E-STRAT FREQUENTLY ASKED QUESTIONS

Version 8.2
04 March 2003
5:27 PM

!! NEW !! NEW !! NEW !!

The BUSINESS PLANS section includes 6 new FAQs
A new section
A STEP-BY-STEP GUIDE TO CORRECT POSTAGE
!! NEW !! NEW !! NEW !!

We have made a number of assumptions when writing these FAQs:

You are using a US version of Windows.
You have installed E-Strat in the recommended folder: C:\E-Strat. In these FAQs, we refer
to this folder as the E-Strat folder.
Your team name is MYTEAM.
You have just received your annual report for period P, and you are thus making decisions
for Period P+1.

TABLE OF CONTENTS
E-STRAT FREQUENTLY ASKED QUESTIONS ............................................................................. 1
1

E-STRAT MANUAL................................................................................................................. 6

1.1

When I download the manual, some figures are black ............................................................ 6

INSTALLATION & SETUP...................................................................................................... 6

2.1
2.2
2.3

Am I allowed to install E-Strat on several computers? ............................................................ 6

Do I need to restart Windows at the end of the E-Strat set-up? .............................................. 6
I downloaded the E-Strat set-up file but I cannot retrieve it on my hard drive. Where is it
located? ................................................................................................................................... 6
I installed E-Strat on my hard drive, but I dont know how to launch it. ................................... 6
I installed E-Strat and I launched it, but I cannot open my team file........................................ 6
How can I check if E-Strat is correctly installed and configured? ............................................ 6
The bottom of the E-Strat screen is hidden by the Windows task bar. What can I do?........... 7
How can I find out where I installed E-Strat?........................................................................... 7
Do I need to have Excel or another third-party software on my PC?....................................... 7

2.4
2.5
2.6
2.7
2.8
2.9

2.10
2.11
2.12
2.13
2.14
2.15

Is there any possibility to get a version of E-Strat for Apple computers? ................................ 7
Is there a dead-line to download the software? ....................................................................... 7
How do you change the team password?................................................................................ 7
The error CLASS NOT REGISTERED pops up when I run the SAMPLE file..................... 7
It is not possible to see the whole screen. Why?..................................................................... 7
When I run the software, a message pops-up: invalid formula syntax. Why?....................... 7

DECISION ROUND PROCESS............................................................................................... 7

3.1
3.2
3.3
3.4
3.5
3.6
3.7

3.13
3.14
3.15
3.16
3.17

What do you mean by Decision Round? ............................................................................... 7

What does the FSX file extension stand for? ........................................................................ 8
What does the TSX file extension stand for? ........................................................................ 8
I have just received the file MYTEAM.FSX. What should I do with it? .................................. 8
Which software should I use to open the FSX file? ................................................................. 8
I cannot open the FSX file. Why? ............................................................................................ 8
Windows Explorer tells me that a MYTEAM.FSX file already exists in the C:\E-Strat folder.
Should I rename it?.................................................................................................................. 8
Can I stop in the middle of making decisions and finish later? ................................................ 8
Can I begin the decision-making process on one computer and complete it using another
computer?................................................................................................................................ 9
Should all team members make decisions and submit them to the Instructor?....................... 9
I have made half of the decisions on my computer, and my team-mate made the other half
on his/her computer. How do we merge these two sets of decisions before submitting them
to the Instructor?...................................................................................................................... 9
I made my decisions on my home computer but I only have access to Internet from the
University ................................................................................................................................. 9
When I select File/Submit decisions in the menu, I do not see the Submit button.......... 9
Can I submit my decisions several times during a decision round? ........................................ 9
What happens if we do not submit our decisions on time?...................................................... 9
My work is not saved. Why? .................................................................................................... 9
I get an error message when I click 'Save and close' in the decision windows ..................... 10

NEWSLETTER CHARTS ...................................................................................................... 10

4.1
4.2

Should we expect dramatic variations in the Financial Data chart from one period to the
next? ...................................................................................................................................... 10
What do K$ and KU mean? ................................................................................................... 10

COMPANY REPORT CHARTS ............................................................................................ 10

5.1
5.2

5.4
5.5

Who sends the messages we receive in our Company Report?......................................... 10

In the "Discovered Active Ingredient" chart, what is the meaning of Initial and Minimal
Estimated Cost? ................................................................................................................... 10
Why is there a difference between the unit cost in the Company report and the one in the
Newsletter?............................................................................................................................ 10
How can we know the fixed production cost for each brand ?............................................... 11
Where can I find the decisions we made in previous periods?.............................................. 11

MARKET RESEARCH STUDIES CHARTS.......................................................................... 11

6.1
6.2
6.3
6.4

When do I get the market studies I ordered?......................................................................... 11

Can I use market studies ordered in Period 4 to make Period 4 decisions? ......................... 11
In Period 4, can I consult study results from Periods 1, 2 and 3?.......................................... 11
There are no ideal spots published where customers might expect the products. Isn't it
unrealistic to have no clue about what the potential customer expects?............................... 11
What is exactly mirror.coms presence on e-dept stores, e-grocers and e-beauty?.............. 11
In the Market Forecast study, what unit does the channel size have? .................................. 11
The predictions of the Market Forecast study are wrong!...................................................... 11
What is the definition of Brand Awareness ?....................................................................... 12
What is a definition of Brand Perception ? .......................................................................... 12

3.8
3.9
3.10
3.11
3.12

5.3

6.5
6.6
6.7
6.8
6.9

6.10 The Market Study entitled The Market Shares Internet Based Channels shows Total
Sales in K$. Is this right? ....................................................................................................... 12
6.11 How to interprete the semantic scale study in the case of Price? ......................................... 12
6.12 How does the number of club members contribute to the SPI ? ........................................... 12
6.13 Are two identical formulas perceived differently? .................................................................. 12
6.14 Advertising budgets are different in charts 1 and 2 of Competitive Intelligence. Why? ......... 12
6.15 !!NEWFAQ!! What are the factors influencing market growth?.............................................. 12
6.16 !!NEWFAQ!! The market forecast study shows a growth of 90% for affluent families in period
7 and 8. Is this true? .............................................................................................................. 12
7

DECISIONS GENERAL ..................................................................................................... 13

7.1
7.2
7.3
7.4
7.5
7.6
7.7

At the beginning of each decision round, decisions are already in. Where do these decisions
come from?............................................................................................................................ 13
How do I save my decisions? ................................................................................................ 13
Can we use the E-Strat software as long as we want? ......................................................... 13
If I have some budget left over this period, is it carried over to next period?......................... 13
Will there be any restriction for decision making for the last round? ..................................... 13
Should we assume that the game finishes after round 6?..................................................... 13
The numbers in my file are not the same as in the manual. Is it normal? ............................. 13

FORMULA DEVELOPMENT DECISIONS............................................................................ 13

8.1
8.2
8.3

8.7

Can we develop several formulas for a given period?........................................................... 13

What happens to the active ingredients that are discovered but not developed? ................. 13
What is relationship between the unit transfer cost and estimated unit cost? Are they totally
different concepts? ................................................................................................................ 14
Can we increase our budget for R&D in order for them to create better projects?................ 14
Why can not we act like R&D department and have to wait for them to develop active
ingredients? ........................................................................................................................... 14
Do we loose cost reduction developed in the previous rounds when we further improve a
brand?.................................................................................................................................... 14
What are the constraints when developing a formula?.......................................................... 14

BRAND PORTFOLIO DECISIONS ....................................................................................... 14

9.1
9.2
9.3
9.4
9.5
9.6
9.7

I am about to launch a new brand. How do I set a new capacity for this brand?................... 14
What is the usual timing for a new brand launch? ................................................................. 14
I introduced a new brand but I changed my mind. Can I cancel the launch? ........................ 15
What is the usual timing for a brand improvement or cost-reduction?................................... 15
I upgraded a brand but I changed my mind. Can I cancel the improvement? ....................... 15
The board of directors makes it impossible to introduce two products at one time. .............. 15
If you upgrade a product in period 3, it is not effective until period 4. When should you start
spending the higher advertising spend? In period 3 or 4?.................................................... 15
Does a change in the formula of a certain product affect the brand awareness or the
purchase intention of the product? ........................................................................................ 15
What are the costs of production capacity when developing a new formula? ....................... 15
Can we withdraw a brand? .................................................................................................... 16
Is there a limit to the number of brands we may have in our portfolio? ................................. 16
Increasing production capacity has no impact on our budget. Why? .................................... 16
Is it possible to upgrade a brand with a different active ingredient? ...................................... 16
How can we make disappear a product?............................................................................... 16
Can we market two brands targeted at two really different segments without the risk of
damaging our image? ............................................................................................................ 16

8.4
8.5
8.6

9.8
9.9
9.10
9.11
9.12
9.13
9.14
9.15
10

BRAND MANAGEMENT DECISIONS.................................................................................. 16

10.1 I cannot access the positioning input cells in the Brand Management screen ...................... 16
10.2 The retail prices of my brands as given in the Newsletter are far below the prices that I set in
the decision form. Why? ........................................................................................................ 16

10.3 The estimated cost is set for some ranges like 0-10 or 10-20. Does this mean that producing
1 unit or 9,999,000 units will not differ in terms of unit cost? ................................................. 16
10.4 Is it possible to reduce production capacity in order to lower fixed costs? ............................ 17
10.5 What is the difference between management time in channel management and brand
management ?....................................................................................................................... 17
10.6 What Is the relationship between sales and management time? .......................................... 17
10.7 I cannot enter decimals in the Recommended Retail Price! Why? ..................................... 17
10.8 What is the difference between production capacity and production level? .......................... 17
10.9 Can we use the production capacity in excess on one brand to produce more units of another
brand?.................................................................................................................................... 17
10.10 Are capacity increases for specific formulas or for specific products? .................................. 17
10.11 Will the +20% automatic adjustment of production level allow us to exceed manufacturing
capacity?................................................................................................................................ 17
10.12 What does a high perceived price mean for a brand? ........................................................... 17
10.13 Is experience effect reset to 0 when a brand is upgraded or cost-reduced? ......................... 18
10.14 How can we sale the units we have in inventory? ................................................................. 18
10.15 How a product should be positioned using the decision panel? ............................................ 18
10.16 What are the consequences of making changes in management time? ............................... 18
10.17 Do we have to pay any firing cots if we reduce the number of our employees?.................... 18
10.18 How can we find out the overall number of our employees at the beginning of period 1 and at
the time being? ...................................................................................................................... 18
10.19 How do you calculate the exceptional cost for building new capacity? ................................. 18
10.20 How to influence the distribution of advertising budget across segments? ........................... 18
10.21 In the positioning decisions, 1 means the highest or 7? ........................................................ 18
11

CHANNEL MANAGEMENT DECISIONS ............................................................................. 18

11.1 Can I withdraw all my brands from a specific distribution channel? ...................................... 18
11.2 Can I withdraw one particular brand from a specific distribution channel?............................ 19
11.3 What is included in the trade marketing budget? What are the effects of increasing or
decreasing it? ........................................................................................................................ 19
11.4 It seems that we can only modify the margins and that the discounts are fixed somehow. Can
we play around with the discount percentages?.................................................................... 19
11.5 How is it possible to change the distributors' margins ? ........................................................ 19
11.6 Does a brand incur ill-will from frustrated customers who were not able to buy the desired
brand when looking for it?...................................................................................................... 19
12

WEB SITE PORTFOLIO DECISIONS................................................................................... 19

12.1 Can I develop several web sites within a given period? ........................................................ 19
12.2 Can I develop a top-notch quality web site within a single period? ....................................... 19
12.3 Why do we get an error message when the Performance level of prima.com is not equal to
0? 19
13

WEB SITE MANAGEMENT DECISIONS ............................................................................. 19

13.1
13.2
13.3
13.4

What are the differences between Banner advertising and Affiliations?........................... 19

What does the discount in web management decisions apply to? ........................................ 20
In the case of a multi-brand site, is the discount the same for each brand?.......................... 20
Can we add new products to our multi-brand website in future periods? .............................. 20

14

MARKET RESEARCH STUDIES DECISIONS..................................................................... 20

14.1 Who decides which segments to target with advertising? ..................................................... 20

14.2 Do all product attributes have the same weight in the purchasing decision? ........................ 20
15

BUDGET................................................................................................................................ 20

15.1
15.2
15.3
15.4

What is Deviation from budget? .......................................................................................... 20

The manual mentions that the budget is calculated as 40% of revenues. Is this right? ........ 20
Our deviation from budget shows K$ 0, but we get an overspending error message. Why? 20
When is the minimum budget of $ 20m granted for a new brand? ........................................ 20

15.5
15.6
15.7
15.8

We preserved $ 500k budget from period 1, can we use it in period 2?................................ 21

Just by purchasing all market studies this period we exceeded our budget. Is it correct? .... 21
How is the budget calculated?............................................................................................... 21
What happens with the budget dollars that you don't use? ................................................... 21

16

DECISION HIGHLIGHTS ...................................................................................................... 21

17

FTP PROBLEMS................................................................................................................... 21

17.1
17.2
17.3
17.4
17.5
17.6

What does FTP stand for? .................................................................................................. 21

Will E-Strat establish the Internet connection? ...................................................................... 21
Do I need to be connected to Internet all the time when making decisions?......................... 21
I have no clue about how to establish an Internet connection? ............................................. 21
How long will submitting decisions take?............................................................................... 21
I got the error message Host Lookup Timed Out when submitting decisions. What
happened?............................................................................................................................. 22
17.7 Is it possible to upload our decisions manually?.................................................................... 22
18

MISCELLANEOUS................................................................................................................ 22

18.1
18.2
18.3
18.4
18.5
18.6
18.7

Can I browse at past results? ................................................................................................ 22

Can I print my annual report? ................................................................................................ 22
Can I copy a chart into Excel or another spreadsheet software? .......................................... 22
Can I copy a graph into PowerPoint or another desktop publishing software? ..................... 22
I cannot access the Graphs menu. Why? ........................................................................... 22
I can't locate the clipboard file... Shouldn't it be under E-Strat? ............................................ 22
I can't open my Round 2 data file because the password is incorrect? ................................. 22

19

BUSINESS PLANS ............................................................................................................... 22

19.1
19.2
19.3
19.4
19.5
19.6

When is the deadline for the electronic copy? ....................................................................... 22

When is the NEW deadline for the back-up paper copy? ...................................................... 23
Why must we send a paper back-up copy of the Business Plan, and who pays?................. 23
Why has the deadline been pushed back by 24 hours? ........................................................ 23
When is the NEW deadline for the decisions for the end of Round 6 of the simulation?....... 23
Why do we have to submit our decisions for Round 6 as well as the Business Plan? This is
too much work! ...................................................................................................................... 23
19.7 Which is more important, my final SPI, or my result in the Business Plan? .......................... 24
19.8 To whom will the envelope for the paper copy be sent?........................................................ 24
19.10 How do we send the paper back-up copy?............................................................................ 24
19.12 How do I find out the opening hours of my local FedEx office?............................................. 24
19.13 Will we get any advice sent in the envelope to help us take the right steps? ........................ 24
19.15 Why cant we send our paper back-up copy by normal post? ............................................... 25
19.16 Will we be penalised if the paper copy is lost by FedEx? ...................................................... 25
19.17 Structure how should we structure the Business Plan?...................................................... 25
19.18 Format how many charts, graphs and tables and where?.................................................. 25
19.19 Are we allowed a front cover and contents page in addition to the 8 pages?........................ 25
19.20 Which leading firms are you referring to in section 6, 2 of the Business Plan Guide? .......... 25
19.21 Will we receive detailed feedback on why we have received a certain overall score? .......... 26
19.22 We are not semi-finalists, but can we send you our Business Plan anyway? ....................... 26
19.23 In Part 4 of the Business Plan, for which three periods should we forecast? ........................ 26
19.24 The points for the final score of the Business Plan do not add up to 100!............................. 26
19.25 Will my country be holding a national final for those who do not make it to Paris? ............... 26
19.26 If I am too late to send in the paper back up copy of my Business Plan will I be disqualified
from Round 6? ....................................................................................................................... 26
19.28 Will I receive a diploma for my participation in the e-Strat challenge?.................................. 27
19.29 Could I please have a copy of the e-Strat Challenge background image?............................ 27
20

STEP-BY-STEP GUIDE FOR THE CORRECT POSTAGE .................................................. 28

21 YOUR LOCAL FEDEX CALL CENTRE TELEPHONE NUMBER ............................................ 28

1
1.1

E-STRAT MANUAL
When I download the manual, some figures are black

You need Acrobat Reader Version 4.0 minimum to display or print the E-Strat manual. The
captures of the software charts and graphs will not show up with Acrobat Reader 3.0. Check the
site http://www.adobe.com to download the latest version of Acrobat Reader.
Please, note that you do not need to download the manual a second time after you have installed
Acrobat Reader 4.0.

2
2.1

INSTALLATION & SETUP

Am I allowed to install E-Strat on several computers?

Yes. You can install E-Strat on several computers: university computer, home computer, laptop,
etc.

2.2

Do I need to restart Windows at the end of the E-Strat set-up?

No. You can launch E-Strat immediately after the end of the set-up process.

2.3

I downloaded the E-Strat set-up file but I cannot retrieve it on my hard drive.
Where is it located?

The location of downloaded files depends on the configuration of your Internet browser. The
easiest solution is to look for a file named E-Strat-Setup.exe on your hard drive. To do that:
With Windows Explorer, select Tools/Find/Files or Folders.
In the cell Named, type < E-Strat-setup.exe >.
In the cell Look in, select Local hard drives.
Check the box Include subfolders;
Click Find Now.
If you find the file, double-click on it to initiate the set-up process and then refer to your manual.
Otherwise, download it again from our web site and make sure to remember where you store the
file.

2.4

I installed E-Strat on my hard drive, but I dont know how to launch it.

Close or minimize all applications until you can see the Windows Desktop. There should be an icon
named The L'Oral E-Strat Challenge represented by a white and purple e. Double-click this
icon to launch E-Strat.

2.5

I installed E-Strat and I launched it, but I cannot open my team file.

You have to wait until the beginning of the first decision round. At that time, you will receive your
first MYTEAM.FSX team file and you will be able to start the first decision round. You will have to
use the team ID and password that you received in the confirmation email.
In the meantime, you can practice using E-Strat with the SAMPLE team file. Select SAMPLE in
the ID list and use SAMPLE as password.

2.6

How can I check if E-Strat is correctly installed and configured?

The best solution is to launch the E-Strat application as explained in the manual. If the installation
is correct, the application will start and a blue page entitled The LOral E-Strat Challenge will
appear.

2.7

The bottom of the E-Strat screen is hidden by the Windows task bar. What can I
do?

We advise you to set the Auto hide property of the task bar. To do that: click on the task bar with
the right button of the mouse; select Properties in the menu; and check the Auto hide box.

2.8

How can I find out where I installed E-Strat?

Launch the E-Strat software by double-clicking the icon and select Installation folder in the File
menu.

2.9

Do I need to have Excel or another third-party software on my PC?

No. E-Strat is a stand-alone software that does not require any additional software or library.

2.10 Is there any possibility to get a version of E-Strat for Apple computers?
No. Only one version of E-Strat has been developed so far, for Pentium-based computers.

2.11 Is there a dead-line to download the software?

No. The Download E-Strat section of the site will remain opened to participants until the end of
the Challenge.

2.12 How do you change the team password?

You cannot change the team password. The password will remain the one which you received in
the confirmation email, until the end of the Challenge.

2.13 The error CLASS NOT REGISTERED pops up when I run the SAMPLE file.
There are two OCX files that must be registered in the Windows registry at installation time. This is
normally done automatically by the Setup procedure.
The first option is to restart the PC and try to re-install E-Strat.
If the error is still there, then click the Start button and select Run in the Windows menu. Type
regsvr32 c:\E-Strat\ttf16.ocx in the input cell and click OK. You should get the message:
DllRegisterServer in c:\E-Strat\ttf16.ocx succeeded. Repeat the same procedure with regsvr32
c:\E-Strat\ttfi6.ocx.
If your problem is not solved, then you may not be allowed to register new OCX files in the
Windows registry. This may be the case at some Universities. You will have to contact your system
administrator.

2.14 It is not possible to see the whole screen. Why?

You must have a SVGA screen (minimum 800 x 600) and to use small fonts in order to view EStrat screens correctly.

2.15 When I run the software, a message pops-up: invalid formula syntax. Why?
E-Strat will not behave properly if the decimal point . is used as the thousand separator in the
Regional settings of the Control panel. The two best combinations are :

3
3.1

Decimal point = .

Thousand separator = space or ,

Decimal point = ,

Thousand separator = space

DECISION ROUND PROCESS

What do you mean by Decision Round?

This is the process you will have to go through 6 times during the competition.
1. Receiving the MYTEAM.FSX file from the Challenge Instructor by email. This is the
file containing the latest simulation results, say the ones of Period P.

2. Copying the MYTEAM.FSX file into the C:\E-Strat folder. Launching the E-Strat
application and opening the result file.
3. Analyzing the results for Period P and making your decisions for Period P+1.
4. Submitting your decisions to the Challenge Instructor by FTP or email by clicking on
the Submit decision button. Or, alternatively, by e-mailing the C:\EStrat\MYTEAM.TSX file to the following address: hotline.e-strat@loreal.com.
5. Waiting anxiously for a few days
6. Checking your results and those of the other teams on the E-Strat website.
7. Drinking a glass of Champagne or a glass of Coke or a glass of water with two
aspirins depending on your ranking.
8. Returning to step 1 and repeating these operations.

3.2

What does the FSX file extension stand for?

FSX stands for From StratX. StratX is the company that developed E-Strat and that is doing the
simulation administration. FSX is the extension of the file that has been processed by StratX and
that will be e-mailed to each team member.

3.3

What does the TSX file extension stand for?

TSX stands for To StratX. StratX is the company that developed E-Strat and that is doing the
simulation administration TSX is the extension of the file that contains your decisions for Period
P+1. This file is normally FTP-ed to StratX when you click on Submit decisions. It is then
processed to calculate your results.

3.4

I have just received the file MYTEAM.FSX. What should I do with it?

You should copy it in the folder where you installed E-Strat, i.e. C:\E-Strat if you used the default
installation settings.
Beware; during decision rounds 2 to 6, a file with the same name will already be there. You must
overwrite this file with the latest one received from StratX. Otherwise, you would be working with
an old file and your decisions would therefore be useless!

3.5

Which software should I use to open the FSX file?

The format of the MYTEAM.FSX file is a STRATX proprietary binary format that can only be
opened through the E-Strat software. Please follow carefully the instructions given in the last
chapter of the manual : section Receiving data.

3.6

I cannot open the FSX file. Why?

Some email softwares (ie Hotmail, Yahoo and others) automatically add a .zip extension when
downloading the .fsx file. You need to rename the file to myteam.fsx. Beware, do not unzip it, as
this would affect the E-Strat software.

3.7

Windows Explorer tells me that a MYTEAM.FSX file already exists in the C:\EStrat folder. Should I rename it?

***No!!***
You must overwrite the previous version of this file with the latest one received from StratX.
Otherwise, you would be working on an old file and your decisions would therefore be useless!!!

3.8

Can I stop in the middle of making decisions and finish later?

Yes. All you have to do is quit E-Strat, launch it again later and reopen your file. Decisions are
saved automatically upon exiting E-Strat, so you do not have to worry about losing decisions made
so far.

3.9

Can I begin the decision-making process on one computer and complete it

using another computer?

Yes. All you have to do is copy the MYTEAM.FSX file from the first computer on a diskette, and
then paste it in the second computers E-Strat folder.
Decisions are saved automatically upon exiting E-Strat, so you do not have to worry about losing
decisions made so far.

3.10 Should all team members make decisions and submit them to the Instructor?
***No!***
On the contrary, only one of you should submit the decisions, preferably the team captain, unless
he or she is unable to do so (illness, vacation, or severe depression due to bad E-Strat results!).
The MYTEAM.FSX result file is sent to the three team members so that you can all look at the
results before meeting to make your decisions.

3.11 I have made half of the decisions on my computer, and my team-mate made the
other half on his/her computer. How do we merge these two sets of decisions
before submitting them to the Instructor?
You cannot merge two decision sets. One of you will have to re-enter his or her decision set on
his/her other team-mates computer.

3.12 I made my decisions on my home computer but I only have access to Internet
from the University
Thats easy! Copy the two MYTEAM.TSX and MYTEAM.FSX files on a diskette and paste them
in the university computers E-Strat folder (C:\E-Strat). Then submit your decisions from this
computer.

3.13 When I select File/Submit decisions in the menu, I do not see the Submit
button
Read the message in the box that pops up!! It explains that your decisions are not finalized and
that you are not yet authorized to submit your decisions. Check potential errors and warnings by
selecting Decision highlights in the Decisions menu.

3.14 Can I submit my decisions several times during a decision round?

Yes. Each time you submit your decisions, the previously submitted version is overwritten. So,
when decisions are due, StratX will always process the latest version you sent.

3.15 What happens if we do not submit our decisions on time?

You are fired! Teams that do not submit their decisions on due time are disqualified from the
Challenge. Check the E-Strat website to get the exact schedule.

3.16 My work is not saved. Why?

Here is the steps to follow when you want to stop in the middle of your decisions and continue
later.
1. Copy the MYTEAM.FSX file (which you received from us) into the C:\E-Strat folder. Do
that only the first time of each decision round.
2. Launch the E-Strat application and select Open in the File menu. Select your team Id
and enter your password.
3. Analyse the results of the last simulated Period (initially, Period 0) and make your decisions
for the next Period (initially, Period 1).
4. If you are not finished but you have to stop temporarily, simply close the E-Strat application.
Your work is saved automatically. You can check that your work is saved by looking at the

date/time of the MYTEAM.FSX file in the C:\E-Strat folder. It should have the same
date/time as when you stopped working.
5. When you are ready to continue, start again at step 2. Beware: not at step 1!!!
6. When you are finished, submit your decisions with FTP by clicking on the Submit decision
button. Or, alternatively, by e-mailing the C:\E-Strat\MYTEAM.TSX file to the following
address: hotline.e-strat@loreal.com.

3.17 I get an error message when I click 'Save and close' in the decision windows
The message you receive is probably the following one: The operation could not be completed
because an error occured while compressing or decompressing your team file. and then An
error occurred while compressing your team file .
Two files are created when you close a decision window: myteam.fsx and myteam.tsx. The FSX
file is always created. The TSX file is created only if your decisions are error-free.
One of this two files cannot be created. Please, check that myteam.fsx is not read-only. To do
that, select the file in the File Explorer and right-click on it. The box "Read-only" should not be
checked.
If this does not work, I suggest that you try to re-install the E-Strat software and start again. Make
sure that you delete the entire E-Strat folder before reinstalling.

4
4.1

NEWSLETTER CHARTS
Should we expect dramatic variations in the Financial Data chart from one
period to the next?

No. The E-Strat world is industrialized and fairly stable. No major political, social or economic
events are anticipated in the near future. You should not expect high inflation rates, stock market
disruption, bankruptcies, etc

4.2

What do K$ and KU mean?

K$ means thousand of $ and KU means thousand of units. For instance:

K$ 2,585 = $ 2,585,000
KU 1,250 = 1,250,000 units

5
5.1

COMPANY REPORT CHARTS

Who sends the messages we receive in our Company Report?

These messages come from different sources. The various departments of your division may send
messages when something special happens, such as the discovery of a new active ingredients,
the development of new formula, the availability of a new manufacturing plant, etc The Board of
Directors may also use messages to inform you that the decisions you have made or plan to make
are not satisfactory. Finally, various administrations may send you messages to inform you on
regulation changes, etc

5.2

In the "Discovered Active Ingredient" chart, what is the meaning of Initial and
Minimal Estimated Cost?

The production cost of a brand decreases over time, as cumulative production increases. This is
explained in the manual. The initial unit cost is the cost of the first 10 millions units produced. The
minimal unit cost will be reached when 40 million units in total have been produced.

5.3

Why is there a difference between the unit cost in the Company report and the
one in the Newsletter?

The first one is the actual unit cost that takes into account the reduction for cumulative production
(see the manual). The other one is the estimated unit cost given by the R&D department.

5.4

How can we know the fixed production cost for each brand ?

It is directly proportional to the manufacturing capacity for this brand. The fixed manufacturing cost
per unit is given in the Newsletter.

5.5

Where can I find the decisions we made in previous periods?

There are no specific charts that show your past decisions. However, most of your decisions and most of
your competitors decisions can be retrieved in the E-Strat results. Analyze in particular: your P&L
statements, R&D results, the Newsletter, some of the Market Research Studies such as Competitive
Intelligence or Benchmarking. In these charts, you will retrieve your portfolio decisions, pricing, advertising
expenditures, trade marketing, promotion, web site design, etc.

6
6.1

MARKET RESEARCH STUDIES CHARTS

When do I get the market studies I ordered?

All studies are ordered at the beginning of a period, say Period P, and are conducted by a
specialized research firm during that period. The results are delivered with your annual report at
the end of the period, i.e. when you are about to make decisions for Period P+1.

6.2

Can I use market studies ordered in Period 4 to make Period 4 decisions?

No, because studies ordered in Period 4 will not be available before the end of Period 4, as
explained in FAQ 6.1. The information provided is relevant to the market situation during the
analysed period, i.e. Period 4 in your case, with the exception of the market forecast study.
To make Period 4 decisions, you should use the studies ordered during Period 3.

6.3

In Period 4, can I consult study results from Periods 1, 2 and 3?

Yes. The E-Strat software provides an easy access to past results, including reports, studies and
graphs.

6.4

There are no ideal spots published where customers might expect the
products. Isn't it unrealistic to have no clue about what the potential customer
expects?

You have plenty of information in the Market Research Studies to help you understand the need of
the customers. The ideal spot for all customers is the top-right corner of the brand map, at an
affordable price!! You will have to determine the best tradeof Quality/Price/Cost to offer to each
segment.

6.5

What is exactly mirror.coms presence on e-dept stores, e-grocers and ebeauty?

As you have probably guessed, mirror.com is using Internet intensively. This company has decided
to distribute its brands through the on-line distribution channels as well as directly to consumers,
with its own web sites. You can do the same, with the exception that you will be allowed to design
your own web sites starting in Period 2.

6.6

In the Market Forecast study, what unit does the channel size have?

Channel sizes are given in thousand of units. It is actually indicated in the sub-title of the chart.

6.7

The predictions of the Market Forecast study are wrong!

The Market Forecast study provides fairly accurate estimates of futures market sizes and growth
rates if the market conditions remain stable. However, the actions of the competitive firms may
have unpredictable implications. For instance, the following actions may have an impact on market
size: price increase or decrease, variation in advertising spending, change in distribution
strategies, brand repositioning, new brand introduction, etc.

6.8

What is the definition of Brand Awareness ?

This is the percentage of potential consumers in each segment who spontaneously recall a given
brand name.

6.9

What is a definition of Brand Perception ?

Semantic scales describe how consumers perceive the marketed brands. Respondents are asked
to rate each brand along each physical characteristic on a scale from 1 to 7 according to the way
they perceive the brand. For instance, a brand rated 2.3 on the "Pleasure" scale is perceived as
giving less pleasure than a brand rating 5.5 on the same scale.

6.10 The Market Study entitled The Market Shares Internet Based Channels
shows Total Sales in K$. Is this right?
No, this is not correct. There is an error in the text. Total Sales in this study are in KU and not K$.
However, the data is correct.

6.11 How to interprete the semantic scale study in the case of Price?
As we had many questions on the subject, we have slightly adjusted the manual. See below:
Semantic scales describe how consumers perceive the marketed brands. Respondents are asked
to rate each brand along each physical characteristic plus price on a scale from 1 to 7 according to
the way they perceive the brand. For instance, a brand rated 2.3 on the Convenience scale is
perceived as being less convenient than a brand rating 5.5 on the same scale. For price, a lower
score on the semantic scale means that the brand is perceived as being cheaper, and a higher
score means that the brand is perceived as being more expensive. Semantic scale scores are not
related to how much a particular segment values the brand. Consumers are also asked to evaluate
the importance of each characteristic, in other words, the weight each characteristic takes in the
buying decision. A sample chart of the Semantic Scale study is depicted in Figure 24.

6.12 How does the number of club members contribute to the SPI ?
It is one of the many elements taken into account by analysts to calculate the SPI. Others are
revenue growth, market share and profitability. The number of Club members is the least important
one.

6.13 Are two identical formulas perceived differently?

No. For instance, you could have two formulas PA-2 and PA-3 with exact same characteristics (i.e.
the same efficacy, pleasure, safety and convenience attributes) but different unit production costs
(PA-3 being a cost-reduced version of PA-2). In this case, if you launch a product with PA-2 and
then upgrade it to PA-3, the consumer perceptions will not change, assuming that you do not
change the price.

6.14 Advertising budgets are different in charts 1 and 2 of Competitive Intelligence.

Why?
In the Competitive Intelligence Summary, the advertising budget includes advertising creation while
the following chart is Advertising media only.

6.15 !!NEWFAQ!! What are the factors influencing market growth?

Market growth is influenced by external factors that do not depend on firms actions or decisions.
This is the intrinsic market growth. In addition, segment growth is influenced by the introduction of
new brands, the upgrade of existing ones, the increase in advertising and promotion expenditures,
the price changes, etc.

6.16 !!NEWFAQ!! The market forecast study shows a growth of 90% for affluent
families in period 7 and 8. Is this true?
No. There is an error in the study. Affluent families market forecast for periods 7 and 8 is 9%.

7
7.1

DECISIONS GENERAL
At the beginning of each decision round, decisions are already in. Where do
these decisions come from?

Each new round replicates decisions made in the previous round. The purpose of these default
decisions is to prevent you from having to start a new round from scratch, with 0s in all input
screens.
During the first decision round (when you are making decisions for Period 1), the default decisions
are copied from the Period 0 decisions, made by the previous management team, who managed
PRIMA until you took over from them.
Obviously, some of your past decisions will not be copied since making them twice would not make
sense: formula development, brand modification or introduction, website creation, etc.

7.2

How do I save my decisions?

Decisions are automatically saved each time you close a decision input screen, except if you close
it by clicking Cancel.

7.3

Can we use the E-Strat software as long as we want?

Yes. There is no time limit or any other usage limitation built-in the software. You can spend 20
hours in the week working on E-Strat but we recommend that you do not spend more than 3 or
4 hours per decision round.

7.4

If I have some budget left over this period, is it carried over to next period?

No. Your budget is allocated for the current period. If you do not spend it entirely, the part left over
is not carried forward.

7.5

Will there be any restriction for decision making for the last round?

No. There will be no restrictions for the last round. You will have to make the same decisions as for
the other rounds.

7.6

Should we assume that the game finishes after round 6?

No. You are strongly advised to manage your business as if the game was continuing after round
6. Making drastic price increases or cutting costs dramatically will not be beneficial for your share
price index. Financial analysts are looking at the ability or your company to generate good return
long-term and not short-term.

7.7

The numbers in my file are not the same as in the manual. Is it normal?

All charts, graphs and data given in the manual are extracted from a SAMPLE file that is not based
on the same market and competitive situations as your own file. You should only refer to your own
company report when making decisions.

8
8.1

FORMULA DEVELOPMENT DECISIONS

Can we develop several formulas for a given period?

Yes.
However, due to resource constraints in the R&D department, you may only develop a maximum of
two formulas per period. You will have to determine which ones represent the best choices for your
company. This of course will depend on the current situation, but also on your long-term strategy.

8.2

What happens to the active ingredients that are discovered but not developed?

Your R&D department will shelve all the projects you decide not to develop. Thus, you can decide
to develop these ingredients at a later stage.

8.3

What is relationship between the unit transfer cost and estimated unit cost?
Are they totally different concepts?

No, these two figures are related. The R&D department provides you with estimates of what will be
the minimum and maximum unit costs of new formulas, while the production department gives you
the exact figures, based on the number of units produced.

8.4

Can we increase our budget for R&D in order for them to create better
projects?

No. The development will cost whatever is indicated in the R&D report.

8.5

Why can not we act like R&D department and have to wait for them to develop
active ingredients?

R&D has been partially automated to limit the complexity of the Challenge. There are already many
decisions to be made.

8.6

Do we loose cost reduction developed in the previous rounds when we further

improve a brand?

No, all cost reduction projects developed in the past have an impact on the production cost of new
formulas. However, the cost of an improved formula will tend to be higher than that of the previous
one.

8.7

What are the constraints when developing a formula?

There are three different constraints.

First, the overall scope of the formula depends on the base active ingredient: A, B, C, etc. For
instance, if the active ingredient is rated 60 in Pleasure, you will not be able to request the
development of a formula rated 90 in the same attribute because 90 is too far from the original
value 60.
Second, the improvements on the original ingredient obtained with a single development project
are limited in scope. To reach the total potential of the ingredient in all attributes, you may have to
launch two or even three successive development projects. For instance, you may first develop the
formula PA-1 to improve PA-Ini on Efficacy, Convenience and Pleasure, and then develop the
formula PA-2 to improve PA-1 on Safety.
Finally, the unit production cost must remain with limits set by R&D. You will be given an indication
of what are the normal and minimum production costs of the specified formula. Developing the
formula at a cost lower than the normal one will be more expensive and you will thus have to
determine the pay-back that you might expect from this additional investment.

9
9.1

BRAND PORTFOLIO DECISIONS

I am about to launch a new brand. How do I set a new capacity for this brand?

Open the Brand Portfolio decision screen, select the new brand in the list and key in a number in
the cell Capacity Built in P. P.
Building new or additional capacity takes one period, as does the launch of a new brand. Thus, if
you build the new capacity during the same period you initiate the new brand launch, the new
capacity will be available right on time, when the brand is ready to go on the market.

9.2

What is the usual timing for a new brand launch?

Launching a new brand takes one period to be completed. The usual timing is given below.
Period P: Decision is made to develop a new formula (e.g. PD-2) and to launch a new brand (e.g.
PASSION) based on this new formula. A new manufacturing capacity must be built for
PASSION. Brand PASSION is not marketed during Period P.

Period P+1: The new formula is developed and the new manufacturing capacity is available. The
brand is actually put on the market and the first sales are made.

9.3

I introduced a new brand but I changed my mind. Can I cancel the launch?

In the FAQ 9.2 example, the new brand launch can be cancelled during Period P, but not during
Period P+1. Once the formula is developed and the new plant is built, it is too late to backtrack
To cancel a new brand launch, simply select it in the Brand Portfolio decision screen, and click
Undo.

9.4

What is the usual timing for a brand improvement or cost-reduction?

Improving or cost-reducing an existing brand takes one period to be completed. The usual timing is
given below.
Period P: Decision is made to develop a new formula (e.g. PB-2) and to improve an existing
brand (e.g. PASEO) based on this new formula. You may want to increase the manufacturing
capacity of PASEO if you believe that the improvement will generate additional sales. Brand
PASEO is marketed during Period P based on its original base formula: PB-1.
Period P+1: The new formula is developed and the additional manufacturing capacity is available.
The upgraded brand is actually put on the market and the first upgraded product sales are made.

9.5

I upgraded a brand but I changed my mind. Can I cancel the improvement?

In the FAQ 9.4 example, the brand improvement can be cancelled during Period P, but not during
Period P+1. To cancel a brand improvement or cost-reduction, simply select it in the Brand
Portfolio decision screen, and click Undo .

9.6

The board of directors makes it impossible to introduce two products at one

time.

There many reasons to this constraint. First, we have put several constraints to make the market
situation not too complex so that most teams have a chance to understand the game, make good
decisions and finish the Challenge. Second, we want to force teams to make difficult choices,
based on a solid financial, marketing and competitive analysis; this is actually much more difficult
than launching new brands all over the place. Finally, most companies have similar constraints as
resources are limited; there are very often opportunities that cannot be followed by lack of cash,
human resources and any other valuable resources.

9.7

If you upgrade a product in period 3, it is not effective until period 4. When

should you start spending the higher advertising spend? In period 3 or 4?

In this example, the work done during Period 3 is aimed at preparing the upgrade: change in
manufacturing processes, design of new marketing materials, financial planning, etc Clearly,
these activities are not visible by consumers. Thus, you should start advertising on the upgraded
product during Period 4, with new positioning messages, change in distribution channels, possibly
new target groups, etc

9.8

Does a change in the formula of a certain product affect the brand awareness
or the purchase intention of the product?

Upgrading a brand with a new formula will not change brand awareness. However, it will probably
affect purchase intentions as the product attributes change. Of course, this is not true if the new
formula is a cost-reduction version of the previous one.

9.9

What are the costs of production capacity when developing a new formula?

If the new formula is used to upgrade an existing brand, then the existing capacity will be available
for the upgraded brand. No additional costs are generated in this case.
For a new brand, your must build a new production capacity. In this case, you will have to bear
exceptional costs, as indicated in the manual. A message will inform you of the costs as well.

9.10 Can we withdraw a brand?

No, you are not allowed to withdraw a brand. However, you can decide to reduce the resources
allocated to it.

9.11 Is there a limit to the number of brands we may have in our portfolio?
Yes. The maximum number is 5.

9.12 Increasing production capacity has no impact on our budget. Why?

To simplify the E-Strat financial statements, you will not deal with cash flows, amortization, raising
debt, etc. Increasing production capacity will have an impact on your results, only when the
capacity is available, as the production fixed costs will increase.

9.13 Is it possible to upgrade a brand with a different active ingredient?

Yes, it is possible. The physical characteristics of the brand will change, to reflect the ones of the
new formula. However, if the new attributes are very different from the current ones, consumers
perceptions will not change immediately. It may take a few periods before all consumers
understand the new positioning of your brand.

9.14 How can we make disappear a product?

You are not allowed to withdraw a brand from your portfolio. However, you can decide to reduce
the resources allocated to it.

9.15 Can we market two brands targeted at two really different segments without
the risk of damaging our image?
A company can market two brands, one targeted at High Earners and one targeted at Low Income
Families with no risk of damaging its corporate image. The simulation behaves as if the two
products were marketed under two different brand names, like "LOREAL PARIS", GARNIER or
LANCOME.

10

BRAND MANAGEMENT DECISIONS

10.1 I cannot access the positioning input cells in the Brand Management screen
These decisions are not available during Period 1 for two reasons. The first reason is that we have
limited the scope of the initial decision round so that you are not overwhelmed by too many
difficulties. The second reason is that, as the previous management team did not order the
Semantic Scales study, you could not make sound positioning decisions during Period 1.

10.2 The retail prices of my brands as given in the Newsletter are far below the
prices that I set in the decision form. Why?
The pricing decision you make in the Brand Management decision screen is the Recommended
Retail Price in $.
The Retail Price given in the Newsletter is calculated by dividing the total retail sales by the
number of units sold. So, this price includes the discounts that are made by distributors, especially
Mass Merchandisers and e-Grocers.

10.3 The estimated cost is set for some ranges like 0-10 or 10-20. Does this mean
that producing 1 unit or 9,999,000 units will not differ in terms of unit cost?
Yes. The first 10 million units of a given brand will be produced at the same cost. The next 10
million units will be produced at 15% reduction, etc Above 40 million units, the unit cost remains
stable.

10.4 Is it possible to reduce production capacity in order to lower fixed costs?

No. Production capacity is made of fixed assets such as machines, factories, etc. these assets
cannot be disposed of in this version of E-Strat.

10.5 What is the difference between management time in channel management and
brand management ?
Brand managers are working at headquarters and other various locations. They are in charge of
many functions such as Communication, Finances, Manufacturing, etc.
Channel managers are in charge of the relationships with distribution channels. They manage the
sales forces, beauty advisors and other at the point of sale.

10.6 What Is the relationship between sales and management time?

Managers are working at headquarters and are in charge of many functions such as
Communication, Finances, Manufacturing, Sales, etc. There is no direct (i.e. linear) relationship
between the amount of management time allocated to a brand and the unit sales of that brand.
However, allocating more time to a brand, channel or website will have a positive impact on sales
as you can expect a better management of your activities.

10.7 I cannot enter decimals in the Recommended Retail Price! Why?

E-Strat will not behave properly if the decimal point . is used as the thousand separator in the
Regional settings of the Control panel. The two best combinations are :
Decimal point = .

Thousand separator = space or ,

Decimal point = ,

Thousand separator = space

10.8 What is the difference between production capacity and production level?
Production capacity refers to the maximum amount of the product which can theoretically be
produced by your factory during one period. This is related to the size of the factory, the equipment
level, speed of lines, etc. You must decide on a level of initial capacity for any new brand, which
will be in place one period later, upon launch. In the same way, any requested capacity increase
for existing brands will take one period to become effective. Once built, capacity cannot be
destroyed.
Production level indicates how many units of the product you actually want the plant to
manufacture. This number can be any level up to the current capacity. It may be that capacity
requested last period turns out to be not needed, as the market has become more sluggish. In
such a case, you may need less production than capacity.

10.9 Can we use the production capacity in excess on one brand to produce more
units of another brand?
No. Each brand has its own production capacity.

10.10 Are capacity increases for specific formulas or for specific products?
Specific products. Thus, if you upgrade a brand with a new formula, the existing capacity remains
available for the upgraded brand.

10.11 Will the +20% automatic adjustment of production level allow us to exceed
manufacturing capacity?
No. Production capacity is a maximum limit that cannot be exceeded. For instance, with a
production capacity of 10,000,000 units and a production level of 9,000,000 units, your production
can vary between 7,200,000 and 10,000,000 units.

10.12 What does a high perceived price mean for a brand?

It means that the brand is perceived to have a high price, which is not favourable for the pricesensitive segments such as Singles or Low income families. It does not mean that this brand is
well perceived by the customers.

10.13 Is experience effect reset to 0 when a brand is upgraded or cost-reduced?

What is taken into account to calculate the "Experience" effect on cost is the cumulative production
of a brand, even if this brand has been upgraded or cost reduced. As a consequence, experience
effect is NOT reset to 0 each time you upgrade or cost-reduce a brand with a new formula.

10.14 How can we sale the units we have in inventory?

Your inventory units are automatically taken into account into your sales of the next period.
Therefore, you need to take your inventory into account when you make your decision on
production level.

10.15 How a product should be positioned using the decision panel?

You need to highlight and put forward the most important attributes for your targeted segment. You
can try to modify the perceived value, but with reasonable limits, which should be compatible to
your actual product values, like 1 or 2 units maximum on the brand map.

10.16 What are the consequences of making changes in management time?

There are financial consequences when making changes to management hours. Please refer to
Financial Data screens of the simulation or to the E-Strat manual for detailed information. There
are also of course sales consequences, as managers manage the brands, the distribution
channels, the websites etc...

10.17 Do we have to pay any firing cots if we reduce the number of our employees?
Yes, indeed. Firing costs are indicated in Newsletter/Financial data.

10.18 How can we find out the overall number of our employees at the beginning of
period 1 and at the time being?
Go in Decisions/Management time and go back to previous periods with the Period button.

10.19 How do you calculate the exceptional cost for building new capacity?
The exceptional cost for additional capacity is calculated at 2.5% of the new capacity cost. It is
incurred in the period when additional capacity is built. It is not deducted from your budget.

10.20 How to influence the distribution of advertising budget across segments?

The advertising budget is used to purchase media space and time. The advertising agency selects
automatically the most appropriate media that targets the most relevant segments for the brand,
based on purchase intentions. You can influence the distribution across segment by designing
brands that are more focused toward a specific segment.

10.21 In the positioning decisions, 1 means the highest or 7?

Semantic scales describe how consumers perceive the marketed brands. Respondents are asked
to rate each brand along each physical characteristic plus price on a scale from 1 (low) to 7 (high)
according to the way they perceive the brand. For instance, a brand rated 2.3 on the Convenience
scale is perceived as being less convenient than a brand rating 5.5 on the same scale. For price, a
lower score on the semantic scale means that the brand is perceived as being cheaper, and a
higher score means that the brand is perceived as being more expensive. Semantic scale scores
are not related to how much a particular segment values the brand.

11

CHANNEL MANAGEMENT DECISIONS

11.1 Can I withdraw all my brands from a specific distribution channel?

Yes. All you have to do is set the Trade marketing budget to 0 for this channel. This means you
do not want to use this distribution channel at all.

11.2 Can I withdraw one particular brand from a specific distribution channel?
Yes. All you have to do is set the Brand priority to 0% for this brand in this channel. This means
you do not want to use this distribution channel for this specific brand.

11.3 What is included in the trade marketing budget? What are the effects of
increasing or decreasing it?
Trade Marketing includes the referencing budgets plus additional features such as beauty
advisors, show-window and in-store location display materials, product sampling displays, etc.
These features are used to provide to outlets the means to enhance sales. Thus, you should obtain
a better push from distributors if you increase the trade marketing budgets.

11.4 It seems that we can only modify the margins and that the discounts are fixed
somehow. Can we play around with the discount percentages?
You have no control over discounts offered by distribution channels to their consumers. You can
only adjust the standard margin by plus or minus 10%.
However, you can offer a discount to the consumers who buy directly on one of your e-commerce
enabled web site.

11.5 How is it possible to change the distributors' margins ?

This is one of the Channel management decisions.

11.6 Does a brand incur ill-will from frustrated customers who were not able to buy
the desired brand when looking for it?
No. This would probably be true for high-end brands in the real world, but the "simplified" e-Strat
world does not include this effect.

12

WEB SITE PORTFOLIO DECISIONS

12.1 Can I develop several web sites within a given period?

No. Your IT department does not have sufficient resources to handle several projects in parallel.
This may change at later periods, depending on your performances.

12.2 Can I develop a top-notch quality web site within a single period?
Probably not. Building top-quality web sites requires time and experience. You will have to
concentrate on the dimensions that seem to be most important for your target segment.

12.3 Why do we get an error message when the Performance level of prima.com is
not equal to 0?
The Board of Directors believes that prima.com should remain an information-only site, and so
does not allow you to enable e-commerce activities.

13

WEB SITE MANAGEMENT DECISIONS

13.1 What are the differences between Banner advertising and Affiliations?
The purpose of Banner advertising is to create visibility for the site to people already surfing on
the Internet and to increase traffic. Such an ad typically appears for a few days or weeks on the
edge of surfers screens.
Affiliations share a similar purpose, but involve longer-term commitments with major Internet
entities, such as portals, communities, etc. In such a case, your site would get a banner and a
direct link from the partners site. Such arrangements are made for 1 year at a time (two periods).
You can, for example, create a partnership for $500K during Period P, and another one during the
following period for $250K. Thus the two will run concurrently for one period, and your total

Affiliations budget would be: $500K for Period P, $750K for Period P+1 and $250K for Period
P+2.

13.2 What does the discount in web management decisions apply to?
Discounts apply to the Recommended Retail Price that you set in the brand management
decisions.

13.3 In the case of a multi-brand site, is the discount the same for each brand?
Yes.

13.4 Can we add new products to our multi-brand website in future periods?
Yes. As soon as these new brands are introduced on the market.

14

MARKET RESEARCH STUDIES DECISIONS

14.1 Who decides which segments to target with advertising?

The Media buying budget allocated to a brand is used to purchase media space and time. Your
advertising agency automatically selects the most appropriate media so as to target the most
relevant segments for the brand. The agency uses the Purchase Intentions study to decide which
segments to target, but your positioning decisions may also have an influence on targeting.

14.2 Do all product attributes have the same weight in the purchasing decision?
No. In the Semantic Scales study, consumers are asked to evaluate the importance of each
product attribute, in other words, the weight each attribute takes in the buying decision. These
weights are reported by consumer group.

15

BUDGET

15.1 What is Deviation from budget?

This is the difference between your budget and your expenses. The budget was allocated to you at
the end of Period P, based on your sales performance during this period (see manual). The
expenses are calculated from your decisions on management time, advertising, trade marketing,
etc
If the deviation is positive, it means that you have some budget left over and that you can increase
some of your expenditures.
If the deviation is negative, it means that you exceed your budget. In this case, you must reduce
your expenditures. You can lower advertising or trade marketing budgets, postpone a web site
creation, etc

15.2 The manual mentions that the budget is calculated as 40% of revenues. Is this
right?
No. There is a mistake in the manual. The budget is equal to 40% of brand contribution, as
specified in the Financial Data simulation chart in the Newsletter. The minimum and maximum
budget limits apply to each brand.

15.3 Our deviation from budget shows K$ 0, but we get an overspending error
message. Why?
This is due to rounding errors in the budget calculation. You need to take $1,000 off somewhere in
your expenses, and the error message will disappear.

15.4 When is the minimum budget of $ 20m granted for a new brand?
In the period when the brand is produced and marketed. For instance, if you decide in period 1 to
introduce a new brand, based on one of the new formulas, the brand will be active in period 2,
which is when the budget will be granted.

15.5 We preserved $ 500k budget from period 1, can we use it in period 2?

No. Left-over budget cannot be forwarded to the next period, as it is the case in most companies.

15.6 Just by purchasing all market studies this period we exceeded our budget. Is it
correct?
The initial decisions are the repetition of the previous period decisions, adjusted so as to spend the
entire available budget. You are of course free to change these decisions. As you increase your
spending in one area (Market Studies), you exceed your available budget. Thus, you must reduce
your expenditures in some other areas.

15.7 How is the budget calculated?

There is a mistake in the manual. The budget is equal to 40% of brand contribution, as specified in
the Financial Data simulation chart in the Newsletter. In addition, there is a minimum and a
maximum budget per marketed brand. For instance, if you market 3 brands, your minimum budget
is 60 M$, i.e. 3 x 20 M$.

15.8 What happens with the budget dollars that you don't use?
The budget that you do not spend will go in your contribution since you do not spend these dollars.
However, you may be able to generate more contribution by spending this budget in appropriate
marketing expenses that will generate a return greater than 1.
Beware: left-over budget cannot be forwarded to the next period, as it is the case in most
companies.

16

DECISION HIGHLIGHTS

17

FTP PROBLEMS

17.1 What does FTP stand for?

FTP stands for File Transfer Protocol. This is a protocol that allows you to transfer files between
two computers using the Internet.

17.2 Will E-Strat establish the Internet connection?

*** No!! ***
E-Strat will always use the current Internet connection. So you must first establish the connection
and then attempt to submit your decisions.

17.3 Do I need to be connected to Internet all the time when making decisions?
Fortunately, no!!! Otherwise, your Internet and/or telephone bills might increase dramatically!! You
only need to be connected to Internet when submitting your decisions. This should take one minute
maximum with a 9,600-baud rate connection, and a few seconds with a more rapid modem.

17.4 I have no clue about how to establish an Internet connection?

If you are using a university computer, you probably have access to a permanent Internet
connection. In this case, submitting your decisions will be a piece of cake!
If you are using your own computer, you need to be registered to an Internet Services Provider.
Refer to this provider to learn how to connect to Internet through Dial-up networking.

17.5 How long will submitting decisions take?

Submitting decisions will take around one minute with a 9,6K baud rate connection, and a few
seconds with a 56K recent modem.

17.6 I got the error message Host Lookup Timed Out when submitting decisions.
What happened?
This means that E-Strat could not reach the FTP server. This is probably because your Internet
connection is not up and running. Refer to the other FAQs in this section.

17.7 Is it possible to upload our decisions manually?

No. You must use the E-Strat application to access the FTP server and upload your decisions.

18

MISCELLANEOUS

18.1 Can I browse at past results?

Yes. Use the Period up and down buttons, located below the menu bar, to browse through past
results, from Period 0 to Period P.

18.2 Can I print my annual report?

Yes. Click Print, located below the menu bar. A dialog box pops up. You have the choice to print
the currently displayed screen (chart or graph) or the entire report.
An interesting feature is to print into an Excel file instead of a printer. This will generate an Excel
file named CurScr.xls for the current screen, or Report.xls for the annual report. Both files will
be located in the E-Strat folder: C:\E-Strat by default. These files will allow you to perform
additional analysis (average, sum, regressions, ) using Excel formulas.

18.3 Can I copy a chart into Excel or another spreadsheet software?

Yes. You should first display the chart you want to copy, e.g. Brand Results, by selecting the
appropriate item in the menu bar. Then, click on the Copy to clipboard button, located below the
menu bar, next to the Print button. The content of the chart is copied into the clipboard in tabseparated format, and can then be pasted into Excel or any other spreadsheet software.

18.4 Can I copy a graph into PowerPoint or another desktop publishing software?
Yes. You should first display the graph you want to copy, e.g. Brand Map, by selecting the
appropriate item in the menu bar. Then, click on the Copy to clipboard button, located below the
menu bar, next to the Print button. The content of the chart is copied into the clipboard in bitmap
format, and can then be copied into PowerPoint, Word or any other text-editing software.

18.5 I cannot access the Graphs menu. Why?

Graphs will not be available before Period 3. Graphs with only one or two data points are not quite
useful.

18.6 I can't locate the clipboard file... Shouldn't it be under E-Strat?

There is no Clipboard File. To use the clipboard: (1) copy the chart or graph in E-Strat as
indicated in FAQs 18.3 & 18.4; (2) use the menu Edit/Paste or the shortcut <Ctrl+V> in the
application (Excel, Word, ) where you want to paste it.

18.7 I can't open my Round 2 data file because the password is incorrect?
This is because you need to download and install a patch to the e-Strat software. The patch is
available on http://www.e-strat.loreal.com in the CHALLENGE/Download section. Installation
instructions are given in the TipsPeriod2.pdf file, also available on the Challenge web site

19

BUSINESS PLANS

19.1 When is the deadline for the electronic copy?

We expect to receive your electronic copy, as stated previously, before 9:00 a.m. Paris time on
Monday 10th March, and we will be taking that day to ensure that all teams have sent in their
Business Plans. We are unable to alter this deadline, due to the sheer volume of work in analysing

and marking these documents. We are committed to giving your hard work the treatment it
deserves!

19.2 When is the NEW deadline for the back-up paper copy?
The post mark on the envelope (paid for by LOral) of your back-up paper copy should prove that
you have telephoned FedEx before 12:00 midday Paris time on Tuesday 11th March. Note, this
copy does not have to arrive at LOral Paris before this deadline, as we will have received your
electronic copy at this time. This is to remove extended differences in postage times from distant
countries.

19.3 Why must we send a paper back-up copy of the Business Plan, and who pays?
LOral will send you the envelope in which you need to place your paper copy Business Plan. This
will be pre-addressed to LOral, and the postage pre-paid for, with the courier service FedEx. The
purpose of sending in a paper copy of your Business Plan is for three reasons:

In order to ensure that no team finds itself unable to send a large file electronically, as a
"safety measure" or back-up.

To enable the clear and aesthetic presentation of your Business Plan, without fearing for
the size of the electronic document. This does not necessarily mean that the two versions
should be any different from each other. Please observe the format specifications detailed
in the Business Plan Guide.

To mirror the real business world as much as possible. Professional proposals or reports
are nearly always also presented as a paper copy, for ease of reading.

19.4 Why has the deadline been pushed back by 24 hours?

This is simply for logistical reasons, as according to the old deadline (9:00 a.m. Paris time Monday
March 10th), those players who live in the Americas would be at a distinct disadvantage, as they
would have less time to complete their Business Plans. This is because some of these teams
would have been forced to send their paper copy before the end of the working day, Friday March
7th, to be sure that FedEx received it before the old deadline. This is because FedEx may not
work over the weekend in their country and post offices may not be open.
Thus, residents of the Americas are now able to send their paper copies before the end of the day
of Monday March 10th to meet the new deadline (12:00 midday Paris time Tuesday March 11th),
so are at no real disadvantage compared to players of other countries around the world. Moreover,
you have all received an extra 27 hours to produce a really professional paper copy of your
Business Plan.

19.5 When is the NEW deadline for the decisions for the end of Round 6 of the
simulation?
To ease the workload in Round 6, we have decided to give you at least an extra day to send in
your final decisions. Thus, you have until 12:00 midday Paris time Tuesday March 11th to e-mail
us your Round 6 decisions. This is the same deadline as the telephone call that you must make to
FedEx so they can come and collect the paper copy of the Business Plan (paid for by LOral, and
in the envelope previously sent to the address of one of the players by LOral).

19.6 Why do we have to submit our decisions for Round 6 as well as the Business
Plan? This is too much work!
Round 6 is the culmination of all of your work in the preceding rounds, it is thus important that the
Competition runs its full course. For your decisions taken in the previous rounds to bear fruit, you
must complete the final round to gauge the efficacy of your strategy. The final round is also your
last chance to help realise the overall vision which you wish to pursue.
Besides, we want to be sure that what strategic vision you have detailed in your Business Plan is
consistent with the decisions you have made in Round 6. It is especially important that we can see
the coherence between your responses to parts 2 and 3 of the Business Plan, which analyse this
part of the competition, and your decisions.

We also wished to raise the level of the game in the semi-finals to be sure to select the best teams
for the international final. By introducing a written element of expression to the competition we
hope to reward those teams who not only possess strong numerical skills, but also are capable of
clear and well-reasoned written analysis.

19.7 Which is more important, my final SPI, or my result in the Business Plan?
Both your final Share Price Index, and the mark for your Business Plan, will be combined in a ratio
of 60:40 (respectively). Both these scores will be normed on a scale from 1 to 100, so they can be
combined to give an overall score for both parts of the competition. Thus, the business plan is twothirds as important as your final SPI after all 6 rounds.
However, it is very important, as explained in FAQ 1), that your Business Plan is consistent with
the decisions you have made in round 6 rounds, which is the proof of your strategic vision in
practice. So, make sure that you dont neglect your Round 6 decisions, they are still important!

19.8 To whom will the envelope for the paper copy be sent?
A pre-addressed and stamped envelope for the paper copy of your Business Plan (addressed to
the LOral headquarters and paid for by LOral) will be sent from Paris, on Monday 3rd March, by
FedEx, to the address of the team member that was specified in your response to the e-mail
requesting one address per team.

19.9 I am French, FedEx will not deliver to me, what do I do?

Indeed, FedEx does not operate within the country from which it sends mail. What you need do is
wait for your pre-paid envelope, sent via chronopost, and follow the instructions which are
included inside the envelope. You will need to go to your local post office before the same deadline
(12:00 midday Paris time on Tuesday 11th March).

19.10 How do we send the paper back-up copy?

Your paper back-up copy should be sent via FedEx in the stamped, addressed envelope provided
and paid for by LOral. All you need do is telephone the number of your local FedEx office
(provided in the envelope and in the FAQs) before 12:00 midday Paris time March 11th and they
will come to collect your Business Plan at address marked on the envelope and forward it to Paris.
All postage costs will be met by LOral. So, make that call, and save yourself the journey to your
local post office!

19.11 When should I telephone FedEx?

You should make two telephone calls to your local FedEx office (see below for the telephone
number):
As soon as you receive your envelope you should telephone your local FedEx office to find out
their opening hours. If, due to the time difference, because you live in a time zone which is behind
GMT, then you will probably have to telephone FedEx Monday 10th March, before your local
FedEx office closes.
The telephone call to FedEx to pick up your envelope should be made before MARCH 11th AT
12:00 MIDDAY Paris time.

19.12 How do I find out the opening hours of my local FedEx office?
As explained in 19.11, please call your national FedEx office, as soon as you receive the
telephone number by post, to work out when you should call FedEx to be sure that your Business
Copy reaches Paris before the deadline. If you have any extra questions or concerns please write
to the specially created hotline for all paper copy enquiries, hotline.fedex@loreal.com.

19.13 Will we get any advice sent in the envelope to help us take the right steps?
Fear not, as a detailed step-by-step guide to posting the paper back-up copy of your Business Plan
will be provided inside the envelope has been provided inside the envelope that has been sent to
the home address of one of your team members.

19.14 What should I do to ensure that LOral records the postage of my paper
copy?
After you have telephoned your local FedEx office for them to pick up your Business Plan, you
should send an e-mail to the FedEx headquarters, to the address: spetchikowsky@fedex.com. The
e-mail should contain:
a)
b)
c)
d)
e)

the reference number of your envelope,

the order number given by your local FedEx office,
your country of residence,
your team name,
and the date and time of your telephone call to your local FedEx office.

This will act as an extra precaution to ensure that LOral is aware that you have telephoned
FedEx, and your envelope is soon to be collected.

19.15 Why cant we send our paper back-up copy by normal post?
LOral prefers all Business Plans to be sent by recorded delivery to cover the costs of postage
and increase speed and reliability. Different countries postage systems are more efficient than
others, and we would be forced to make the deadline earlier for the paper copy, to be sure to
receive it in time.
This is also a precaution to ensure that LOral has an official receipt of when the paper copy of the
Business Plan was posted for our records. We can thus be sure that you have sent your copy
before the deadline, and are still qualified to enter the final, even if there are problems with its
postage. This also saves you some time, money and worry!

19.16 Will we be penalised if the paper copy is lost by FedEx?

FedEx has an excellent reputation for speed and reliability, thus the chances of your paper copy
being lost are extremely slim. However, in the event of a problem with the postage of your
Business Plan, we will have a record of your telephone call and e-mail to FedEx, and your
envelope having been collected. Thus, we will be know if we do not receive the paper copy that it is
not your fault.

19.17 Structure how should we structure the Business Plan?

It is your choice how you decide to structure your answers and present your arguments. This gives
you the freedom to show an original and creative approach, while ensuring that your report is clear
and well-organised.
Bear in mind that all five aspects of the Business Plan must be addressed (as detailed in Part 2 of
The Business Plan Guide) to be eligible for the points available for each section. Note, the scoring
system can be used as a rough guide for the length of each of your responses to these sections.
Check the updated scoring table in FAQ 19.24.

19.18 Format how many charts, graphs and tables and where?
The main body of the Business Plan should just contain text. Any charts, graphs or tables that you
wish to include should appear in an appendix, attached to the 8 pages (maximum) of the main
document. The sum total of any combination of charts, graphs and tables may not exceed 4, and
should not be longer than 2 pages of standard A4.

19.19 Are we allowed a front cover and contents page in addition to the 8 pages?
Yes, if you wish to include a front cover of one page, and a table of contents of one page, these
two pages will not be counted as part of the 8 pages of content of the text of the Business Plan.
For the back-up paper copy the page limit is less strict.

19.20 Which leading firms are you referring to in section 6, 2 of the Business Plan
Guide?
When we ask, "How do you think todays leading firms achieved their current position?", we are
referring to the ones in the simulation (Bella, Vista, etc), and to the other Primas around the real

world. In playing e-Strat you are both competing against the virtual companies in the game, and
against the other teams around the world. Therefore, to give a full answer you should comment on
both sorts of competition that you face.

19.21 Will we receive detailed feedback on why we have received a certain overall
score?
You will receive a mark for each section and a total score for the Business Plan, with your final
SPI, but for further details concerning the breakdown of your score for the Business Plan we will
not have sufficient time to provide such a detailed personalised analysis of your work.
However, after all the Business Plans have been marked we will provide general explanations on
the web site on 19th March at 18:00 Paris time for the reasons behind the awarding of high or low
scores for different sections. If you should need a personal de-brief for your studies, please write to
the hotline after the posting of the results, and we will do our best to respond to you individually.

19.22 We are not semi-finalists, but can we send you our Business Plan anyway?
We regret that the size of the task of marking the 175 Business Plans of the qualified semi-finalists
is too large to enable us to accept any more. However, we encourage you to visit the web site after
the semi-finalists Business Plans have been marked, as you will be able to judge your
performance yourselves, by referring to our analysis of the work received. You may also want to
share your work with other playing colleagues or a professor. We are sorry to not be able to
respond personally, but we invite you to register next year, or even better, apply for a job or
internship to do the real thing!

19.23 In Part 4 of the Business Plan, for which three periods should we forecast?
We would prefer it if you forecasted for periods 7, 8 and 9, as we ask you to make a specific
forecast for period 6.

19.24 The points for the final score of the Business Plan do not add up to 100!
This is true, well spotted! We are impressed by your attention to detail. The following number of
points will be awarded for each of the six parts of the Business Plan. This is the official marking
system for the Business Plan scores:
1) Market Analysis, Round 1 5

20 points

2) Situation Analysis, Round 6

15 points

3) Forecast Results, Round 6

20 points

4) 3- Period Forecast

15 points

5) Key Learning Points

15 points

Overall Quality / Professionalism

GRAND TOTAL

15 points
100 points

19.25 Will my country be holding a national final for those who do not make it to
Paris?
Some countries are indeed to hold their own national finals, giving teams who played in Round 6,
but who did not qualify for the international finals, a chance to present their Business Plans. To
discover whether your country is to hold its own national e-Strat final, and details about his event,
please wait to be informed by your countrys recruiter, or by the e-Strat web site, in due course.

19.26 If I am too late to send in the paper back up copy of my Business Plan will I be
disqualified from Round 6?
No, but you may receive a lower score for the final, overall part of the Business Plan marking
system, Overall Quality / Professionalism. This is because, for a true business presentation, you
would be expected to provide a paper version of your proposal or report. Also, other teams who

submit a professionally presented paper copy of their Business Plan will perhaps be awarded a
higher score for this section.
Note, it is not necessary for you to submit a different version for the paper copy of your
Business Plan. You may add a front cover page or other pages of your choice, should you wish;
but this is NOT a requirement.

19.27 Is it too late for me to send my postal address to you to be sent the FedEx
envelope?
Yes, but you can contact your local FedEx office call centre (see below for the telephone
number) and pay them to send off the back-up paper coy of your Business Plan. You can include
the invoice for the postage costs with FedEx in your envelope, and LOral will reimburse you.

19.28 Will I receive a diploma for my participation in the e-Strat challenge?

All teams which were still qualified to play e-Strat 2003 at the end of Round 5 will indeed receive a
diploma to recognise the effort and achievement which such an experience has afforded them.
Note, this does include those teams who submitted their Round 5 decisions on time, but did not
qualify for Round 6. Those of you who qualified to become semi-finalists, or finalists, will receive a
diploma which specifies the level of your achievement. This will be sent to your home address after
the competition.

19.29 Could I please have a copy of the e-Strat Challenge background image?
Yes, of course! If you should like to be sent the official e-Strat image, we would be happy to email it in a jpeg format, should you wish to use it to illustrate your Business Plan.. Also, if you
should like to download the e-Strat screen saver to show your friends, please go to the e-Strat
home page.

20

STEP-BY-STEP GUIDE FOR THE CORRECT POSTAGE

THE STEP-BYSTEP GUIDE FOR THE CORRECT POSTAGE
OF YOUR PAPER COPY BACK-UP BUSINESS PLAN

Remember that :

Most importantly, you should have sent the electronic copy of your Business Plans before
MARCH 10th AT 9:00 A.M. Paris time. This is the official version to be received with
maximum priority.

The TSX file of your Round 6 decisions should be sent by electronic mail, and FedEx
should be telephoned to send the back-up paper copy of your Business Plan, by MARCH
11th AT 12:00 MIDDAY Paris time.

1) Telephone your local FedEx office to find out their opening hours, and by what date and time
you will need to call them to be sure to meet the Paris time deadline. Find the list of all the local
FedEx call centre telephone numbers for all the countries with players in Round 6 attached. Look
down the list for your country and dial the number.
2) Telephone your local FedEx office to post your paper back-up copy Business Plans by MARCH
11th AT 12:00 MIDDAY Paris time. Tell the FedEx call centre employee the address where they
need come to pick up the envelope, and the following order number : 116040042, to cover
transport costs.
3) Fill out your address in the senders part of the label (No.1, in the top left-hand corner, marked
From); and the Total Weight (as marked in part 4 of the label). This should be the address
where FedEx comes to collect your envelope that contains your Business Plan. If you do not have
access to scales, most packages will weigh around 500 grams. The FedEx official form should
then be replaced in its plastic holder on the outside of the envelope and resealed.
4) Send an e-mail to the FedEx headquarters, to the address: spetchikowsky@fedex.com. The
e-mail should contain:
a) the reference number of your envelope,
b) the order number given by your local FedEx office,
c) your country of residence,
d) your team name,
e) and the date and time of your telephone call to your local FedEx office.
This will act as an extra precaution to ensure that LOral is aware that you have telephoned
FedEx, and your envelope is soon to be collected.

21 Your Local FedEx Call Centre Telephone Number

COUNTRY

TELEPHONE NUMBER

TOWN OF DEPARTURE

Argentina

64-9-256-5300

BUENOS AIRES

Australia

13-26-10

SYDNEY

Brazil

0800 90 3333

RIO DE JANEIRO

Canada

800 463-3339

MONTREAL

Chile

115115751884

SANTIAGO

China

800-8102338

PEKING

Finland

80090092

HELSINKI

Germany

0800 123 0800

FRANKFORT

Greece

302109943100

ATHENS

Hong-Kong

852-2730 3333

KOWLOON

India

91 222570 8888/ 1600226161 BOMBAY

Indonesia

6221-522 4636

JAKARTA

Isral

972-357-777-88

JERUSALEM

Italy

800123800

MILAN

Japan

0120-003200

TOKYO

Latvia

0-800-5300

RIGA

Malaysia

1 800 88 6363

KUALA LUMPUR

New Zealand 64-9-256-5300

JOHANNESBURG

Norway

47-63-940300

OSLO

Peru

115115751884

LIMA

Poland

48 22 868 1710

WARSAWA

Portugal

0800-244144

LISBON

Russia

7-095-234-3400

MOSCOW

Singapore

1 800-7432626

SINGAPORE

South Africa

27 11 923 8000

JOHANNESBURG

South Korea

080 023 8000

SEOUL

Spain

900 100 871

MADRID

Taiwan

0800-075-075

TAIPEI

Thailand

662-367-3222

BANGKOK

Turkey

90 212 549 0404

ISTAMBUL

UK

0800 123 800

LONDON

Uruguay

5982-628-0100

MONTEVIDEO

USA

800 463-3339

NYC

Keep your fingers crossed that in a month and a half you will be flying on your way to Paris for the
international final! Good luck!