Business Policy Game
Rules & Procedures
Total Enterprise Simulation
An international simulation
HRM integrated throughout
An International Simulation
Merica, a North American country
Choice of second country
Merica – Domestic competition
Nystok – Eastern European
Pandau – Southeast Asian
Sereno – Latin American
Separate demand structures
Currency transfers via exchange rates
Project expenses and
Manage financial structure
of the firm
Short-term bank loans
Bond sales & repurchases
Stock sales & repurchases
Certificate of deposit investments
Sales office management
Price by area Product quality
Advertising by area Product features
Product introduction Market segments
Price & Advertising by area
Sales Office Management
Sales force management
Hire, fire, transfer
Closing and opening offices
New lines – 1 quarter to complete
New plant addition – 2 quarters
New plant – 3 quarters
Close & sell plant
All reports since
View reports on
Management Department, ST 717
Grad assistants who run the game can be
found there on decision days (Monday &
Thursday) from 9 a.m. to 6 p.m.
Each MGMT 497 section is a separately run
Each team is a company competing against
other companies in this world
Do NOT forget your world and team
number for the next 10 weeks!
Simulated world: consumer durable.
Two Year Plan and Final Reports: DO NOT
need to choose a product.
Assume, for purposes of your plan, that
everyone else in your world is selling the
same product: your direct competitors.
Criteria Weighting Factors
Game performance is graded based on ROA,
ROE, MS ($, not units), SP, UPC, TNI
Weighting factors indicate how your team
prioritizes these objectives
Allows your team to influence how you will be
Preliminary: trial run, may be changed
Final: set in concrete; basis for grade
Each team submits its decision drive for
Each decision is for one quarter (4 decisions
The game runs for 4 years (Years 3 – 6), or
16 quarterly decisions
Geographic Home Areas
Area 1: Eastern Merica – Teams 1 and 4
Area 2: Southern Merica – Teams 2 and 5
Area 3: Western Merica – Teams 3 and 6
Area 4: Nystok/Pandau/Sereno – all teams
have international sales offices; none have
headquarters or plants here
Each team receives a Decision drive during
the first week of classes.
Each team will input their quarterly
decision ONLY on the Decision drive
provided by the instructor: copies will NOT
Input decisions using the Players Program
available on the bpg website
Get the Players Program
BPG website software.bpgsim.biz
Go to Players Area
SCROLL DOWN to get 6th edition
Download copy of the manual, if you wish
Download the Players Program onto your
PC or laptop
User name = player
Password = swb30oss
Install the program
BPG Game Site
• Main Menu
• Decision Variables
• Frequently Asked Questions
Quick Start Menu
Player’s Program Menu
Buttons for frequently
Decisions used items
New decision set
Open decision set
Player’s Program (English, Portuguese, Spanish)
Player’s Program Tutorial
Quick Start Manual
Pay the Simulation Licensing Fee
On the bpg website, use a credit card to pay
the $100 licensing fee for your team
Make sure you input the correct World #
and Team #
Send the license to
Provide your own email address for
confirmation of the credit card transaction
SetUp: make sure you set to the correct
drive (e.g., a: drive, g: drive—however this is labeled for
your flash drive in your computer)
Copy decision forms from Appendix
Note market research is from menu
Warning: New Decision vs. Change
Change previously entered decisions*
*Context –sensitive help
Decision Input Form
See Appendix C for 2 year history and
Market research is not instant: will be
printed out with your results
Level playing field
Industry rankings clear with each output
The Game Will Not be Rerun!!
Get Your Inputs Correct the First
[HINT: If you really want to FAIL Mgmt
497, change your team’s decision before
turning it in.]
Print TWO Copies of
Your Decision Inputs
One copy for your records.
One copy turned in in case your drive
has a virus.
Decisions are Due by 1:00 P.M.
Monday and Thursday
If your decision drive is not received
on time, your previous quarter’s
decision will be used
Bring Your Photo ID!
I.D. is required for turning in and picking
up the decision drive: this is for your own
Pick up time: 5 p.m.
Be wild and wacky. Lose millions of
dollars if you wish. And be sure to
try out all the decision fields, so you
know how they work.
Turn in your company name to the
simulation grad assistants
Turn in a list of all your company
executives with phone numbers with the
first Game Decision—just in case!
Hope you will enjoy the
Business Policy Game!
Playing the Business Game
Remember that your company’s Market Share will be evaluated based on
dollar sales, not on unit sales:
Too much under-pricing is not a wise strategy to gain market share.
Sales revenue data (in $000s) are given in Report F2.
Keep track of any change in operating profit margin:
Monitor production costs and operating expenses closely.
Account for possible general cost inflation (as indicated by CPI).
Adjust production costs for different models, different features and
different quality levels when introducing a new product model (see
Note that the better the margin is, the more money the company will be able
to get from every dollar of sales to invest in growth, fund strategic plans,
repay debt, buy back stocks, or distribute dividends to shareholders.
Emergency Bank Loans
Emergency borrowing will lead to:
An immediate downgrade of the company’s credit rating and thus a
sharp rise in borrowing costs.
Additional disincentive effects:
Causing some salespersons to leave the company.
Causing consumer demand to fall.
As with standard bank loans, emergency loans will be automatically repaid
from your bank account on the first day of the following quarter. Interest is
charged, at a high premium rate, during the quarter when the loan is
R&D Funding for Product Development
The payoffs from R&D spending can take time to show up:
Much of the R&D spending may have little immediate payoffs, but it
improves the prospect of significant payoffs in the future.
The law of diminishing returns still apply:
Beyond a certain amount, large increases in R&D funds will not lead to
any substantial reduction in time for developing a new product.
Any large cut in the R&D budget will have a negative morale effect on the
R&D department, causing some of its best people to leave.
Skilled researchers are hard to find and cannot easily be replaced once
they leave the company.
Due to lack of funds, many existing projects can be halted. Even a new
product model which is close to release can be scrapped.
The company should avoid large swings in R&D funding. Hence, steady
funding of R&D efforts is important.
Temporary Layoffs and Line Deactivation
Increase operating expenses in the corresponding quarter
Temporary Layoffs – They will result in a charge for each quarter a
production line is idle and on standby.
Deactivating Lines – They will lead to a one-time charge (costing almost
twice as much as the per-quarter charge for temporary layoffs).
Deactivated lines can be reactivated later but with an additional charge.
Negative morale effects on productivity
Lower productivity will result in higher per-unit product costs.
Less units to spread the fixed overhead costs over
The average cost per unit will rise with decreased production.
To be sure, keeping extra production lines just to avoid a higher UPC will
not be good if the unsold surplus units are piling up with no quick
turnaround in sight.
Introduction of a New Product Model
Confirm the availability of a new product model.
Check either the Industry Report (Report F2) and the Operating
Information Report (Report E) from the latest quarter.
Enter the new model number on the decision form for the current quarter
(indicate also the quality and features levels you want for your product in
each market area).
During the current quarter, your company will produce the new model but
still sell the old model out of the inventory on hand.
If the old inventory is depleted, some customer orders will be met using
the new model.
Any unsold units of the old model will be liquidated at the end of the
All the inventory available next quarter will be of the new model. The new
product model will officially be introduced and sold in the next quarter.
Product Model and Sales
A new product model may not always be successful:
There is at least an 80% chance that the new model will succeed and
There is up to a 20% chance that the new model will not do well and will
actually cause a decrease in sales.
Even when two companies sell products with the same model number and
same product characteristics, their products will not be perceived as identical
products by consumers:
This means the product brand matters for consumers.
Being the first to enter a specific market or sell a new product allows a
company to acquire superior brand recognition and customer loyalty,
thus giving the company some extra advantages to stay on top.
Reading the Industry Report
When reading the Industry Report (Report F), you can see some quarterly
data for all the companies in your industry. Some of the ratio numbers
reported can help you evaluate the relative profitability and efficiency of the
Reported in the Report Financial Ratios
Income to Assets Ratio = Return On Asset
Income to Equity Ratio = Return on Equity
Income to Sales Ratio = Net Profit Margin
Sales to Assets Ratio = Asset Turnover
Bonds to Equity Ratio = Debt to Equity Ratio
Hope you will enjoy the
Business Policy Game!