GROWBAL

PLAYER BRIEFING PAPER

ON LINE VERSION

INTRODUCTION .................................................................................................. 2 
STRATEGY FORMULATION................................................................................ 5 
IMPLEMENTATION - (DECISIONS REQUIRED EACH HALF YEAR) ................. 6 
ADDITIONAL INFORMATION ............................................................................ 13 
DECISION SHEET – previous management ...................................................... 14 
CURRENT FINANCIAL INFORMATION ............................................................. 17 

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© 2020 Chris Elgood Associates Ltd.
INTRODUCTION
You have recently been appointed as a Board member for a retail office furniture
company. The company is a listed company with a current share price of £2.50. In
your role you will be asked to formulate the company’s strategy for the future, and
to devise the policies to implement this strategy.
Your objective, along with your fellow Directors, is to increase the company’s share
price and secure the future of the company.

RULES AND BOUNDARIES

You are taking part in a simulation and the information in this text provides the
framework within which your company operates. There are six companies
competing in the market, all starting from the same position:
 they all offer products in every market segment,
 they each have a one sixth share of each segment,
 they have identical profit and loss accounts.
Financial results for the last half year before you joined the board are shown in
Current Financial Information from page 176.
As a team you will need to formulate your strategy using the data provided, and by
drawing on your own knowledge of how businesses operate. The simulation is
interactive: if one company improves its decision-making during the simulation and
the others do not, then the improved team will benefit and the others will suffer.

THE CURRENT SITUATION

THE MARKET
Your company trades in Europe, and exports to Africa and Asia. For the past three
years the company has been trying to build sales in Africa and Asia, exporting from
its warehouses in Europe. So far, these two markets have only shown very modest
profits.
For the past five years all markets have grown slowly and the projection for the
future is similar (See Table 1: Potential Increase in Market Size).

Potential Increase in Market Size

Geographical Area
Year 1 Year 2 Year 3
Europe 2% 2% 3%
Africa 3% 4% 5%
Asia 4% 5% 5%
Table 1: Potential Increase in Market Size

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© 2020 Chris Elgood Associates Ltd.
MARKET SEGMENTS

Your company purchases and re-sells three product ranges, which are aimed at
three distinct market segments as described in Table 2: Key Customers.

Range Key Customers

Popular Educational establishments, religious and community facilities,

factory environments.

Standard Furniture used by most employees working in commercial offices

and home office environments.
Statement pieces used for boardrooms, senior executive offices
Executive
and Reception areas.
Table 2: Key Customers

In the last half year your split of sales revenue for these ranges in the three
geographical markets was as in Table 3: % of Total Revenue Generated by each
Segment.

Geographic Area % of total revenue generated by each segment

Popular Standard Executive
Europe 31 32 37
Africa 40 34 26
Asia 36 34 30
Table 3: % of Total Revenue Generated by each Segment

Within each geographical market there are four different sectors.

1. Government: Sales made to the Government through negotiation and by

tendering for contracts.
2. Big Firms: Sales made by negotiation and tender.
3. Retail: Sales made to independent retailers.
4. Direct: Sales made online to individuals and small traders.

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© 2020 Chris Elgood Associates Ltd.
Within each segment there are four channels to market, see Table 4: Channels to
Market.

Channel Customer Groups

Central and local Government departments. Associated
Government
organisations such as Embassies.
Large public and private organisations employing over 1000
Big Firms
people.
Retail outlets Retail companies selling onto the end user.

Direct Direct sales on line to individuals and small vendors.

Table 4: Channels to Market

Table 5: Market Size for the Past Half Year, shows the entire market size for the
past half year, i.e. what all 6 firms sold.

Total market Government Big Firms Retail Direct

size (£ m
revenue) £m £m £m £m
Europe 30.1 8.2 12.8 5.8 3.3
Africa 8.0 2.4 2.9 1.6 1.1
Asia 8.7 2.2 2.4 2.2 1.9
Table 5: Market Size for the Past Half Year

MARKET ACTIVITY
All companies start the simulation in the same state. You should assume that this
follows a stagnant period when none of the companies took any major initiative,
and all were content to maintain their market share. The costs shown in the
financial information reflect this. If you decide to embark on a strategy to achieve
sales growth also consider the potential impact on your marketing and
administrative costs.
If you decide on a strategy not to spend anything on marketing in a particular
segment this will indicate your desire to withdraw from a market and your sales will
fall away.

PRODUCT SOURCING
At the present time all the company’s products are sourced from Europe. Pressure
on profit means that significant research has been done to identify alternative
sources. A report detailing alternative options will be issued as soon as the
research is complete.

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© 2020 Chris Elgood Associates Ltd.
STRATEGY FORMULATION
You need to formulate a strategy for your company. It may be helpful to ask
yourselves the following:

1. What is the current market situation?

2. What are the predictions for the future?
3. What internal constraints are there?
4. In which areas can the Board make decisions?
5. Which of the decision areas would enable the Board to take advantage of
the opportunities identified?
If you have an opportunity to consider these issues individually in advance, then
your first Board meeting can be spent sharing ideas and agreeing strategy.
If this is not possible, time will need to be set aside at your first Board meeting to
establish the current situation and formulate your strategy. You will be provided
with a strategy and audit sheet to record your initial strategy and any revisions
made during your tenure.

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© 2020 Chris Elgood Associates Ltd.
IMPLEMENTATION - (DECISIONS REQUIRED EACH HALF
YEAR)

The simulation is played in time periods that represent one half year each. Each
half year you will need to complete a decision sheet. A copy of the decision sheet
completed by your predecessors is included from page 14, and you will receive a
blank one of these each half year. Keep a record of the decisions you make each
half year to help assess your results and refine your hypothesis. The following
information describes each of the decision areas, and the options available to you.

CONTROL CODE - COVERING ALL AREAS

What degree of autonomy do you feel should be given to the regional managers?
There are three choices (see Table 6: Control Codes), each demonstrating a
different policy.

Choice Policy
Tight control over practices and procedures so that staff in all
1 geographical and national areas are visibly conforming to 'The
company way of doing things'.
An intermediate policy with some direction from the Board and
2
some local autonomy.
A high degree of local autonomy with little interference from the
3
Board.
Table 6: Control Codes

GEOGRAPHIC AREA DECISIONS

For each geographic area you must consider:
1. The image you wish to portray.
2. The sectors you want to target.
3. The pricing policy you want to adopt.

MARKET IMAGE
This is the image you wish the public and your customers to associate with your
company. The image is then translated into how you present and sell all of your
product ranges. Creating a clear image will help customers to identify your
products and help both public and staff relations. If you choose an inappropriate
image, or your other decisions do not back up your choice of image, this will have a
negative effect.

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© 2020 Chris Elgood Associates Ltd.
Table 7: Image Codes and Descriptions, lists the images available and gives a brief
explanation of each. You may choose a different image from the list for each
geographic market.

Choice Image Description

CL Classic Timeless. It will never be dated.
Contempora
CO Modern. Up-to-the-minute.
ry
Designs are instantly recognised and different
DI Distinctive
from competitors.
EL Elegant Pleasing to look at.
Only for the best people. Shows a refusal to
EX Exclusive
compromise on quality.
FA Fashionable Trendy, quick to copy changes in trends.
GL Global Available all over the world.
GR Green Environmentally sensitive.
OP Opulent Makes a show of extravagant quality and cost.
PO Popular Affordable by ordinary people.
RE Reliable Solid range of products that people trust.
RO Robust Strong. Down-to-earth. Won’t break.
You do not wish to offer your products for sale in this
Not Trading
geographic area.
Table 7: Image Codes and Descriptions

It is possible to change your image each half year, but the impact may be delayed
while customers and staff adjust.

Entry of decisions online:

If you decide not to offer your product for sale in a geographic region select ‘not
trading’ from the drop-down image code box.

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© 2020 Chris Elgood Associates Ltd.
SEGMENT/SECTOR STRATEGY

The division of the markets into segments (Popular, standard, Executive) and into
sectors (Government, Big Firms, etc.) means there are twelve mini-markets in each
geographical region. In each of these you must choose between six allowed
marketing strategies to implement your overall strategy. The options are shown in
Table 8: Marketing Strategy.

Choice Marketing Strategy

5 Develop aggressively.

4 Develop steadily.

3 Maintain position.

2 Reduce gradually.

1 Reduce rapidly.

0 Withdraw from market.

Table 8: Marketing Strategy

When you take up your appointment on the board, the effectiveness of each
company’s marketing strategy is identical. The decisions each company now
makes regarding their marketing will change this. For example, five companies
might choose to increase their marketing effort in a particular market segment,
whilst another elects to maintain its position. In this scenario the company that
decides to leave its marketing effort unchanged will find it has fewer sales in that
segment than those who increase their marketing effort.
The level of marketing effort can be changed each half year. However, if you
withdraw from a market, re-entry will require a significant investment.
Your segment decision will affect your marketing costs. These include the
promotional activities suitable for each sector. The sector with the lowest marketing
costs is Direct Sales. Compared with this, the costs of the other three market
sectors are shown in Table 9: Marketing Cost Relative to the Direct Channel (%).

Channel Marketing cost relative to Direct (%)

Government 133
Big firms 200
Retail 233
Table 9: Marketing Cost Relative to the Direct Channel (%)

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© 2020 Chris Elgood Associates Ltd.
PRICE STRATEGY
For each range there is a price band within which your products will be offered for
sale. Within these bands you must decide how you wish your managers to operate.
For example, if prices in the market place are cut, do you want your management
teams to stand firm, to match the lowest price being offered, or to undercut all
competitors? You communicate your policy to the managers by selecting one of the
codes shown in Table 10: Pricing Strategy Codes.

Choice Policy

Your intention is to keep prices towards the top end of the accepted
range for the sector. This policy gives customers the message "We
P believe this is a sensible price and that unjustified reductions help
nobody in the long run". A Board of Directors selecting P would not
want to reduce prices in response to reductions made by others. It
would want to raise prices where conditions permitted.
You are adopting an intermediate strategy in which the aim is to
M charge "the going rate". A Board of Directors selecting M would
want to follow price alterations made by others but would not initiate
them.
You are searching for a price advantage. A Board of Directors
selecting R would expect to operate towards the bottom end of the
R price range appropriate to the sector. This decision implies a
willingness to initiate price competition, and to respond to price
competition from others.
Table 10: Pricing Strategy Codes

The only way in which you can increase your prices is by skilfully positioning the
company. You can create a situation in which your managers are able to raise
prices because of the perceived value of the company’s products. Conversely,
excessive discounting may result in lower prices throughout the market.

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© 2020 Chris Elgood Associates Ltd.
MANAGEMENT PRIORITIES
As the Board of Directors, you need to translate your strategic vision into tangible
actions that staff can implement by selecting four management priorities each half
year. The four items you select will then be given top priority. None of the other
areas will be totally neglected, but you are indicating that, at this moment in time,
your four highlighted areas are of paramount importance.

Entry of decisions online:

If you are not trading in a geographic region do not select Management Priorities
for that region.

You can select the same management priorities across all regions but within a
region a priority can only be selected once.

For the geographic regions in which you are trading you can choose different
priorities. The areas that you can choose to focus on are shown in Table 11:
Management Priority Codes.

Choice Management Priority

1 Advertising.
2 Customer Insight and Research.
3 Discount Policy.
4 Environmental Sensitivity.
5 Product Support.
6 Promotional Literature.
7 Public Relations.
8 Selling Skills.
9 Supplier Relations.
10 Systems and Administration.
11 Training (All Levels).
Table 11: Management Priority Codes

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© 2020 Chris Elgood Associates Ltd.
AGENDA ITEMS
As a Board director you will have to make decisions about a wide range of topical
issues that crop up unexpectedly. Issues which cannot be linked directly to the
other decisions you make are provided as agenda items.
The number of agenda items you receive each half year will vary. In some periods
the documentation you receive will require you to discuss an issue and select one
of the recommended options. In others you will be required to discuss an issue and
make a decision without being provided with options. In these instances, your
Board will need to submit a written recommendation with an explanation.

DIVIDEND
You may decide to pay a dividend to your shareholders. This dividend will be
awarded as a consequence of the current half year. So, for your first half year you
would make your decision by evaluating the choices you are making for the current
6 months, and by examining the financial position you inherited from the previous
Board. The cash required to pay any dividend will be taken from your next balance
sheet. Your ability to pay a dividend does not depend on the previous half year
showing a profit.
Dividends are paid on the basis of pence per share. When you join the Board the
share capital is 4 million £1 shares.

Entry of decisions online:

Enter the dividend as pence per share with a maximum of one decimal place.
£1.00 would be entered as 100, £0.21 would be entered as 21 and £0.025 would
be entered as 2.5.

The maximum dividend allowed in any decision period is £2.50 the value of the
shares at the start of the simulation.

SHARE CAPITAL SOUGHT FROM NEW SHARE ISSUE

You may wish to raise new capital. Shares will be taken up at the company's
current share price. This is £2.50p when you join the Board but will vary during
your stewardship. All share issues will be fully taken up, but you cannot issue more
than 4 million new shares.
In the Balance Sheet, the whole amount received from your share issue will be
shown on the Asset side as Cash. On the Capital side, Share Capital will increase
by the nominal value of the issue: the difference between nominal value and actual
value will be an adjustment to the Retained Reserves account on the Balance
Sheet.
For example, if you issue 1 million shares in your first half year, your Share Capital
will increase to 5 million, and your cash position will improve by 1,000,000 x £2.50.

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© 2020 Chris Elgood Associates Ltd.
Entry of decisions online:

The maximum number of shares you can issue during the simulation is 4,000,000.
These can be issued in one period or spread over a number of periods. Enter the
number of shares you wish to issue as a whole number without commas or decimal
points. So, 1,000,000 shares would be entered as 1000000.

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© 2020 Chris Elgood Associates Ltd.
ADDITIONAL INFORMATION
STOCK VALUE
When you join the Board the value of the stock you hold is shown in the accounts
as £2,667,425. You have 3,483 units of the Popular range, 3,545 of the Standard
range and 1,988 of the Executive range. All items are valued at the average cost
price shown on the Sales and Cost Information Report.
During the simulation you may make decisions which result in stock being
purchased at a cheaper rate. To allow for this, the value of stock is always worked
out on an average cost basis. All the money spent on stock during the simulation is
divided by all the number of units purchased and the average cost for the Popular,
Standard and Executive ranges is worked out separately. This figure is used for
two purposes. It is used to multiply the number of units in stock to give the stock
value in the balance sheet. It is also used to multiply the number of units sold, and
so to get Cost of Sales.
Stock is ordered automatically in response to the expected pattern of orders, but
the amount of stock held will vary. The simulation examines a combination of your
different decisions to measure the skill shown by your Board as regards stock
management. If your stock falls below a certain figure there will be two adverse
effects. Firstly, the company will not win all the orders that it might otherwise get
because the item needed is sometimes not in stock. Secondly, the amount of stock
judged to be necessary in order to service a given level of business will increase.
This is because the company is deemed to be making mistakes about what to buy,
in what quantity, and about recording and finding things. It is therefore possible for
two companies with the same level of sales to be holding quite different values of
stock.

TRANSPORT CHARGES
There is a transport cost attached to sales in Africa and in Asia. This currently
works out as an average of £25.00 for Africa and £50.00 Asia.

STAFF MOTIVATION
The report headed Sales and Cost Information includes a figure for the company’s
motivation index. The figure of 100 when you join the Board is seen as average. A
company with highly motivated staff will be more cost effective and more
successful at winning sales.

PRODUCT SOURCING
When you take up your positions all products are being sourced from Europe.
However, significant research is being done to find an alternative supplier in the
developing world. As soon as the purchasing and operations departments have
agreed on a supplier, they will put forward a recommendation for you to review.

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© 2020 Chris Elgood Associates Ltd.
DECISION SHEET – PREVIOUS MANAGEMENT

TEAM NAME Previous Management Team

Use this sheet to record the decisions you make so you can analyse your results
and draw conclusion.

CONTROL CODE

Circle your choice of control code for this Half Year 1 2 3

GEOGRAPHIC AREA DECISIONS

Use the grids below to record the decisions you make for each region (e.g.
Europe).
If you do not want to offer your products for sale in a region then you do not need
to have a strategy for that region and when entering your decisions into the online
software, select ‘Not Trading’.
For all regions where you do want to offer your products for sale you will need to
make three decisions:
 Image Code: you can select a different image code for each region.
 Strategy for the market segment and sector: this is the effort you wish to put
behind your marketing strategy. Enter an integer value between 0 and 5.
 Price Strategy: this is the price strategy you wish to follow for each market
segment. Enter P, M or R.

EUROPE

Image Code CL CO DI EL EX FA GL GR OP PO RE RO

Strategy Popular Standard Executive

Government 2 2 2
Big Firms 2 2 2
Retail 2 2 2
Direct 2 2 2

Price Strategy P/M/R M M M

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© 2020 Chris Elgood Associates Ltd.
 AFRICA

Image Code CL CO DI EL EX FA GL GR OP PO RE RO

Strategy Popular Standard Executive

Government 2 2 2
Big Firms 2 2 2
Retail 2 2 2
Direct 2 2 2

Price Strategy P/M/R M M M

ASIA

Image Code CL CO DI EL EX FA GL GR OP PO RE RO

Strategy Popular Standard Executive

Government 2 2 2
Big Firms 2 2 2
Retail 2 2 2
Direct 2 2 2

Price Strategy P/M/R M M M

MANAGEMENT PRIORITIES

Priority Priority Priority Priority

Number Number Number Number
Europe
The previous management team failed to translate their
Africa
strategy into priorities for the staff.
Asia

AGENDA ITEM CHOICES

Record the number for the agenda item you selected for this Half-Year.
The previous management team made no significant decisions during the
last half year.

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© 2020 Chris Elgood Associates Ltd.
DIVIDEND

If you wish to pay a dividend, enter your Dividend in Pence per Share 0.0p
for the Half Year just completed:

NEW SHARES ISSUED

If you wish to issue shares, enter the number of new shares you wish 0.0
to issue:

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© 2020 Chris Elgood Associates Ltd.
CURRENT FINANCIAL INFORMATION

PROFIT AND LOSS ACCOUNT (6 Months)

Previous Management Team

REVENUE 7,813,988

COST OF SALES 4,268,729

GROSS PROFIT 3,545,259

DISTRIBUTION COSTS 190,264

MARKETING 1,440,000
ADMINISTRATIVE EXPENSES 648,800
PROPERTY COSTS 216,223
DEPRECIATION 377,750
STRUCTURE AND DEVELOPMENT 0
OPERATING PROFIT 672,222

FINANCE COSTS 0
GROSS PROFIT POST INTEREST AND BEFORE EXTRAORDINARY
672,222
ITEMS

EXTRAORDINARY ITEMS 53,027

PROFIT BEFORE TAX 725,249

TAX 326,362

PROFIT AFTER TAX 398,887

DIVIDENDS PAID 0

PROFIT FOR THE HALF YEAR ATTRIBUTABLE TO EQUITY HOLDERS 398,887

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© 2020 Chris Elgood Associates Ltd.
 BALANCE SHEET
Previous Management Team

ASSETS

Non-Current Assets 7,177,250

Current Assets
Inventories 2,667,425
Trade receivables 781,399
Cash 1,113,560
4,562,384
Total Assets 11,739,634

EQUITY AND LIABILITIES

Share capital 4,000,000

Retained earnings 5,396,809
Total Equity 9,396,809

Non-Current Liabilities
Long term borrowings 0
Total Non-Current Liabilities 0

Current Liabilities
Bank overdraft 0
Trade and other payments 2,016,463
Current tax payable 326,362
Total Current Liabilities 2,342,825

Total Liabilities 2,342,825

Total Equity and Liabilities 11,739,634

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© 2020 Chris Elgood Associates Ltd.
 SALES AND COST INFORMATION
HALF YEAR 0 (Old Management Team)

NUMBER OF UNITS SOLD BY GEOGRAPHIC AREA, SEGMENT AND SECTOR

Popular Standard Executive
Europe
Government 1,126 469 938
Big Firms 1,783 1,126 1,126
Retail 563 751 469
Direct 281 563 188
Africa
Government 327 164 218
Big Firms 545 273 109
Retail 191 191 109
Direct 109 164 55
Asia
Government 335 129 180
Big Firms 387 103 232
Retail 206 309 129
Direct 206 284 77

MARKEITNG SPEND BY GEOGRPAHIC AREA AND SEGMENT

Government Big Firms Retail Direct

Europe 96,000 144,000 168,000 72,000
Africa 96,000 144,000 168,000 72,000
Asia 96,000 144,000 168,000 72,000

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© 2020 Chris Elgood Associates Ltd.
SALES AND COST PRICE (£'s per unit)
SALES PRICE COST PRICE
Europe Africa Asia
Popular 425 450 465 275
Standard 550 575 590 300
Executive 675 700 715 325

STOCK ON HAND (units) 9,016

TOTAL SALES THIS PERIOD (units) 14,415
MOTIVATION INDEX (Av = 100) 100
LATEST SHARE PRICE (£) 2.50

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© 2020 Chris Elgood Associates Ltd.
 PERCENTAGE SHARE OF THE MARKET
Half Year: 0
POPULAR STANDARD EXECUTIVE
Europe Gov Big F Ret Di Gov Big F Ret Di Gov Big F Ret Di
1 Competitor 1 17 17 17 17 17 17 17 17 17 17 17 17
2 Competitor 2 17 17 17 17 17 17 17 17 17 17 17 17
3 Competitor 3 17 17 17 17 17 17 17 17 17 17 17 17
4 Competitor 4 17 17 17 17 17 17 17 17 17 17 17 17
5 Competitor 5 17 17 17 17 17 17 17 17 17 17 17 17
6 Competitor 6 17 17 17 17 17 17 17 17 17 17 17 17
Highest Price: 425 Highest Price: 550 Highest Price: 675
Lowest Price: 425 Lowest Price: 550 Lowest Price: 675

Africa Gov Big F Ret Di Gov Big F Ret Di Gov Big F Ret Di
1 Competitor 1 17 17 17 17 17 17 17 17 17 17 17 17
2 Competitor 2 17 17 17 17 17 17 17 17 17 17 17 17
3 Competitor 3 17 17 17 17 17 17 17 17 17 17 17 17
4 Competitor 4 17 17 17 17 17 17 17 17 17 17 17 17
5 Competitor 5 17 17 17 17 17 17 17 17 17 17 17 17
6 Competitor 6 17 17 17 17 17 17 17 17 17 17 17 17
Highest Price: 450 Highest Price: 575 Highest Price: 700
Lowest Price: 450 Lowest Price: 575 Lowest Price: 700

Asia Gov Big F Ret Di Gov Big F Ret Di Gov Big F Ret Di
1 Competitor 1 17 17 17 17 17 17 17 17 17 17 17 17
2 Competitor 2 17 17 17 17 17 17 17 17 17 17 17 17
3 Competitor 3 17 17 17 17 17 17 17 17 17 17 17 17
4 Competitor 4 17 17 17 17 17 17 17 17 17 17 17 17
5 Competitor 5 17 17 17 17 17 17 17 17 17 17 17 17
6 Competitor 6 17 17 17 17 17 17 17 17 17 17 17 17
Highest Price: 465 Highest Price: 590 Highest Price: 715
Lowest Price: 465 Lowest Price: 590 Lowest Price: 715

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© 2020 Chris Elgood Associates Ltd.