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3 year-stategic plan

Scheduled Plans
Your instructor has assigned the 3-Year Strategic Plans for the following decision periods:
Year 9-11: Available immediately after the deadline for Year 8.

Year 13-15: Available immediately after the deadline for Year 12.

Your decision schedule may show that your instructor expects you and your co-managers to prepare one or more 3-Year
Strategic Plans for your company. See your decision schedule for the deadlines for completing any 3-year plans that have been
assigned.
To prepare a 3-Year Strategic Plan, you must click on the 3-Year Strategic Plan item in the Decision/Reports
Program menu the item for the Plan will appear in the menu when it becomes available, as scheduled by your
instructor.
Doing a 3-year strategic plan involves:
1. Stating a strategic vision for your company.

2. Establishing objectives for EPS, ROE, credit rating, image rating, and stock price appreciation each of the next three years.

3. Declaring what competitive strategy your company intends to pursue.

4. Preparing a pro forma income statement for the each of the next three years based on your projections of unit sales,
revenues, costs, and profits in each of the four geographic regions during each year of the plan period.

If you have any questions about how to proceed, there is a Help page associated with each section of the 3-Year
Strategic Plan.
The purpose of the 3-year plan is to have you and your co-managers to think ahead and consider what prices, sales volumes,
and market shares it will take to meet or beat the targeted levels of performance that shareholders are expecting (and that are
built into the Investor Expectations scoring standard).
Doing a 3-year plan is thus an exercise in thinking strategically about your company's present position and future prospects,
anticipating what market and competitive conditions are likely to prevail in the years just ahead, charting a course for the
company to follow, establishing some performance targets to measure your company's progress in moving along the intended
strategic path, and setting forth a strategy and accompanying set of financial projections. You'll be asked to project what specific
prices, sales volumes, market shares, per pair costs, and profit margins it will probably take to achieve the strategic and financial
objectives the company's management team has set.
The 3-Year Plan will probably take 45-75 minutes to complete, depending on the speed at which you and your co-managers work
and how long it takes you to reach a consensus on the content of the plan.
You can begin working on your assigned 3-year strategic plan as soon as the results for the previous year's
decisions are available. In other words, if the deadline for completing the plan coincides with the deadline for the
Year 15 decision, then you can begin working on the plan as soon as the results for Year 14 become available. You
really can't make much headway on doing the plan before then because you will need to utilize the results of the most recent
year in doing all the financial projections that are an integral part of the 3-year plan.
Special Note: Once your plan has been completed, you can review your company's performance scores on the
plan by clicking on this link and the score will appear at the top of this screen.
How the Caliber of Your Strategic Plan Will Be Evaluated. A strategic planning effort that is predicated on
setting stretch objectives and then meeting or beating these objectives merits greater applause from board members and
investors than a 3-year plan that contains bare minimum performance objectives which company managers are then able to
easily meet or beat. Hence, the procedure for determining the caliber of your company's 3-year strategic plan is not
based on just the words and financial projections in the plan but on the level of performance that the plan
actually delivers.
Bear in mind that board members and investors expect that company co-managers will strive to meet and ideally beat the
following performance targets:
1. Grow earnings per share from $0.75 at the end of Year 5 to $1.00 in Year 6, $1.75 in Year 7, $2.75 in Year 8, $4.00 in
Year 9, $5.25 in Year 10, $6.50 in Year 11, $7.50 in Year 12, $8.50 in Year 13, $9.25 in Year 14, and $10.00 in Year 15.
2. Grow average return on equity investment (ROE) from 14.5% at the end of Year 5 to 17% in Year 6, 20% in Year 7,
25% in Year 8, 30% in Year 9, and by an additional 2.5% annually in Years 10 through 15 (thus reaching 45% in Year 15).
Average ROE is defined as net income divided by the average of total shareholder equity balance at the beginning of the
year and the end of the year. Average ROE for each company is reported on page 2 of the Camera & Drone Journal. Data
for calculating your companys average ROE appears on page 4 of the Company Operating Reports in the companys
Balance Sheet.
3. Achieve stock price gains of $5.50 per share in Year 6, $12.50 per share in Year 7, $30 per share in Years 8 -13, and
$20 per share in Years 14-15 (thus reaching $250 per share in Year 15). Board members believe these stock price gains
are definitely within reach if the company meets or beats the annual EPS targets, achieves the targeted rates of return on
shareholders equity (ROE), rewards shareholders with growing dividends, and from time to time prudently uses its
financial capabilities to repurchase shares of stock. The companys stock price was $12 per share at the end of Year 5.
Note: Stock price is a function of revenue growth, earnings per share growth, average ROE, credit rating, the rate of
growth in the annual dividend paid to shareholders, and managements ability to consistently deliver good results (as
measured by the percentage of each years 5 performance targets that your company achieves).
4. Maintain a healthy credit rating, defined as B+ or higher in Years 6 through Year 10 and at least A- in Years 11-15.
The companys credit rating was B at the end of Year 5.
5. Maintain an image rating (brand reputation) of 70 or higher in Years 6-9, 72 in Years 10-12, and 75 in Years 13-15.
The image rating is a function of (1) your companys P/Q ratings for action cameras and UAV drones, (2) your companys
global market shares for both action cameras and UAV drones (as determined by your market shares in the four
geographic regions), and (3) your companys actions to display corporate citizenship and conduct operations in a socially
responsible manner over the past 4-5 years. Your company had an image rating of 70 at the end of Year 5.In the space
provided on the 3-year strategic plan, indicate what your performance targets are for each of the upcoming three years.
Your strategic plan will be graded on a scale of 1 to 100, with the points awarded tied directly to whether your company meets
or beats the performance targets management establishes for EPS, ROE, credit rating, image rating, and stock price for each of
the three years of the strategic plan. The scoring is based on the principle that your company's strategic plan is good
if the management team sets stretch targets for EPS, ROE, stock price appreciation, credit rating and image
rating for each of the three years of the strategic plan and then meets or beats these targeted levels of
performance.
To get a performance score of 80 for any one year of the plan, you company must set and achieve performance targets that are
commensurate with Investor Expectations that year (as shown on pages 2 and 3 of each year's New GLO-BUS Camera Drone
Journal).
To receive a score above 80 requires setting stretch targets that are above the Investor Expectations standards and then
meeting or beating these stretch targets. To receive a score of 90 or higher, your management team will have to set
stretch targets for EPS, ROE, and stock price that are either 10% to 30% above the Investor Expectations targets or that
increase by 10% to 30% annually in the event that your company's performance already exceeds Investor Expectations levels
and then achieve sales volumes, revenues, and earnings that result in your company meeting or beating these
stretch targets.
Hence, you should avoid creating a 3-year plan which commits the company to achieving performance targets that are unrealistic.
As you will see below, the scoring is based on the conviction that company managers should not be rewarded with a good
grade for setting pie-in-the-sky performance targets and then delivering a performance far short of what was promised there
can be no applause whatever for a strategic plan that over promises and under delivers!!!!!! At the same time, though, there is
no glory to be gained by sandbagging and setting easily achieved performance targets.
The following point system governs how your company's performance score on the 3-year strategic plan will be determined:
14 points for setting any one target below the investor expectation minimum and then meeting or beating the target (70
points max. if applied to all 5 targets for each year of the plan). Thus, setting and achieving sub-par objectives results in a
maximum performance score of 70 or a C.Underachievement of a particular target results in a point reduction
proportional to the underachievement, subject to a minimum consolation prize score of 10 points on the
targets set for EPS, ROE, and stock price. Under no circumstances will any points be awarded for setting and
achieving a target below a B credit rating or an image rating of 50.
16 points for setting any one target equal to the investor expectation minimum and then meeting or beating the target (= 80
points max. if applied to all five targets for each year of the plan). Thus, if all 5 performance targets are set at the normal or
minimum level and if these targets are subsequently achieved, then the performance score will come out to be an 80 or a B.
The actual values for the normal investor expectations performance targets for every year of the simulation are shown on
pages 2 and 3 of each years Camera & Drone Journal.

18 points for setting a stretch target on any one performance measure that is "one notch" above the Investor Expectation
standard and then meeting or beating the stretch target (90 points max. if applied to all five performance measures)

"One notch" stretch targets are:

EPS depending on whether or not a company has already exceeded the Investor Expectation level for EPS, then:

- 10% above the companys prior-year EPS for EACH of the 3 upcoming years if the company's EPS was above
the Investor Expectation level for the prior-year.
- 10% above the Investor Expectation for EACH of the 3 upcoming years if the companys EPS was at or below
the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's EPS.
Stock Price - depending on whether or not a company has already exceeded the Investor Expectation level for Stock Price,
then:

- 10% above the companys prior-year Stock Price for EACH of the 3 upcoming years if the company's Stock Price
was above the Investor Expectation level for the prior-year.
- 10% above the Investor Expectation for EACH of the 3 upcoming years if the companys Stock Price was at or
below the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's Stock Price.
An ROE target 10% higher than the investor-expected target

A credit rating one rating higher than the investor-expected target (which equates to an A- in Years 6-10 and an A in
Years 11-15)

An Image rating 10% higher than the investor-expected target

19 points for setting a stretch target on any one performance measure that is "two notches" above the Investor Expectations
level and then meeting or beating the stretch target (95 points max. per year if done for all five performance measures)

"Two notch" stretch targets are defined as:

EPS depending on whether or not a company has already exceeded the Investor Expectation level for EPS, then:

- 20% above the companys prior-year EPS for EACH of the 3 upcoming years if the company's EPS was above
the Investor Expectation level for the prior-year.
- 20% above the Investor Expectation for EACH of the 3 upcoming years if the companys EPS was at or below
the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's EPS.
Stock Price - depending on whether or not a company has already exceeded the Investor Expectation level for Stock Price,
then:
- 20% above the companys prior-year Stock Price for EACH of the 3 upcoming years if the company's Stock Price
was above the Investor Expectation level for the prior-year.
- 20% above the Investor Expectation for EACH of the 3 upcoming years if the companys Stock Price was at or
below the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's Stock Price.
An ROE target 20% higher than the investor-expected target

A credit rating two rating higher than the investor-expected target (which equates to an A in Years 6-10 and an A+ in
Years 11-15)

An image rating 20% higher than the investor-expected target

20 points for setting a stretch target on any one performance measure that is "three notches" above the Investor Expectation
level and then meeting or beating the stretch target (100 points max. per year if done for all five performance measures)

"Three notch" stretch targets are defined as:

EPS depending on whether or not a company has already exceeded the Investor Expectation level for EPS, then:

- 30% above the companys prior-year EPS for EACH of the 3 upcoming years if the company's EPS was above
the Investor Expectation level for the prior-year.
- 30% above the Investor Expectation for EACH of the 3 upcoming years if the companys EPS was at or below
the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's EPS.
Stock Price - depending on whether or not a company has already exceeded the Investor Expectation level for Stock Price,
then:

- 30% above the companys prior-year Stock Price for EACH of the 3 upcoming years if the company's Stock Price
was above the Investor Expectation level for the prior-year.
- 30% above the Investor Expectation for EACH of the 3 upcoming years if the companys Stock Price was at or
below the Investor Expectation level for the prior year.
Awarded points will be based on the condition above that applies to the company's Stock Price.
An ROE target 30% higher than the investor-expected target

Credit rating of A+

An image rating 30% higher than the investor-expected target

Different stretch objectives may be set for each of the five performance measures. In other words, a company can have an A+
credit rating objective (a three-notch stretch), an image rating objective 10% above expectations (a one-notch stretch), an ROE
objective 20% above expectations (a two-notch stretch), an EPS objective equal to Investor Expectations, and a stock price
objective that is below Investor Expectations.
Underachievement of any target results in a point reduction proportional to the underachievement, subject to a
minimum consolation prize score of 10 points on any one target. For instance, if co-managers set a 30% stretch target
of $10 per share for EPS (which carries a score of 20 points if achieved) and actual EPS turns out to be just $6 (60% of the
targeted level), then they will incur an 8-point penalty and get only 12 points (60% of 20 points). If co-managers set a 30%
stretch target of $5 per share for EPS (which carries a score of 20 points if achieved) and actual EPS turns out to be just $1
(20% of the targeted level), then they will incur an 10-point penalty and earn the consolation prize score of 10 points. Hence,
company co-managers have nothing to gain by setting overly ambitious objectives and failing to meet them.
To get a good (80 or better) performance score for any one year of the plan, the scoring approach requires that a company
achieve performance levels at least commensurate with investor expectations that year (as shown on pages 2 and 3 of each
years GLO-BUS Statistical Review). To receive scores above 80, a company must set stretch objectives that are higher than the
investor minimum performance targets and then meet or beat these stretch targets.
Clearly, the point system for judging the caliber of a companys strategic plan (1) rewards co-managers for setting stretch
objectives and then succeeding in meeting or beating the stretch objectives and (2) punishes the strategic plan scores of
companies when the targeted levels of performance are not met.
Indeed, the scoring is based on three principles:
A companys strategic plan is good if management met or beat the targeted levels of performance and if
these targets contained some stretch.

A companys 3-year strategic plan is not so good if it results in a performance far short of what was
promisedthere can be no applause whatsoever for a strategic plan that over promises and under delivers.

There is no glory to be gained by sandbagging and setting easily achieved performance targetssetting and achieving high
stretch objectives earns a higher strategic plan score than does a plan where company co-managers set lower target
objectives and achieve them.

If a company meets or beats a performance target, then its performance score for that target equals the
corresponding number of points for that target.
A companys performance score for any one year of the plan is the sum of the points earned for each of the five
performance targets.
A companys overall performance score on the 3-year plan is the average of the performance scores earned for
each of the 3 years of the plan period.
The scores earned on the 3-year plan are reported to co-managers on the 3-Year Strategic Plan link that appears
on the left of their Corporate Lobby screenas the results for each year of the plan become available, all they
have to do to track their scores is just click on the link and the scores will be shown near the top of the page that
appears.
Different degrees of stretch objectives (one-notch versus two-notch versus three-notch) can be set for different
performance measures. Company co-managers have complete flexibility to set an A+ credit rating objective (a three-notch
stretch), an image rating objective of 75 (a one-notch stretch), a 20% ROE objective (a two-notch stretch), an EPS objective
equal to the normal expectation, and a stock price objective that is below the investor expectation level.
If your company meets or beats a performance target, then your performance score for that target equals the
corresponding number of points for the target you set. Underachievement of any of any target results in a point
reduction proportional to the underachievement, subject to a minimum consolation prize score of 10 points on
any one target. For instance, if you set a 30% stretch target of $10 per share for EPS (which carries a score of 20
points if achieved) and actual EPS turns out to be just $6 (which is only 60% of the targeted level), then you will
incur an 8-point penalty and get only 12 points (60% of 20 points). Consequently, it is risky and unwise to prepare a
plan with overly ambitious stretch objectives that require highly optimistic or even fairy-tale prices, sales volumes, market
shares, and profit margins in order to reach the targeted levels of performance the point penalty for committing to achieve
performance targets that you cannot deliver on can be pretty severe.
To get a good (80 or better) performance score for any one year of the plan, the scoring approach requires that a company
achieve performance levels at least commensurate with investor expectations that year (as shown on pages 2 and 3 of each
years New GLO-BUS Camera Drone Journal). To receive scores above 80, a company must set stretch objectives that are
higher than the investor minimum performance targets and then meet or beat these stretch targets.
Clearly, the point system for judging the caliber of a companys strategic plan (1) rewards co-managers for setting stretch
objectives and then succeeding in meeting or beating the stretch objectives and (2) punishes the strategic plan scores of
companies when the targeted levels of performance are not met.
The scoring is based on the principles that
A companys strategic plan is good if management met or beat the targeted levels of performance and if
these targets contained some stretch.
A companys 3-year strategic plan is not so good if it results in a performance far short of what was
promisedthere can be no applause whatsoever for a strategic plan that over promises and under delivers.
There is no glory to be gained by sandbagging and setting easily achieved performance targetssetting and achieving high
stretch objectives earns a higher strategic plan score that does a plan where company co-managers set lower target
objectives and achieve them.

A companys performance score for any one year of the plan is the sum of the points earned for each of the five
performance targets.
A company's overall performance score on the 3-year plan is the average of the performance scores earned for
each of the 3 years of the plan period.
Special Note: The scores you and your co-managers earn on the 3-year plan are reported on the top of this page.
As the results for each year of the plan become available, just click on the 3-Year Strategic Plan link in the
Assignments Menu box near the top of your Corporate Lobby screen and the scores will be shown at the top of
the screen.
Recommended Decision-Making Procedure

As you and your co-managers approach the task of making decisions for an upcoming year, we strongly recommend using the
following procedure. The recommended steps come from our experiences of having administered hundreds of simulations for
thousands of participants, and they should work well for you especially for the first few decision rounds when you are trying to
figure things out.

Step 1: Print (or review online) the 7-page Camera & Drone Journal (CDJ) (ideally each company co-manager
should make a copy for their own use) Review your company's performance on the scoreboard pages (pp. 1-3). Scrutinize the
numbers on the Industry Overview (p 4), the Financial Performance Summary (p. 5), and the Camera/Drone Benchmarks (p. 6-7).
There is a Help button at the top of every report page that provides line-by-line explanations of each item and how to make
effective use of the information on these report pages. Skim/read the Help text to be sure you understand the numbers and what
they tell you about the strong and weak aspects of your companys performance. (Skip this step in the first decision round since
the first CDJ issue appears after the Year 6 decision round deadline passes.)

Step 2: Print (or review online) the 4-page Company Operating Report (ideally one printout for each company
co-manager). This 4-page report provides you with all the details relating to your companys operations. There is a Help button
at the top of each report page that provides line-by-line explanations of each item and how to make effective use of the
information on these report pages. Pages 2 and 3 of this report are very important because they identify the regions where your
companys camera and drone businesses performed best and the regions where they underperformed. Corrective actions are
needed for all the underperforming parts of your companys operations. Skim/read the Help pages if you need help in
understanding any of the numbers and, especially, if you want/need suggestions/tips about how to make the best use of the
information provided.
Studying these reports especially for Year 5 when you are trying to get a grip on your companys business needs to be
automatic. There is a Help button at the top of every report page that provides line-by-line explanations of each item and how to
make effective use of the information on these reports. Skim/read the Help text until you are confident you understand the
numbers and what they tell you about the strong and weak aspects of your companys performance. It is perilous to rush into
making decisions for the upcoming year without first having a good command of your companys prior-year results.

Step 3: Make extensive use of the Competitive Intelligence Reportespecially the 4 pages showing the
Comparative Competitive Efforts of Rival Companies in each of the 4 geographic regions (ideally each company co-manager
should make a copy for their own use). These 4 pages show your companys competitiveness (as measured by your competitive
effort on all the variables that affect market share in both the camera and drone market segments) against the industry average
efforts, region by region. The two Strategic Group Maps on each page indicate your companys market position in cameras and
drones versus those of rival companies. Skim/read the Help pages if you need help in understanding any of the numbers and,
especially, if you want/need suggestions/tips about how to make the best use of the information provided.

Step 4: You are now ready to begin decision-making for the upcoming year. You should have a better idea at
this juncture of some of the things you want to change/improve/correct, and what it might take to improve your companys
performance in the upcoming year. We suggest moving through the decision entry screens in the order they appear on the
menu. You will always need to cycle back and forth through the decision entry screens to arrive at a cohesive and compatible set
of entries that hold promise for producing good performance.
Each time you change an entry, an assortment of on-screen calculations will instantly show the projected impact of the entry on
unit sales, revenues, market share, unit costs, profit, EPS, ROE, and other pertinent factors. The on-screen calculations are there
to help you evaluate the relative merits of one decision entry versus another. They provide instant feedback on the possible
outcomes and consequences of alternative decisions and are intended to support wiser decision-making and strategizing on your
part. Often, it will take a minute or two to digest all the changes in the on-screen calculations that occur when you make a
particularly significant change the best way to deal with this is to put the prior number back in the entry field and then redo
the entry and watch the changes in the on-screen calculation a second or third time.
No decision entry is final until the decision deadline passes, so you can enter as many numbers in the decision fields and try
out as many different decision scenarios as you wish. When you have made entries that you wish to retain, be sure to click the
Save button at the top-right.

Step 5: Review and print the projected Company Operating Reports. As you finalize your decision entries for the
year, it is a good idea to review some of the numbers in the projected Company Operating Reports. Check the projected
Production Cost Report and the Income Statement page to see if the projected costs are higher/lower than the prior year and if
costs are moving in the right direction. Check to see if profitability in each geographic region is better/worse than the prior year;
check the projected costs against those on the Benchmarks pages (page 6-7) of the Camera & Drone Journal to see how well
your projected costs compare with the prior-year industry lows, industry averages, and industry highs. If you spot areas where
costs are rising and/or profitability is headed downhill, you may want to reconsider some of the decision entries to see if you can
turn things around.
When your reach a final set of decisions, it is always a good idea to print a copy of the projected Company Operating Reports.
Then, when the results for the round are generated, you can compare the numbers in the projected Company Operating Reports
with the numbers in the actual Company Operating Reports. Having the ability to see what went wrong should your company
have a bad year is important (and you really cant diagnose what went wrong without a copy of the projected Company
Operating Reports to find the differences between what was projected and what actually happened).

Step 6: Print a copy of your decision entries. From any decision entry screen, click the Print button to print a summary
of the entries you have made for the year. Retain a copy of the Current Year Decision Summary for your records so that you
may refer to it later if necessary. Check the printout carefully to be sure that all the entries are as you want them.

Step 7: End the decision-making session. When you are ready to end the session, make sure that the one team
member hits the Save button. If you have any unsaved decision entries the program will prompt you with a message. You can
click the Save button to retain the unsaved entries or simply close the window to discard them.
The entries that exist on all the decision screens when the Save button is last clicked by any co-manager are the entries that will
count when the deadline passes. Until the deadline for the round passes, you may launch a new decision-making session at a
later time and change any of the entries that were previously saved.
Now you are ready to exit the Decision/Reports section and return to your Corporate Lobby, where you can log out.

Special Note: : It is normal for company co-managers to log-on simultaneously and each be engaged in decision-making. When
you log-on and launch the Decision/Reports program, check the Alerts and Chat Center box to see if other co-managers are
logged on; if so, you should click on the collaborate and audio buttons to communicate and coordinate your activities with those
of other team members. It is important that company co-managers coordinate their activities, especially when it comes to
entering and saving decisions. The communication (Alerts and Chat) center located at the bottom-left of the Decision/Reports
Program window allows you to communicate (by text or voice) with any co-manager currently active in the Decisions/Reports
Program and also to work from the same screens.
Financial Ratios Used in New GLO-BUS
Profitability Ratios (as reported on pages 2 and 7 of the GLO-BUS Statistical Review)
Earnings Per Share (EPS) is defined as net income divided by the number of shares of stock issued to stockholders. Higher
EPS values indicate the company is earning more net income per share of stock outstanding. Because EPS is one of the five
performance measures on which your company is graded (see p. 2 of the GSR) and because your company has a higher EPS
target each year, you should monitor EPS regularly and take actions to boost EPS. One way to boost EPS is to pursue actions that
will raise net income (the numerator in the formula for calculating EPS). A second means of boosting EPS is to repurchase shares
of stock, which has the effect of reducing the number of shares in the possession of shareholders.

Return On Equity (ROE) is defined as net income (or net profit) divided by total shareholders equity investment in the
business. Higher ratios indicate the company is earning more profit per dollar of equity capital provided by shareholders. Because
ROE is one of the five performance measures on which your company is graded (see p. 2 of the GSR), and because your
companys target ROE is 15%, you should monitor ROE regularly and take actions to boost ROE. One way to boost ROE is to
pursue actions that will raise net profits (the numerator in the formula for calculating ROE). A second means of boosting ROE is
to repurchase shares of stock, which has the effect of reducing shareholders equity investment in the company (the denominator
in the ROE calculation).

Operating Profit Margin is defined as operating profits divided by net revenues (where net revenues represent the dollars
received from camera sales, after exchange rate adjustments and any promotional discounts). A higher operating profit margin
(shown on p. 7 of the GSR) is a sign of competitive strength and cost competitiveness. The bigger the percentage of operating
profit to net revenues, the bigger the margin for covering interest payments and taxes and moving dollars to the bottom-line.

Net Profit Margin is defined as net income (or net profit, which means the same thing) divided by net revenues (where net
revenues represent the dollars received from camera sales, after exchange rate adjustments and any promotional discounts). The
bigger a companys net profit margin (its ratio of net income to net revenues), the better the companys profitability in the sense
that a bigger percentage of the dollars it collects from camera sales flow to the bottom-line. The net profit margin represents the
percentage of revenues that end up on the bottom line.

Operating Ratios (as reported on the Comparative Financial Performances page of the GLO-BUS Statistical
Review)

The ratios relating to costs and profit as a percentage of net revenues that are at the bottom of page 7 of the GSR are of
particular interest because they indicate which companies are most cost efficient:
The percentage of total production costs to net sales revenues. This ratio is calculated by dividing total
production costs of cameras by net revenues (where net revenues represent the dollars received from camera sales, after
exchange rate adjustments and any promotional discounts). Low percentages are generally preferable to higher percentages
because they signal that a bigger percentage of the sales price for each camera is available to cover delivery, marketing,
administrative, and interest costs, with any remainder representing pre-tax profit. Companies having the highest ratios of
production costs to net revenues are likely to be caught in a profit squeeze, with margins too small to cover delivery, marketing,
and administrative costs and interest costs and still have a comfortable margin for profit. Production costs at such companies are
usually too high relative to the price they are charging (their strategic options for boosting profitability are to cut costs, raise
prices, or try to make up for thin margins by somehow selling additional units).

The percentage of delivery costs for cameras to net sales revenues. This ratio is calculated by dividing total
delivery costs by net revenues (where net revenues represent the dollars received from camera sales, after exchange rate
adjustments and any promotional discounts). A low percentage of delivery costs to net revenues is preferable to a higher
percentage, indicating that a smaller proportion of revenues is required to cover delivery costs (which leaves more room for
covering other costs and earning a bigger profit on each unit sold).

The percentage of total marketing costs for cameras to net sales revenues. This ratio is calculated by dividing
total marketing costs by net revenues (where net revenues represent the dollars received from camera sales, after exchange rate
adjustments and any promotional discounts). A low percentage of marketing costs to net revenues relative to other companies
signals good efficiency of marketing expenditures (more bang for the buck), provided unit sales volumes are attractively high.
However, a low percentage of marketing costs, if coupled with low unit sales volumes, generally signals that a company is
spending too little on marketing. The optimal condition, therefore, is a low marketing cost percentage coupled with high sales,
high revenues, and above-average market share (all sure signs that a company has a cost-effective marketing strategy and is
getting a nice bang for the marketing dollars it is spending).

The percentage of total administrative costs for cameras to net sales revenues. This ratio is calculated by
dividing administrative costs by net revenues (where net revenues represent the dollars received from camera sales, after
exchange rate adjustments and any promotional discounts). A low ratio of administrative costs to net revenues signals that a
company is spreading its fixed administrative costs out over a bigger volume of sales. Companies with a high percentage of
administrative costs to net revenues generally need to pursue additional sales or market share or risk squeezing profit margins
and being at a cost disadvantage to bigger-volume rivals (although a higher administrative cost ratio can sometimes be offset
with lower costs/ratios elsewhere).

Liquidity Ratio (as reported on the Comparative Financial Performances page of the GLO-BUS Statistical
Review)

The current ratio is defined as current assets divided by current liabilities. It measures the companys ability to generate
sufficient cash to pay its current liabilities as they become due. At the least, your companys current ratio should be greater than
1.0; a current ratio in the 1.5 to 2.5 range provides a much healthier cushion for meeting current liabilities. Ratios in the 5.0 to
10.0 range are far better yet. A bolded number in the current ratio column designates the company with the best/highest current
ratio; companies with shaded current ratios need to work on improving their liquidity if the number is below 1.5.

Dividend Ratios (as reported on the Comparative Financial Performances page of the GLO-BUS Statistical
Review)

The dividend yield is defined as the dividend per share divided by the companys current stock price. It shows what return (in
the form of a dividend) a shareholder will receive on their investment in the company if they purchase shares at the current stock
price. A dividend yield below 2% is considered low unless a company is rewarding shareholders with nice gains in the
companys stock price. A dividend yield greater than 5% is considered high by real world standards and is attractive to
investors looking for a stock that will generate sizable dividend income. In GLO-BUS, you should consider the merits of keeping
your companys dividend payments high enough to produce an attractive yield compared to other companies. A rising dividend
has a positive impact on your companys stock price (especially if the dividend is increased regularly, rather than sporadically),
but the increases need to be at least $0.05 per share to have much impact on the stock price. However, as explained below, you
do not want to boost your dividend so high (just for the sake of maintaining a record of dependable dividend increases) that your
dividend payout ratio becomes excessive. Dividend increases should be justified by increases in earnings per share and by the
companys ability to afford paying a higher dividend.

The dividend payout ratio is defined as the dividend per share divided by earnings per share (or total dividend payments
divided by net profitsboth calculations yield the same result). The dividend payout ratio thus represents the percentage of
earnings after taxes paid out to shareholders in the form of dividends. Generally speaking, a companys dividend payout ratio
should be less than 75% of EPS, unless the company has paid off most of its loans outstanding and has a comfortable amount of
cash on hand to fund growth and contingencies. If your companys dividend payout exceeds 100% for several quarters and
certainly for more than a year or two, then you should consider a dividend cut until earnings improve. Dividends in excess of EPS
are unsustainable and thus are viewed with considerable skepticism by investorsas a consequence, dividend payouts in excess
of 100% have a negative impact on the companys stock price.

Credit Rating Ratios (as reported on the Comparative Financial Performances page of the GLO-BUS
Statistical Review)

Below are descriptions of each of the four factors determining your companys credit rating:
The debt-equity ratio (defined as long-term debt divided by total shareholders equity) indicates the extent to which the
companys long-term capital has been supplied by creditors or by shareholders. A debt-equity ratio of .33 is considered good.
As a rule of thumb, it will take a 4-quarter average debt-equity ratio close to 0.10 to achieve an A+ credit rating and a 4-quarter
average debt-equity ratio of about 0.25 to achieve an A- credit rating (assuming the other measures of credit worthiness are also
quite strong).

The times-interest-earned ratio (defined here as operating profit for the last four quarters divided by net interest for the
last 4 quarters) is a measure of the safety margin that creditors have in assuring that company profits from operations are
sufficiently high to cover annual interest payments. A times-interest-earned ratio of 2.0 is considered rock-bottom minimum by
credit analysts. A times-interest-earned ratio of 5.0 to 10.0 is considered much more satisfactory for companies in the digital
camera industry because of quarter-to-quarter earnings volatility over each year, intense competitive pressures which can
produce sudden downturns in a companys profitability, and the relatively unproven management expertise at each company.

The debt payback capability is a measure of the number of years it will take to pay off the companys outstanding loans
based on the most recent years free cash flow (where free cash flow is defined as net income plus depreciation minus total
dividend payments). Net income is reported on a companys Income Statement, companywide depreciation costs are reported on
the Production Cost Report, and annual dividend payments are shown on the Cash Flow Statement portion of a companys
Finance Report. The number of years to pay off the debt equals the amount of long-term debt shown on the Balance Sheet
divided by free cash flow. A short debt payback period (less than 3 years) is a much stronger sign of creditworthiness and cash
flow strength than a long payback period (8 to 10 years or more). If your companys number for debt payback is bolded, then
your company has the shortest payback period in the industry; if your companys number has a shaded background, then your
debt-payback period is high relative to rivals and you need to work on improving profitability and free cash flows in order to
reduce the debt payback period.

A company is considered more creditworthy when its line of credit usage is small (say 5% to 15% of the total credit
available) because it has less debt outstanding and greater access to additional credit should the need arise. A companys
creditworthiness is called into serious question when it has used 80% or more of its credit line, especially if it also has a long
debt payback period, a relatively high debt-equity ratio, and/or a relatively low times-interest earned ratio. Generally speaking,
credit analysts like to see companies using only a relatively small portion of their credit lines over the course of a year (theres no
problem of borrowing more heavily to finance the typically double production levels of the third quarter so long as most of these
borrowings are repaid in the fourth quarter when the cash from high third-quarter sales is received). What troubles credit
analysts most is a company that calls upon 50% or more of its credit line quarter-after-quarter, year-after-year and seems
constantly on the verge of struggling to pay its debt outstanding. Companies that utilize only a small percentage of their credit
lines are viewed as good credit risks, able to pay off their debt in a timely manner without financially straining their business.

The four credit rating measures are of roughly equal importance in determining a companys credit rating. However, weakness on
just one of the four can be sufficient to knock a companys credit rating down a notch. Weakness on two (or more) can reduce
the rating by several notches. If any of the credit rating measures for your company have a shaded or highlighted background,
then you and you co-managers need to take calculated action to get those ratios up as rapidly as possible. Bolded numbers on
the credit rating measures indicate credit rating strength relative to rival companies.
Companies placed on credit watch need to pay special attention to improving their creditworthiness and financial
performance. This nearly always means considering strategy changes and boosting your companys
competitiveness in the marketplace so as to greatly improve your companys overall profitability and ROI.
Video Tutorials and Help Pages
Company Presentation
Your instructor may opt to have you and your co-managers do a presentation at the end of the simulation (or possibly even at
some point during the simulation). Typically, the audience for such a presentation is your company's board of directors and/or
shareholders (with your instructor, invited guests, and other class members assuming the roles of board members and/or
shareholders). Your instructor will clarify whether the context of your presentation will be a meeting of the company's board of
directors or an annual shareholders' meeting or some other audience.
In the event you are asked to do a presentation on the performance and operation of your company, then we suggest that you
create a PowerPoint slide presentation (or a set of transparencies that you can show on an overhead projector if your classroom
is not equipped to show slides from a PC).
Unless otherwise instructed, your presentation should include the following topics and slides:
A brief review of the financial performance of your company during the time you and your co-managers have run the
company.
This review should consist of charts showing the following:
Trends in the company's annual total revenues

Trends in the company's annual earnings per share (EPS)

Trends in the company's annual return on equity investment (ROE)

Trends in the company's annual credit rating

Trends in the company's year-end stock price

Trends in the company's annual image rating

As you know, when you launch the Decisions and Reports program, there are performance graphs showing your company's
performance on each of the above six performance indicators along with many others at the bottom of the Performance
Highlights page of the Company Operating Reports. These graphs for the final year of the simulation can easily be inserted
into a PowerPoint presentation or Word document. Double-click on the graph you want to download and the graph will be
saved to your computer/device as a PNG image file. Once you have named and saved a picture file of a graph to your local
drive you can insert the picture into your PowerPoint presentation or Word document using the Insert tab provided in the
Office program.

Double-click on a graph
to save it to as an image.
If you wish to create additional performance graphs, you can do so, but the above six bar graphs tell an adequate story about
your company's historical performance.
A slide describing your strategic vision for the company.

A slide that shows what performance targets for EPS, ROE, credit rating, and image rating you and your co-managers would
set for each of the next two years (assuming the simulation were to continue). You may also want to indicate a stock price
target as well.

A slide that sets forth your company's competitive strategy in Action Capture cameras in some detail and how that strategy
has evolved over the years you have managed the company. You may need to have more than one slide here if your
company's strategy in AC cameras varies markedly from geographic region to geographic region.

A slide that sets forth your company's competitive strategy in UAV Drones in some detail and how that strategy has evolved
over the years. Again, more than one slide may be needed if your company's strategy in UAV Drones varies markedly from
one geographic region to another, such that your company is pursuing a meaningfully different competitive strategy in some
regions versus others.

A slide describing your company's production strategy (as concerns use of overtime, and expansion of in-house assembly
capacity) and work force compensation/training strategy.

A slide describing your company's finance strategy (as concerns dividends, use of debt versus equity, stock
issues/repurchases, actions to achieve/maintain a strong credit rating, etc.) You should clearly describe your company's
dividend policy during the period you have managed the company. Here, you should also set forth what sort of dividend
increases, if any, you would likely consider paying out in the next two upcoming years (given the EPS targets you have
established).

A slide showing (1) those companies you consider to be your strongest/closest competitors in AC cameras as of the last year
or two of the simulation and (2) those companies that are your strongest/closest competitors in the UAV Drone segments.

One or more slides detailing the actions you would take to out-compete these close rivals in the next two years (assuming the
simulation continues for several more years). Since the actions may differ between AC Camers and UAV Drones, you may well
need 2 slides here.

A set of slides detailing the "lessons learned" about crafting a winning strategy and about what the managers of a company
should or should not do for a company to be financially and competitively successful in a head-to-head battle against
shrewdly-managed rival companies.

You should, of course, adjust the content of your presentation to conform to whatever topical outline that your instructor
specifies. Thus, depending on what your instructor tells you about what items to address in your presentation, you may need to
add slides covering other topics or delete coverage of some of the above suggested topics.
Peer Evaluations
Peer evaluations are usually done towards the end of the New GLO-BUS exercise. Peer evaluations involve (1) evaluating both
your co-managers and yourself on 12 factors and (2) providing any additional written comments. The content of the peer and
self evaluations will be provided to your instructor but will not be reported to your co-managers.
Peer Evaluations will be available for completion and submission beginning: 6-Oct-17 7:00 am.
Completed evaluations must be submitted no later than: 9-Oct-17 11:00 pm.
Click here to view the peer evaluation form.

The End-Game Evaluations will be available Fri, 6-Oct-17 at 7:00 am.


The End-Game Evaluations are due Mon, 9-Oct-17 at 11:00 pm.
Participant Grade Book
New GLO-BUS Simulation Grades
The following items have been selected and scheduled by the course instructor to comprise the New GLO-BUS simulation
exercise portion of the course. These component items are used by the course instructor to determine your individual score for
the New GLO-BUS simulation. All component scores are calculated and presented on a 100 point scale. The course instructor may
choose to weight these items in some manner (which he/she may or may not choose to reveal) to arrive at an overall score for
the New GLO-BUS simulation component of the course.
Simulation Grade Components Score
Company Score (game-to-date) 45
Note: Scores for evaluations of you by teammates are kept
confidential and are available only to the course instructor.

See the course instructor for more information on your overall simulation score or your overall course
score/grade