J&J

Engineering Leadership
Development Program

Management Development
Simulation
 AGENDA
I. Introduction

II. Draft: Learning Objectives

III. Setting up the Simulation

IV. Example: Team Structure & Roles

V. General Simulation steps

for each team

VI. NEXT STEPS

Appendix:
Biographical Summary of the Author of the Simulation
I. Introduction

Gold Simulation’s core business is the development of

simulations to meet training and educational challenges
necessary to achieve outstanding employee results.

Business simulations are among the most effective

learning experiences, driving real and enduring behavioral
change.

Dynamic, realistic experiences allow the participants to

apply knowledge and learn from their mistakes before
costing your company a fortune.

What better way to learn management & leadership skills

than being given the opportunity to run a company in a
competitive environment.

It will be motivating, effective and fun!

II. Draft Learning Objectives:
1. Learn & apply management skills by being on a firm’s “board of
directors” in a simulated marketplace & economy.

2. Understanding the “big picture” of managing a firm & how all

functional areas must work together to deliver outstanding business
results.

3. Learn the difficulty of making short and long term decisions in

view of uncertainty and the importance of prudent risk taking.

4. Effectively using financial information to make key decisions for

capital and expense spending to improve revenue & costs.

5. Enable the future leaders of J&J to:

-Apply Leadership Skills

-Build an effective team
-Understand the Strategic Management Process
-Apply negotiation skills
-Improve planning & coordinating for success

6. Have fun competing against your peers and learn from your
“mistakes”.
III. Setting up the Simulation Experience
1. Number of firms.
Can have any number of JNJ managed firms competing only against
each other or in a marketplace with computer managed firms as well
(i.e. 10 JNJ managed firms, 15 computer managed firms for a total of
25 firms in the marketplace).

2. Number of JNJ people per firm.

You can have any number from 1 or more. Typically the teams
range from 3 to 5.

3. Number of decisions
Can select up to 8 major decisions impacting demand, supply and
costs for several functional areas including:

-Marketing/Sales: Price, Advertising

-Customer Service: E-commerce improvements such as an on-line
services, web marketing, electronic payment &
shipping.
-Research & Dev: Investment level
-Finance & Eng’g: Capital investment impacting capacity & efficiency
-Operations: Production level
-Quality: Process improvements impacting efficiency & quality
-Human Resources: Training investment

4. SET Overall objective for team competition

-Maximize cumulative profits, Market Share, Capital Efficiency, other
III. Setting up the Simulation Experience - continued
4. External environment
You can set the economy to make the game more complex
or less complex such as:
-Growing economy, Business Cycles, Unknown economy

5. Duration of the simulation game.

Typically runs from 4 to 8 periods of “play” where each is
considering three months in time but any number is possible.

The decisions for each period can take as little as 15 minutes with

minimal analysis to an hour per set of decisions.

Options to reduce conference time requirements:

1. Have a few periods played by teams remotely in advance of the conference & leave
the final one or two periods to play when they are at the conference.
2. Introduce the simulation at the conference, play 1 or 2 periods and the balance after
the conference.
3. Have the entire simulation played before or after the conference.

6. Team Structure & Roles

The roles and responsibilities can be combined to accommodate
various team sizes from 2 to 8 members with anywhere from
4 to 8 decisions. Typical roles played may include:
President & Board Members:
-VP of Operations – VP of Finance – VP of Marketing/Sales
-VP of R&D – VP of Quality – VP of Customer Service
 IV. EXAMPLE : TEAM STRUCTURE AND ROLES
4 members per team with 8 decisions
PRESIDENT
1. Chair board meetings & lead the management board.
2. Ensure development of company mission and strategic plans.
3. Ensures all decisions are made on time.
4. Spokesperson for the company and gives summary presentation of
lessons learned at the final overall ELDP meeting on behalf of the team.
5. Responsible for Research & Development investment (since no VP
R&D)

V.P. of FINANCE & Management Board .

1. Recommendation & achievement of financial objectives.
2. Assessment & impact of General Economy and Industry.
3. Evaluation and forecast of cash flow and profitability.
4. Support other team members with financial analysis
5. Recommend tactical “simulation decisions” for capital investment (plant size).

V.P. of OPERATIONS & Management Board

1. Recommendation and achievement of Operations Objectives.
2. Assessment of plant capacity utilization, productivity, and cost efficiency.
3. Recommends tactical “simulation decisions” for production level, process
improvements/quality and training investments.

V.P. of MARKETING/SALES & Management Board

1. Recommendation and achievement of sales objectives.
2. Forecasting of sales both short and long term (1 to 3 years).
3. Evaluation of company and competitor pricing, advertising.
4. Recommends tactical decisions for price, advertising and e-commerce.
V. General Simulation Steps for Each Team

1. Evaluate internal & external environment.

2. Forecast market demand and supply.
3. Formulate strategic objectives
4. Develop short and long term strategies (short term
is next 1-2 quarters and long term is next 2-3 years).
5. Enter simulation decisions on line.
6. Obtain results, and repeat steps 1-5.

General Group Discussion: Can occur after each session or wait

till the wrap up session indicated below.

Wrap Up Session– Lessons Learned Presentation by Each

Team or Selected Teams

*How they dealt with risk and uncertainty in decision making

*Utilization & importance of financial analysis to make decisions.
*How the key strategies and tactical decisions were negotiated.
*Collaboration and teamwork issues
*Impact of forecasts on company performance
VI. NEXT STEPS
for
 APPENDIX

Biographical Summary of the Author of the Simulation

Dr. Steven Gold, President of Gold Simulations is a professor of

economics in the College of Business at the Rochester Institute of
Technology, and department chair of Accounting and Finance. He
has been active in the development of economic and business
simulations for use in the classroom and in industry. He is the
author of 4 computerized simulation games and has published over
24 referred journal articles and proceedings in the field of simulation
and gaming. The first commercially available microeconomic
simulation in the nation, MICROSIM, was published with Macmillan
Publishing Company in 1984. His other published simulation games
include: Decide-POM: Decision Exercises in Computer Instructor
Designed Environments in Production and Operations Management
(with McGraw-Hill); Astute Business Policy (with SHR Associates),
and currently Beat The Market: An Interactive Microeconomic
Game (with Gold Simulations, a company he founded). Dr. Gold
was past President of the National Association of Business
Simulations and Experiential Learning (ABSEL). He has presented
his research abroad at the International Simulation and Gaming
Association in Weimar, Germany, and as a lecturer at Scheffield
Polytechnic Institute in England; and the Czech Republic.