remaining
company earns whatever fraction of the image rating weighting that corresponds to its image rating divided by
the best-in-industry performer's image rating. If image rating performance carries a 20-point weight, a
company with an industry-leading image rating of 80 receives a score of 20 points and a company with a 60
image rating earns a score of 15 points (60 divided by 80 = 0.75 and 75% of 20 points = 15 points).
In the very rare instance when the company with the highest current-year image rating has a rating
below the investor-expected target, the best-in-industry performer does not earn the maximum number
of points but rather a percentage of the maximum score that equals the leader's image rating as a % of
the investor-expected image rating target. The current-year B-I-I scores of all other companies will then be
whatever fraction of the leader's point award that corresponds to their respective image ratings divided by the
leader's image rating. Therefore, if the industry leader has a 60 image rating in a year when the investor-
expected target is 70 and if the image rating weight is 20 points out of 100 points, the leader would earn 17
points (60 divided by 70 = 0.857 and 85.7% of the 20-point maximum = 17 points, rounded to the nearest
whole number) and a company with a 56 image rating would get 16 points (56 divided by 60 = 0.933 and
93.3% of the 17 points earned by the company with the highest rating of 60 equals 16 points).
The Game-to-Date Best-in-Industry (B-I-I) Score for Image Rating. A company's Game-to-Date (G-
T-D) B-I-I score for image rating is based on how its average image rating for the last three years compares
against the annual investor-expected target established by company Boards of Directors. A 3-year average
image rating is used to measure game-to-date B-I-I performance, as opposed to an all-year average, so as not
to burden a company's performance with early-year image ratings that may not be representative of the
reputation it has recently achieved with its strategy.
The company having the highest 3-year average image rating is designated as the best-in-industry performer
on image rating and receives the maximum score on this measure (unless its image rating is below the annual
investor-expected target established by the company's Board of Directors). Thus, a company with an industry-
leading 3-year average image rating of 83 would earn the point maximum (20 points if the image rating weight
is 20% or 20 points). In the rare instances when the industry leader’s 3-year average image rating is below the
annual investor-expected target, the leader's image rating score equals the leader's 3-year average image
rating as a % of the image rating target); for example, a company with an industry-leading 3-year average
image rating of only 66 in a year when the investor-expected target was 70 would earn a game-to-date B-I-I
score for image rating of only 19 points (66 divided by 70 = 0.943 and 94.3% of 20 points = 19 points, rounded
to the nearest whole number).
All other companies earn game-to-date B-I-I scores for image rating that equal a fraction of the points awarded
to the best-in-industry performer, with their respective fraction being equal to their 3-year average image rating
divided by the best-in-industry performer's 3-year average image rating. For example, if the image rating
weight is 20 points and the best-in-industry performer has a 3-year average image rating of 78, then a

company with a 3-year average image rating of 71 will receive a game-to-date B-I-I score for image rating of 18
(71 divided by 78 times 20 points, rounded to the nearest whole number).
Unless your company has the industry-leading 3-year average image rating, your company's B-I-I score for
image rating under the Game-to-Date (G-T-D) Score column will always be whatever fraction of the best-in-
industry performer's point award that corresponds to your company's 3-year average image rating divided by
the B-I-I performer's 3-year average image rating.
The Corporate Social Responsibility and Citizenship Section of Page 3

The data grouping at the bottom of page 3 of the CDJ shows industry high-average-low outlays for corporate
social responsibility and citizenship for each year, the high-average-low outlays per total number of camera
and drone units sold, and the high-average-low range of image rating points generated from these outlays.
The numbers here are pretty much self-explanatory but the following may prove helpful:
As concerns the Total and Per Unit Expenditures for Corporate Social Responsibility and Citizenship:
• The numbers in the “High” columns represent the highest amounts that a company in the industry spent.
The company is not identified for reasons of competitive sensitivity.
• The numbers in the “Low” columns represent the least amounts spent by a company in the industry. The
company is not identified for reasons of competitive sensitivity.
• The numbers in the “Average” columns represent the average expenditures of all companies in the
industry.
As concerns the Image Rating Points Generated from Expenditures for Corporate Social Responsibility and
Citizenship:
• The numbers in the “High” column represent the largest number of image rating points received by a
company as a result of its spending for corporate social responsibility and citizenship initiatives. The
• The numbers in the “Low” column represent the smallest number of image rating points received by a
company as a result of its spending for corporate social responsibility and citizenship initiatives. The
• The numbers in the “Average” column represent the average number of image rating points received by
companies in the industry as a result of outlays for corporate social responsibility and citizenship initiatives.
Beginning in Year 9, this section will also include announcement of a “Gold Star Award for Corporate
Citizenship” given by the World Council for Exemplary Corporate Citizenship. The Council’s award is presented
to the company that spends the highest percentage of its revenues for corporate social responsibility and
citizenship initiatives. The Council decided that its Gold Star Award should be based on percentage of
revenues spent rather than total dollars spent because a total dollar measure of effort is “biased” in favor of
companies with big revenue streams. The use of a %-of-revenues measure is size-neutral and a more valid
measure of “company effort.” A 2nd place Gold Star Award will also be announced. Gold Star awards are an
honor and do not affect company image ratings.
Tip: All the information in this section of the Camera & Drone Journal is intended to provide guidance to
company co-managers in deciding whether to increase, decrease, or leave unchanged their levels of spending
for corporate social responsibility and citizenship initiatives—or perhaps to spend no money at all. Use it,
along with the information in the top section of the Corporate Social Responsibility and Citizenship Decision
Screen, to assess what changes, if any, you and your co-managers should make in your company’s
expenditures for the six optional social responsibility and citizenship initiatives.

GLO-BUS CDJ Page 3b Help

Page 3b of the Camera & Drone Journal
The scoreboard of company performance on page 3b of the Camera & Drone Journal (CDJ) shows
• The accuracy of each company's projected or forecasted net revenues, EPS, and Image Rating and
whether the accuracy of these projections/forecasts was good enough to qualify for a Bull’s Eye Award.
• How your company’s Average Variance from management’s forecasts of net revenue, EPS, and Image
Rating compared against the Average Variances of other companies in your industry and also against the
worldwide company average variance for the specified year.
• Beginning with the Year 7 decision round, the industry’s “Leap Frog” winner (which is awarded to the
company with the biggest jump in Weighted Average Score as reported in the last column of that year’s
scoreboard).
The Bull’s Eye Award Section

Every regularly-scored decision period, each company can qualify for a 1-point Bull’s Eye Award (to be added
to its Weighted Average game-to-date performance score and produce the GTD Overall score in the bottom
section of Page 1 of the CDJ). To receive a 1-point Bull’s Eye award, a company’s co-managers must
“accurately” project or forecast their company’s actual revenues, EPS, and Image Rating. The purpose of the
Bull’s Eye Award is to reward company managers for astutely anticipating upcoming-year market and
competitive conditions and crafting a strategy and set of decision entries that produces an actual performance
closely in line with the projections showing at the Projected Company Performance box just to left of each
decision screen for your final set of decision entries.
The projected/forecasted values for revenues, EPS, and Image Rating used to determine the Bull’s Eye
Awards are the revenue-EPS-image rating values that appear in the Projected Company Performance
box for each company’s last set of saved decision entries that are used to process the industry’s
actual results.
For a company to earn a Bull’s Eye Award equal to 1-bonus point to be added to their overall game-to-date
Weighted Average Score (as shown in the Game-To-Date Scoreboard section on page 1 of the of the Camera
& Drone Journal, all three of the following conditions must be met:
1. The company’s actual total revenues must be within ±5% of projected/forecasted total revenues,
2. The company’s actual EPS must be within either ±10-cents of projected EPS or within ±5% of projected
EPS, and
3. The company’s actual image rating must be within ±4 points of the projected image rating.
Standard rounding rules apply to the ±5% calculations for revenues and EPS. There are no decimal
points involved in the calculation and reporting of a company’s Image Rating.
No partial bonus points are awarded when just one or two of these three conditions are met.
There are as many 1-point Bulls Eye Awards as there are companies that meet all three conditions.
There is no limit on the number of Bull’s Eye Awards a company can receive. Hence receiving a Bulls
Eye Award for each of the various decision rounds can significantly impact a company’s overall score.
While Bull’s Eye Award statistics are provided during the practice rounds for illustrative purposes, any awards
are erased after the practice rounds—in other words, any Bull Eye Awards during the practice rounds “do not
count” and will not be included in the bonus-point additions to a company’s final game-to-date overall score.

The total bonus points (both Bull’s Eye and Leap Frog bonuses) accumulated by each company and the
bonus-point-adjusted overall score for each company are shown in the bottom section of page 1 of the Camera
& Drone Journal where the Game-to-Date Overall Score for each company appears—see the last column of
the Game-To-Date Scoreboard. This enables you to readily track the status and impact of the bonus point
awards for each company throughout the simulation exercise.
If a company fails or chooses not to make and save decision entries for a given decision round (year), the
company is not eligible for the Bull’s Eye Award in that year, and the word Ineligible will appear in the Bull’s
Eye Award column for the company.
The purpose of the Bull’s Eye Award is to reward company managers for astutely anticipating upcoming year
market conditions and the degree of competitive efforts exerted by rival companies.
The Upper Section. The meaning of the numbers displayed is easily grasped. Under the Revenue
heading, each company’s forecasted or projected revenues are shown in the first column, followed by its actual
revenues for the year. The percent variance is calculated by subtracting the forecasted revenues from the
actual revenues, dividing by the actual revenues, and multiplying by 100 to arrive at a percent variance.
Negative variances indicate actual revenues were below the forecast. Positive variances indicate that actual
revenues were above the forecasted value. A company meets the first condition for the Bull’s Eye Award
if its Percent Variance is within the ±5% range.
Under the EPS heading, each company’s forecasted or projected EPS is shown in the first column, followed by
its actual EPS for the year. The percent variance is calculated by subtracting the forecasted EPS number from
the actual EPS number, dividing by the actual EPS value, and multiplying by 100 to arrive at a percent
variance. Negative variances indicate a company’s actual EPS was below the company’s forecast. Positive
variances indicate that a company’s actual EPS came in above the forecasted value. A company meets the
second condition for the Bull’s Eye Award if its Percent Variance is within the ±5% range or if its
projected EPS is within ±10-cents of actual EPS.
Under the Image Rating heading, each company’s forecasted or projected image rating is shown in the first
column, followed by its actual image rating for the year. The point variance (shown in the next column) is
calculated by subtracting the company’s forecasted image rating from its actual image rating. The point image
rating variance is calculated by subtracting the actual Image Rating from the forecasted Image Rating value.
Negative point variances indicate the company’s actual image rating was below company management’s
forecast. Positive point variances indicate that a company’s actual image rating was above management’s
forecasted value. A variance within ±4 points meets the third condition for the Bull’s Eye Award.
Companies meeting all three Bull’s Eye Award qualifications are indicated with a “Yes” in the Bull’s
Eye Award column and the last column on the right reports each company’s cumulative Bull’s Eye
Awards across all decision rounds.
What to Do to Improve the Accuracy of Your Projections/Forecasts. If your company’s average

variances have turned out to be too large to earn a Bull’s Eye Award for several years, then your company’s
management team needs to do two things:
1. Study the column of industry-averages in Competitive Intelligence Reports for the past several years to
look for trends in the movement of the various industry-averages for camera/drone prices, P/Q ratings,
models offered, advertising, length of warranties and so on in each region to get clues as to which
direction and by how much the averages might reasonably be expected to change in the upcoming
decision round. What kinds of actions might rival companies take in the upcoming decision round to
enhance their competitiveness and win additional sales volumes and market share in the action camera
segment and in the drone segment? In other words, you and your co-managers need to evaluate and
debate whether and why the efforts of rival companies for the various competitive factors will, on
average, intensify or weaken somewhat in the upcoming year and by how much.

2. Then you have to enter your reasoned and analysis-based “guesstimates” for what you think the
industry averages for the upcoming decision round will be in the Competitive Assumptions boxes at the
bottom of the decision screens for Action-Capture Camera Marketing and UAV Drone Marketing. The
numbers already showing in the boxes for the two Competitive Assumptions sections are last year’s
industry averages; your task is to enter your guestimates for what the industry averages will turn out to
be in the upcoming decision round. The closer your two sets of Competitive Assumptions for the
upcoming-year industry averages approximate the actual industry averages (as will be reported in the
upcoming year’s Competitive Intelligence Report), the closer will the forecasts of your company’s
revenues, EPS, and Image Rating be to actual performance.
Key Points:
• The Competitive Intelligence Report is absolutely the best data source for clues about how
the industry averages might change in the upcoming year.
• The accuracy of the entries you make in the Competitive Assumptions boxes are the key to
winning Bull’s Eye Awards.
• Spending some quality time on developing analysis-based Competitive Assumptions is the
best way to win more Bull’s Eye Awards. Making “wild” or “uninformed” or “off the cuff” or
“shooting from the hip” guesses won’t work out well.
If you are still unsure about how to go about making adjustments in the numbers in the Competitive
Assumptions sections, then click on the Help section for the Marketing Decisions screens for Cameras and
Drones and scroll down until you come to the discussion about making entries in the boxes for the Competitive
Assumptions. Spending the time to make analysis-based adjustments in the prior-year industry averages and
trying to anticipate what the upcoming year’s industry averages might be usually results in significant
improvements in the accuracy of your Revenue-EPS-Image Rating projections.
The Center Section. The four rows of data in this section of page 3b provide a quick way for you to see
how well the accuracy of your company’s combined variances for actual and projected revenues, EPS, and
image rating compare against the industry-high, the industry-average, and industry-low for revenues, EPS, and
Image rating compare.
The number for your company’s variance is simply the arithmetic average of your three percentage variances
for revenues, EPS, and Image Rating shown in the Bulls Eye statistics section. The numbers for the industry-
high, industry-average, and industry-low are arithmetic averages as well.
You should be pleased with your company’s forecasting accuracy when your company is consistently at or
near the low industry range of variance figures. Such an outcome signals that your company’s management
team is doing a good job (compared to most other rivals) of anticipating the overall changes in the competitive
efforts of rival companies and developing a strategy and set of decision entries that is producing actual
performance outcomes reasonably in line with what you expected.
The Leap Frog Award

A Leap Frog Award of one bonus point is awarded annually to the company in the industry whose Weighted
Average Score in the current year is most improved over the prior year (based on number of points, rather than
percentage improvement) in comparison to the score gains of all other companies in the industry. See the last
column in the top section of page 1 of the CDJ.
• The first Leap Frog Award is given in Year 7 (since it takes two years of results for a company to
show improvement over its prior year’s results).
• In case two or more companies tie for the biggest point-improvement in overall score, each
company will receive a 1-point Leapfrog Award bonus.

• In the rare instance where all companies fail to improve their current scores from one year to
the next (indicated by a negative year-to-year change in overall score for all companies in the
industry), no Leap Frog bonus is awarded.
The total bonus points (both Bull’s Eye and Leap Frog bonuses) accumulated by each company and the
bonus-point-adjusted overall score for each company are shown in the bottom section of page 1 of the Camera
& Drone Journal where the Overall Game-to-Date company scores appear. This enables you to readily track
the status and impact of the bonus point awards throughout the simulation exercise.
Interpreting the Numbers in the Leap Frog Award Section. The numbers displayed require little
explanation. The “Year __” column shows each company’s overall current-year score (based on both the
Industry Expectation and Best-in-Industry scoring standards), as reported on p. 1 of the Camera & Drone
Journal. The Δ column reports the size of the point-score change from the prior year—delta (or Δ) is the
mathematical symbol for “change.”
Highlighted numbers in the Δ column signify the Leap Frog Award winner (or winners).

Overview of the Market for Action Cameras and UAV Drones

Action-Capture Camera Global Statistics

The top section of this 1-page overview provides easy-to-understand global statistics for action-capture
cameras. It shows the average wholesale prices charged for cameras in the just-completed year for each
geographic region and the global market as a whole, along with the associated percentage changes from the
preceding year. The next row displays the total number of AC cameras (in 000s) demanded by buyers in each
region and worldwide, followed by the number of cameras that all companies in the industry assembled,
shipped, and sold in each region and worldwide. Any numbers above zero (0) for “Unsatisfied Demand” in a
region signal that one of more companies had insufficient assembly capacity to fill retailer orders in that
region—the sum of all unfilled orders industry-wide is the global number for Unsatisfied Demand.
Note: Which companies lost sales due to insufficient assembly capacity and which companies had
windfall sales gains from retailers anxious to replenish inventory with substitute brands is reported in
the “Gained/Lost” row in the section of the current year Competitive Intelligence Report that displays
the “Comparative Competitive Efforts of Rival Companies” for each geographic region.
The Demand Forecast numbers (in 000s of cameras) in each region and globally for the upcoming three years
are helpful in determining your company’s near-term needs for additional camera assembly capacity. They are
also useful in deciding whether the different-size growth opportunities in the four regions warrant
increasing/decreasing your company’s market share targets in certain regions and/or putting more/less
emphasis on marketing cameras in some regions than others.
Remember: The demand forecasts for cameras represent the midpoint of a range that can vary by
±1%, and the sizes and directions of these variations from the midpoint typically differ by region.
Moreover, the camera demand forecasts are based on the assumption that rival companies (1)
compete aggressively enough to capture the forecasted growth opportunities and (2) do not radically
alter current price levels and/or product quality/performance and/or other marketing efforts. Future
growth rates may turn out to be higher than forecasted in the event more buyers are attracted to
purchase action cameras because of significant declines in industrywide average camera prices,
significant improvements in camera quality/performance over time, and/or sharp boosts in the
marketing and competitive efforts of rival companies to boost sales volumes. Conversely, factors that
can drive away potential buyers and cause the growth in buyer demand to fall below the forecasted
amounts include sharply higher camera prices and/or eroding camera quality/performance and/or
greatly diminished marketing and competitive efforts industrywide.
The graph of Action-Capture Camera Global Trends enables you to quickly assess the changes in the global
average wholesale price of cameras, the all-company average P/Q ratings, and the all-company average
number of extra performance features being incorporated in AC camera designs and specifications.
Recommendation: Check how your company’s average wholesale price, P/Q rating, and use of extra
performance features compare against the industry averages for these three important competitive
traits and consider whether your company might need to make adjustments that will enhance your
company’s competitiveness versus rivals. For example, is your company ahead or behind the industry
as a whole in incorporating extra performance features in your company’s camera models?
UAV Drone Global Statistics

The bottom half of this 1-page overview provides easy-to-understand global statistics for UAV drones—the
information parallels that for action-capture cameras.

It shows the average retail prices charged for UAV drones at company websites in the just-completed year for
each geographic region and for the global market as a whole, along with the associated percentage changes
from the preceding year. The next row displays the total number of UAV drones (in 000s) demanded by drone
buyers in each region and worldwide, followed by the number of UAV drones that all companies in the industry
assembled, shipped, and sold in each region and worldwide. Any numbers above zero (0) for “Unsatisfied
Demand” in a region signal that one of more drone-makers had insufficient assembly capacity to fill drone
buyer orders in that region—the sum of all unfilled orders industry-wide is the global number for Unsatisfied
Demand.
Note: Which companies lost drone sales due to insufficient drone assembly capacity and which
companies had windfall sales gains from drone buyers anxious to purchase a substitute drone brand is
reported in the “Gained/Lost” row (the row just under the three rows relating to “Drone Unit Demand”) in
the section of the current year Competitive Intelligence Report pertaining to the “Comparative
Competitive Efforts of Rival Companies” for the four geographic regions.
The Demand Forecast numbers (in 000s of drones) in each region and globally for the upcoming three years
are helpful in determining your company’s near-term needs for additional drone assembly capacity. They are
also useful in deciding whether the different-size growth opportunities in the four regions warrant
increasing/decreasing your company’s market share targets in certain regions and/or putting more/less
marketing emphasis on some regions than others.
Remember: The drone demand forecasts represent the midpoint of a range that can vary by ±1%, and
the sizes and directions of these variations from the midpoint typically differ by region. Moreover, the
forecasts are based on the assumption that rival drone-makers (1) compete aggressively enough to
capture the forecasted growth opportunities and (2) do not radically alter current price levels and/or
product quality/performance and/or other marketing efforts. Future growth rates may turn out to be
higher than forecast in the event more drone buyers are attracted to purchase a UAV drone because of
significant declines in industrywide drone prices, significant improvements in drone quality/performance
over time, and/or sharp boosts in the marketing and competitive efforts of rival drone-makers to boost
sales volumes. Conversely, factors that can drive away potential drone buyers and cause the growth in
drone buyer demand to fall below the forecasted amounts include sharply higher drone prices and/or
eroding drone quality/performance and/or greatly diminished marketing and competitive efforts
industrywide.
The graph of UAV Drone Global Trends enables you to quickly assess the changes in the global average price
of drones at company websites, the all-company average P/Q ratings for drones, and the average number of
extra performance features that companies are incorporating in their UAV drone designs and specifications.
Recommendation: Check how your company’s average retail price, P/Q rating, and use of extra
performance features compare against the industry averages for these three important competitive
traits and consider whether your company might need to make adjustments that will enhance your
company’s competitiveness againstrival drone brands. For example, is your company ahead or behind
the industry as a whole in incorporating extra performance features in your company’s UAV drones?

Comparative Financial Performances

This page of the Camera & Drone Journal provides comparative income statement data for all companies in
the industry, selected balance sheet data for all companies, and an assortment of financial and operating
statistics for each company (dividend data, credit rating measures, profitability ratios, capital outlays and
shares of stock outstanding). In the real world, this information is always available for companies whose stock
is publicly traded and can be obtained from company annual reports, annual SEC 10-K filings, quarterly SEC
10-Q filings, and many other public sources.
This page of information makes it easy for you to see how your company’s financial performance compares
with that of any and all rival companies.
Why You Should Quickly Review the Income Statement Data

The comparative income statement data is primarily useful for seeing which companies are the largest and
smallest in the industry based on revenues, who is earning the biggest profits, and who is probably burdened
with excessive interest costs. Each company began with same revenues and profits, so those with high net
sales revenues have grown faster than those with low net sales revenues. Those with high net profits have
been able to grow their company’s profits faster than those with low net profits. Companies with high interest
costs either have the most debt outstanding or weak credit ratings (which drives up interest rates).
It is generally useful to scan this data each year just to stay on top of such matters.
Why You Should Quickly Review the Balance Sheet Data

The balance sheet data on p. 5 of the CDJ is useful for tracking:
• Which companies have plenty of cash on hand and which are cash poor—a 0 for cash on hand
means a company did not have sufficient cash to pay all of its bills and thus its negative year-end
cash balance (overdrawn checking account) was covered by an “emergency” bank loan to cover its
overdraft at an added interest rate penalty of 2%.
• Which ones have large fixed assets and thus have made the biggest investments in camera/drone
assembly capacity (and possibly have undertaken robotics upgrades).
• The comparative amounts of long-term loans of all companies in the industry. Companies with
bigger amounts of long-term loans typically have higher interest expenses.
• Which companies have issued new shares of stock and which companies have repurchased
outstanding shares.
• Which companies have how much in shareholders’ equity investment. Companies with greater
amounts of shareholder equity on their balance sheet have to earn higher net profits in order to
achieve the investor-expected ROE targets.
Just as with the income statement data, you should scan the comparative balance sheet statistics each year
just to stay on top of how well your company stacks up relative to the other companies in the industry.
Making Good Use of the Financial and Operating Statistics
The Dividend Data. The three columns of dividend statistics show each company’s annual dividend
payment per share of common stock outstanding, the total amount of cash used to make the dividend
payments, and the dividend payout ratio (the percentage of net income used to pay the declared dividend).

The dividend statistics provide information that will help you decide:
• Whether you need to consider raising your company’s dividend, in light of the dividends being paid
by other companies in the industry. Dividend increases generally have a positive impact on your
company’s stock price (unless they involve paying out more than the company is earning—i.e. a
dividend payout ratio greater than 100%). A bolded number in the annual dividend column signifies
the company or companies with the highest annual dividends; dividends with a shaded background
are low relative to other companies and signal a need for management to consider a dividend
increase (if the company’s financial condition permits).
• Whether your company’s dividend payout ratio is higher/lower than those of other companies. The
dividend payout ratio is defined as the percentage of earnings per share that is being paid out to
shareholders in the form of dividends. Generally speaking, a company’s dividend payout ratio
should be less than 75% of EPS, unless the company has paid off most of its loans outstanding and
has a comfortable amount of cash on hand to fund growth and contingencies. Any company with a
dividend payout exceeding 100% is a strong candidate for a dividend cut unless earnings improve
in the upcoming year. Dividends in excess of EPS are unsustainable and thus are viewed with
considerable skepticism by investors—as a consequence, dividend payouts in excess of 100%
have a negative impact on the company’s stock price.
• Whether you should consider increasing your company’s dividend. A steadily rising dividend helps
boost the company’s stock price; however, raising the dividend should be done only if you think
your company has sufficient internal cash flows.
The Credit Rating Measures. These three columns in this grouping reveal how each company stands on
the three financial measures determining each company’s credit rating:
1. The debt vs. equity percentage (or debt-to-equity ratio)—the debt percentage is the percentage of
total assets financed by all types of creditors and is calculated by dividing total liabilities by total
assets. The equity percentage is the percentage of total assets financed by shareholders and is
calculated by dividing total shareholders’ equity by total assets. Both total liabilities and total
shareholders’ equity are standard entries on every company’s balance sheet.
A company’s debt-to-equity ratio can also be calculated by dividing its total liabilities by total
shareholders’ equity. For example, if a company has total liabilities of $100 million and total
shareholders’ equity of $200 million, then its debt percentage is 0.5 (or 50%), which means that
total liabilities are half as big as total shareholders’ equity or, to put it a bit differently, the company’s
shareholders have contributed $2 to the financing of the company’s total assets for each $1
contributed by creditors/lenders.
A company’s debt-to-equity ratio is quite often expressed, not as a number or a percent, but as a
combination of the debt and equity percentages of total assets. The first number is always the debt
percentage and the second number is always the equity percentage—GLO-BUS uses the
combination of the respective debt/equity percentages approach. Thus, in the column where it
says Debt:Equity Percent, an entry of 33:67 signifies that the company's total assets are financed
by 33% debt and 67% shareholders' equity.
When the debt-to-equity ratio is expressed as a combination of the debt and equity percentages of
total assets, debt-to-equity percentages of 50:50 signal that a company’s total assets are being
financed equally by creditors and shareholders. As a general rule, the smaller the debt percentage
is below 50 and the bigger the equity percentage is above 50, the less risk to lenders that a
company will be unable to make interest and principal payments. Conversely, debt-to-equity
percentages of 75:25 would plainly pose a high risk to bank lenders, because of the borrower’s
financial burden in having to make large annual interest payments and big annual principal
payments on outstanding loans that could soak up a big fraction (perhaps even all or more) of cash
flows from operations. As a company’s debt percentages rise progressively above 50% of total
assets, creditors (most especially banks that have loaned the company money) generally consider

that that the company’s creditworthiness is becoming “increasingly risky” and that company
managers are relying too heavily on the use of debt and creditor financing to operate the
business.in a sound and secure financial manner. A company’s balance sheet is considered to
be “weaker” the higher the percentage of its total assets that is debt-financed. Conversely, a
company’s balance sheet is considered to be “stronger” the higher the percentage of its
total assets that is equity-financed.
Note: As a company’s debt percentage falls below 50 and its equity percentage rises above 50,
the debt-to-equity measure of the company’s creditworthiness helps strengthen its credit rating. As
a company’s debt percentage rises above 50 and its equity percentage falls below 50, the debt-to-
equity measure of its creditworthiness punishes its credit rating.
As a rule of thumb, it will take a debt percentage as low as 10%-15% to achieve an A+ credit rating
and a debt percentage of about 20%-25% to achieve an A- credit rating (assuming the company’s
interest coverage ratio and current ratio are also quite strong).
2. The interest coverage ratio—calculated by dividing a company’s operating profit by its annual
interest expenses, as shown on the company’s income statement)) is a measure of the safety
margin that creditors have in assuring that company profits from operations are sufficiently high to
cover annual interest payments. An interest coverage ratio 2.0 is considered “rock-bottom
minimum” by credit analysts. An interest coverage ratio of 5.0 to 10.0 times annual interest
expenses is considered much more satisfactory for companies operating in the markets for action
cameras and UAV drones because (1) unexpectedly intense competitive pressures can produce
sudden downturns in a company’s operating profits and thus its ability to cover annual interest
expenses, and (2) company managers have limited experience and their ability to guide the
company successfully through tough market and competitive conditions is relatively unproven.
3. The current ratio—calculated by dividing current assets by current liabilities. A company’s current
ratio is a measure of its liquidity and ability to generate sufficient cash to pay its current liabilities as
they become due. In the eyes of creditors, a current ratio of 2.0 is often considered “bare minimum”
to avoid concerns about a company’s short-term liquidity. Creditors consider that a company
becomes more creditworthy the further its current ratio is above 2.0.
The debt:equity percentages and the interest coverage ratio are the two most important credit rating
measures. Weakness on either one may be sufficient to knock a company’s credit rating down a notch (or
come close to doing so). Weakness on both measures risks a credit rating downgrade to B or lower. If any of
the credit rating measures for your company are weak relative to rivals or the industry averages, then you and
you co-managers need to take prompt action to improve your company’s three credit rating ratios.
The Profitability Ratios. The three columns of profit margin ratios (gross profit margin, operating profit
margin, and net profit margin) enable you to compare how well your company’s profit margins compare against
both rival companies and the industry averages.
• A company’s gross profit is equal to “net sales revenues” minus “cost of goods sold,” where cost of
goods sold is the sum of total production/assembly costs for both action cameras and UAV drones.
Gross profit, therefore, represents that portion of revenues left over after all costs associated with
materials and assembly for cameras and drones have been covered. The gross profit margin
(defined as gross profit as a percentage of net sales revenues) represents the percentage of net
sales revenues available to cover operating expenses (delivery costs, marketing costs, and
administrative expenses) and yield an operating profit.
• A higher operating profit margin (defined as operating profits as a percentage of revenue) is a sign
of competitive strength and cost competitiveness. The bigger the percentage of operating profit to
net sales revenues, the bigger the margin for covering interest payments and income taxes and
moving dollars to the bottom-line. Companies with the highest operating profit margins typically

have the highest net profit margins (unless their interest expenses are quite high due to abnormally
high debt and/or interest rates on their loans).
Companies whose operating profit margin are smaller than the industry average are well-advised to
pursue actions to boost their operating profit margins. Such actions usually must involve becoming
more cost efficient and/or increasing unit sales and market share.
• The bigger a company’s net profit margin (its ratio of net profits to net revenues), the better the
company’s profitability in the sense that a bigger percentage of the dollars it collects from
camera/drone sales flow to the bottom-line. The net profit margin is sometimes called “return on
sales” because it represents the percentage of revenues that end up as net profits. However, it
does not follow that a company with the highest net profit margin in the industry necessarily earns
the highest total dollars of net profit in the industry; this is because a company with a somewhat
smaller net profit margin can out-earn a company with a higher net profit margin if the smaller
margin company secures a sufficiently bigger global sales volume and market share of cameras
and/or drones.
Nonetheless, when a company’s net profit margin is below the industry average, its management
team is well-advised to pursue actions to boost the company’s net profit margin.
Capital Outlays. It is always useful to quickly scan the column of data relating to the capital outlays of
companies in the industry to see which companies are spending most heavily to either expand their capacity to
assemble more cameras/drones or possibly to undertake robotic upgrades (in order to lower assembly costs?).
Shares of Common Stock Outstanding. The data on shares of stock for each company is useful for
tracking which companies have issued new shares of stock (which has a dilutive effect on earnings per share,
but which may be “necessary” to raise equity capital to expand assembly capacity, pay down debt, and protect
their credit ratings) and which ones have repurchased shares (usually to boost earnings per share and their
stock price, both of which are important factors in scoring company performance).

Action-Capture Camera Benchmarks

Page 6 of the Camera & Camera Journal
This page contains extremely valuable information about (1) how your company’s costs for camera
components and features, R&D, workforce costs and productivity, total production and assembly costs, and
camera assembly capacity stack up against the industry-low, industry-average, and industry-high and (2) how
your company’s marketing costs, operating profits per camera sold, and operating profit margin, warranty claim
rate, and warranty costs compare against the industry-low, industry-average, and industry-high in each of the
four geographic regions.
STRONG RECOMMENDATION: The information on this page is absolutely essential for

determining whether your company’s camera costs are “in line” and competitive with those of
rivals and whether your company’s profitability per camera sold in each region matches up well
with that of rival companies. Your company’s management team is strongly urged to examine
this information after each and every decision round to determine if your company needs to
take immediate action to improve your company’s standing against the industry-low, industry-
average, and industry-high benchmarks.
Your company’s overall performance suffers if/when your company’s numbers compare
unfavorably against the industry benchmarks.
The Assembly and Production Benchmark Data

The number shown in the “low” column always represents the lowest value among all companies in the
industry; the number in the “high” column always represents the highest value among all companies in the
industry. The fourth column on the far right showing the corresponding number for your company allows you to
determine how your company stands (but protects the competitive sensitivity of this information since the
names of the industry high and low companies are not revealed). You can use the numbers in these four
columns to gauge your company’s competitiveness on each of the categories on the page.
The Costs of Camera Components and Features. Here you need to determine whether your
company’s costs for camera component and features are “in line” with the costs of rivals. For example: How
did your company’s action cameras stack up this past year with respect to the cost of the image sensor
component? The cost of the LCD-screen display? The cost of the image quality component? The cost of
camera housing? The cost of included accessories? And so on for each component/feature and for the “Total
Cost of Camera Components and Features.”
If your company’s P/Q rating for action cameras is below the industry average P/Q rating, then your company’s
costs for each of the various camera components/features should typically be below the industry average
number, and definitely be below the industry average number for “Total Cost of Camera Components and
Features.”
It is imperative to have below-average total costs for camera components/features if your company’s
strategy is to compete on the low-end of the action camera market and attract buyers on the basis of
lower prices than rivals.
If your company’s P/Q rating for action cameras is the lowest in the industry, then your company’s costs for
each of the various components should definitely be at or near the industry-low number for each component,
and, ideally, should equal the industry-low number for “Total Cost of Camera Components and
Features.” If not, then action should be taken to reduce your company’s total cost for components/features in
the upcoming decision round.

If your company’s P/Q rating for action cameras is the highest in the industry, then your company’s costs for
each of the various components might understandably be near or at the industry-high number for each
component, and might well be the industry-high number for “Total Cost of Camera Components and Features,”
especially if your company’s P/Q rating for cameras is meaningfully above the next-highest P/Q rating. So
while there is no reason to panic, there’s still plenty of reason to try to be more cost-efficient in achieving the
industry-high P/Q rating. Should your company have a “Total Cost of Camera Components and Features” that
is below the industry-high number, then so much the better because your company probably has a
component/features-based cost advantage versus one or more rivals with a slightly lower P/Q rating for
cameras as compared to your company’s industry-high P/Q rating.
R&D Expenditures. The two benchmarks for R&D expenditures provide a basis for deciding whether your
company should consider increasing its R&D expenditures. Companies to the high side of the industry
averages may want to further exploit their R&D-based competitive advantage over rivals by increasing their
annual expenditures for R&D to even higher levels.
The benefits of R&D expenditures are subject to diminishing marginal returns.
Falling too far behind the industry-average for cumulative R&D expenditures (and rivals with R&D
expenditures well above the cumulative industry average) risks being saddled with a R&D-based
competitive disadvantage.
Workforce Statistics. The workforce benchmark for total compensation provides a basis for judging
whether your company needs to consider increasing/decreasing one or more components of workforce
compensation for the members of camera PATs.
If your company’s PAT productivity (number of cameras a PAT assembles per year) is below the industry
average and perhaps alarmingly below the industry high, then management needs to consider whether it would
be cost-effective to spend more on best practices training and productivity improvement and/or to increase one
or more components of total compensation for camera PAT members.
If your company’s labor costs per camera assembled are much above the industry average, you can be fairly
confident that your company is doing a relatively poor job of managing its camera assembly operations and
that attention needs to be given to making adjustments in whatever factors are deemed responsible for your
company’s high labor costs per camera assembled. Such adjustments might involve increasing/decreasing
expenditures for best practices training and productivity improvement and/or increasing/decreasing one or
more components of total compensation and/or increasing/reducing the use of overtime assembly.
All companies have equal opportunity to match the labor costs achieved by the company whose labor
cost per camera assembled matches the industry-low number. And the company with the industry-low
number may have further opportunity to drive down its labor costs per camera assembled.
The best test of whether a company is doing a good job managing its camera assembly workforce is
whether it achieves the lowest cost per camera assembled in the industry. Paying workers the highest
compensation in the industry or having the highest productivity merits little or no applause unless it
results in achieving the lowest labor costs per camera assembled.
Total Camera Production/Assembly Cost. The company with the lowest total camera production
(assembly) cost is the industry’s lowest-cost producer and assembler of action cameras. Usually such
companies have low camera P/Q ratings (quite possibly the lowest in the industry).
The company with the highest total camera production/assembly cost is the industry’s highest-cost producer
and assembler of action cameras—not a particularly enviable position to occupy (unless maybe the company
has the highest P/Q rating in the industry and its costs are not “alarmingly higher” than the industry average
cost—a condition that would likely jeopardize its ability to compete successfully and earn acceptable profits).

Companies that have a total cost per unit meaningfully below the industry average and also have a camera
P/Q rating close to the industry average have done a cost-efficient job of managing their production/assembly
operations. Companies that have a total cost per unit that is $10 or more below the industry average and also
have a camera P/Q rating above the industry average by .2 or more have likewise done a reasonably cost-
efficient job of managing their camera production/assembly operations. Companies that have a total cost per
unit close to the industry-low and also have a camera P/Q rating that is meaningfully above the company with
the lowest camera P/Q rating in the industry can also be considered as having cost-efficient camera
production/assembly operations.
Your task here is to determine if the cost benchmarks indicate your management team has a
sufficiently cost-efficient camera manufacturing operation that can compete on a cost-effective basis
vis-a-vis rival companies or whether cost-reducing actions need to be implemented in the upcoming
decision round.
Assembly Facility. The benchmarking data in this grouping enable you to judge how the size of your
company’s camera facility and the associated capacity to assemble cameras compare against the industry-low,
the industry-average, and the industry-high.
While every company begins the GLO-BUS exercise with equal-sized manufacturing capabilities, the distance
between the companies with the smallest and largest camera assembly capability often becomes sizable as
the decision rounds unfold.
It is your call as to how big you want your company’s camera business to be or become. However, the
crucial thing is not so much how big your company’s camera business is or becomes but whether your
company’s camera market share and camera profits are sufficiently large to make an adequate-to-good
contribution to achieving the investor-expected performance targets.
The Geographic Operating Benchmark Data

The six industry benchmarks for each geographic region (delivery costs per camera sold, marketing costs per
camera sold, operating profit per camera sold, operating profit margin per camera sold, warranty claim rates,
and warranty repair costs) are intended to provide useful guidance about your company’s cost competitiveness
and camera profitability versus rivals. But, even more importantly, their purpose is to point to specific areas
where you may be able to improve or further enhance the performance of your company’s camera business.
Because the 6 benchmarks are the same for each region, separate discussions of how to make the best use of
the benchmarks for each region are unnecessary—one will suffice. But where your company stands on each of
the 6 benchmarks is likely to be materially different for each region.
Delivery Costs per Camera Sold. Benchmarking your company’s delivery costs per camera sold against
the industry-low, industry-average, and industry-high is a means of judging whether your company possibly
has a cost-based competitive advantage/disadvantage versus rivals based on shipping costs and tariffs paid in
each of the four geographic regions. Companies below the industry-average are obviously spending less per
camera sold for shipping costs and tariffs paid in a given region than companies above the industry average.
However, you should be alert to the fact that there are occasions when above-average delivery costs per
camera sold may be “OK” or a “normal” consequence of the strategy being employed. This is because tariffs
are based on price of the camera —a company’s costs for tariffs paid per camera sold may be “legitimately”
higher than the regional average if it is selling a camera with a higher-than-average P/Q rating and thus
incurring higher-than-average costs to produce the higher-rated cameras (and thus is also charging a higher-
than-average regional price to sell its cameras in a particular geographic region). Likewise, a company’s tariff
costs per camera sold should normally be lower-than-average if it is selling a camera with a lower-than

average P/Q rating and thus incurring lower-than-average costs to produce the lower-rated cameras (and thus
is also charging a lower-than-average price to sell its cameras in a particular region).
Marketing Costs per Camera Sold. Benchmarking your company’s marketing costs per camera sold
against the industry-low, industry-average, and industry-high is a means of judging whether your company
possibly has a cost-based competitive advantage/disadvantage versus rivals based on marketing
expenditures. Companies below the industry-average are obviously spending less per camera sold on all the
various marketing efforts than companies above the industry average. However, you have to be careful in
drawing conclusions about what this means exactly.
There are occasions when above-average marketing costs per camera sold may be “OK” or a “normal”
consequence of the strategy being employed. For instance, you and your co-managers should expect that
your company’s marketing costs per camera sold will be above the industry-average when:
1. Your company is pursuing a differentiation strategy that calls for spending more on various
marketing activities to help set your action cameras apart from the action cameras of rival
companies in ways that enhance buyer appeal and enthusiasm for your brand of action cameras.
2. Unit sales of your cameras are “low” relative to those of rival brands (because your company is
pursuing a premium quality/premium price strategy to sell action cameras that have better
performance and quality than the models rivals are offering)—such strategies typically result in
selling a smaller number of cameras compared to the sales volumes achieved by cheaper-priced
cameras. As a consequence, the “extra” marketing expenditures result in higher than average
marketing costs per camera sold.
Furthermore, a company’s marketing expenditures per camera sold may be below the industry-average (1)
because a company is “underspending” or marketing—which is not-so-good or (2) it may signal its marketing
efforts are more cost-efficient than rivals because its marketing strategy is producing a high volume of camera
sales and thus spreading its total marketing expenditures over a bigger number of camera sales—which
translates into a marketing-based competitive advantage.
It is easy to determine whether reason (1) or reason (2) above accounts for your company’s standing against
the industry-average benchmark because your company’s camera marketing expenditures and sales volumes
in each region are reported in the section of the Competitive Intelligence Report pertaining to “Comparative
Competitive Efforts of Rival Companies.” And you can use the information in this section of the CIR to make
judgments about whether some rival companies are underspending or overspending on marketing.
Some things to consider:

• Is it “better” for a company’s marketing costs per camera sold to be below the industry-average
benchmark (perhaps at or close to the industry-low benchmark) or is it “better” for a company’s
marketing costs per camera sold to be above the industry-average benchmark (perhaps at or close
to the industry-high benchmark)?
From a purely cost standpoint, it is “best” to have marketing costs per camera sold that are below
the industry-average benchmark. But this can easily be achieved by spending comparatively small
amounts on marketing, which is likely to put the company at a competitive disadvantage versus
rivals in attracting buyers to purchase its brand of cameras. Such underspending on marketing is
not a competitive plus that will lead to above-average profitability!
While marketing costs per camera sold that are above the industry-average are plainly
disadvantageous from a cost perspective, what if the result is a marketing-based competitive
advantage versus rivals that boosts a company’s brand appeal to buyers and leads to higher
regional sales, market share, and profitability? Then such “high” levels of marketing expenditures
per camera sold turn out to be a competitive and profitable plus.

What if a company has marketing costs per camera sold well above the industry-average
benchmark that are the product of “overly-aggressive” marketing to outspends most every other
rival? Is it possible for a company to overspend on marketing efforts and unwittingly reduce
profitability? The answer is, yes.
• A company’s management team whose marketing cost per camera sold is below the industry-
average and perhaps close to or at the industry-low needs to ask itself two questions:
Is our marketing cost per camera sold so low because we are spending too little on marketing
efforts relative to rival companies?
Is our marketing cost per camera sold low because our camera brand offering in the region had so
much higher overall buyer appeal than rivals that our company sold a lot more cameras, thus
driving marketing costs per camera sold below the industry-average benchmark? A “yes” answer to
this question signals that the company’s marketing expenditures were very cost-effective; a “no” or
“probably not” answer signals a probable need to increase and/or reallocate the company’s
marketing expenditures to produce better outcomes.
• A company whose marketing cost per camera sold is above the industry-average and certainly
close to or at the industry-high needs to evaluate whether its marketing expenditures are as cost-
effective and profit-enhancing as they need to be.
The marketing goal should not be to simply outspend rivals (by perhaps an overwhelming amount),
but rather to spend enough to capture an attractively profitable sales volume and market share at
the lowest feasible marketing cost per camera sold –which might turn out to be above the industry-
average benchmark but which, more ideally, ends up being below the industry-average benchmark.
Bear in mind: Just as a company can under-spend on marketing, it can also overspend and waste
money, thus cutting unnecessarily into operating profit margins and overall profitability in the region.
• On the other hand, it makes perfectly good business sense for a company to try to gain a
marketing-based competitive advantage over rivals that boosts its sales volume and profitability;
such efforts might well result in spending amounts on the various marketing efforts that cause a
company’s marketing costs per camera sold to be above the industry average. But for such efforts
to be cost-effective and profit-enhancing (rather than wasteful) company managers must be careful
to allocate monies to the various types of marketing efforts in ways that produce big enough sales
gains to boost profitability (rather than erode it).
The test of whether spending for various types of marketing expenditures are cost effective and
competitively wise hinges on whether they result in sufficiently greater sales, market share, and
profitability to make the extra marketing expenditures worthwhile from a profit-boosting perspective.
Your task here is to assess your company’s standing compared to the marketing cost per camera sold
benchmark in each geographic region and determine what if any corrective actions regarding camera
marketing expenditures are needed in the upcoming decision round.
Operating Profit per Camera Sold. Your company’s operating profit per camera sold in each region
merits careful scrutiny as to how your company stands region-by-region against the industry-low, industry-
average, and industry-high. However, to fully understand your company’s position vis-a-vis the benchmarks,
you also need have a printout of page 2 of your Company’s Operating Reports in front of you—the top section
of page 2 shows the performance of your company’s camera business region-by-region as concerns revenues,
camera costs, operating profit per camera, total operating profit, and operating profit margin.
Anytime a company has negative operating profits per camera sold in a given geographic region, then decisive
actions to correct this condition are called for in the upcoming year. It goes without saying that you and your
co-managers should make every effort to avoid losing money on each camera sold in any region. Actions to
boost profitability in a given geographic region are also called for if operating profit per camera is either barely

positive (say less than $3) or far below the operating profit per unit sold being achieved by many/most rival
companies.
A company pursuing a low-cost/low-price strategy is likely to have an operating profit per camera that is below
the industry-average (maybe even close to the industry-low). But the strategy of such companies, if they are to
earn acceptable camera profits (or, better still, appealingly high total camera profits) in a region must be to
capture a sufficiently large sales volume/market share in the region so that its operating profit per camera
times the number of cameras sold produces an adequate/appealing total operating profit.
On the other hand, a company that produces/markets a high-end, premium-priced camera should have an
operating profit per camera sold that is above the industry-average and, preferably, close to the industry-high.
Why? Because its sales volume/market share is likely to be below the regional-average owing to the premium
price of its cameras. Thus, it takes a high operating profit per camera sold to end up with an appealingly high
total operating profit—and thereby help meet or beat the investor-expected EPS targets.
As a general rule, companies selling cameras with above-average P/Q ratings at above-average prices should
have above-average operating profits per camera sold, in order to realize acceptable or better total operating
profits on their camera sales in each region. When this is not the case, management should investigate
whether (1) their company’s overall costs per camera sold are “too high” relative to rivals marketing cameras of
comparable price and performance/quality or (2) their cameras are “underpriced,” thus putting a squeeze on
the operating profit per camera sold. Corrective actions then need to be pursued in the upcoming decision
round.
A company whose operating profit margin equals the industry-high in a region, can take great satisfaction only
if it considers the resulting total operating profit in the region (as reported in the top section of page 2 of its
Company Operating Reports) is satisfactory or better.
Very likely, there will be sizable differences in your company’s operating profit per camera sold across the four
regions. In the region or regions where operating profit per camera sold is low, you need to consider actions to
boost the operating profit per camera to a number close to (or even above) the number in the region(s) where
operating profit per camera sold in higher. It makes little sense to turn a blind eye to the fact that in the just-
completed decision round your company sold cameras in one region and realized an operating profit per
camera of $5 while in another region your company’s operating profit per camera was $20. Big region-to-
region differences in operating profit per camera sold are “giant red flags” signaling corrective actions
are needed. Doesn’t it make more business sense to adjust your company’s marketing efforts and
product offering such that projected operating profits per camera sold across the four regions in the
upcoming decision round are roughly equal to (or, better still, above) the highest regional operating
profit per camera number your company earned in the prior decision round?
Actions to boost operating profit per camera sold in a given geographic region are also usually called for
whenever your company’s operating profit per camera sold is either barely positive (say less than $5) or
meaningfully below the operating profit per camera sold being achieved by many/most rival companies.
Operating Profit Margin (in %) per Camera Sold. The operating profit margin benchmarks provide
another measure for evaluating how well your company’s profitability in the action camera market segment
compares against rivals’ profitability in each of the four geographic regions. Operating profit margin can be
calculated either of two ways: (1) total operating profit divided by net revenues and (2) operating profit per
camera sold divided by net revenue per camera sold. As with the operating profit per camera sold
benchmarks, to fully understand your company’s position versus the operating profit margin benchmarks, you
need have a copy of page 2 of your Company’s Operating Reports in front of you—the top section of page 2
shows the performance of your company’s camera business region-by-region as concerns revenues, camera
costs, operating profit per camera, total operating profit, and overall operating profit margin. Observe here that
your company’s operating profit margin in each region is shown on the last line of the “Revenue-Cost-Profit
Breakdown” section at the top of page 2.

If your company’s operating profit margins are at or near the industry-low in a region, then corrective actions
are very likely needed—unless sales volume/market share in the region is sufficiently high to produce “OK” or
better total operating profits. But even then, it makes sense to consider actions to boost subpar operating
profit margins closer to the industry average (without greatly impairing sales volume) and achieve even better
total profitability.
As was the case with operating profit per camera sold, you will likely find that your company has meaningfully
different operating profit margins for cameras in the four regions. In the region or regions where camera
operating profit margins are low, you need to consider actions to boost the operating profit margin to a
percentage close to (or even above) the percentage in the region(s) where the operating profit margin is
highest.
It makes little business sense for your company’s management team to be satisfied with results in the just-
completed decision round indicating your company’s camera sales in one region resulted in an operating profit
margin of 15% while in another region your company’s operating profit margin was 6%. Doesn’t it make more
business sense to adjust your company’s marketing efforts and product offering in the upcoming
decision round to produce projected operating profit margins across the four regions that are roughly
equal (and are also at or above the highest percentage margin your company earned in the prior
decision round)?
Actions to boost the camera operating profit margin in a given geographic region are usually appropriate
whenever your company’s percentage margin is under, say, 5% or else meaningfully below the industry-
average operating profit margins by many/most rival companies. Operating profit margins above the industry-
average and/or very close to the industry-high are normally highly positive, unless accompanied by subpar
sales volumes/market shares that result in total operating profits too small to help drive good overall company
performance.
Warranty-Related Benchmarks. The two warranty-related benchmarks—the warranty claim rate and
warranty repair cost per camera sold—enable you to make judgments about whether the length of your
company’s warranty period in each region might need to increased/decreased and how the resulting warranty-
related costs for cameras in compare against the industry-low, industry-average, and industry-high.
Plainly, both the warranty claim rate and the warranty cost per camera sold are largely governed by (1) the
length of the warranty period (warranty claims and costs will be higher for a 1-year warranty than a 60-day
warranty) and (2) camera P/Q ratings (claims tend to be higher for cameras with 2-star P/Q ratings than with 7-
star P/Q ratings). So when you look at how your company stands versus the industry-low, industry-average,
and industry-high, you have to remember that the length of the each company’s warranty period and P/Q rating
for cameras impacts how each company compares against the industry benchmarks for both the warranty
claim rate and warranty repair costs per camera sold.
However, the information in the CIR relating to the Comparative Competitive Efforts of Rival Companies
provides you with complete details on each rival company’s camera warranty period and P/Q rating in each
geographic region. So you are armed with the data to draw your own conclusions about whether your
company’s warranty claim rates and warranty costs in each geographic region compare favorably or
unfavorably against the industry-low, industry-average, and industry-high benchmarks and to then take
whatever corrective actions you deem appropriate.

UAV Drone Benchmarks

This page contains extremely valuable information about (1) how your company’s costs for drone components
and features, R&D, workforce costs and productivity, total production and assembly costs, and drone assembly
capacity stack up against the industry-low, industry-average, and industry-high and (2) how your company’s
marketing costs, operating profits per drone sold, and operating profit margin, warranty claim rate, and
warranty costs compare against the industry-low, industry-average, and industry-high in each of the four
geographic regions.
The information on this page is essential for determining whether your company’s drone costs are “in
line” and competitive with those of rivals and whether your company’s profitability per drone sold in
each region matches up well with that of rival companies. Your company’s management team is
strongly urged to examine this information after each decision round to determine if your company
needs to take immediate action to improve your company’s standing against the industry-low,
industry-average, and industry-high benchmarks.
The Assembly and Production Benchmark Data

The number shown in the “low” column always represents the lowest value among all companies in the
industry; the number in the “high” column always represents the highest value among all companies in the
industry. The fourth column on the far right showing the corresponding number for your company allows you to
determine how your company stands (but protects the competitive sensitivity of this information since the
names of the industry high and low companies are not revealed). You can use the numbers in these four
columns to gauge your company’s competitiveness on each of the categories on the page.
The Costs of Drone Components and Features. Here you need to determine whether your company’s
costs for drone component and features are “in line” with the costs of rivals. For example: How did your
company’s drones stack up this past year with respect to the cost of the built-in drone component? The cost of
the GPS/WiFi/GPS components? The cost of the battery pack component? The cost of obstacle sensors?
The cost of extra performance features? And so on for each component/feature and for the “Total Cost of
Drone Components and Features.”
If your company’s P/Q rating for UAV drones is below the industry average P/Q rating, then your company’s
costs for each of the various drone components/features should typically be below the industry average
number, and definitely be below the industry average number for “Total Cost of Drone Components and
Features.”
It is imperative to have below-average total costs for drone components/features if your company’s
strategy is to compete on the low-end of the UAV drone market and attract buyers on the basis of
lower prices than rivals.
If your company’s P/Q rating for UAV drones is the lowest in the industry, then your company’s costs for
each of the various components should definitely be at or near the industry-low number for each component,
and, ideally, should equal the industry-low number for “Total Cost of Drone Components and Features.”
If not, then action should be taken to reduce your company’s total cost for components/features in the
upcoming decision round.
If your company’s P/Q rating for UAV drones is the highest in the industry, then your company’s costs for
each of the various components might understandably be near or at the industry-high number for each
component, and might well be the industry-high number for “Total Cost of Drone Components and Features,”
especially if your company’s P/Q rating for drones is meaningfully above the next-highest P/Q rating. So while
there is no reason to panic, there’s still plenty of reason to try to be more cost-efficient in achieving the

industry-high P/Q rating. Should your company have a “Total Cost of Drone Components and Features” that is
below the industry-high number, then so much the better because your company probably has a
component/features-based cost advantage versus one or more rivals with a slightly lower P/Q rating for drones
as compared to your company’s industry-high P/Q rating.
R&D Expenditures. The two benchmarks for R&D expenditures provide a basis for deciding whether your
company should consider increasing its R&D expenditures. Companies to the high side of the industry
averages may want to further exploit their R&D-based competitive advantage over rivals by increasing their
annual expenditures for R&D to even higher levels.
The benefits of R&D expenditures are subject to diminishing marginal returns.
Falling too far behind the industry-average for cumulative R&D expenditures (and rivals with R&D
expenditures well above the cumulative industry average) risks being saddled with a R&D-based
Workforce Statistics. The workforce benchmark for total compensation provides a basis for judging
whether your company needs to consider increasing/decreasing one or more components of workforce
compensation for the members of drone PATs.
If your company’s PAT productivity (number of drones a PAT assembles per year) is below the industry
average and perhaps alarmingly below the industry high, then management needs to consider whether it would
be cost-effective to spend more on best practices training and productivity improvement and/or to increase one
or more components of total compensation for drone PAT members.
If your company’s labor costs per drone assembled are much above the industry low, you can be fairly
confident that your company is doing a relatively poor job of managing its drone assembly operations and that
attention needs to be given to making adjustments in whatever factors are deemed responsible for your
company’s high labor costs per drone assembled. Such adjustments might involve increasing/decreasing
expenditures for best practices training and productivity improvement and/or increasing/decreasing one or
more components of total compensation and/or increasing/reducing the use of overtime assembly.
All companies have equal opportunity to match the labor costs achieved by the company whose labor
cost per drone assembled matches the industry-low number. And the company with the industry-low
number may have further opportunity to drive down its labor costs per drone assembled.
The best test of whether a company is doing a good job managing its drone assembly workforce is
whether it achieves the lowest cost per drone assembled in the industry. Paying workers the highest
compensation in the industry or having the highest productivity merits little or no applause unless it
results in achieving the lowest labor costs per drone assembled.
Total Drone Production/Assembly Cost. The company with the lowest total drone production/assembly
cost is the industry’s lowest-cost producer and assembler of UAV drones. Usually such companies have low
drone P/Q ratings (quite possibly the lowest in the industry).
The company with the highest total drone production/assembly cost is the industry’s highest-cost producer and
assembler of UAV drones—not a particularly enviable position to occupy (unless maybe the company has the
highest P/Q rating in the industry and its costs are not “alarmingly higher” than the industry average cost—a
condition that would likely jeopardize its ability to compete successfully and earn acceptable profits).
Companies that have a total cost per unit meaningfully below the industry average and also have a drone P/Q
rating close to the industry average have done a cost-efficient job of managing their production/assembly
operations. Companies that have a total cost per unit that is $10 or more below the industry average and also
have a drone P/Q rating above the industry average by .2 or more have likewise done a reasonably cost-

efficient job of managing their drone production/assembly operations. Companies that have a total cost per
unit close to the industry-low and also have a drone P/Q rating that is meaningfully above the company with
the lowest drone P/Q rating in the industry can also be considered as having cost-efficient drone
production/assembly operations.
Your task here is to determine if the cost benchmarks indicate your management team has a
sufficiently cost-efficient drone manufacturing operation that can compete on a cost-effective basis
vis-a-vis rival companies or whether cost-reducing actions need to be implemented in the upcoming
decision round.
Assembly Facility. The benchmarking data in this grouping enable you to judge how the size of your
company’s drone facility and the associated capacity to assemble drones compare against the industry-low,
the industry-average, and the industry-high.
While every company begins the GLO-BUS exercise with equal-sized manufacturing capabilities, the distance
between the companies with the smallest and largest drone assembly capability often becomes sizable as the
decision rounds unfold.
It is your call as to how big you want your company’s drone business to be or become. However, the
crucial thing is not so much how big your company’s drone business is or becomes but whether your
company’s drone market share and drone profits are sufficiently large to make an adequate-to-good
contribution to achieving the investor-expected performance targets.
The Geographic Operating Benchmark Data

The six industry benchmarks for each geographic region (delivery costs per drone sold, marketing costs per
drone sold, operating profit per drone sold, operating profit margin per drone sold, warranty claim rates, and
warranty repair costs) are intended to provide useful guidance about your company’s cost competitiveness and
drone profitability versus rivals. But, even more importantly, their purpose is to point to specific areas where
you may be able to improve or further enhance the performance of your company’s drone business.
Because the 6 benchmarks are the same for each region, separate discussions of how to make the best use of
the benchmarks for each region are unnecessary—one will suffice. But where your company stands on each
of the 6 benchmarks is likely to be materially different for each region.
Delivery Costs per Drone Sold. Benchmarking your company’s delivery costs per drone sold against the
industry-low, industry-average, and industry-high is a means of judging whether your company possibly has a
cost-based competitive advantage/disadvantage versus rivals based on shipping costs and tariffs paid in each
of the four geographic regions. Companies below the industry-average are obviously spending less per drone
sold for shipping costs and tariffs paid in a given region than companies above the industry average.
However, be aware that there are occasions when above-average delivery costs per drone sold may be “OK”
or a “normal” consequence of the strategy being employed. This is because tariffs are based on price of the
drone—a company’s costs for tariffs paid per drone sold may be “legitimately” higher-than-average if it is
selling a drone with a higher-than-average P/Q rating and thus incurring higher-than-average costs to produce
the higher-rated drones (and thus is also charging a higher-than-average price to sell its drones). Likewise, a
company’s tariff costs per drone sold should normally be lower-than-average if it is selling a drone with a lower-
than average P/Q rating and thus incurring lower-than-average costs to produce the lower-rated drones (and
thus is also charging a lower-than-average price to sell its drones).
Marketing Costs per Drone Sold. Benchmarking your company’s marketing costs per drone sold against
the industry-low, industry-average, and industry-high is a means of judging whether your company possibly
has a cost-based competitive advantage/disadvantage versus rivals based on marketing expenditures.

Companies below the industry-average are obviously spending less per drone sold on all the various marketing
efforts than companies above the industry average. However, you must be careful in drawing conclusions
about what this means exactly.
There are occasions when above-average marketing costs per drone sold may be “OK” or a “normal”
consequence of the strategy being employed. For instance, you and your co-managers should expect that
your company’s marketing costs per drone sold will be above the industry-average when:
1. Your company is pursuing a differentiation strategy that calls for spending more on various
marketing activities to help set your UAV drones apart from the UAV drones of rival companies in
ways that enhance buyer appeal and enthusiasm for your brand of UAV drones.
2. Unit sales of your drones are “low” relative to those of rival brands (because your company is
pursuing a premium quality/premium price strategy to sell UAV drones that have better performance
and quality than the models that rivals are offering)—such strategies typically result in selling a
smaller number of drones compared to the sales volumes achieved by cheaper-priced drones. As
a consequence, the “extra” marketing expenditures result in higher than average marketing costs
per drone sold.
Furthermore, a company’s marketing expenditures per drone sold may be below the industry-average (1)
because a company is “underspending” or marketing—which is not-so-good or (2) it may signal its marketing
efforts are more cost-efficient than rivals because its marketing strategy is producing a high volume of drone
sales and thus spreading its total marketing expenditures over a bigger number of drone sales—which
translates into a marketing-based competitive advantage.
It is easy to determine whether reason (1) or reason (2) above accounts for your company’s standing against
the industry-average benchmark because your company’s drone marketing expenditures and sales volumes in
each region are reported in the section of the Competitive Intelligence Report pertaining to “Comparative
Competitive Efforts of Rival Companies.” And you can use the information in this section of the CIR to make
judgments about whether some rival companies are underspending or overspending on marketing.
Some things to consider:

• Is it “better” for a company’s marketing costs per drone sold to be below the industry-average
benchmark (perhaps at or close to the industry-low benchmark) or is it “better” for a company’s
marketing costs per drone sold to be above the industry-average benchmark (perhaps at or close to
the industry-high benchmark)?
From a purely cost standpoint, it is “best” to have marketing costs per drone sold that are below the
industry-average benchmark. But this can easily be achieved by spending comparatively small
amounts on marketing, which is likely to put the company at a competitive disadvantage versus
rivals in attracting buyers to purchase its brand of drones. Such underspending on marketing is not
a competitive plus that will lead to above-average profitability!
While marketing costs per drone sold that are above the industry-average are plainly
disadvantageous from a cost perspective, what if the result is a marketing-based competitive
advantage versus rivals that boosts a company’s brand appeal to buyers and leads to higher
regional sales, market share, and profitability? Then such “high” levels of marketing expenditures
per drone sold turn out to be a competitive and profitable plus.
What if a company has marketing costs per drone sold well above the industry-average benchmark
that are the product of “overly-aggressive” marketing to outspends most every other rival? Is it
possible for a company to overspend on marketing efforts and unwittingly reduce profitability? The
answer is, yes.
• A company’s management team whose marketing cost per drone sold is below the industry-
average and perhaps close to or at the industry-low needs to ask itself two questions:

Is our marketing cost per drone sold so low because we are spending too little on marketing efforts
relative to rival companies?
Is our marketing cost per drone sold low because our drone brand offering in the region had so
much higher overall buyer appeal than rivals that our company sold a lot more drones, thus driving
marketing costs per drone sold below the industry-average benchmark? A “yes” answer to this
question signals that the company’s marketing expenditures were very cost-effective; a “no” or
“probably not” answer signals a probable need to increase and/or reallocate the company’s
marketing expenditures to produce better outcomes.
• A company whose marketing cost per drone sold is above the industry-average and certainly close
to or at the industry-high needs to evaluate whether its marketing expenditures are as cost-effective
and profit-enhancing as they need to be.
The marketing goal should not be to simply outspend rivals (by perhaps an overwhelming amount),
but rather to spend enough to capture an attractively profitable sales volume and market share at
the lowest feasible marketing cost per drone sold –which might turn out to be above the industry-
average benchmark but which, more ideally, ends up being below the industry-average benchmark.
Bear in mind: Just as a company can under-spend on marketing, it can also overspend and waste
money, thus cutting unnecessarily into operating profit margins and overall profitability in the region.
• On the other hand, it makes perfectly good business sense for a company to try to gain a
marketing-based competitive advantage over rivals that boosts its sales volume and profitability;
such efforts might well result in spending amounts on the various marketing efforts that cause a
company’s marketing costs per drone sold to be above the industry average. But for such efforts to
be cost-effective and profit-enhancing (rather than wasteful) company managers must be careful to
allocate monies to the various types of marketing efforts in ways that produce big enough sales
gains to boost profitability (rather than erode it).
The test of whether spending for various types of marketing expenditures are cost effective and
competitively wise hinges on whether they result in sufficiently greater sales, market share, and
profitability to make the extra marketing expenditures worthwhile from a profit-boosting perspective.
Your task here is to assess your company’s standing compared to the marketing cost per drone sold
benchmark in each geographic region and determine what if any corrective actions regarding drone
marketing expenditures are needed in the upcoming decision round.
Operating Profit per Drone Sold. Your company’s operating profit per drone sold in each region merits
careful scrutiny as to how your company stands region-by-region against the industry-low, industry-average,
and industry-high. However, to fully understand your company’s position vis-a-vis the benchmarks, you also
need have a printout of page 3 of your Company’s Operating Reports in front of you—the top section of page 3
shows the performance of your company’s drone business region- by-region as concerns revenues, drone
costs, operating profit per drone, total operating profit, and operating profit margin.
Anytime a company has negative operating profits per drone sold in a given geographic region, then decisive
actions to correct this condition are called for in the upcoming year. It goes without saying that you and your
co-managers should make every effort to avoid losing money on each drone sold in any region. Actions to
boost profitability in a given geographic region are also called for if operating profit per drone is either barely
positive (say less than $20) or far below the operating profit per unit sold being achieved by many/most rival
companies.
A company pursuing a low-cost/low-price strategy is likely to have an operating profit per drone that is below
the industry-average (maybe even close to the industry-low). But the strategy of such companies, if they are to
earn acceptable drone profits (or, better still, appealingly high total drone profits) in a region must be to capture

a sufficiently large sales volume/market share in the region so that its operating profit per drone times the
number of drones sold produces an adequate/appealing total operating profit.
On the other hand, a company that produces/markets a high-end, premium-priced drone should definitely have
an operating profit per drone sold that is above the industry-average and, preferably, close to the industry-high.
Why? Because its sales volume/market share is likely to be below the regional-average owing to the premium
price of its drones. Thus, it takes a high operating profit per drone sold to end up with an appealingly high total
operating profit—and thereby help meet or beat the investor-expected EPS targets.
As a general rule, companies selling drones with above-average P/Q ratings at above-average prices should
have above-average operating profits per drone sold, in order to realize acceptable or better total operating
profits on their drone sales in each region. When this is not the case, management should investigate whether
(1) their company’s overall costs per drone sold are “too high” relative to rivals marketing drones of comparable
price and performance/quality or (2) their drones are “underpriced,” thus putting a squeeze on the operating
profit per drone sold. Corrective actions then need to be pursued in the upcoming decision round.
A company whose operating profit margin equals the industry-high in a region, can take great satisfaction only
if it considers the resulting total operating profit in the region (as reported in the top section of page 2 of its
Company Operating Reports) is satisfactory or better.
Very likely, there will be sizable differences in your company’s operating profit per drone sold across the four
regions. In the region or regions where operating profit per drone sold is low, you need to consider actions to
boost the operating profit per drone to a number close to (or even above) the number in the region(s) where
operating profit per drone sold in higher. It makes little sense to turn a blind eye to the fact that in the just-
completed decision round your company sold drones in one region and realized an operating profit per drone
of $80 while in another region your company’s operating profit per drone was $35. Big region-to-region
differences in operating profit per drone sold are “giant red flags” signaling corrective actions are
needed. Doesn’t it make more business sense to adjust your company’s marketing efforts and product
offering in the upcoming decision round such that projected operating profits per drone sold across
the four regions are roughly equal to (or above) the highest regional operating profit per drone sold
your company earned in the prior decision round?
Actions to boost operating profit per drone sold in a given geographic region are also usually called for
whenever your company’s operating profit per drone sold is either barely positive (say less than $20) or
meaningfully below the operating profit per drone sold being achieved by many/most rival companies.
Operating Profit Margin (in %) per Drone Sold. The operating profit margin benchmarks provide
another measure for evaluating how well your company’s profitability in the UAV drone market segment
compares against rivals’ profitability in each of the four geographic regions. Operating profit margin can be
calculated either of two ways: (1) total operating profit divided by net revenues and (2) operating profit per
drone sold divided by net revenue per drone sold. As with the operating profit per drone sold benchmarks, to
fully understand your company’s position versus the operating profit margin benchmarks, you need have a
copy of page 3 of your Company’s Operating Reports in front of you—the top section of page 3 shows the
performance of your company’s drone business region-by-region as concerns revenues, drone costs,
operating profit per drone, total operating profit, and overall operating profit margin. Observe here that your
company’s operating profit margin in each region is shown on the last line of the “Revenue-Cost-Profit
Breakdown” section at the top of page 3.
If your company’s operating profit margins are at or near the industry-low in a region, then corrective actions
are very likely needed—unless sales volume/market share in the region is sufficiently high to produce “OK” or
better total operating profits. But even then, it makes sense to consider actions to boost subpar operating
profit margins closer to the industry average (without greatly impairing sales volume) and achieve even better
total profitability.

As was the case with operating profit per drone sold, you will likely find that your company has meaningfully
different operating profit margins for drones in the four regions. In the region or regions where drone operating
profit margins are low, you need to consider actions to boost the operating profit margin to a percentage close
to (or even above) the percentage in the region(s) where the operating profit margin is highest.
It makes little business sense for your company’s management team to be satisfied with results in the just-
completed decision round indicating your company’s drone sales in one region resulted in an operating profit
margin of 18% while in another region your company’s operating profit margin was 9%. Doesn’t it make more
business sense to adjust your company’s marketing efforts and product offering in the upcoming
decision round to produce projected operating profit margins across the four regions that are roughly
equal (and are also at or above the highest percentage margin your company earned in the prior
decision round)?
Actions to boost the drone operating profit margin in a given geographic region are usually appropriate
whenever your company’s percentage margin is under, say, 5% or else meaningfully below the industry-
average operating profit margins by many/most rival companies. Operating profit margins above the industry-
average and/or very close to the industry-high are normally highly positive, unless accompanied by subpar
sales volumes/market shares that result in total operating profits too small to help drive good overall company
performance.
Warranty-Related Benchmarks. The two warranty-related benchmarks—the warranty claim rate and
warranty repair cost per drone sold—enable you to make judgments about whether the length of your
company’s warranty period in each region might need to increased/decreased and how the resulting warranty-
related costs for drones in compare against the industry-low, industry-average, and industry-high.
Plainly, both the warranty claim rate and the warranty cost per drone sold are largely governed by (1) the
length of the warranty period (warranty claims and costs will be higher for a 1-year warranty than a 60-day
warranty) and (2) drone P/Q ratings (claims tend to be higher for drones with 2-star P/Q ratings than with 7-star
P/Q ratings). So when you look at how your company stands versus the industry-low, industry-average, and
industry-high, you have to remember that the length of the each company’s warranty period and P/Q rating for
drones impacts how each company compares against the industry benchmarks for both the warranty claim rate
and warranty repair costs per drone sold.
However, the information in the CIR relating to the Comparative Competitive Efforts of Rival Companies
provides you with complete details on each rival company’s drone warranty period and P/Q rating in each
geographic region. So, you are armed with the data to draw your own conclusions about the whether your
company’s warranty claim rates and warranty costs in each geographic region compare favorably or
unfavorably against the industry-low, industry-average, and industry-high benchmarks and to then take
whatever corrective actions you deem appropriate.

GLO-BUS CIR: Comparative Competitive Efforts of Rival Companies HELP
Competitive Intelligence Report

Comparative Competitive Efforts
Explanations — Suggestions and Tips
The role of this Help section is to coach you on how to properly analyze the competitive efforts data and
sales/market share outcomes. The goal is to quickly enable you to be a shrewd “power-user” of the
information in this report and equip you to properly identify and evaluate what specific changes in your
company’s competitive efforts in the upcoming year offer the best prospects for boosting your company’s
profitability and overall performance of the five scoring measures.
Important: Just assessing your company’s competitiveness in one region—like North America—is
never sufficient because the competitive efforts of rival companies vary from one region to another.
Hence, you have to look at how well your company’s competitive efforts compare against rivals,
competitive factor by competitive factor, in each of the four regions to learn what actions to consider to
improve your company’s profitability and performance scores in the upcoming year. If you will take
the time to read this Help section from top to bottom, you will discover it is easy to read the
story the numbers tell and then use this story to make wise, performance-enhancing
adjustments in your company’s competitive efforts in the upcoming decision round.
Trying to save yourself the time and trouble of carefully studying the contents of each year’s
Comparative Competitive Efforts report is destined to result in disastrous competitive and
performance outcomes for your company. Not paying attention to the data in this report means you
will be naively and blindly headed into a competitive battle against rival companies whose competitive
intent and competitive strength you know little to nothing about—the chances of your company being
competitively successful and achieving the investor-expected performance targets are slim to none.
Running a company in a competitively blind manner and hoping for good outcomes or depending on
luck are not sound approaches to managing a company, and they are definitely not a pathway to
achieving good company performance.
Use the links below to quickly access the desired topic in the Comparative Competitive Efforts report:
The Buttons at the Top of the Page

AC Camera Segment — Competitive Effort Comparisons
UAV Drone Segment — Competitive Effort Comparisons
The Strategic Group Maps for AC Cameras and UAV Drones
Why the Competitive Efforts of Rival Companies Will Change Every Year
The Buttons at the Top of the Page

When you open the Comparative Competitive Efforts report you will initially see the report for North
America. This page displays the competitive efforts of each company in the AC Camera market segment and
the UAV Drone market segment. The page also shows (1) how your company’s competitive effort in North
America on each of the factors affecting unit sales/market share compare against the industry average for
North America and (2) the percentage size of any resulting competitive advantage or disadvantage—see the
last two columns on the right side of the page.
Changing the Region. To see the company comparisons for a different region (Europe-Africa, Asia-Pacific,
and Latin America), click on the Region button (currently showing “North America”) to show the report for a
different region.

Changing the Year. Initially, the data for the just-completed year will appear on the page. You may review or
print a report from any previous year by clicking the Year button at the top-right of the page.
Changing the Company Being Compared to the Industry Averages. While you are primarily interested in
how your company’s competitive effort compared to the all-company regional averages on each factor that
determines unit sales and market share (to see whether your company had a competitive advantage or was at
a disadvantage on that factor), you can also see how any other company stacks up against the industry/all-
company regional averages and the resulting percentage sizes each company’s competitive effort ss
above/below the averages in the far right column. To change to a different company and view the percentage
sizes of its competitive advantages/disadvantages versus the industry averages, click the Company letter
button and choose the company of interest--this feature is particularly useful for studying the competitive
efforts of companies you consider to be your closest competitors and/or industry-leading companies.
Printing the Report. You may find it useful to print the Comparative Competitive Efforts reports. Click the
Print button at the top to print the report for a single region or for all four regions.
Recommendation: Consider printing all four pages of the report (1 page for each geographic region)
to have available when you begin entering decisions for prices, P/Q ratings, models offered, and so on
for the current year. This will save you the annoyance of switching back-and-forth between the report
pages and the AC Camera Marketing, UAV Drone Marketing, and Special Contract Offers decision
entry pages.
AC Camera Segment — Competitive Effort Comparisons

Observe how your company’s competitive effort compares to the industry average, for all 8 competitive factors
affecting sales and market shares in the Internet segment. Whether your company’s effort on a particular
competitive factor is above/below the industry average (see the Industry Average column on the right)
determines whether your company had a competitive advantage or competitive disadvantage on that factor.
The size of your company’s competitive advantage/disadvantage is signaled by the percentages in the column
at the far-right. The bigger the percentage size of any competitive advantage or disadvantage, the
bigger the positive/negative impact on your company’s cameras sold and market share in the region.
Important: How many AC cameras a company sells is a function of the company’s overall competitive effort
relative to the industry-average effort in the region for all 11 competitive factors taken as a group.
As you review your company’s competitive efforts versus rival companies, bear in mind that some competitive
factors are more important than others. A 12% competitive advantage or disadvantage against the industry
average on such competitively important factors as average wholesale price or P/Q rating or number of models
carries more weight in impacting a company’s sales volume and market share than does a 12% competitive
advantage or disadvantage on less influential competitive factors like website displays or retailer support.
Average Wholesale Price. The first line of the AC Camera Segment data shows the average wholesale price
each company charged the retailers of its camera models. Your company’s sales/market share outcomes in a
region were positively impacted if your company’s average wholesale price was below the regional average
and were negatively impacted if your company’s retail price was above the regional average.
• The bigger the percentage your company’s average wholesale price was below the regional average,
the bigger was your company’s price-based competitive advantage and thus the bigger was the positive
impact on your company’s cameras sold and market share in the region.
• The bigger the percentage your company’s average wholesale price was above the regional average,
the bigger was your company’s price-based competitive disadvantage and the bigger was the negative
impact on your company’s cameras sold and market share in the region.

• Always check to see if the percentage size of your company’s price-based competitive advantage or
disadvantage was large or small (see the last column on the page). A large price-based competitive
disadvantage should automatically become a candidate for corrective action in the upcoming decision
round — particularly if you are unhappy with the resulting regional sales and market share outcomes in
the AC Camera segment or if your company’s prior-year profitability in the region and/or aspects of your
company’s prior-year overall performance were subpar.
P/Q Rating. The second line displays the P/Q ratings of the AC cameras offered by each company in the
designated region. Your company’s sales/market share outcomes in a region were positively impacted if your
company’s P/Q rating was above the regional average, and they were negatively affected if your company’s
P/Q rating was below the regional average. Companies with P/Q ratings above the industry average had a P/Q
rating-based competitive advantage; companies with P/Q ratings below the industry average suffered from a
P/Q rating-based competitive disadvantage. The size of the advantage or disadvantage is measured by
percentage size a company’s P/Q rating is above/below the industry-average in each region.
Because P/Q ratings are an important competitive factor in determining each company’s sales/market share
outcomes, the bigger a company’s P/Q rating competitive advantage in a region, then the bigger the positive
impact on its AC cameras sold and market share in the region. Conversely, the bigger a company’s P/Q rating
competitive disadvantage, the bigger the negative impact on its AC cameras sold and market share.
Always observe whether the percentage size of any resulting P/Q competitive advantage or disadvantage for
your company was large or small. A large P/Q-based competitive disadvantage should automatically become
a candidate for corrective action in the upcoming decision round—particularly if you are unhappy with the
resulting sales and market share outcomes in the AC camera segment or if your company’s prior-year
profitability in a region and/or aspects of your company’s prior-year EPS and ROE performance were subpar.
Brand Reputation. On the third line are the comparative brand reputations of rival companies (as measured
by the respective Image Ratings on the second page of the prior year’s Camera & Drone Journal). A
company’s brand reputation (which is its image rating from the prior year) is based on (1) its global average
P/Q rating of AC cameras, (2) its global average P/Q rating of UAV drones, (3) its global average market share
of total AC camera sales, (4) its global average market share of total UAV drone sales, and (5) its corporate
social responsibility and citizenship actions undertaken over the past 4-5 years.
Companies with brand reputations above the industry average had a reputation-based competitive advantage
over companies with brand reputations below the industry average across all four regions.
Your company’s sales/market share outcomes in a region were positively impacted if your company’s brand
reputation in the region was above the regional average, and they were negatively affected if your company’s
brand reputation was below the regional average.
Number of Models. The fourth line of the AC Camera Segment section shows comparisons of the number of
camera models offered by each of the company. Companies offering more than the industry average number
of models have a model-based competitive advantage over companies with a below-average number of
models. The size of the advantage or disadvantage is measured by percentage size a company’s number of
models is above/below the industry-average in each region.
A large percentage competitive disadvantage on models always merits careful evaluation by company
managers. Normally, a big model-based competitive disadvantage is a strong signal that managers should
consider narrowing (perhaps eliminating) this disadvantage in the upcoming decision round. Such
consideration becomes increasingly important if you are unhappy with the resulting sales and market share
outcomes in the AC camera segment or if your company’s prior-year profitability and/or aspects of your
company’s prior-year EPS and ROE performance were subpar.

Retail Outlets. The fifth data grouping shows the comparative numbers of retail outlets (multi-store chains,
online retailers, and local retailers) stocking and merchandising each company’s camera brand. The numbers
of retailers each company has are competitively important because these retailers are the company’s only
distribution channel for accessing the buyers of action cameras—plainly, having more retailers enhances a
company’s competitiveness against companies with fewer retailers. Having more/fewer multi-store retailers
than the industry-average in a particular geographic region means you have a competitive advantage or
disadvantage versus rivals, on average, in the multi-store distribution channel—the size of the advantage or
disadvantage is measured by percentage size your company’s number of retailers is above/below the industry-
average in each region. It is also clear from the numbers of multi-store chains just which company (or
companies) has/have the biggest competitive advantage in the multi-store distribution channel. If your
company does not have an attractive number of multi-store chains carrying your camera line and if you wish to
increase unit sales and market share in that region, then you need to consider what changes in competitive
effort you might need to make in the upcoming year (lower prices, higher P/Q rating, more ads, more
promotions, biggest price discounts, etc.) to attract more multi-store chains to carry your company’s brand.
Precisely, the same interpretation can be made for the numbers of online retailers and local retailers.
The number of retailers desirous of carrying a company’s brand in an upcoming year is based on:
1. Each brand’s prior-year share of action camera sales in that region (companies with growing market
shares tend to attract more retailers to stock their brands, and companies with falling market shares
can expect to lose some of their retailers).
2. Each company’s P/Q ratings for its action camera models (companies whose P/Q ratings have
risen relative to the industry average tend to gain retailers, and companies whose P/Q ratings have
fallen relative to the industry average tend to lose some of their retailers).
3. Each company’s prior-year spending year to support the merchandising efforts of its retailers in the
region as compared to the all-company regional average. In general, companies that boost
spending to support the merchandising efforts of retailers relative to the regional average tend to
attract additional retailers; companies whose spending for retailer support declines relative to the
regional average tend to lose retailers.
4. Each company’s number of prior-year weekly sales promotion campaigns and the size of
promotional discounts offered as compared to the regional averages. Retailers lean toward
stocking the brands of companies that have more weekly sales promotions and bigger discounts
during these promotions because they help generate buyer traffic and boost store revenues.
The percentages in the last column on the right display the size of any competitive advantage/disadvantage
your company has in the numbers of online retailers and local camera shops that are merchandising the
company’s cameras in the region.
You should be alert to the numbers of multi-store chains, online retailers and local camera shops handling the
brands of rival companies. Is your company the leader? If not, how far behind the leader(s) are you—and
what should you consider doing in the upcoming year to try to attract more retailers of all types to handle your
company’s brand? In particular, do you need to increase the amount of sales/merchandising support provided
to retailers in certain regions? Do you need to improve the buyer attractiveness of your company’s price, P/Q
rating, number of models, or advertising, so as to win a bigger market share in the region—which, in turn
causes more retailers to stock and merchandise your company’s brand?
To attract more retailers in future decision rounds, your company will most likely have to undertake
actions that make it more attractive for retailers in the region to stock its camera brand via some
combination of the following: (1) grow your company’s market share in the region and/or (2) improve your
company’s P/Q ratings relative to the industry average and/or (3) increase your company’s expenditures for
retailer support relative to the regional average and/or (4) increase your company’s number of weekly sales
promotions in the region relative to the regional average and/or (5) increase the size of your company’s
promotional discount relative to the regional average during weekly sales promotions.

Retailer Support. Companies whose retailer support expenditures are above the regional average gain a
competitive edge in attracting retailers to stock their brand compared to companies providing below-average
amounts of retailer support—the bigger a company’s retailer network in a region, the stronger is its brand
exposure to camera shoppers and the stronger the resulting positive impact on its regional sales and market
share.
Advertising. Companies whose advertising expenditures are above the all-company regional-average gain an
advertising-based competitive edge that positively impacts their company’s regional sales volume and market
share; the bigger the percentage competitive advantage, the bigger the positive impact. Companies whose
spending is below the regional average suffer from an advertising-based competitive disadvantage that
negatively impacts their regional sales and market share; again, the bigger the percentage competitive
disadvantage, the bigger the negative impact.
Website Displays. Companies whose expenditures for website displays are above the regional average have
a website display-based competitive edge that positively impacts their regional sales volume and market share.
Conversely, below-average expenditures for website displays result in a competitive disadvantage that
negatively impacts a company’s regional sales volume and market share. The bigger the percentage
competitive advantage/disadvantage, the bigger the positive/negative impact.
Weeks of Sales Promotions. Companies having above-average number of sales campaigns gain a
promotion-based competitive edge that positively impacts their regional sales volume and market share.
Conversely, a below-average number of weekly promotions results in a competitive disadvantage that
Sales Promotional Discount. Companies offering discounts above the regional average gain a competitive
advantage that positively impacts the company’s regional sales volume and market share, with the size of the
positive impact depending on the percentage size of the competitive advantage. Companies offering discounts
below the regional average have a competitive disadvantage that negatively impacts the company’s regional
sales volume and market share, with the size of the negative impact depending on the percentage size of the
Warranty Period. A company whose warranty period exceeds the regional-average gains a competitive edge
that positively impacts its regional sales/market share, whereas a company whose warranty period is below the
regional average suffers a competitive disadvantage that negatively impacts its regional sales volume and
market share. The further a company’s warranty period is above/below the regional-average, the bigger the
positive/negative impact.
Demand for ACC Units. Carefully review the numbers showing the demand for your company’s cameras
versus those of rival companies and the region’s industry-average. Demand amounts greater than the regional
all-company average signal higher-than-average buyer appeal for your company’s camera brand and a
stronger-than-average overall competitive effort as compared to the buyer appeal for rival camera brands and
the overall competitive efforts exerted by rival companies.
If demand for your company’s cameras was above the regional average number, then the combined effects of
the competitive factors where your company had competitive advantages versus the industry averages
outweighed the combined effects of the competitive factors where your company had competitive
disadvantages as compared to the industry averages.
Conversely, if demand for your company’s cameras was below the regional average number, then the
combined effects of the competitive factors where your company had competitive advantages were overridden
by the combined effects of the competitive factors where your company had competitive disadvantages.
Gained/Lost (due to stockouts). This line shows which companies lost sales because they were unable to
assemble enough camera units to fill all the retailer orders they received. When a company cannot fill all the
orders from retailers stocking/merchandising its camera brand (called a “stockout”), the retailers whose

orders cannot be filled immediately shift their orders to companies with comparable offerings. In other
words, all lost sales/unfilled orders are reallocated to companies having cameras of comparable buyer appeal
and sufficient assembly capacity to fill the “extra” orders, which results in “sales gained.” The plus (+) numbers
in this row represent sales gains and the minus (˗) numbers represent sales lost.
AC Camera Units Sold. This line displays the number of cameras each company sold after adjusting the
demand for the company’s AC cameras for sales gains or losses.
Market Share. This line reports each company’s actual market share of AC camera sales in the region. Any
company with a market share above the industry average had higher-than-average buyer appeal for its camera
brand and a stronger-than average overall competitive effort as compared to those companies with a below-
average market share.
As you compare the market shares of all companies in the regions, you should understand that:
• The company having the biggest market share in a region is the company that exhibited the strongest
overall competitive effort versus rivals.
• The company with the lowest market share in a region is the company that had the weakest overall
competitive effort among all companies.
• Companies with an average (or near average) market share in a region exerted an average (or near
average) overall competitive effort.
The key point here is that a company’s various percentage competitive advantages and disadvantages
in the AC camera segment will result in a market share above/below the regional-average market share.
• If your company’s regional market share of camera sales was above the regional average, then your
company’s percentage competitive advantages and disadvantages resulted in a net overall competitive
advantage of a size sufficient to produce the above-average market share your company received.
The company with the largest market share had the biggest overall net competitive advantage in the
region’s AC camera segment, which is why its overall competitive effort is judged to have been the
strongest in the region.
• If your company’s regional market share was below the regional average, then your company’s
percentage competitive advantages and disadvantages resulted in a net overall competitive
disadvantage of a size sufficient to produce the below-average market share your company received.
The company with the smallest market share had the biggest overall net competitive disadvantage in
the region’s AC camera segment, which is why its overall competitive effort is judged to have been the
weakest in the region.
Important: It is not a given that (1) the company with the highest market share also earned the highest profits
in that region nor that (2) companies with above-average market shares earned higher profits than those with
lower market shares. A high market share does not automatically equate to high profitability, and a
small market share does not automatically equate to low profitability. Large-share companies may earn
lower profits than firms with smaller market shares because of ill-advised price-cutting and/or overspending on
assorted marketing efforts, perhaps coupled with high production costs per camera. Small share firms may
actually be highly profitable because they sell top quality cameras at premium prices and/or because their
production operations are exceptionally cost-efficient and/or because their marketing expenditures are
exceptionally cost-effective.

While you are not provided data pertaining to the profitability of individual company market shares in each
region’s camera segment (this is considered to be competitively sensitive information), you can see how the
profitability of your company’s market share outcomes compared to the industry-low, industry-
average, and industry-high profitability benchmarks on page 6 of the Camera and Drone Journal.
Tip: As the simulation progresses, it makes sense to zero in on how well your company compares not only
against the regional averages but also against the competitive efforts of those particular companies you
consider to be close rivals and also perhaps those companies that are industry leaders. There is merit in
adjusting your company’s competitive efforts to beat (or at least closely match) the competitive efforts of
companies that are close rivals, provided such actions also boost your company’s profitability in the region.
Likewise, there’s reason to compare your company’s competitive efforts against the company with the largest
number of cameras sold to better learn which competitive factors accounted for why your company sold fewer
cameras and also to compare your company’s competitive efforts against one or two of the industry leaders to
better understand what kind of competitive efforts it will take for your company to narrow the performance gap.
Tip: If your company’s cameras sold/market share in a region were lower than you would have liked, then you
need to consider actions to profitably strengthen your company’s overall competitive effort (perhaps by
increasing those competitive efforts where your company was burdened by competitive disadvantages and/or
by strengthening even further those competitive efforts where your company had competitive advantages. But
pursue only those competitive improvement actions that also improve projected profitability. There is
no glory in capturing a bigger market share when it results in lower profitability.
Special AC Camera Contracts. The last 3 rows show the results of the competition for special contracts to
supply multi-store chain retailers with AC cameras at a discounted price. The first row in this section reports
each bidder’s discount price offer. The second row reports the Value Index associated with each bidder’s
offer. The Value Index is based on (1) the net wholesale price the retailer will pay after the price discount, (2)
the P/Q rating of the bidder’s action cameras, and (3) the numbers of models in the bidder’s line of cameras.
Multi-chain retailers consider the Value Index as the best indicator of which bidder(s) is/are offering them the
best deal, taking into account the factors of discounted net price, camera performance-quality, and breadth of
product selection. The third row shows the company or companies whose bids were accepted and the number
of extra cameras they sold.
This information will prove valuable in helping you determine what can be done to improve your company’s
Value Index, should you be interested in competing to win a special contract in the upcoming decision round.
Back to top
UAV Drone Segment — Comparative Competitive Efforts

The analysis of the Comparative Competitive Efforts data for the UAV drone segment parallels that for the AC
camera segment. Observe how your company’s competitive effort compares to the industry average, for all 10
competitive factors affecting sales and market shares in the UAV drone segment. Whether your company’s
effort on a particular competitive factor is above/below the industry average (see the Industry Average
column at the right) determines whether your company had a competitive advantage or competitive
disadvantage on that factor. The size of your company’s competitive advantage/disadvantage is signaled by
the percentages in the column at the far-right. The bigger the competitive advantage or disadvantage, the
bigger the positive/negative impact on your company’s number of drones sold and market share.
Important: How many drones a company sells is a function of the company’s overall competitive effort relative
to the industry-average effort in each region for all 10 competitive factors taken as a group.
Average Direct-Sale Price. Check out how your company’s average direct-sale price for drones at the
company’s website compares against those of rivals and the size of the resulting price-based competitive
advantage/disadvantage your company had versus the industry-average in each region. Your company’s

sales/market share outcomes in a region were positively impacted if your company’s average direct-sale price
was below the regional average, and they were negatively impacted if your company’s average direct-sale
price was above the regional average.
• The bigger the percentage your company’s average direct-sale price was below the regional average,
the bigger was your company’s price-based competitive advantage on this important competitive factor
and thus the bigger was the positive impact on your company’s drone demand and market share in the
region.
• The bigger the percentage your company’s average direct-sale price was above the regional average,
the bigger was your company’s price-based competitive disadvantage and the bigger was the negative
impact on your company’s drone demand and market share in the region.
• Make a point of checking whether the percentage size of your company’s competitive advantage or
disadvantage was large or small (see the last column on the page). A large price-based competitive
disadvantage should automatically become a candidate for corrective action in the upcoming decision
round — particularly if you are unhappy with the resulting sales and market share outcomes in the
region’s UAV drone segment or if your company’s prior-year profitability in the region and/or overall
company performance were subpar.
Discount to Online Retailers. The second line of the UAV Drone Segment data displays the comparative
percentage discounts to third-party online retailers offered by each company in the designated region. Your
company’s sales/market share outcomes in a region were positively impacted if your company’s percentage
discount was above the regional average, and they were negatively affected if your company’s percentage
discount was below the regional average.
A large discount-based competitive disadvantage should automatically become a candidate for corrective
action in the upcoming decision round—particularly if you are unhappy with the resulting sales and market
share outcomes in the region’s UAV drone segment or if your company’s prior-year profitability in the region
and/or aspects of your company’s prior-year overall performance were subpar.
P/Q Rating. The third line of the UAV Drone Segment data displays the comparative P/Q ratings of the UAV
drones offered by each company in the designated region. Your company’s sales/market share outcomes in a
region were positively impacted if your company’s P/Q rating was above the regional average, and they were
negatively affected if your company’s P/Q rating was below the regional average.
Because P/Q ratings are an important competitive factor in determining each company’s sales/market share
outcomes, the bigger a company’s P/Q rating competitive advantage in a region, then the bigger the positive
impact on its UAV drone sales and market share in the region. Conversely, the bigger a company’s P/Q rating
competitive disadvantage, the bigger the negative impact on its UAV drone sales and market share.
A large P/Q-based competitive disadvantage should automatically become a candidate for corrective action in
the upcoming decision round—particularly if you are unhappy with the resulting sales and market share
outcomes in the region’s AC camera segment or if your company’s prior-year profitability in the region and/or
aspects of your company’s prior-year overall performance were subpar.
Brand Reputation. On the fourth line are the comparative brand reputations of rival companies (as measured
by the respective Image Ratings on the second page of the prior year’s Camera & Drone Journal). A
company’s brand reputation (which is its image rating from the prior year) is based on (1) its global average
P/Q rating of AC cameras, (2) its global average P/Q rating of UAV drones, (3) its global average market share
of total AC camera sales, (4) its global average market share of total UAV drone sales, and (5) its corporate
social responsibility and citizenship actions undertaken over the past 4-5 years.
Companies with brand reputations above the industry average have a reputation-based competitive advantage
over companies with brand reputations below the industry average.

Your company’s sales/market share outcomes in a region were positively impacted if your company’s brand
reputation in the region was above the regional average, and they were negatively affected if your company’s
brand reputation was below the regional average.
Number of Models. The fifth line of the UAV Drone Segment section shows comparisons of the number of
drone models offered by each company. Companies offering more than the industry average number of
models have a model-based competitive advantage over companies with a below-average number of models.
Your company had a model-based competitive advantage over companies offering buyers fewer drone models
and a competitive disadvantage against companies having a bigger line of drone models.
A large percentage competitive disadvantage on models always merits careful evaluation by company
managers. Normally, a big percentage model-based competitive disadvantage is a strong signal that
managers should consider narrowing (perhaps eliminating) this disadvantage in the upcoming decision round.
Such consideration becomes increasing imperative if you are unhappy with the resulting sales and market
share outcomes in this region’s UAV drone and/or if your company’s prior-year drone profitability in the region
and/or aspects of your company’s prior-year overall company performance were subpar.
Online Retailers. The sixth data grouping shows the comparative numbers of third-party online retailers that
stock and merchandise each company’s drone models. The numbers of online retail “partners” each company
has are competitively important because these online retailers represent an additional distribution channel for
selling its drones to buyers—plainly, having more third-party online retailers enhances a company’s ability to
achieve higher sales volumes and market share versus companies with fewer third-party online retailers.
Your company’s sales/market share outcomes in a region were positively impacted if your company’s number
of third-party online retailers was above the regional average, and they were negatively affected if your
company’s online retailer number was below the regional average. The bigger the resulting percentage size of
the online retailer-based competitive advantage/disadvantage, the bigger the resulting positive/negative impact
on your company’s regional drone sales and market share.
Website Displays. Companies whose expenditures for website displays are above the regional average have
website display-based competitive edge that positively impacts their regional sales volume and market share.
Conversely, below-average expenditures for website displays results in a competitive disadvantage that
Search Engine Advertising. Companies whose expenditures for search engine advertising are above the all-
company regional-average gain a search engine advertising-based competitive edge that positively impacts
their regional sales volume and market share; the bigger the percentage competitive advantage, the bigger the
positive impact. Companies whose expenditures are below the regional average suffer from a search engine
advertising-based competitive disadvantage that negatively impacts their regional sales and market share;
again, the bigger the percentage competitive disadvantage, the bigger the negative impact.
Retailer Recruitment. Companies whose expenditures for recruiting third-party online retailers (and
supporting the merchandising efforts of those who agree to stock/market the company’s brand of UAV drones)
are above the all-company regional-average gain a competitive edge that positively impacts their company’s
regional sales volume and market share; the bigger the percentage competitive advantage, the bigger the
positive impact. Companies whose expenditures are below the regional average suffer from a competitive
disadvantage that negatively impacts their regional sales and market share; again, the bigger the percentage
competitive disadvantage, the bigger the negative impact.
Warranty Period. A company whose warranty period exceeds the regional average gains a competitive edge
that positively impacts its regional sales/market share, whereas a company whose warranty period is below the
regional average suffer a competitive disadvantage that negatively impacts its regional sales volume and
market share. The further a company’s warranty period is above/below the regional average, the bigger the
positive/negative impact.

Drone Unit Demand. Carefully review the numbers showing the demand for your company’s drones versus
those of rival companies and versus the regional industry-average. Demand amounts greater than the regional
average signal higher-than-average buyer appeal for your company’s drone models and a stronger-than-
average overall competitive effort as compared to the buyer appeal for the drone models marketed by rivals
and the overall competitive efforts exerted by rival companies.
If unit demand for your company’s drones was above the regional-average number, then the combined effects
of the competitive factors where your company had competitive advantages versus the industry averages
outweighed the combined effects of the competitive factors where your company had competitive
disadvantages as compared to the industry averages. Conversely, if unit demand for your company’s drones
was below the regional average number, then the combined effects of the competitive factors where your
company had competitive advantages were overridden by the combined effects of the competitive factors
where your company had competitive disadvantages.
Gained/Lost (due to stockouts). This line shows which companies lost sales because they were unable to
assemble enough drones to fill all the orders they received. When a company cannot fill orders, buyers
immediately shift their orders to companies with comparable offerings. Thus, lost sales/unfilled orders are
reallocated to companies having drones of comparable buyer appeal and sufficient assembly capacity to fill the
“extra” orders, which results in “sales gained.” The plus (+) numbers in this row represent sales gains and the
minus (˗) numbers represent sales lost.
UAV Drone Units Sold. This line displays the number of drones each company sold after adjusting the
demand for the company’s Drone Unit Demand for sales gains or losses.
Market Share. Any company with a market share above the industry average had higher-than-average buyer
appeal for its drone models and a stronger-than average overall competitive effort as compared to those
companies with a below-average market share.
As you compare the market shares of all companies in the regions, you should understand that:
• The company having the biggest market share in a region is the company that exhibited the strongest
overall competitive effort.
• The company with the lowest market share in a region is the company that put forth the weakest overall
competitive effort.
• Companies with an average (or near average) market share in a region exerted an average (or near
average) overall competitive effort.
The key point here is that a company’s various percentage competitive advantages and disadvantages
in the UAV drone segment will result in a market share above/below the regional-average market share.
• If your company’s market share of drone sales in a region was above the regional average, then your
company’s percentage competitive advantages and disadvantages resulted in a net overall competitive
advantage of a size sufficient to produce the above-average market share your company received.
The company with the largest market share had the biggest overall net competitive advantage in the
region’s UAV drone segment, which is why its overall competitive effort is judged to have been the
strongest in the region.
• If your company’s market share in region was below the regional average, then your company’s
percentage competitive advantages and disadvantages resulted in a net overall competitive
disadvantage of a size sufficient to produce the below-average market share your company received.
The company with the smallest market share had the biggest overall net competitive disadvantage in
the region’s UAV drone segment, which is why its overall competitive effort is judged to have been the
weakest in the region.

Important: It is not a given that (1) the company with the highest market share also earned the highest profits
in that region nor that (2) companies with above-average market shares earned higher profits than those with
lower market shares. A high market share does not automatically equate to high profitability, and a
small market share does not automatically equate to low profitability. Large-share companies may earn
lower profits than firms with smaller market shares because of ill-advised price-cutting and/or overspending on
assorted marketing efforts, perhaps coupled with high production costs per drone. Small share firms may
actually be highly profitable because they sell high-quality drones at premium prices and/or perhaps because
their production operations are exceptionally cost-efficient and/or because their marketing expenditures are
exceptionally cost-effective.
While you are not provided data pertaining to the profitability of individual company market shares in the
regional drone segments (this is considered to be competitively sensitive information), you can see how the
profitability of your company’s market share outcomes compared to the industry-low, industry-
average, and industry-high profitability benchmarks on page 7 of the Camera and Drone Journal.
Tip: As the simulation progresses, it makes sense to zero in on how well your company compares not only
against the regional averages but also against the competitive efforts of those particular companies you
consider to be close rivals and also perhaps those companies that are industry leaders—use the Time
Series Competitive Efforts report on the Competitive Intelligence Report to easily track the competitive
maneuvering of an industry leader or close rival for all years completed to date. There is merit in adjusting
your company’s overall competitive effort to beat (or at least closely match) the competitive efforts of
companies that are close rivals, provided such actions also boost your company’s profitability in the region.
Likewise, there’s reason to compare your company’s competitive efforts against the company with the
largest number of drones sold to better learn which competitive factors accounted for why your company
sold fewer drones, and to also compare your company’s competitive efforts against those of one or two of
the industry leaders to learn what they have recently done to be industry leaders and to better understand
what sort of competitive efforts it may take for your company to narrow the performance gap.
Tip: If you believe your company’s drones sold/market share in a region were lower than you would have
liked, then you need to consider actions to profitably strengthen your company’s competitive effort (perhaps by
increasing those competitive efforts where your company was burdened by competitive disadvantages and/or
by strengthening even further your competitive efforts where your company had competitive advantages. But
pursue only those competitive improvement actions that also improve projected profitability. There is
no glory in capturing a bigger market share when it results in lower profitability.
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The Strategic Group Maps for AC Cameras and UAV Drones

There is merit in examining the two “strategic group maps” showing how your company is positioned against
rivals in the region based on price and P/Q rating (the vertical axis) and sales promotions / advertising (the
horizontal axis for the AC camera segment) or search engine advertising / retailer discount (the horizontal axis
for the UAV drone segment).
The sizes of the circles are drawn proportional to each company’s market share in the geographic region.
Your company’s position on the strategic group map for cameras is likely to be different from that on the
strategic group map for drones, and the maps for different regions can be different as well.
• Those company circles that are bunched closest together signify “strong” or “close” competitors
because their prices, P/Q ratings, sales promotions / advertising, or search engine advertising /
retailer discount are similar; those farthest apart are “weak” competitors because their prices,
product attributes are very dissimilar and appeal to buyers with different preferences as opposed to
the preferences of buyers which your company is targeting.

• Companies that are more isolated, in the sense of not having many other company circles close to
their positions, face somewhat weaker head-to-head competition because their product offerings
are more strongly differentiated from the other companies. However, such differentiation on the
part of these “distantly-positioned” companies may be attractively profitable (because of weaker
competition from rivals) or considerably less profitable (because the market position occupied by
these companies is not associated with a product offering that is particularly appealing to the buyers
of cameras/drones).
• Companies whose circles are bunched closely together encounter strong competitive pressures
from nearby rivals (because their products are weakly differentiated as concern the measures on
the horizontal/vertical axes). The more companies that are clustered close together, the more likely
that profitable opportunities exist for several of these companies to differentiate their product
offerings more strongly and thereby reposition themselves in a more open (or vacant) part of the
market where competitive pressures from rivals are weaker.
Because the strategic group maps at the bottom of the page are helpful in pinpointing who your company’s
closest competitors are, you should consider studying the competitive efforts of these companies more closely
and see if you can anticipate what competitive maneuvers they will undertake next. The more successful you
are in predicting their next competitive moves, the more able you are to craft actions in the upcoming decision
round to counter (and hopefully defeat) their competitive efforts.
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Why the Competitive Efforts of Rival Companies Will Change Every Year
Analyzing the prior-year competitive efforts of rival companies is quite necessary, but it is nonetheless
incomplete as a gauge of the competitive efforts and competitive strength that companies in the
industry will display in the upcoming year. Most (if not all) companies have incentive to make changes
(sometimes drastic changes) in the competitive efforts they employed in the prior year.
• Underperforming companies (those with subpar profitability and low performance scores) have a strong
incentive to substantially strengthen their competitive efforts, often by correcting competitive
weaknesses.
• Industry-leading companies often undertake actions to strengthen their competitive efforts in areas
where they were competitively weak. They also have reason to enhance their competitive efforts on
factors for which they were competitively strongest and enjoyed a sizable competitive advantage.
Industry leaders that are complacent and stick with status quo competitive efforts are unlikely to remain
leaders for long.
• Companies whose managers are aggressively striving to join the ranks of the industry leaders have a
strong incentive to narrow or eliminate any competitive advantages enjoyed by higher-ranking
companies. Plus, they are likely to increase their competitive efforts in areas where they were
competitively weakest.
• Companies with average performance scores have an incentive to improve their competitiveness by at
least modest amounts and thus earn higher performance scores.
There is good reason to expect competition to intensify because of the pressures on all companies to
improve their overall performance. Such pressures may well “require” all companies to take actions to boost
certain competitive efforts at least a little just to maintain/protect their current market shares and industry
standing. Companies wanting to really move up the performance ranks rapidly will often significantly increase
their competitive efforts in several areas (especially where they have glaring competitive weaknesses) in order
to achieve the desired improvement in their company’s industry standing and overall performance.
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Competitive Intelligence Reports
Regional Average Competitive Efforts
The role of the Regional Average Competitive Efforts report is to provide you with a complete historical
record of the changes in the regional-average levels of competitive effort in all four geographic market
areas for all years/decision rounds completed to date.
Such a time-series review of the industry-average levels of competitive effort across the four regions is
intended to assist you in making analysis-based updates in the Competitive Assumptions appearing in
the bottom sections of the AC Camera Marketing and UAV Drone Marketing decision screens.
The year-to-year changes in the average levels of competitive effort exerted by all companies on the
competitive factors affecting AC camera UAV drone sales volumes and market shares in each region
can be used to:
1. Help you arrive at judgments about what size adjustments to make in the prior-year regional-
average levels of competitive effort all companies may employ on the 10 competitive factors
affecting AC Camera sales/market shares and the 9 competitive factors affecting UAV drone
sales/market shares.
2. Help you determine what levels of competitive effort your company may need to employ to
compete more effectively against rivals and achieve the desired sales volume and market
shares in each region in the upcoming year.
Caution: Be alert to the fact that historical trends are not a perfect predictor of the future—past trends
may or may not continue into the future. This is why a first-rate update of the Competitive Assumptions
should also consider each of the following more forward-looking considerations:
1. Poorly-performing companies that were outcompeted last year have strong incentive to
strengthen their competitive efforts (particularly those where they suffered from competitive
disadvantages).
2. High-performing rivals may well try to open up a wider competitive advantage on certain
competitive factors to further enhance their prior-year’s performance.
3. Companies that were surprised by unexpectedly strong competitive efforts by one or more of
their close rivals and, as a consequence, suffered a loss of camera/drone sales and market
share in one or more regions, may well retaliate with much strengthened competitive efforts of
their own to recapture their former market share(s)—or even increase them.
4. Ambitious companies, intent on overtaking the industry leader, might well opt to boost their
competitive efforts on one or two competitive factors (in either or both of the camera/drone
market segments) by significant amounts and thus achieve competitive advantages that they
hope will propel them into an industry-leading position.
5. Some (most?) companies are likely to try to enhance their sales and market shares in those
6. Industry-leading companies have a strong incentive to strengthen their own competitive
efforts—they will not remain industry leaders for long by sticking with status quo competitive
efforts across the board. It is not farfetched for an industry leader to boost its competitive efforts
on a camera/drone competitive factor where it has had a big competitive advantage—and thus
try to widen its competitive advantage over rivals.
Copyright © GLO-BUS Software, Inc.

The Business Strategy Game CIR: Comparative Competitive Efforts of Rival Companies HELP
7. All firms have an incentive to adjust their competitive efforts in cameras/drones in one or more
regions to improve their company’s overall performance and thereby meet or beat the periodic
and sometimes annual increases in the investor-expected performance targets.
A good argument can be made, therefore, that company managers should expect competition to
intensify in the current/upcoming year and in later years, thus resulting in higher regional-average levels
of competitive effort in at least some, perhaps many, of the competitive factors governing regional sales
and market shares. After all, if you are considering making different marketing decision entries (or
increasing/decreasing the P/Q rating of your footwear or changing the number of models offered) to
improve your company’s profitability and performance, then the co-managers of most other rival
companies are also likely to be considering how to alter the makeup of their competitive efforts in order
to improve their company’s profitability and performance.
Tip: Make a printout of all four pages of this report, so that you can have the historical information for
each region in front of you when time comes to make the Competitive Assumptions updates on the
Internet Marketing and Wholesale Marketing decision screens.
Competitive Intelligence Reports
Time Series Competitive Efforts for Any Company
The role of the Time Series Competitive Efforts report is to provide you with a means of quickly
reviewing how the competitive efforts of any company have changed over the years completed to date
in any or all of the four geographic regions. Such a time-series review of a company’s competitive
efforts is particularly useful:
1. When your company is striving to overtake one or more of the industry’s best-performing
companies. To successfully challenge and overtake rival companies, it is useful to see how
their levels of competitive effort in the AC camera segment and the UAV drone segment have
changed over time. The time-series data should prove useful in:
(a) Drawing conclusions about the future levels of competitive effort these rivals may employ in
each of these two segments.
(b) Determining what levels of competitive effort your company may need to employ in each of
these two segments to narrow the performance gap and move ahead of them in the
performance standings in the years to come.
2. When your company is trying to outcompete and outperform those companies you
consider to be your company’s closest competitors. Companies are close competitors
when they charge comparable prices, have comparable P/Q ratings for their cameras/drones,
and offer comparable numbers of models. Often, a company’s closest competitors are the same
across all four regions because their prices, P/Q ratings, and models/styles are comparable to
those of your company in most every region, if not all regions. Reviewing the time-series
competitive efforts data for each close rival for all years completed to date should prove useful
in:
(a) Drawing conclusions about the levels of competitive effort these close rivals may employ in
the AC camera segment and the UAV drone segment in the upcoming year on other
competitively-relevant factors besides selling price, P/Q rating, and number of models
offered.
(b) Determining what levels of competitive effort your company may need to employ in these
two segments on these same or other competitively relevant factors to successfully
outmaneuver and outperform a particular close rival in the upcoming year or maybe longer.
Copyright © GLO-BUS Software, Inc.

GLO-BUS Assembly and Facilities Operations Help
Assembly and Facilities Operations

Explanations, Suggestions, and Tips
After each decision round, you and your co-managers are provided with a 4-page “Company Operating Report”
detailing all relevant aspects of your company’s operations in the just-completed year and providing a complete
set of financial statements (income statement, balance sheet, and cash flow statement). The 4-page set of
reports provides you with a quick, convenient means of reviewing any and all aspects of your company’s
internal operations.
The information in this 4-page Company Operating Report, the Competitive Intelligence Report and the
7-page Camera & Drone Journal provide you with comprehensive and detailed feedback on what is
happening with your company and what is going on throughout the industry. It is your responsibility
to know about this information and make full use of it as may be needed.
What is on This First Page
There are two columns of data—one for camera assembly and facilities operations and one for drone
assembly and facilities operations. Each column provides detailed production and assembly information,
investment in facilities, work force statistics, and itemized production/assembly costs—essentially everything
you might need or want to know about prior-year assembly and facility operations.
The first data grouping in each column summarizes units assembled in-house at regular time and overtime,
product R&D expenditures in the preceding year, cumulative product R&D expenditures, and assorted
attributes of the cameras/drones assembled.
The second data grouping is a status report regarding space available for workstations, new spaces added in
the most recent year, spaces available for workstations in the year upcoming, and installed workstations.
The third data grouping reports various aspects about your company’s investments in its camera/drone plant
facilities, workstations, and robotics upgrades (if any).
A complete set of workforce statistics is contained in the fourth data grouping.
A very detailed breakdown of your company’s production and assembly costs for cameras/drones appears in
the last data grouping on this page. Unit costs are calculated by dividing each total cost number by the number
of cameras/drones assembled, shipped, and sold to buyers. These costs are a consequence of your previous
year's entries on the Product Design decision entry page and on the Workforce Compensation and Assembly
decision entry page.

GLO-BUS AC Cameras—Market Segment Performance Help
AC Cameras—Market Segment Performance

You will find it valuable to examine the information on this page every year and use the information to take
corrective actions in the upcoming decision round.
What is on This Page
This page contains comprehensive revenue-cost-profit information regarding the sale of your company’s
cameras in each of the four geographic regions of the world market in the most recently completed year.
There are data groupings for “Regular” AC Camera Sales, (starting in Year 9) camera sales made under
Special ACC Contracts, and all AC Camera Operations.
Regular AC Camera Sales
The important thing to look for in this first data grouping is the cross-regional differences in the operating profit
margins—the percentages are likely to be significantly lower in one or two regions than in the others.
Typically, the regions with small operating profit margins are also the regions where total operating profit and
operating profit per camera sold are also lowest. It is in these underperforming regions where corrective
actions to boost profitability are most needed.
Once you have identified the underperforming regions that most need management attention in the upcoming
year, you must then proceed to determine the reasons for the underperformance.
• Was it due to weak demand for your company’s cameras, perhaps because your company was
badly (and unexpectedly?) out-competed by rivals in this region or regions? See the data for this
region or regions in the Competitive Intelligence Report.
• Was it partly due to sales lost due to stockouts (because your company failed to assemble enough
units to meet buyer demand in this region or regions)?
• Was it due to production costs and/or marketing costs that were higher than those of rivals in this
region or regions? (See the benchmarking data on page 6 of the Camera and Drone Journal.)
• Was it due to charging a price that was too low (which “squeezed” profit margins) or too high (which
resulted in unexpectedly lower sales and market share)? See the data for this region or regions in
the Competitive Intelligence Report.
• Was it partly due to having fewer retailers in the region than many/most rivals? See the data for
this region or regions in the Competitive Intelligence Report.
• Was it partly due to spending too little on various marketing efforts relative to the expenditures of
rival companies? See the data for this region or regions in the Competitive Intelligence Report.
• Was it partly due to large unfavorable exchange rate adjustments that reduced the net revenue
received on cameras sold.
• Was it due to having to pay import duties on cameras shipped to Europe-Africa, the Asia-Pacific,
and/or Latin America?
• Was it partly due to other reasons you can confidently identify based on your analysis of the
situation?
As indicated above, answering these questions cannot be done just by looking at the other information
on this page. You will almost certainly have to examine (1) the data for this region or regions in the
Competitive Intelligence Report and (2) the benchmarking data on page 6 of the Camera and Drone Journal.

Only if you identify the real reasons for the underperformance are you prepared to take the appropriate
corrective actions. Just guessing at things to do that might work is never a sound approach to managing a
business that competes against rivals intent on taking sales and market share away from your company
whenever you give them the opening to do so.
There are a number of corrective actions to consider:

• Explore ways to reduce production/assembly costs (without having much, if any, adverse
effect on the camera P/Q rating). Possible candidates include components costs, costs for extra
performance features and product enhancements, product R&D, and labor costs for assembly. But
achieving cost savings all across aspects of camera operations merit consideration.
• Change the average wholesale price to camera retailers. Raising prices may be wise if the
added revenues from a higher price will more than compensate for a reduction in unit sales. Lower
prices are called for if gains in volume will help spread fixed costs out over a greater number of
units sold. The primary costs which are fixed (fixed in the sense that they do not vary directly as
unit sales go up or down in a given year) include depreciation costs, advertising costs, new product
R&D, and administrative expenses. When fixed costs are sufficiently large, spreading them across
a greater volume of sales can result in meaningfully lower costs per camera sold.
• Change sales promotion efforts, perhaps increasing/decreasing the annual number of weekly
sales promotions and/or reducing the size of the promotional discount to realize higher net
revenues per unit or perhaps increasing the size of the discount to realize greater sales volume.
• Attract more camera retailers to stock your company’s brand of cameras. To attract more
retailers in a given geographic region in future decision rounds, your company will most likely have
to undertake actions that make it more attractive to retailers in any given region to stock your
company’s camera brand via some combination of the following: (1) grow your company’s market
share in the region and/or (2) improve your company’s P/Q ratings in comparison to the industry
average and/or (3) increase your company’s expenditures for retailer support relative to the regional
average and/or (4) increase the number of weekly sales promotions your company has annually in
the region relative to the regional average and/or (5) increasing the size of your company’s
promotional discount relative to the regional average during weekly sales promotions.
• Change advertising expenditures. “Very high” advertising costs per camera sold usually signal
either overspending on ads (driving up unit costs per camera) or relatively low sales volume (when
a sizeable advertising budget is spread over a small number of cameras sold, then “high”
advertising costs per camera sold squeeze profit margins).
• Consider changes in other competitive effort measures—number of models, the P/Q rating—
that may hold potential for either lower costs or greater unit sales not only in the underperforming
region(s) but also elsewhere.
Good clues for what moves to make can often be gotten from careful analysis of the Competitive Intelligence
Report for the underperforming region(s).
Special ACC Contracts
As you will discover in Year 9, companies in the industry have an opportunity to bid for contracts from large
camera retailers in each region to supply them with action cameras at discount prices. Winning such contracts
will boost a company’s unit sales in a region by 10%. This section reports the results of such bidding,
indicating whether your company won or lost the bidding contest in each region and, if your company was a
winning bidder, what the impact was in terms of units assembled, revenue gains, costs, contribution margin,
and increased profits.

It is important to understand the meaning and importance of the term “contribution margin.” When you win a
contract to supply cameras at a discounted price, the profitability of the contract hinges on:
• The incremental revenues that the company will receive—these are shown in the “Incremental
Revs-Costs-Margin” section.
• The incremental costs the company will incur to assemble and deliver the cameras to the retailer
under the contract. These incremental costs include the cost of components/features, the labor
costs to assemble the cameras being supplied under the contract, an allowance for warranty
claims, and the delivery costs (shipping costs and import duties). The company’s accounting
methodology is to allocate all other camera-related costs the company incurs to the company’s
“regular” camera business—this is because the company has no assurance that it will win any
contracts whatsoever and thus all costs that do not vary directly with the number of cameras sold
(such as depreciation, administrative expenses, product R&D, PAT training, and marketing
expenditures) should be allocated to the company’s “regular” camera business of selling action
cameras at regular prices to action camera retailers across the world.
• The contribution margin—defined as incremental revenues minus incremental costs—determines
the profitability of the special contracts. In other words, the only added costs a company incurs in
fulfilling the contract bids it may win to supply 10% additional cameras are the variable costs
associated with assembling, delivering, and handling warranty claims on these extra sales of action
cameras (all costs associated with handling warranty claims on the cameras supplied under special
order contracts are included in the entry for “warranty claim allowance.”
As long as the revenues the company receives from winning special contracts in a region exceed the
incremental costs, the contract is profitable—the bigger the contribution margin (incremental revenues
minus incremental costs), the bigger the boost to the company’s operating profits in the region.
All AC Camera Operations
This section merely combines the operating results of the first and second data groupings to provide an overall
view of the performance of your company’s action camera business region-by-region and worldwide.

UAV Drones—Market Segment Performance

You will find it valuable to examine the information on this page every year and use the information to take
corrective actions in the upcoming decision round.
What is on This Page
This page contains comprehensive revenue-cost-profit information regarding the sale of your company’s UAV
drones in each of the four geographic regions of the world market in the most recently completed year. There
are data groupings for “Direct Online Sales”, 3rd-Party Online Retailers, and All UAV Drone Operations.
Direct Online Sales
The first thing to look for here is the cross-regional differences in the operating profit margins—the percentages
are likely to be significantly lower in one or two regions than in the others. Verify that the regions with small
operating profit margins are also the regions where total operating profit and operating profit per drone sold are
also lowest. It is in these underperforming regions where corrective actions to boost profitability are
most needed.
year, you and your co-managers must then proceed to determine the reasons for the underperformance.
• Was it due to weak demand for your company’s UAV drones at the company’s website, perhaps
because your company was badly (and unexpectedly?) outcompeted by rivals in this region or
regions? See the data for this region or regions in the Competitive Intelligence Report.
• Was it partly due to sales lost due to stockouts (because your company failed to assemble enough
units to meet buyer demand in this region or regions)? See the “Unit Demand and Sales” section at
the bottom of the report page.
• Was it due to production costs and/or marketing costs that were higher than those of rivals in this
region or regions? (See the benchmarking data on pages 6 and 7 of the Camera and Drone
Journal.)
• Was it due to charging a price that was too low (which “squeezed” profit margins) or too high (which
resulted in unexpectedly lower sales and market share)? See the data for this region or regions in
the Competitive Intelligence Report.
• Was it partly due to having fewer 3rd-party online retailers in the region than many/most rivals? See
the data for this region or regions in the Competitive Intelligence Report.
• Was it partly due to spending too little on search engine advertising or website displays relative to
the expenditures of rival companies? See the data for this region or regions in the Competitive
Intelligence Report.
situation?
on this page. You will almost certainly have to examine the data for this region or regions in the Competitive
Intelligence Report and the benchmarking data on page 7 of the Camera and Drone Journal.
Only if you identify all of the real reasons for the underperformance are you prepared to take the appropriate
corrective actions. Just guessing at things to do that might work is never a sound approach to managing a

business that competes against rivals intent on taking sales and market share away from your company
whenever you give them the opening to do so

• Explore ways to reduce production/assembly costs (without having much, if any, adverse
effect on the drone P/Q rating). Possible candidates include the costs of the design specifications
for UAV drones on the UAV Drone Design decision screen, product R&D, and labor costs for
assembling UAV drones. But achieving cost savings all across aspects of your company’s drone
operations merit consideration.
• Change the average retail price to drone buyers at the company’s website. Raising prices
may be wise if the added revenues from a higher price will more than compensate for a reduction in
unit sales. Lower prices are called for if gains in volume will help spread fixed costs out over a
greater number of units sold. The primary fixed costs (fixed in the sense that they do not vary
directly as unit sales go up or down in a given year) include depreciation costs, advertising costs,
new product R&D, and administrative expenses. When fixed costs are sufficiently large, spreading
them across a greater volume of sales can result in meaningfully lower costs per unit sold.
• Change marketing costs. “Very high” marketing costs per drone sold usually signal either
overspending (driving up unit costs per drone sold) or too small a sales volume (when sizeable
marketing expenditures are spread over a small number of drones sold, then “high” marketing costs
per drone sold squeeze profit margins).
that may hold potential for either lower costs or greater unit sales not only in the underperforming
region(s) but also elsewhere.
Good clues for what moves to make can often be gotten from careful analysis of the Comparative Competitive
Efforts of Rival Companies for the underperforming region(s).
3rd-Party Online Retailers
Again, the first thing to look for here is the cross-regional differences in the operating profit margins. The
percentages are likely to be significantly lower in one or two regions than in the others. Verify that the regions
with small operating profit margins on sales to 3rd-party online retailers are also the regions where total
operating profit and operating profit per drone sold to 3rd-party online retailers are also lowest. It is in these
underperforming regions where corrective actions to boost profitability on sales to 3rd-party online
retailers are most needed.
year, you must proceed to determine the reasons for the low profit margins on sales to 3rd-party online
retailers.
• Was it due to an “oversized” discount to online retailers that cut deeply into the net revenue your
company received on each drone sold to 3rd party online retailers? You can see how the size of
your discount compared to rivals by looking at the data for this region or regions in the Competitive
Intelligence Report.
• Was it due to production costs and/or retailer recruitment/support expenditures that were higher
than those of rivals in this region or regions? (See the benchmarking data on page 7 of the Camera
and Drone Journal.)
• Was it due to charging a “low” average retail price to online customers (which after the discount off
this price granted to 3rd-party online retailers left your company with too little net revenue per drone
sold to 3rd-party online retailers to cover the remaining costs and end up with an attractive operating
profit margin)?

• Was it partly due to large unfavorable exchange rate adjustments that reduced the net revenue
received on drones sold to 3rd-party online retailers?
• Was it due to having to pay import duties on drones shipped to Europe-Africa, the Asia-Pacific,
and/or Latin America?
situation?
on this page. You will almost certainly have to examine the data for this region or regions in the Competitive
Intelligence Report and the benchmarking data on page 7 of the Camera and Drone Journal.
Only if you correctly identify the real reasons for the underperformance are you prepared to take the
appropriate corrective actions. Just guessing at things to do that might work is never a sound approach to
managing a business that competes against rivals intent on taking sales and market share away from your
company whenever you give them the opening to do so.

• See if drone production/assembly costs can be cut. Possible candidates include the costs of
the design specifications for UAV drones on the UAV Drone Design decision screen, product R&D,
and labor costs for assembling UAV drones. But achieving cost savings all across aspects of your
company’s drone operations merit consideration.
• Change the average retail price to drone buyers at the company’s website Raising prices may
be wise if the added revenues from a higher price will more than compensate for a reduction in unit
sales. Lower prices are called for if gains in volume will help spread fixed costs out over a greater
number of units sold. The primary fixed costs (fixed in the sense that they do not vary directly as
unit sales go up or down in a given year) include depreciation costs, advertising costs, new product
R&D, and administrative expenses. When fixed costs are sufficiently large, spreading them across
a greater volume of sales can result in meaningfully lower costs per unit sold.
• Change the size of the discount off the average retail price to drone buyers at the company’s
website that the company grants to 3rd-party retailers.
• Change the amount the company spends for recruiting 3rd-party online retailers and
supporting their merchandising efforts.
that may hold potential for either lower costs or more profitable sales volumes not only in the
underperforming region(s) but also elsewhere.
Good clues for what moves to make often have to come from careful analysis of the Comparative Competitive
Efforts of Rival Companies for the underperforming region(s).
All UAV Drone Operations
This last section on the page combines the operating results for Direct Online Sales and Sales to 3rd-Party
Online Retailers to provide you with a complete region-by-region and worldwide picture of how well your
company’s overall drone business performed.
The important thing to scrutinize here is the numbers for operating profit and operating profit margin. These
numbers should confirm that actions need to be taken in the upcoming decision round to improve the
profitability of those regions with skimpy operating profits and operating profit margins.

GLO-BUS Financial Statements Help
Financial Statements
This page displays complete annual financials for the company’s operations across all four geographic regions,
including an income statement, a balance sheet, a cash flow statement, and selected financial statistics.
Income Statement
Sales Revenue represents the net revenues (after promotional discounts and exchange rate adjustments) the
company received from sales in each geographic region and worldwide.
Cost of Goods Sold represent total production costs of both AC cameras and UAV drones. A breakdown of
total production costs for cameras and drones is shown in the bottom section the Assembly and Facilities
Operations report (page 1 of your Company Operating Reports).
Delivery Costs represent the total of the delivery costs the company incurred for all four geographic regions,
as reported on pages 2 and 3 of your Company Operating Reports (COR).
Marketing Costs represent the sum of all the various expenditures the company incurred for marketing
cameras and drones. The marketing costs for cameras are detailed on page 2 of the COR showing Market
Segment Performance for cameras; the marketing costs for drones are detailed on page 3 of the COR showing
Market Segment Performance for drones.
Administrative Expenses consist of general corporate overhead, expenses associated with managing and
overseeing the company's two assembly facilities, and expenses associated with managing and overseeing
the company's PAT workforce.
Corporate Overhead — Your company incurs annual administrative expenses of $5 million for executive
salaries and other general corporate expenses—this amount is not expected to change in upcoming years.
There are potentially additional corporate overhead costs associated with various Corporate Social
Responsibility and Citizenship initiatives that you and your co-managers may decide to undertake in upcoming
years. These potential overhead costs can include $300k annually for various environmental initiatives, up to
$1.1 million for efforts to improve working conditions in the company’s two assembly facilities, and $500k
annually for instituting and administering a supplier code of conduct. For accounting purposes, all corporate
overhead expenses are allocated to AC Camera operations and to UAV drone operations based on the
percentage of total units sold. In Year 5, the company sold 840,000 action-capture cameras and 140,000 UAV
drones, a total of 980,000 units—cameras thus accounted for 85.7% of total unit sales and drones accounted
for 14.3%. Consequently, the Year 5 corporate overhead expenses of $5 million resulted in corporate overhead
allocations of $4,286,000 to AC Camera operations and $714,000 to UAV drone operations.
Facilities Administration — Administrative costs to oversee and maintain the company’s two assembly facilities
average $2,700 per workstation space. In Year 5, administrative costs for the 300 workstations spaces in the
AC Camera facility totaled $810,000. Administrative costs for the 110 workstation spaces in the UAV drone
facility totaled $297,000. Administration expenses for these two facilities will increase in future years as more
workstation spaces are added.
Workforce Administration — The administrative cost to manage the company’s assembly workforce is $5,500
per PAT employed. This translated into administrative costs of $1,540,000 for 280 camera PATs employed in
Year 5 and $517,000 for the 94 drone PATs employed. In future years, workforce administration expenses will
increase when more PATs are employed to assemble cameras/drones.
Operating Profit (Loss) equals sales revenues less all the above listed expenses.
Interest Income (Expense) represents interest earnings on the company’s ending cash balance from the prior
year minus interest payments on loans outstanding. It is possible at some point in the exercise that the

company pays off most or all of its loans and accumulates sufficient cash such that interest income on its cash
balances exceeds its interest payments, in which case the number for Interest Income (Expense) will be
positive rather than negative.
Other Income (Expense) will usually be a negative number if your company makes charitable contributions—
charitable contributions appear as an expense on this line. Other Income or expense can result should your
instructor decide, for some whatever reason, to award your company a “refund” or assess your company a
“fine”.
Pre-tax Profit (Loss) equals Operating Profit (Loss) adjusted for Interest Income (Expense) and Other Income
(Expense).
Income Taxes equal 30% of company-wide pretax profits. No income tax is owed if the company incurs a pre-
tax loss on worldwide operations.
Net Profit equals Pre-Tax Profit (Loss) minus Income Taxes paid. Should the company have a Net Loss, the
Net Loss can be carried forward for one year and offset some or all of the income taxes owed the following
year.

Balance Sheet
Except where specified, all entries on the balance sheet represent end of period numbers.
ASSETS
Cash on Hand equals the company’s ending cash balance for the just completed year. In the event the cash
on hand number is 0, then the Global Community Bank where your company does its banking business
automatically loaned the company sufficient money to cover a year-end negative cash balance (the amount by
which the company’s checking account was overdrawn)—such “overdraft loans” are in an amount sufficient to
bring your company’s year-end cash balance to 0. Any such loans are due and payable at the end of the
upcoming year. An overdraft loan carries a 2% interest penalty over and above what interest rate the bank
would charge your company for a 1-year loan (which is based on your company’s credit rating and the going
interest rate for borrowers with your credit rating). To avoid such overdraft loans, you should always consider
maintaining a year-end cash balance cushion of perhaps $10 to $15 million to cover any unexpected cash
shortfalls. The Global Community Bank pays your company an annual interest rate on year-end cash balances;
the agreed-upon interest rate is set at three percentage points below the prevailing interest rate for one-year
loans to borrowers with an A+ credit rating.
Accounts Receivable are always equal to 25% of prior year worldwide net revenues from the sales of
cameras to camera retailers and sales of drones to 3rd-party online retailers—the company grants such
retailers 90-day payment terms on all orders. Customers buying UAV drones at the company’s website pay for
their purchases via credit card, so there are no accounts receivable on such purchases.
Component Inventories stem from the company’s practice of maintaining a 10% reserve of camera and
drone components at all times. This prevents disruptions of assembly operations in the event that components
suppliers have unexpected delays (due to severe weather, transportation breakdowns, or other unusual
circumstances) in delivering components on a just-in-time basis to the company’s assembly plants.
Total Current Assets equal cash on hand plus accounts receivable plus component inventories.
Gross Investment in Plant and Equipment equals the amount the company has paid for its Taiwan facilities,
workstations, robotics upgrades, and office furnishings and equipment in the both its corporate offices and
sales offices it has in each of the four geographic regions. New gross investment occurs whenever facilities
expansions for additional workstation space, new workstation installations, and robotics upgrades are
undertaken.
Accumulated Depreciation equals the sum of all the amounts depreciated since the company commenced
operations. The company’s annual depreciation rate is 5% of gross investment, which equates to an average
plant/equipment life of 20 years.
Total Fixed Asset Investment represents the still un-depreciated value of all of the company’s gross
investment in plant and equipment.
Total Assets are calculated by summing Total Current Assets and Total Fixed Asset Investment.
LIABILITIES
Accounts Payable represents the amounts owed suppliers for components used in assembling cameras and
drones. Invoices submitted by suppliers for components are paid at the end of 90 days. So payments to
components suppliers in any one year represent 25% of the components used in the last 90 days of the prior
year and 75% of the components used in the just-completed year.

Overdraft Loan Payable represents the amount the Global Community Bank automatically loaned the
company to cover any negative cash balance at the end of the most recent year—anytime such overdraft loans
occur, the company’s cash on hand at the beginning of the next year will be $0.
One-Year Bank Loan Payable is an entry that represents bank borrowing by company co-managers to
finance company operations. The amount is scheduled for repayment in the following year. Note 6 to the
balance sheet reports the interest rate on this 1-year loan.
Current Portion of Long-Term Loans represents the annual principal payments due in the coming year on 5-
year and 10-years loans outstanding as explained in Note 7 below the Balance Sheet. Note 8 to the balance
sheet shows the annual principal payments on each of the 5-year and 10-year loans outstanding; the sum of
these annual payments equals the current-portion of long-term loans.
Total Current Liabilities equals the sum of the preceding liability entries.
Long-Term Bank Loans Outstanding equals the outstanding principal on all 5-year and 10-year loans that is
not due and payable in the upcoming year. Note 8 to the balance sheet reports details of the company’s long-
term loans outstanding—the loan number, the year in which the loan was taken out, the initial principal, the
interest rate, the term of the loan, the outstanding principal, the annual principal payment, and the annual
interest payable. You will need to refer to Note 8 any time you and your co-managers opt to pay off a 5-
year or 10-year loan in advance—decisions to prepay such loans require the entry of the loan numbers
on the Finance and Cash Flow decision entry page.
Total Liabilities equals the sum of Total Current Liabilities and Long-Term Bank Loans Outstanding.
SHAREHOLDER EQUITY
Common Stock represents the combined par value (at $0.50 per share) of all 20 million shares of common
stock outstanding. Each new share of common stock that is issued will boost this balance sheet entry by
$0.50. Each share of common stock that is repurchased will reduce this balance sheet entry by $0.50. Note 9
reports the number (in 000s) of shares of common stock outstanding at the end of the just completed year.
Additional Capital represents the amount that shareholders have paid for new shares over and above the par
value of $0.50 per share. For example, if the company decides to raise additional capital by issuing 1 million
shares of stock and the issue price is $25 per share, then the 1 million-share stock issue will generate $25
million in cash (1 million shares x $25 per share). In the stockholders' equity portion of the balance sheet, the
Common Stock account will increase by $1 million ($1 par value x 1 million shares issued), and the Additional
Capital account will increase by $24 million [ ($25 issue price – $1 par value) x 1 million shares issued ].
Since the Additional Capital account represents the amount shareholders have paid for new shares over and
above par value, this account is always debited for the full amount the company pays for repurchased shares
in excess of par value. For instance, if the company decides to repurchase 1 million shares of outstanding
stock at a buyback price of $38.50, then the 1 million-share stock repurchase will require $38.5 million in cash
($38.50 per share x 1 million shares retired). In the stockholders' equity section of the balance sheet, the
Common Stock account will decrease by $1 million ($1 par value x 1 million shares retired) and the Additional
Capital account will decrease by $37.5 million [ ($38.50 repurchase price – $1 par value) x 1 million shares
retired ].
Retained Earnings represents additional investment in the company on the part of shareholders. Your
company’s retained earnings represent all of the company’s profits earned over all years of the company’s
operations that were not paid out to shareholders as dividends and thus were reinvested in growing the
company’s camera/drone business. The amount retained in any one year equals total net profits less dividend
payments—in other words, any net profits not paid out to shareholders in the form of dividends are
retained in the business and represent reinvestment of earnings in the business—such reinvestment is, in

effect, additional money that shareholders have invested in company operations. As such, retained earnings
represent stockholders’ equity investment every bit as much as do the balance sheet entries for common
stock and additional capital.
It is important for you to understand that retained earnings do not represent a hoard of cash that has been
set away somewhere. All of the cash that is available to your company is shown on the balance sheet as
Cash On Hand. The amount of cash a company has on hand is something entirely different from the amount
of retained earnings reported in the shareholder equity section of the balance sheet—the two are totally
unrelated. You should view retained earnings as merely an accounting entry on the balance sheet that reports
the company’s cumulative reinvestment of net profits not paid out as dividends—further, retained earnings are
also adjusted downward by the amount of net losses the company reports.
Total Shareholder Equity equals the sum of the entries for common stock, additional capital, and retained
earnings. Note that there are numbers showing shareholder equity at the beginning of the year and the end of
the year and the entries—common stock, additional capital, retained earnings—in which the changes occurred.
Important Note: Your company’s performance is judged on Return On Average Shareholder

Equity—defined as net profit divided by the average of total shareholder equity at the beginning
of the year and the end of the year—see Note 11. Your company’s Return On Average
Shareholder Equity is shown in the shaded line just under the Total Shareholder Equity.
Cash Flow Statement
CASH AVAILABLE
Beginning Cash Balance represents cash on hand left over from the previous year. The beginning cash
balance is never negative because your company's arrangement with Global Community Bank calls for the
bank to automatically lend an amount sufficient to bring the cash balance to $0 in any year that your company
runs short of cash. A beginning cash balance of $0 is a reliable signal that such an automatic loan was
granted. Positive beginning cash balances are desirable and reflect better cash flow management. Moreover,
the beginning cash balance is the amount on which your company will earn interest—the Global Community
Bank pays the company an annual interest rate on cash balances equal to 3% below the “prime rate” it
charges on loans to companies with an A+ credit rating.
Cash Inflows consist of monies coming in from some or all of six sources:
Receipts from Sales represent cash flowing in from the sales of cameras/drones during the just completed
year. This is usually your company’s biggest cash inflow component in the report year. Receipts from
camera/drone sales consist of (1) 25 percent of the sales revenues in the previous year (which were not
received from camera retailers and 3rd-party online retailers until the report year) and (2) 75% of the
camera/drone sales revenues that your company reported this year. Cash inflows from calendar sales do not
correspond to calendar year revenues because the company grants 90-day payment terms on the orders it
receives from camera retailers across the world and 3rd-party online retailers of UAV drones.
Bank Loans constitute a cash inflow because all of the money your company borrowed in the report year via
1-year, 5-year, and 10-year loans is available for funding cash outlays in the year the loans are taken out.
Stock Issues during the report year are a source of cash available for use in the event you elect to raise
additional equity capital by issuing shares of common stock. The full amount of the proceeds of new issues of
common stock are available for use in the year the new shares are issued. The cash inflow that results from
issuing additional shares equals the number of shares issued multiplied by the issue price per share.

Loan to Cover Overdraft brings your otherwise overdrawn checking account balance up to $0. Should the
company run short of cash unexpectedly, an overdraft loan will be issued automatically.
Interest Income on Prior-Year Cash Balance is earned on any positive cash balance at the beginning of
each year. The interest rate paid on cash balances is always 3 percentage points below the prevailing interest
rate for a one-year loan to a borrower with an A+ credit rating. All interest earned on the company’s prior-
year’s beginning cash balance is paid in the report year and thus is available for the company’s use in paying
its expenses and other cash obligations.
Cash refund represents a source of cash if your instructor believes special circumstances or some unusual
event warrants awarding your company a cash refund. Any such refunds appear on this line, but normally the
entry here will be $0.
CASH OUTLAYS
Payments to Components Suppliers represent the amounts owed for (1) 25% of the components used in
assembling cameras/drones in the last 90 days of the prior year and (2) 75% of the components used in
assembling cameras/drones in the report year (as explained in Note 2 to the Cash Flow Statement). Payments
for components delivered from suppliers are not due and payable for 90 days following receipt of those
components.
Production and Assembly Expenses represent cash outlays for all non-component production and assembly
expenses except depreciation (which is a non-cash accounting charge); these payments cover worker
compensation, PAT training and productivity improvement, product R&D, plant operations and maintenance,
and allowances for warranty repairs.
Delivery, Marketing, and Administrative Expenses cover cash outlays for shipping fees, import duties, all
marketing-related efforts (such as retailer support, advertising, and the costs of website operations), and
general administrative expenses. Breakdowns of these expenses for each geographic region are reported on
pages 2 and 3 of the Company Operating Reports.
Capital Outlays include payments for new workstations, robotics upgrades, assembly facilities expansions,
and any capital expenditures incurred as part of the company’s efforts to display corporate social responsibility
and citizenship.
Principal Repayments on Bank Loans must be made as scheduled for 1-year, 5-year, 10-year, and overdraft
loans (overdraft loans are treated as 1-year loans). The scheduled principal payments on each outstanding
loan appear in Note 8 for the Balance Sheet.
Interest Payments include the interest due on overdraft loans and all other outstanding bank loans. The
interest due on each bank loan is shown in Note 8 for the Balance Sheet.
Stock Repurchases reflect how much cash the company used to buy back shares of common stock during
the report year. The cash outflow that results from repurchasing shares equals the number of shares
repurchased multiplied by the repurchase price per share.
Income Tax Payments are based on a tax rate equal to 30% of pre-tax income as reported in the company’s
Income Statement. However, in the event your company loses money in a given year, the loss would be
carried forward for one year. Thus, the taxes paid in any one year could turn out to be less than 30% of
current-year pre-tax profits if your company lost money in the prior year.
Dividend Payments to Shareholders are always equal to the dividend declared per share multiplied by the
number of shares outstanding (after the repurchase of any shares during the report year). For instance, if your
company had 10 million shares of common stock outstanding and paid an annual dividend of $1.00 per share,

then the cash outlay for dividend payments would be $10 million. An entry of $0 for this item indicates your
company decided to declare no dividend in the report year.
Charitable Contributions may or may not be a part of your company’s social responsibility strategy. If they
are, then amount of the charitable contribution for the report year appears on this line.
Cash Fines may on rare occasions be assessed by your instructor for certain actions taken by your company
that were deemed to be illegal or “out-of-line.” The amount of any such fines appears as an entry on this line.
The total of all cash payments your company was obligated to make during the report year equals the sum of
all the cash payments listed in the Cash Outlays section of the Cash Flow Statement.
NET CASH BALANCE
Your company’s net cash balance at the end of the report year is shown on the shaded line at the bottom of
the Cash Flow Statement.
CASH FLOW NOTES
It is recommended that you read the Notes at the bottom of the Cash Flow Statement. Why? To help
ensure you have a strong grasp of company operations and how things work.
The Selected Financial Statistics
This section shows your company’s standing on each of the three measures determining your credit rating,
plus your company’s overall operating profit margin and net profit margin across all operations, your dividend
payout ratio (the percent of net profit paid out as dividends, and total market capitalization (which is equal to
your company’s year-end stock price times the number of shares of common stock outstanding).

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GLO-BUS

Developing Winning Arthur A. Thompson, Jr.

2020 Edition Mark A. Reidenbach

GLO-BUS is published and marketed exclusively

Copyright © 2020 by GLO-BUS Software, Inc. All rights reserved.

How the GLO-BUS Exercise Works...................................................................................................... 3

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How the GLO-BUS Exercise Works

Your Company’s Operations

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The Worldwide Market for Action-Capture Cameras

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Projected Growth of Unit Sales of Action-Capture Cameras

Worldwide North America Europe-Africa Latin America Asia-Pacific

Years 11-15 4.0%-6.0% 2.5%-4.5% 2.5%-4.5% 6.0%-8.0% 6.0%-8.0%

The Worldwide Market for Unmanned Aerial View Drones

Projected Growth of Unit Sales of Unmanned Aerial View Drones

Period Worldwide North America Europe-Africa Asia Pacific Latin America

Years 6-7 15.5%-17.5% 15.0%-17.0% 15.0%-17.0% 17.0%-19.0% 17.0%-19.0%

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Performance/Quality (P/Q) Ratings of AC Cameras and UAV Drones

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The Retailers and Buyers of Action-Capture Cameras and UAV Drones

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5. Discount Offered to 3rd-Party Online Retailers—While exerting efforts to recruit third-party

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Crafting a Strategy to Be Competitively Successful

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Product Design Decisions

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AC Camera Marketing Decisions

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UAV Drone Marketing Decisions

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Compensation, Training, and Facilities Decisions

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Corporate Social Responsibility and Citizenship (CSRC)

Finance and Cash Flow Decisions

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• Issuing shares of stock—Additional capital may be raised by issuing new shares of

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What the Board of Directors Expects: Results in Five Key Areas

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Reporting the Results

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Scoring Your Company’s Performance

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