Economic simulation as a training and learning tool for the basics of financing, accounting and management / business administration.

The participant in the economic simulation "IPFM" as CEO is required to make the right business decisions in order to bring the company into the profit zone and drive the share price up. Integrated into a simulated real business situation, the simulation participant has the task of analyzing the market and the company and, based on the information provided, making sales, fixing sales prices, purchasing and cost analysis in order to positively control the company's margins and profits. In addition to the operational business, a medium-term business strategy must be developed, budget and success planning formulated, which is questioned and checked with regard to its planned implementation.

Are the success indicators correct or do they need to be readjusted?

With a limited initial budget and a given production capacity, the business aims to be continuously expanded. It is not the short-term success, but the medium-term and long-term business success that determines a stable share price, which is the parameter for the implemented operational management of the stock corporation to be controlled.

Investments that can secure the future of the company must be planned with a view to the market potential.

Over a limited period of several imaginary years, a number of decisions are made on a quarterly basis, which the simulation participant decides on and, if necessary, previously discussed in the Board of Management, which can consist of several other simulation participants. Alone or in groups, in a competitive context with other participants / groups or individually, the participants manage their company and make their management decisions.

Are the sales right? Is enough profit being made? How is the liquidity situation to be assessed? Are the costs in relation to production and sales?

Every quarter, the decision package is fed into the system and by clicking on the "Next" button, the company is in the next quarter and the simulation participants can see the consequences of their decisions. It is now necessary to examine how well or badly the decisions have affected business success. Key figures and documents document the results of the management decisions made. When interpreting the new business figures, it is necessary to weigh up whether the path taken was successful and to what extent planning and management are on the right path and how far readjustments or fundamentally different procedures are required. With the newly acquired knowledge, the next round of decisions is taken, which aims to further optimize the business results.

The simulation can also be played in international forums. With regard to intercultural expertise and subject-specific language skills, the simulation for face-to-face events is also a valuable training tool.

The participants learn

  • Plan business developments and present plans

  • apply important parameters as a controlling tool,

  • Evaluate profitability depending on the situation

  • correctly interpret the balance sheet and income statement,

  • to understand the booking and recording of business transactions

  • to plan investments using suitable investment calculation methods

  • liquidity-preserving financial planning into account

  • Understand and recognize indicators of success for the operative business

  • Understand established management portfolios and create them independently

  • Analyze costs and prepare them for the price calculation of products or projects

  • to calculate prices

  • To be able to calculate margins in such a way that strategic decisions for the product range can be derived with regard to the quality of the corporate product or division profit contribution.

  • Networked thinking regarding the influence of individual decisions on the overall entrepreneurial result

  • terminology competence

  • In an international context: intercultural and language skills

In the course of the simulation, established market situations can influence day-to-day business and must be solved with the best possible reactions.

management challenge

In this simulation, you are now the CEO of a manufacturing company and you can direct the fortunes of this company.

To do this, you must correctly assess the market situation and make profitable business decisions. Bring your company into the profit zone as soon as possible and increase the stock value of your company.

Start your activity with a limited budget.

You produce a product on one machine that has to hold its own in a competitive environment in the high-priced market segment. Get ahead of the competition and analyze your financial, market and production situation.

You each have several decision options for improving production, sales and finances.

financial controlling

The heart of your financial controlling is the balance sheet and income statement. From this you can derive key financial figures, inventory figures and liquidity figures, most of which are also made available to you in a prepared form. At the same time, a wide variety of information on the cost situation in your company is available to you. It is now your task to interpret these values ​​correctly and to draw conclusions for your further procedure.

production controlling

Various production machines are available for purchase on the market. The machines have different capacities and operating and production costs. Adapted to your production plan, investments in suitable machines should be considered. You can use various investment calculation models for your planned investment. At the same time, you should keep your products competitive by practicing quality management and staying innovative by researching, developing and ensuring product and production quality.

marketing controlling

You operate in an oligopolistic market. This means that you cannot sell your products without keeping an eye on the competition. Invest in the marketing of your company and your product sales to secure and expand your market position. Strengthen your sales team for higher sales. The competition itself also offers innovations, invests in its marketing and tries to take market share from you.

procurement controlling

You must plan your raw material purchases and ensure a steady supply of materials for production. If you don't keep enough material available in your raw material store, you run the risk of production being throttled or, in the worst case, even standing still.

funding and liquidity

You can consider various financing options to finance your projects. Either you finance it with your own or someone else's funds. External funds are available to you in the form of long-term or short-term loans. The interest on the loans varies. In order to avoid over- or under-liquidity, the financial requirements and financial returns must be taken into account. Depending on the business risk, the cost of the loans can vary, and borrowing can be limited if your capital situation is unfavorable. Alternatively, you have the option of granting participation in exchange for profit distributions, provided your prospects for participation appear sufficiently attractive. You can also invest your excess liquidity yourself in holdings in other companies in the form of securities purchases, which will ensure dividend payments for you. Alternatively, you can keep your liquidity in your bank account for a low interest rate.

Market Scenario Analysis

Money market, raw materials market, labor market and sales market are in continuous economic interaction with each other. This means that product prices, product demand, wage costs, raw material costs, credit and debit interest for long-term or short-term loans, inflation, consumer and competitive climate as well as overall economic development must be constantly observed in order to generate optimal business results.

Share price as a management performance barometer

The stock price of your company reflects the performance of your manager.

This means that your share price is an indicator of whether and to what extent you are making profits. What is your liquidity situation and how do you assert yourself in the market. Finally, your share price is a testament to how confident you are in the disciplines of controlling, financial management, cost accounting, investment accounting and, to a certain extent, risk management and marketing.