TABLE OF CONTENTS

The Simulation: an Introduction | Vision and Corporate Design | Decision Variables | The Contracts Program
The Market Reports | Firm Reports: Credit, Sales & Production | Firm Reports: Financial Statements
The Scent Industry | Plant and Location  | Subsidiaries | Bankruptcy | Forecasting Demand | NPV | Broker

Your Virtual World

To begin, you must imagine the Global View Simulation as a microcosm, a world in miniature. Within this interactive world you will open and operate a firm. Your team will compete against other student operated firms from around the world. Political, economic, and technological factors will influence markets and create unique opportunities and threats.

How does it work?

• Distribution Channel
• Firm to Firm Negotiations
• Decision Set
• Product
• Location
• The Boss
• Peacock Industries

.

Distribution Channel ?
The distribution channel is the channel through which product flows. The end retail buyer in the simulation is simulated and will react to economic and political events as well as specific industry factors. Firms compete for this retail market share only within their own market group (up to 8 firms per market group - see details on simulation matrix below). Firms are allowed to make a host of contracts with one another including the sale/purchase of finished goods. Goods purchased from other firms for resale to the retail market carry your private labels.

There are two levels to the simulation, an Introductory level and an Advanced level. At the introductory level firms play for a shorter duration and are limited to the distribution end of the channel. At the Advanced level, where your team will be playing, firms are allowed to operate anywhere within the distribution channel, from production to distribution. Firms are allowed to make contracts between the two levels of the simulation. Therefore, a manufacturer could sell product to a firm in the Introduction to Business Simulation.

For instance, you may operate a distribution firm selling only to the simulated retail market. You may open a manufacturing firm that sells only to other firms in the advanced and introductory simulations. You may decide to build your own plant and produce your own goods or build no plant and purchase all your goods from other firms.

Please note that some professors may limit your choice to only 1 of the following options:

• Manufacturing Only: build and operate one or two factories which sell ONLY to other firms in the simulations. They do NOT sell to the simulated retail market. These firms typically run medium to large plants with no expenditures on marketing (manufacturing only firms are expected to locate in MO designated market groups which have zero simulated retail demand)
• Distribution Only: a firm which sells primarily to the simulated retail market and has NO plant (sourcing all goods for resale from other firms in the simulations).
• Classical firm: a firm which builds a plant to manufacture primarily to meet sales in its own simulated retail market. These firms typically run small to medium factories constructed to supply only their own demand.

Each type of firm listed above has unique risks and advantages:

The manufacturing only firm does not have the expense of marketing (sales reps, advertising budgets, etc...). They also are not restricted to demand/competition within their own market groups but compete across all market groups to secure demand. However, they must work to secure contracts with other firm, have a harder time determining demand and have large initial outlays of cash to get plants up and running as well as continuing expenditures on maintenance and depreciation.

Distribution only firms can run slim without the extra expense of operating and maintaining a plant. However, they must work to secure contracts with other firms, face large marketing expenditures and run the risk of product shortages. They are restricted to competition for retail demand within their own market group. Firms participating in the Introduction to Business program, are all distribution only firms.

The classical firm is a balance between the two extremes. Classical firms are protected against market shortages and have more maneuverability since they can reach outside their own market group. They don't have to spend time on securing contracts if they compete only within their own market group. However, running a classical firm takes additional time in analysis as executives must consider both plant operation considerations and distribution/marketing decisions/results. Classical firms also have the disadvantage of spending on both plant and marketing.

Firm to Firm Negotiations?
In this simulation, firms are able to make a variety of contracts with one another including sale/purchase of product. Contracts may be made between any firm in any market group and also between the two levels of the simulation. In order to make your firm successful you will need to interact with the businesses around you. You cannot succeed if you cut yourself off from the distribution channel. Even a classical firm should keep tabs on opportunities in the market place. To maintain your place in the chain you will need to form business relationships, learn to negotiate, analyze market trends, and create contracts. There are many means to achieve communication; e-mail, chat rooms and websites to promote your product or service to other firms.

When communicating with other firms be aware of professionalism and cultural differences. Remember that you are representing your firm in your communications.

When making contracts consider the following legal guidelines:

In order to conclude a valid contract the following must occur:

1. There must be an offer made which includes the essential terms of the "deal"
2. If this offer is accepted unchanged, a contract is made.
3. If the offer is not accepted unchanged, the counter-offer, that is the varied suggestion for the contract, must be accepted by the original offeror, before there is a valid contract.
4. The contract should not be posted until both parties agree on the terms.

Only valid contracts may be executed. Only 1 party to the contract executes the contract in the online recording system. All parties to the contract should keep written record of negotiations. In the case of chat room deals, you should print the chat session or formalize the agreement with a written confirmation by e-mail or webct mail.

Decision Set?
Each week you will develop a set of decisions and contracts. One week represents one quarter of a year. Your decisions and contracts will be put into action when the simulation runs on Friday. Your decision set may be altered as often as you wish until the database is closed Friday morning (9am San Francisco Time) for processing. A message will indicate you can no longer enter decisions. The decision menus do not change until you change them. If you do not alter decisions, then your prior set will be repeated. Contracts are different. After the simulation runs, all firm contracts are cleared out. This is because most firm to firm contracts are dynamic with price and order amounts changing every week.

Product?
So what's everyone selling? This session all firms will be in the Scent industry. There are two products:

• Product 1 = aftershave = P1
• Product 2 = perfume = P2

For more detailed information on product please refer to the Scent Industry Chapter

Location?
There are two broad regions in the simulation. These regions represent two markets as well as physical locations for factories and firm headquarters:

• Area 1 = The North American Free Trade Area = NAFTA
• Area 2 = The European Union, including the Czech Republic = EU

There are two location options that give you added benefits/risks, locating in Mexico or the Czech Republic. In order to locate in Mexico or the Czech republic you must enter a contract before you build any plant hours. This option is of importance primarily for the manufacturer, as it gives the advantage of lower labor rates. There are additional risks in terms of production. Refer to the Plant Chapter for more information.

The newly created Euro Dollar, or EURO will be the currency used in the EU for both pricing and paying laborers if you're a manufacturer. All other figures are in U.S. dollars.

The Boss

You can follow economic and political trends and try to predict what lies ahead, by reading "The Boss" an online newspaper published with the results of each run. The Boss is your best link to the macro economic environment you are operating within. If you're not reading "The Boss", you're not thinking right.

Peacock Industries

Peacock Industries runs Firm 18 in the Scent Industry.  This administratively run company sells finished goods to firms in the simulation for a limited period of time. Peacock Industries does not act as a buyer except in special cases, as directed by the Global View Administration. Nor does Peacock Industries sell raw materials, plant hours, or other assets, unless through a special arrangement, such as the liquidation of a bankrupt firm.

Peacock will sell finished goods only in early quarters of the simulation, before manufacturers are present. They may maintain their presence longer at the Introductory level of the simulation. They can usually supply your full order for finished goods. The prices for Peacock product will go up each week. The current Peacock asking price can always be found in "The Boss".

To buy finished goods through Peacock Industries, you simply enter a contract with your designated Peacock firm for product. See The Contracts Section for more details.

Where do you look for the information you need? It's all online at www.globalview.org

Simulations Link

• To access your decision set
• To access all reports
• To enter firm information (i.e. firm URL)

WebCt Posting Board:

To read or post stockholder notices

To read or post contract offers

WebCt Firm Mailbox:
• To send a message to AGV Administrators
• To send a message to a single firm
• To send a message to all firms

• WebCt Chat Rooms:
• To talk with fellow teams directly
• To talk directly with AGV Staff

To fully incorporate your firm you must do the following:

• Pay the incorporation fee (please ask your professor whether you are required to pay this fee online or at your bookstore - most European teams are paid for by their university)
• File the following information with your game administrator

E-mail to globalview@earthlink.net

Firm Number:_____________________ Firm Name:_______________________

Operation Selection: i.e. Manufacturing only

Firm Location Area 1 (NAFTA)_______ Firm Location Area 2 (EU)___________

Number of Executives:_______________

Optional E-mail Addresses for your Firm:
Primary:__________________________ Secondary:________________________

It is important as you begin to use chat rooms and create contracts that you represent your company as a professional. Remember that the teams you are communicating with are international and may negotiate differently. All contractual details should be clearly stated. Also, be courteous of time differences.

In order to conclude a valid contract the following must occur:

1. There must be an offer made which includes the essential terms of the "deal"
2. If this offer is accepted unchanged, a contract is made.
3. If the offer is not accepted unchanged, the counter-offer, that is the varied suggestion for the contract, must be accepted by the original offeror, before there is a valid contract.
4. The contract should not be posted until both parties agree on the terms.

Only valid contracts may be executed. Only 1 party to the contract executes the contract in the online recording system. All parties to the contract should keep written record of negotiations. In the case of chat room deals, you should print the chat session or formalize the agreement with a written confirmation by e-mail or webct mail.

Insure when you send messages to the Global View Administrators or to other firms that you include your own firm number in the communication.

Keep in mind that you have real stockholders in this simulation. Participants in the Broker Simulation invest in your firm. They must be kept informed concerning stock repurchases and issues, as well as dividend declarations for the coming quarter. These decisions will directly affect the investments of your stockholders. All Stockholder notices must be posted to the WebCT Stockholder Posting Board by the due date and time given by AGV administrators.  Insure that you meet all time requirements. Investors are at different sites and thus are making decisions in varied time zones.  Failure to issue public notice could result in a class action lawsuit against your firm.

Rude, vulgar, or threatening communications sent to other firms, administrators, or legal consultants may bring fines against your firm; or, if the situation is grievous enough, cause your firm to be shut down entirely. All participants are expected to adhere to AGV's Code of Conduct.

There are two minimum requirements for all firms operating in the Global View World. In order to begin and continue operations each firm must:

1. Issue and maintain at least 300,000 shares of stock. Fines apply if stock falls below the 300,000 share requirement.

2. You must be an active firm. A firm which simply issues stock and then idles through the simulation will be shut down.

The Rules

Following is a list of rules which must be followed by each firm, and penalties for breaking these rules. Violations of these rules is considered illegal within the simulation. These rules differ from AGV's Code of Conduct. You need to read AGV's Code of Conduct before beginning the simulation.

Rule 1: Outstanding shares may never fall below 300,000. Starting from the date of your first stock issuance, you must always have at least 300,000 shares outstanding.
Fine: $20,000 and immediate sale of stock required to bring the number of shares outstanding to the 300,000 share minimum.

Rule 2: Paying dividends with no retained earnings is illegal. Retained earnings must be positive both prior to and after the dividend payment.
Fine: $20,000 plus additional penalties if the decision is judged to be intentional.

Rule 3: Each firm may operate only 1 subsidiary (Please see subsidiary policy).
Fine: Corporate minimum fine of $250,000.

Rule 4: Each student may participate in the management of only 1 firm (plus its subsidiary).
Fine: To be arranged with your professor.

Rule 5: Firms may not willfully bankrupt other firms through contract manipulation (including your own subsidiary)
Fine: To be arranged by your administrator. Penalty will be severe.

Rule 6: Price fixing or engaging in setting market shares or establishing cartel arrangements is not allowed.
Fine: This act is criminal in character. A firm could be assessed $500,000 plus damage awards up to $5,000,000 to customers and competitors judged to have been injured by the process.

Rule 7: Theft through Contracts is not allowed. If you find that your firm is losing suspect amounts of money, goods, raw materials, etc... check your records. Your firm may be experiencing theft through the Contracts program. Keep your eye on the quarterly list of executed contracts to make sure that only legal and confirmed contracts for your firm are being executed.
Fine: Heavy fines apply, dependent upon assessment.

Rule 8: Firms may not retain unreasonable financial benefits. It happens, although rarely, that a firm may receive windfall amounts of money through an error.
Fine: Any unreasonable asset gained will be removed. If a cover-up of the benefit is intentional, further action will be taken.

Firm 9: Dumping is not allowed. Firms may not place product on the retail market for less than its cost, unless it already has a sustained presence in that market. This is considered dumping and is illegal.
Fine: A firm may be fined up to $500,000, depending upon whether or not executives dumping product did so intentionally.

Rule 10: All firms must follow trade regulations, environmental regulations, and new safety standards, that may be defined over the course of the simulation.
Fine: Firms found violating regulations will be fined and may be held accountable in a court of law.

Rule 11: Firms must make announcements to all stockholders of issuance of additional stock, stock buybacks, or issuance of dividends. You do NOT need to post notice of your IPO (initial public offering). These messages to stockholders should be posted on the WebCT posting board, prior to the quarterly run.
Fine: Firms in violation will be held accountable for damages to individual stockholders. A $10000 to $50000 fine may also be assessed.

In the course of every simulation there are bound to be legal questions. Stockholders and firms damaged by other executives and firms may wish to pursue legal action to decide disputes.

One of the major causes of disputes between firms arises from Contracts. Verbal agreements are binding, but they are also hard to prove. The court system within Global View will not hear a case dependent on verbal evidence alone. It is important when you enter into a contract, especially a long term contract, that you have the contract in writing. Printing or saving correspondence would be helpful.

Problems may also arise for stockholders. A firm which does not make known large repurchases and issuance of stock, as well as dividend issuance, may be held accountable to stockholders. Likewise, a company which opens a subsidiary in order to bleed it to death for the benefit of the parent company may find itself facing a class action law suit from the minority stockholders.

If you feel that yourself or your firm has a serious grievance, you will need to follow these steps.

Step 1: Try to settle the dispute out of court.

Step 2: If you still cannot resolve the conflict, contact your Global View administrator. Note that this will cost you legal fees and consume more time and effort on your part. It is always best to try to settle without having a lawyer intervene.

Note: Global View administrators will contact both teams and request information related to the dispute. If your team does not provide the requested information within a reasonable time frame (before the following quarter run), Global View will automatically side with the communicating firm and the non communicating firm will be come responsible for both assessed damages and legal fees.