Individual Simulation Play and Assignment for the “backbay Battery Simulation”

INDIVIDUAL SIMULATION PLAY AND ASSIGNMENT FOR THE
“BACKBAY BATTERY SIMULATION”

        You are going to play the role of the Division Manager making the product development investments for a period of eight years. The main challenge is what to do about the ultra-capacitors. Investing heavily in ultra-capacitor R&D at this point might severely tax the company’s ability to stay competitive in NiMH, yet it seems that the manager must start investing soon or risk missing a new technology wave. But none of its current customers seem to have much interest; rather they are pressuring the company for better pricing and improved performance in NiMH. How to balance investment decisions and maintain the health of the current business while developing options for the future represents the central challenge for you in the simulation.

        What makes the investment challenge for the Division Manager particularly acute is the fact he is getting evaluated on cumulative profit over a period of eight accumulated years of investment. The manager has to balance this criterion against what she perceives as the best interests for the long term health of the business, which is not necessarily the same thing. However, the manager is also assessed against specific short-term financial criteria which include not exceeding a negative sales variance of greater than -50% in a single year or 20% for more than three years. Also if the division loses money for three years, as represented by total profit over a sliding three year window, the Division Manager will be fired. This requires YOU to carefully determine appropriate sales projections for both technologies, and of course the need to be meeting the above short term criteria will prevent you from inflating sales estimates to justify a higher R&D spend. As in real life, balancing spending with realistic sales estimates is critical, as well as not forecasting unrealistic sales projections to secure funding.