by Chiraag Devani, Mark Henry, and Fajar Prihantoro
Students from graduate level Engineering Management programs around the nation are offered the opportunity participate in some friendly academic competition in the 2017 MEMPC PriSim Business War Games Competition. This simulation is designed to mimic the real world: an overwhelming amount of data is provided, decision combinations are seemingly endless, and finding success in the simulation involves finding success in the teams. Teams are expected to meet at least twice a week to submit decisions every four days or so, which translate to “periods” in the simulation. Input decisions and inherent simulation factors are processed and results are presented for review before the team makes the next set of decisions. Duke University was represented in two teams of four Engineering Management students, and faced teams from other Engineering Management programs such as Cornell University, Northwestern University, and Dartmouth College.
The teams were formed based on student interest, and the simulation was kicked off with a lunch to meet team members and learn more about the simulation. After initial simulation familiarity was established, team members divided the major sections of the simulation for specialization – advertising, financing, manufacturing, and product development. Each specialization became a focus for one team member, who closely examined results in that specific section and presented recommendations during each meeting. These recommendations were then discussed with the rest of the team before locking in final decisions.
The winner of the simulation was determined by a scoring sheet containing various performance metrics: market share, final stock price, market value, cumulative profit, final round profit, ROA, ROE, and customer preference. Teams decided which metrics they wish to be measured or focused on. Winning teams are those who were able to achieve outstanding performance in metrics selected based on strategy used during the simulation. Establishing strategy in the beginning of the simulation was critical. Some considerations for establishing a winning strategy are a) focusing on technology and product development in the early stage so that the teams can launch the best cars in the market b) understanding which of the car’s attributes the market wants and targeting the market segment/sub segment that best fits the team’s strategy, c) creating the right marketing and advertising strategy for the current/new cars, and d) properly forecasting sales to plan production and inventory capacity.
Relating the simulation back to our classes within the Engineering Management Program was the biggest take away. During our marketing classes, we had completed a PharmaSim simulation within the medical industry and the strategies we had developed were directly applicable. The ability to analytically prepare and identify revenue models that would result in the highest level of profit was a key advantage for the Duke teams. In addition, through our Finance class and exposure to project management and technology commercialization, the members of the team were able to directly apply their coursework and academic knowledge. In regard to choosing the right metrics to be graded by, our team did extremely well in identifying Return on Equity and Return on Assets as our largest competitive advantage.
While the competition was a fantastic learning experience, not everyone could be a winner. Based on our two teams’ strategies, we believe there was room for improvement. Firstly, the majority of our focus was on our individual markets and strategy. There was excitement in developing a new strategy and changing the product lineup. Ultimately, this was a competition and this approach allowed teams who kept the original basic sedan lineup to own the market segment and maximize volume growth. Lastly, the simulation was run with a finite number of periods. Several of our competitors exaggerated their strategies in the final period to increase their selected performance metrics without consideration of the next period. Both Duke teams acted with the idea that this would be an ongoing business and did not take actions that would have improved performance in the last period but would jeopardize the long-term viability of the enterprise. This decision affected our performance in the last period and our ranking in the competition.
All in all, the PriSim Business War Games Competition was a great learning experience for the participating Master of Engineering Management students. It helped to apply contextualize coursework and provided students with an opportunity to work as a team solving complex business and engineering situations.