HOW TO PLAY MORE DETAILS

HOW TO PLAY MORE DETAILS Copyright © 2012 by Harvard Business School Publishing. About Back Bay Battery, Inc. • You are the President of Back Bay B...
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HOW TO PLAY MORE DETAILS

Copyright © 2012 by Harvard Business School Publishing.

About Back Bay Battery, Inc. • You are the President of Back Bay Battery, Inc. a division of a $40 billion consumer electronics manufacturer. • Back Bay Battery produces 2 types of batteries: – Nickel Metal Hydride (NiMH), the mainstay business, makes up 80% of revenue – Ultracapacitor batteries (UC), a newer battery technology, represents 20% of revenue

• Batteries are sold to businesses that produce consumer electronics in 3 primary markets: – Portable power tools: drills, sanders, electric screwdrivers, and other wireless tools – Two-way radios: commercial radios and walkie-talkie systems used by service people, taxi companies, and outdoor expeditions – Portable power packs: used for emergency back-up power, industrial products, medical equipment, and small electric appliances. Copyright © 2012 by Harvard Business School Publishing.

How to Play 1. Prepare – review the Prepare tab and read the foreground reading. 2. Analyze reports – the reports will give you information about current and historical sales, product features that are desired by your customers, how feature performance is changing over time, and financial statements showing the health of the company.

3. Enter decisions – click on the Decide tab to enter sales estimates and decisions for the next year. Set prices and allocate R&D spending across the product lines and performance features. 4. Review results and continue through 8 simulated years. Copyright © 2012 by Harvard Business School Publishing.

PREPARE This section gives information on your role, a company overview, and provides basic steps for How to Play. The Foreground Reading provides key background information about: • Back Bay Battery, Inc. • Battery technology • Market trends The Scenario Description informs what kind of decisions you’ll have to make in the simulation and if you’re instructor has set a run limit.

Copyright © 2012 by Harvard Business School Publishing.

Estimated Project Investments Annual Project Cost

Project Length

Total Cost

Potential Performance Range

NiMH: Energy Density

$3.0 – $9.0 M

4 – 6 years

$12.0 – $54.0 M

900 – 5,200 watt hours/kg

NiMH: Recharge Cycles

$1.0 – $6.0 M

5 – 8 years

$5.0 – $48.0 M

530 – 1,050 cycles

NiMH: Self Discharge

$2.0 – $4.0 M

5 – 8 years

$10.0 – $32.0 M

11 – 21 months

NiMH: Recharge Time

$1.0 – $5.0 M

4 – 7 years

$4.0 – $35.0 M

105 – 210 minutes

NiMH: Process Improvement

$1.0 – $6.0 M

4 – 7 years

$4.0 – $42.0 M

10% - 56% reduction in unit costs

UC: Energy Density

$4.0 – $10.0 M

5 – 7 years

$20.0 – $70.0 M

900 – 1,700 watt hours/kg

UC: Recharge Cycles

$2.0 – $9.0 M

5 – 8 years

$10.0 – $72.0 M

8,750 – 17,490 cycles

UC: Self Discharge

$2.0 – $8.0 M

5 – 8 years

$10.0 – $64.0 M

32 – 63 months

UC: Recharge Time

$1.0 – $6.0 M

5 – 7 years

$5.0 – $42.0 M

9 – 17 minutes

UC: Process Improvement

$3.0 – $7.0 M

5 – 7 years

$15.0 – $49.0

10% – 74% reduction in unit costs

Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Dashboard Overview (Advanced Scenario) This page provides a visual summary of the current status of the simulation. 1. Sales by Market graph (with Total Sales) 2. Sales by Product graph (with Total Sales) 3. Previous Year’s R&D Spending chart 4. Previous Year’s Sales Variance graph 5. Historical Feature Spending spark lines for each battery type 6. Timeline tracks your progress through the simulation

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Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Dashboard Overview (Introductory Scenario ) This page provides a visual summary of the current status of the simulation. 1. Sales by Market graph 2. Sales by Product graph 3. Previous Year’s R&D Spending chart 4. Total Sales chart 5. Historical Feature Spending spark lines for each battery type 6. Timeline tracks your progress through the simulation

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Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Unit Sales This screen tracks the unit sales for both battery types, color coded by market segment.

On this screen, like most others in the simulation, click View Data to see the data presented in tables. Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Desired Features The 2 battery types vary in performance across 5 technology features: 1. Energy density – a measure of how long a battery lasts 2. Recharge cycles – how many times the battery can be recharged before it is no longer able to hold a charge 3. Self-discharge to 50% – how quickly a fully charged battery loses its charge when it is left unused 4. Recharge time – the minutes to fully recharge the battery You can monitor how both battery types perform across the feature categories compared to customer desired feature performance. Toggle between the different market segments to view how preferences vary by customer type. Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Feature Performance You can monitor your R&D investment and feature performance for each battery type across each of the 5 categories.

If you want to see substantial performance improvements, you have to invest in your own R&D. Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Potential Customers The potential customers for all three markets is large. The portion of potential users and installed base vary from market to market and from year to year.

Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Income Statement The Income Statement provides a summary of yearly net income with two years’ historical data.

Cumulative Profit is the yearly net income accumulated through the course of the simulation. Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: Dashboard Overview (Advanced Scenario)

Your sales variance determines how successful you were at setting your sales forecast.

If your variance is too great, you'll get fired. There are three ways that you can get fired: 1. 2. 3.

You have very large negative sale variance in one year. You have a large negative variance for several years in a row. You lose money for several years in a row. Copyright © 2012 by Harvard Business School Publishing.

ANALYZE: News Market News is updated annually based on the previous year’s performance. New market news stories are denoted with a number in the navigation bar at the beginning of each round. Clicking on that number launches that year’s news.

Click “View All News” to launch the Market News screen and read all market news stories for all years.

Copyright © 2012 by Harvard Business School Publishing.

DECIDE: Decisions This is where all Decisions are entered. For each battery type, • Enter the next year’s Sales Forecasts • Set the Price • Select R & D Investments for each feature area You must also submit a brief statement explaining your strategy. This entry is mandatory in the first year, but can be revised in later years. Your entries will be viewable by your professor. Copyright © 2012 by Harvard Business School Publishing.

DECIDE: Additional Screens After you submit your first year’s decisions, these screens will populate and help you track and review your decisions as you progress through the simulation: • R&D Investment Opportunities • R&D Spending History • Sales Forecast History (Advanced Scenario) • Price History

Copyright © 2012 by Harvard Business School Publishing.

Archived Runs Depending on simulation setup determined by your facilitator, you may be able to run the simulation more than once. The simulation saves each run you start. To view or resume your prior run attempts, click the “Archived Runs” link at the bottom of your screen.

Copyright © 2012 by Harvard Business School Publishing.

Cumulative Profits Depending on simulation setup determined by your facilitator, you may be able to view a list of your classmates’ cumulative profits, and possibly, their corresponding strategies. To see the Cumulative Profits list, click the link at the bottom of the screen.

Copyright © 2012 by Harvard Business School Publishing.