Itemized Simplification




As you know, INTOPIA is close to what is presently accepted as the permissible limit of complexity of strategy simulations in the management game form. Thus, one may well desire to simplify it in either (or both) of two situations, namely time constraints (e.g. in Executive Development Programs) or participant background constraints (e.g. non-business under grads, business under grads with little International Business awareness).

The memo below suggests many ways of simplifying the game. It is a menu of largely independent items from which you can pick and choose. None of the following items involve reprogramming of any kind (other than the readjustment of parameters).
  1. PRE-MADE ENTREPRENEURIAL DECISIONS

    The pressure of time may mitigate against companies being able to master the initial entrepreneurial decisions, and notably defining the concept of their businesses in terms of products, regions, functions performed, and clienteles served. The facilitator may elect to make these decisions in advance by constructing certain standard company profiles, such as being a chip manufacturer in the U.S., a PC maker in the EU, a world-wide wholesaler, or a vertically integrated electronics company in either of the two main regions. S/he may then simply allocate profiles to teams, or arrange an auction of different profile types.

    It is also possible to eliminate the initial entrepreneurial decisions by letting teams in a later game simply begin their operations with outputs from companies in an earlier run (and not necessarily the last Q of that run.)

    Alternatively, one might have the rule that during a build-up (and learning) phase (3-4 Quarters), companies are confined to a single operating area, i.e. either U.S. or EU. From Q4 or Q5 on, they could be in 2 or 3 areas as they please.

  2. FOREIGN CURRENCY (FC) MANAGEMENT

    Presents an area of intricacy to students as well as managers not generally exposed to it. Things become greatly simplified with fixed currencies. You may want to tell teams in advance that there will be no exchange rate changes. This eliminates currency risks and hedging (and, therefore, Form H7). It still retains two key elements of foreign currency: students are "forced" to learn to think of FC and, not least, to make sure they have enough of the proper FC in any given area when needed - or face negative balances, i.e., "overdrafts."

  3. LOCAL CURRENCY ONLY

    Another important simplification is auto-conversion of FC (as an alternative to fixed currencies). This is also easy to effectuate. We will be glad to send you the amended copies of (and simplified) decision forms involved (primarily F3 and H6). This will eliminate 90% of the sources of negative FC accounts (and the hefty Supplier Credits which typically follow).

    Participants should be told that they can use automatic conversion without any opprobrium with regard to performance evaluation. (Naturally, successful pursuit of active currency management is a plus.) In practice, most managers do not get directly involved in routine currency problems, but participants need to be reminded that other than temporary exchange rate changes inevitably affect the competitiveness of the countries (and firms) involved, and hence is (or should be) a major concern to every manager.

  4. PLACE TRANSACTIONS ON A CASH BASIS

    Cash flow planning is dramatically simplified by setting future Accounts Payable/Receivable percentage rates in consumer and/or inter-company sales to zero. In effect this will place the most important flows of funds on a cash basis.

  5. STANDARD INTER-COMPANY LOANS ONLY

    We retain straightforward form H4, but drop H8 for tailor-made financial service. H4 is already in Swiss Francs to both companies. Intercompany payments using W1 banned or permitted in Swiss Francs only.

  6. STANDARD PLANT SALES ONLY

    Permit only the standard excess plant sale to an "outside" industry (i.e. to the Facilitator, as per Form W2 in FORMIN Help).

  7. UNRESTRICTED PATENTS ONLY

    Swiss Francs only. NO patent pools (but cross licensing OK).

  8. NO JOINT VENTURES

    (Simplifies life for the Facilitators as well.)

  9. AIR FREIGHT ONLY

    This eliminates a major logistics challenge for the teams, and attendant time - lag problems. It may be wise to provide companies with copies of Form H6 with Mode of Transport option pre-recorded as "A".

  10. FORGET ABOUT MODEL SCENARIO

    Do not use the Model Scenario at all -- or only highly selectively. It means a considerable simplification for participants (and will also make your life as Facilitator simpler).

  11. LIMIT THE GAME TO CHIPS (OR CELL PHONES)

    In this way the complexity, and need for synchronization of the chips-PC configuration is eliminated. This removes a lot of worries from the teams, and in addition will automatically bring the time spent in intercompany transactions under control.

    Cellphones might be a better name than chips for a product exclusively for end consumers. To make sure of an adequate market you may also wish to multiply all numbers of the PSO1 parameter by a factor of 2 or 3, depending on number of teams.
If some version of item 2 or 3 is used in some combination in which item 4 is also employed, it is clear that cash budgeting will be much simplified. In such a case teams might find it appropriate to design their own cash budgeting approaches.

If you use the local currency option in item 3, it might be a good idea to reduce the interest rates on Supplier Credit (SC), etc., everywhere. Finally, you may delete the Board Message on the Balance Sheet (WC menu) and insert a text somewhat like this: In this run of INTOPIA, the Foreign Currency Statement (FCS) is largely relevant only in Liechtenstein.

SIMPLIFYING FOREIGN EXCHANGE MANAGEMENT IN Q1

In making Q1 decision teams are confronting a rich variety of entrepreneurial and, if the Model Scenario is being used, several strategy-tactics decisions as well.

A good idea of Accounting Prof. John Hill here at IU is to reduce the decision-making level somewhat in the initial Q. He recommends that teams are instructed to make the capital transfer from HO necessary for Area working capital in Swiss Francs (SF, Currency 4) on Area Form F3. They should also be told to use "Conversion in Area?" option in the Cash Transfer part of the form, by hitting the "Y" key. That option will also take care of most, if not all, other conceivable FC needs which might occur in Q1.

CUTTING THE FLORA OF FORMS

An easy way to simplify life for participants (especially if saving time is important), and still retain all essentials of a standard run of the game, is withholding Decision Forms F4, H7, H8, and W2. This reduces by 25% the number of forms used. Teams should be informed that these somewhat specialized types of decisions and transactions will not be featured in the current game. (W2-type plant disposals to non-industry members to be handled by Faciliator.)

APPLICABLE SCENARIO

While many users prefer to develop their own scenarios of environmental events, several users still use the Model Scenario delivered with the Master Program. The main part of this scenario may still be used in simplified version of INTOPIA, but appropriate changes should be made (for instance, there will be no Brazilian devaluation).
Frequently Asked Questions
Course Synopsis
Model Scenario
Lecture Topics
Flexibility & Modularity
General Simplification
Itemized Simplification
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