Strategic Business Analysis
战略业务分析

Simulation Handbook  

The Executive Business Simulation Competing in a Global Market 

Lead Facilitators 

Dr Martyn Bradley University of Liverpool  

April Training Executive Ltd  

Julio Faria and Matthew Galloway  

June 2025 

CONTENTS
内容

Page No
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1. INTRODUCTION TO THE BUSINESS SIMULATION 1
1. 商业模拟 1 简介

2. THE LEARNING OPPORTUNITY 2
2. 学习机会 2

3. YOUR SIMULATION TASKS 2
3. 您的模拟任务 2

4. BACKGROUND TO THE EUROPEAN MARKETPLACE 3
4. 欧洲市场背景 3

4.1 The Financial and Economic Environment 3 

4.2 The Car Market 4 

4.3 Financial Position of European Car Manufacturers 6 

4.4 Pricing and Profit Margins 7
4.4 定价和利润率 7

4.5 Marketing 7 

4.6 Forecast 8 

5. BUSINESS SIMULATION PARAMETERS 9 

5.1 Introduction 9 

5.2 The Starting Position 9 

5.3 The Simulation Economic Environment 9 

5.4 The Marketplace 9 

6. A GUIDE TO MAKING DECISIONS 9 

6.1 Company and Model Names 9 

6.2 Selection of Target Market 9 

6.3 Setting Selling Price 10 

6.4 Product Portfolio Decisions 10 

6.5 Research Projects 11 

6.6 Production 13 

6.7 Personnel 14 

6.8 Marketing and Communications 14 

6.9 Market and Competition Research 15 

6.10 Finance 15 

7. INSTRUCTIONS FOR USING EXECUTIVE 17 

7.1 Basic Parameters 17 

7.2 Executive Operating Instructions 17 

APPENDIX I : SCHEDULE OF ACTIVITIES 20 

Appendix II : List of Executive Roles Available 22 

Appendix III : Market Research on Promotion/Advertising 25 

Appendix IV : cost & data sheet for year 1 30 

Appendix V : Decision Form 32 

Appendix VI : Summary of Financial Ratios 34 

Appendix VII : FREQUENTLY ASKED QUESTIONS 35 

The purpose of this briefing paper is to prepare you for your participation in the Executive business simulation activity within the Strategic Business Analysis module.  

INTRODUCTION TO THE BUSINESS SIMULATION 

Executive is a business simulation that is based on the European passenger car industry. The simulation is as realistic and current as possible, however, some of the complexity of the industry has been removed to allow you to focus your time and energy on key strategic and important business issues. 

You will work as part of a management team that has the opportunity to establish and manage a design, engineering and manufacturing automobile company, which competes in the European marketplace. The decisions you will make cover a wide range of business skill areas from finance to marketing, business strategy, risk management, human resources, effective interpretation of information, presentation/communication skills. You will also assume specific management roles for the simulation from those that are available (see Appendix I, page 22).  

The simulation is fully interactive and teams are competing in a real time environment, which, at the start of the simulation activity, reflects the current financial, economic and market conditions 

The task of each team is to achieve long-term profitability for its company. It is important to remember that the environment will change as the simulation progresses. These changes include the overall economy, advances in technology, costs, and the needs and tastes of your customers. All companies will be competing for market share and bringing new products to market.  

The goal is to determine what strategies your team wants to set and how to implement them (i.e., what decisions you will need to make), in order to maximise your contribution and position in the European automotive industry. 

A successful firm is likely to have a strategy and plan that is well thought out and executed. Creating a sound business strategy is a very important process as this will be the framework for all decision-making and your company's use of valuable resources. The strategy will therefore be a long-term vision, with a mission and stated objectives, which will be used as the basis for your team's decision making. In developing your strategy, you will need to define which strategic customer groups you are aiming to serve over time in order to achieve a Sustainable Competitive Advantage (Ref. Porter (1980) Competitive Strategy, Free Press). 

To achieve success in the Executive business simulation environment, you and your team will need to anticipate changes in the needs of the customers and the actions of competitors and respond accordingly. While many firms do an excellent job of tracking changes in customer preferences, they often fail to anticipate the likely moves and reactions of competitors. It is essential to take account of competitor information in the making of decisions, if you do not do so it could prove to be disastrous for sustainability and profitability. For example, having the “best” product for a particular customer will rarely win against competitors with “acceptable” products that are supported by far superior distribution coverage and massive advertising budgets. Another example is failing to anticipate a competitor entering into the market sector in which you operate. The purpose of this exercise is to help your team explore and anticipate the probable moves of key competitors and then take this information into account when making decisions going forward. 

Strategies will have to be developed and implemented relating to manufacturing, new product development, distribution, marketing and financial investment. 

You will initially develop a high-level strategic mission with objectives and plans for your company based on consumer trends, the general economic environment and the competition within the industry. You will be able to develop, test and launch new product concepts and/or modify existing product ranges to improve positioning, as well as to invest in manufacturing output, distribution and marketing. You will need to manage the growth of your company in order to maximise your return on such strategies and investments, whilst growing the business.  

Every simulated year each team/company will make a set of business decisions relating to the running of the business. It is important to draw on the team's combined knowledge and work as a team when making these decisions. To help with the decision making, it will be possible to purchase market and competitor information that is generated by the simulation each year. However, you should also take into consideration the culture and tendencies of the human competition of the teams that are competing directly with you in this exercise. 

Once all team members agree on the decisions that they think are best for the company, they are entered in the computer and submitted for processing through the master simulation. It is during processing that the decisions of the other teams/companies, the background competition, and any economic factors, impact the market and the performance of the companies operating in the marketplace. After processing, the simulation will move to the next year and you will have access to your results and any market/competitor data you have purchased. 

You must develop and launch two products in the first year. As the simulation progresses you will be able to modify these models and launch new ones to improve market positioning. You will need to manage the growth of your company to maximise your return on such strategies and investments, whilst, hopefully, growing the business. 

There is an online help facility in the simulation. You will receive additional information in a special student briefing session about the parameters and decision-making framework. Primarily, you will learn by doing and your analysis of the results achieved each year. It is very important that you read and become familiar with the background information in this document. Some strategic analysis papers are provided in the appendices to enable you to make notes as you read through the document, which can be used when you meet with your team to develop your plans for the business. Answers to ‘Frequently Asked Questions’ are provided in Appendix VII on page 35, and these should be referred to before contacting tutors with queries  .

Executive will provide you with a dynamic learning experience. Each team will develop uniquely, based upon how you perform, the competitors interact, what new products are introduced, and how these products are supported. The economy will have its ups and downs, customer needs will evolve and competition will intensify. The simulation is designed to be a fun, but very challenging experience. 

THE LEARNING OPPORTUNITY 

In designing and developing this exercise, the following learning elements have been taken into consideration:  

Critical thinking 

Business review and financial analysis 

Environmental and business analysis (e.g. PESTLE, 5 Forces, SWOT) 

Portfolio and market management and development  

Stakeholder expectations management 

Managing across the market and business value chains 

Managing unexpected events at the macro and micro level 

Managing financial investment and performance 

Understanding impact of ‘business’ decisions on company performance and results 

Working in a team environment under strict deadline and reporting pressure 

YOUR SIMULATION TASKS 

To read through this briefing pack and make any notes that you wish to share with your team colleagues when you meet. Basic research about the European car market is provided in this document but you may wish to carry out further investigation, including how experts view future prospects for the industry  .

To develop a plan for your business as a team/company. You will be provided with a standard template for the business plan, the final version must be submitted by midday on Monday 2nd June 2025 at 3pm. All information and guidance has already been provided by the Module Leader. 

Before beginning the "real" simulation event, you will have the opportunity to run a trial round/year of an exercise to familiarize yourself with the operation of the simulation and the decision-making process. This will take place after the opening presentation on Monday, 9th June and will close at 16.30. This session will also give you practice in using the forecasting model within the simulation that enables you to test your business decisions before submitting them for processing in the master simulation. You will be given access to the results between 17.30 and 22.00. Questions can be submitted by email during this period. NB : There will be no access to the trial run decisions or results after this time, so you are advised to keep a record of any information you wish to retain for future reference. 

The simulation exercise. The actual simulation activity will begin on the morning of Tuesday, 11th June (09.00 am) and run until Friday, 13th June (12.00 noon). You will be required to make 4 sets of business decisions, one for each of the 4 years. The business decisions will cover the areas listed below 

Product Portfolio – name, market segment, technical specification, product marketing and price 

Operations: - resources, automation, training and wages  

Brand Marketing and marketing/competitor information 

Portfolio investment plan 

Financial and investment plan 

E. Each team is required to record a 14-15 minute presentation. Details of what is expected to be explored within the presentation has already been circulated by the module leader.  

F. Each team will be required to create an A3 poster. Details of what is expected to be included within your poster has already been circulated by the module leader. 

BACKGROUND TO THE EUROPEAN MARKETPLACE 

For the purposes of this section the marketplace comprises the European Union (25-27 countries, as in some cases no data is available from Cyprus and Malta) + the EFTA countries (Iceland, Norway and Switzerland) and the UK. Figures do not include the European countries that are not part of the EU. Please note that some sources will report the EU25 or EU14 figures only, some will include the EU14 + EFTA and some will include the whole of Europe, therefore figures quoted in other sources could be different to the ones provided in this document. 

In 2024 Global car manufacturing totalled 75.3 million units. EU’s car production fell by 6.2%, North American production fell by 3.2%, Japan and South Korea declined by 8.6% and 1.2% respectively. China’s production increased by 5.2% solidifying its position as the world’s largest car producer, with a 35.4% market share, up from 31% in 2023. 

In 2008 and 2009, Europe was the world's largest passenger car market in terms of sales, taking over from the USA, where the market was falling. However, following a period of declining sales in Europe, China took the lead in 2010 and now accounts for 35.4% of all sales worldwide. Europe held second position until 2012 when the US market began a slow recovery, pushing Europe into third place, a trend that has continued to date. The gap between the two reduced between 2017 and 2019, but widened again in Europe 2020-2022, closing again slightly in 2023, but the USA moved ahead again in 2024. A potential trade war in 2025, emanating from the USA, is creating significant new challenges in world markets. 

New passenger car registrations/sales in the largest three domestic markets for 2019-2024 were  :

China : 31.4m (25.8m in 2023, 23.56m in 2022, 21.39m in 2021, 20.18m in 2020 and 21.45m in 2019) 

USA :12.2m (15.46m in 2023, 13.73 in 2022, 14.9m in 2021, 14.45m in 2020 and 16.97m in 2019) 

Europe+EFTA+UK : 12.9m (12.8m in 2023, 11.29m in 2022, 11.78m in 2021, 11.96m in 2020 and 15.8m in 2019)  .

The European automotive arena remains an extremely important, complex and a highly competitive arena, and a very challenging marketplace on which this simulation is based. 

The Financial and Economic Environment 

The COVID-19 pandemic of 2020-2022 had a huge negative impact on the global economy. This was then compounded by extreme shortages of the semiconductor chips needed for manufacturing, the ongoing effects of the war in Ukraine, and now the beginnings of an international trade war. Many parts of the World, and the USA in particular, had begun to see recovery and growth return., while the economies of Europe lagged  .

The burden of the debt incurred by governments who offered generous support packages during COVID-19, necessitated a return to austerity measures, with cuts in public spending and no relief from taxation. Benefits from the EU’s post-pandemic fund, set up to help countries with large debt, will stop when the fund closes in 2026. The reform of EU spending rules will also leave some economies vulnerable, e.g. France and Italy. High energy prices resulting from the war in Ukraine, high interest rates and high inflation have also impacted heavily on consumer spending and commercial investment. The emerging tariffs war and the pressures to shift towards more environmentally friendly transport, has created a very challenging, business arena. 

The European economy saw close to zero growth in 2023. This improved to 1% growth overall in 2024. The two largest national economies, Germany and the UK, did come close to recession, and some leading companies, including. Volkswagen, collectively announced tens of thousands of layoffs. Strikes were also evidence of unrest throughout Europe, particularly in France, Germany and the UK. Despite the layoffs, unemployment remains stable and at a historically low rate, in fact a shortage of workers seems to be much more of a problem. 

Inflation has been falling in most European countries and was expected to continue on this trajectory for the near future. With inflation rates being at a more acceptable level, wages rising and, hopefully, energy prices falling, consumer spending and economic growth is predicted to increase, albeit slowly. Consumer confidence should also open the way for those who have been saving money over the last few years, to begin spending again. However, it must be remembered that European economies will remain vulnerable to changes in energy prices and geopolitical stability. The challenges of new tariffs in their largest export markets, the USA, and the high levels of imports of EV’s from China, pose significant challenges in the years ahead. 

The Car Market 

Market Size 

The market has undergone a period of significant change over the last 17 years. In 2007, sales of passenger cars reached a high of 16m in Europe. In 2008, they then plummeted during the financial crisis and were easily the worst for over a decade, at 14.7 million. Gloomy forecasts for 2009 proved to be well founded with the whole market falling yet again to 14.5m. There was some recovery at the start of 2010, supported by Government incentives, the most successful being the scrappage schemes, introduced in 2009 and continuing through part of 2010. However, once the schemes ended, the industry was left still suffering from over-capacity and a crowded marketplace, forcing several European companies to reduce their workforce and production, and enforce new working practices  .

New product ranges and upgrades stimulated growth in the first quarter of 2011, but eventually registrations fell by 1.5% to 13.6 million for the whole year. There was some optimism as sales improved on 2010 figures in the stronger economies, with sales generally reflecting the economic conditions within individual countries. However, this optimism was short lived as 2012 saw a decline in nearly all countries, with the overall market falling by 8.1% to 12.5 million. 2013 saw a further 1.6% fall to 12.3 million, the lowest level since 1995 and 25% below the 2007 peak. However, the last 4 months of 2013 saw the beginning of some growth. Fortunately, the trend continued into 2014 and the year ended with registrations of just below 13 million, an upturn of 5.6% and the first increase since 2007.  

2015 brought more optimism, with registrations rising by 9.2% to a total of 14.2 million. The trend continued throughout 2016 and the year ended with a 6.3% increase to a total of 15.1m units. 2017-2019 saw three more years of stability, with slower growth at 3.3% in 2017, no change in 2018 and just under 2% growth in 2019. Total sales were 15.6m, 15.6m and 15.8m, respectively. 

2020, dominated by the COVID-19 crisis, saw new car sales plummet by 24.3%, the largest fall ever recorded, affecting all countries. All the leading markets experienced double digit losses. Norway fared the best, recording a drop of less than 1%. The prediction by experts that the market would rise by 10% by the end of 2021, did not materialise, as COVID restrictions remained in place, and there were further short periods of "lock down" in the economy. The year ended with registrations falling by 1.5% from 11.96m to 11.78m. However, sales did increase slightly in four of the five leading markets (France +0.5%, Italy +5.5%, Spain +1%, UK +1%), but fell by 10.1% in Germany, which is the largest market. This was the first increase in the UK since 2017 where sales had continued to fall year on year (-5.7% in 2017, -6.8% in 2018 and -2.4% in 2019), possibly a result of concerns over Brexit, road taxation levies set by the government for new cars in 2017, and the possible future restrictions on diesel cars. 

The forecast that registrations would increase by 7.6% in 2022, again failed to materialise and sales fell by another 4.1% to 11.29m. This can be explained by the supply difficulties experienced by all manufacturers as they struggled to obtain the microchips needed for vehicle electronics, as well as other parts. They had no choice but to restrict production, a problem that initially began post-COVID and was exacerbated by the war in Ukraine. Large price increases were also a possible factor, as manufacturers pursued a policy of high profits on fewer car sales. 

The much-anticipated recovery finally came in 2023 when the market grew by 13.7% to just over 12.8m; this continued in 2024, increasing further to just over 12.9m car registrations. All countries, except for Norway, saw an increase in sales, with eight of the top ten markets achieving double digit percentage rises. The increase in Germany, the leading market, was restricted to 7.3% and the rise in Sweden was very marginal. The 27.2% drop in Norway can be attributed to the removal of some of the significant government incentives that had previously been given to encourage purchase of new electric vehicles. Given that Norway has the highest percentage share of BEV registrations in the World, at around 90%, the impact would have been considerable. Also, by 2025 all new vehicles must comply with the government’s zero-emissions policy, which could mean that all new cars would have a relatively high price, potentially restricting consumer demand  .

Summary – European Passenger Car Market New Registrations 

The peaks were in 2007 (16m) and 2019 (15.8m). 

Market Headlines – Design and Fuel Type 

In 2024 the total EU+EFTA+UK market increased by just 0.8%. The growth of Battery Electric Vehicles slowed by 1.3%, while hybrids continued to grow, up by a significant 19.6%. Also In 2024, SUV sales continued to dominate, taking 54% of the market, up from 51% of new car sales in 2023, 47% in 2022, 45.5% in 2021, 40.3% in 2020 and 38.2% in 2019. Previously, 2023 was the first time that SUVs accounted for more than half of total new car registrations in Europe  .

In terms of fuel type, MHEV (Mild Hybrid Electric Vehicle) technology continued to provide a compromise for buyers who are not quite ready to convert to electric/full hybrid but want some of the advantages. MHEV cars are fuelled by petrol/gasoline, but have an additional small battery added that does not need charging independently. These batteries are designed to boost efficiency and reduce emissions. They usually work by allowing the engine to cut power earlier when coming to a stop, allowing start/stop systems to keep the engine off longer. They also sometimes offer an electric-only boost when pulling away. They are still classed as Internal Combustion Engine (ICE) vehicles rather than an Electric Vehicle (EV)  .

In 2024, the market share taken by all APVs increased to 54%, up from 52.3% in 2023, and 46.9% in 2022. Most of the sales were initially taken from the diesel car market, where market share fell from 16.4% in 2022 to 11.9% in 2023, however the diesel share held at 11.9% in 2024. Market share of petrol cars fell by 2.4% in 2024, to 35.7%, following on a 1% fall in 2023,  

2024 market share of new registrations by fuel type was split as follows: 

APVs : 54.7% (52.3% in 2023, 46.9% in 2022, 40.5% in 2021; 24.5% in 2020; 10.6% in 2019)
适航证 ： 54.7%（ 2023 年为 52.3% ， 2022 年为 46.9%，2021 年为 40.5%；2020 年为 24.5%；2019 年为 10.6%）

Petrol : 33% (35.7% in 2023, 36.7% in 2022, 39.9% in 2021; 47.5% in 2020; 57.8% in 2019)
汽油 ： 3.3 %（ 2023 年 35.7% 、 2022 年 36.7%、2021 年 39.9%；2020 年 47.5%；2019 年 57.8% ）

Diesel : 10.4% (11.9% in 2023 ,16.4% in 2022, 19.6% in 2021; 28% in 2020; 31.6% in 2019)
柴油机 : 1 0.4 % （ 2023 年为 11.9% ，2022 年为 16.4 %，2021 年为 19.6%；2020 年为 28%；2019 年为 31.6%）

Breakdown of APV sales (% of the whole market) :
APV 销售额明细（占整个市场的百分比）：

BEVs (Battery Electric Vehicles: 15.5% (15.7% in 2023, 12.1% in 2022; 9.1% in 2021; 5.4% in 2020)
BEV（电池电动汽车）： 15.5 % （ 2023 年为 15.7% ， 2022 年为 12.1%；2021 年为 9.1%；2020 年为 5.4%）

HEVs (Hybrid Electric Vehicles): 31.4% (26.4% in 2023, 22.1% in 2022; 19.7% in 2021; 11.9% in 2020)
HEV（混合动力电动汽车）： 31.4 %（ 2023 年为 26.4% ， 2022 年为 22.1%，2021 年为 19.7%，2020 年为 11.9%）

PHEVs (Plug-In Hybrid Electric Vehicles): 7.3% (7.7% in 2023, 9.4% in 2022; 8.9% in 2021; 5.1% in 2020)  

The remainder were fuelled by alternative fuels such as Natural Gas (NGV), bioethanol, hydrogen and LPG (Liquified Petroleum Gas). 

Petrol (gasoline) remained the most popular individual fuel source for new cars in Europe, followed by hybrid vehicles, although many of these also rely on the use of petrol, combined with electric (as do PHEVs). Battery-electric vehicles (BEVs) again outsold diesel-powered vehicles, although there was a small fall in sales vs 2023, in favour of hybrids (see rationale below). 

The data shows that the share taken by hybrids continued to rise, while the BEV share fell marginally in 2024. The market share taken by petrol decreased slightly and diesel continued to fall, albeit at a slower rate. Interestingly, the share taken by PHEVs and “other” APV fuels also increased, following a pattern of continuous displacement of fossil fuels in recent years. The slow-down in growth in BEV sales is probably due to concern over the limitations of the infrastructure for charging, and the high cost of purchasing the vehicle
数据显示，到 2024 年，混合动力汽车的市场份额持续上升，而纯电动汽车的市场份额则略有下降。汽油汽车的市场份额略有下降，柴油汽车的市场份额继续下降，但下降速度有所放缓。值得注意的是，插电式混合动力汽车和“其他”APV 燃料的市场份额也出现了增长，这与近年来化石燃料的持续取代模式相符。纯电动汽车销量增长放缓可能是由于人们对充电基础设施的局限性以及购车成本过高感到担忧。.

Financial Position of European Car Manufacturers 

Revenue/Sales and Market Share 

2023 saw sales rise for all manufacturers as the microchip shortage that had brought massive supply chain issues and forced low production levels from 2020 to 2022, came to an end. This meant that back orders could be fulfilled, boosting sales and revenues. This rise in sales continued into 2024 

The five leading European manufacturers in terms of new registrations are the VW Group, Stellantis, the Renault Group, the BMW Group and Mercedes-Benz. Jaguar Land Rover, Ford, Toyota and Nissan also manufacture cars in Europe, but sales in the region are lower than for the top five, relying much more heavily on other worldwide markets. Imports also take a large part of European sales  .

In 2024, market share was distributed as follows: 

VW Group 26.3% (2023: 25.9%); Stellantis 15.1% (2023:16.6%); Renault Group 9.9% (2023:9.7%); Hyundai Group 8.2% (2023:8.6%); BMW Group 7.1% (2023:7.1%); Toyota Group 7.8% (2023:6.9%); Mercedes-Benz 5.4% (2023: 5.5%); Ford 3.3% (2023 4%); Tesla 2.5% (2023: 2.9%); Nissan 2.4% (2023: 2.3%); Volvo 2.9% (2023:2.2%). Suzuki, Mazda, Jaguar Land Rover Group, Honda and Mitsubishi took the remaining share (less than 2% each). 

Notable issues  :

Outliers: Volvo's recent success can be attributed to its strategic shift towards electrification, offering a flexible range that includes plug-in hybrids and mild hybrids. This approach has resonated with consumers, particularly in the UK, where Volvo achieved record sales in early 2025, delivering 11,898 cars in March and over 18,000 in Q1, making the UK its third-largest market. ​Despite a global slowdown in electric vehicle uptake, Volvo's diversified portfolio and strategic market positioning have contributed to its robust performance in the European automotive sector. 

Tariffs: The European Union imposed tariffs of up to 45% on Chinese-made electric vehicles in 2024, citing concerns over unfair government subsidies that allowed Chinese manufacturers to undercut prices. These tariffs led to strategic adjustments by Chinese automakers, including delays in product launches and re-evaluation of distribution strategies. However, some companies, like BYD, announced plans to establish production facilities within the EU, in Hungary, by the end of 2025, to mitigate tariff impacts. In 2025 the Trump administration in the US announced international tariffs, which are having a significant negative impact on the motor industry worldwide  .

Profits 

After a period of falling profits in 2018-2020, most European car manufacturers re-structured and many saw profits grow between 2020 and 2024, even though there was a decline in unit sales. Despite an increase in revenue in 2023, growth in operating profits fell slightly for Mercedes-Benz and BMW, declining further in 2024. On the other hand, Renault turned a loss into a net profit, while both VW and Stellantis made good gains in 2023. Stellantis Revenue and Profits fell in 2024. Outside of the top five, Jaguar Land Rover (owned by Tata of India), achieved significant increases in both revenue and profits in 2023 and 2024, while Tesla had spectacular sales growth in 2024. Tesla sales are falling rapidly at the beginning of 2025. 

The overall financial improvement achieved for all companies over the last few years has mainly been the result of a major change in strategy, with focus being put on production and sale of high margin cars and, in many cases, the complete removal of models that had very low margins. This has been done in conjunction with a reduction in workforces, some plant closures and cuts in overheads in areas such as marketing, which was not needed when production was limited. This strategy may not be optimal as the market begins to slow, and competition increases. 

It is anticipated that the pressure on profits could resume in 2025, with a significant drop across the industry. The challenge from lower cost electric car imports from China will continue in 2025. New emission controls regulations from the EU are also scheduled to come into force, which could impact profits further  .

The most profitable company in the World is Ferrari, followed by Porsche (when taken in isolation from the VW Group), both European manufacturers. However, these brands are exceptional and not typical of mainstream companies. 

Revenue and Profits for the top five European manufacturers 

Pricing and Profit Margins 

With the pressure on sales and profit margins, there is always a need for strong pricing strategies. To restore dwindling margins, there has been strong efforts amongst automakers to reduce costs and improve productivity. Many companies moved to focussing on the production and sale of high margin models, removing some of the low margin cars from their portfolios. 

Over recent years, there has also been a change of pricing strategy throughout the industry, with companies setting realistic list prices rather than inflating them to allow for customer negotiation and cutting some of the aggressive customer-focused marketing campaigns. 

Any thoughts that the COVID-19 pandemic may have resulted in large discounts being offered were unfounded. With demand outstripping supply there was no need to offer such incentives, in fact prices increased substantially between 2020 and 2024, with manufacturers aiming to maximise profits. However, competition is once again beginning to bite as the market returns to near full capacity. 

In an attempt to address slowing sales and the impact of increasing competition, leading manufacturers have already begun to cut prices on their electric models. Tesla led the way by slashing prices five times in the first four months of 2023. Others are now bringing relatively low-cost electric and/or hybrid cars to market; prices for the all-electric Dacia Spring, which is about to be launched, will begin at £14,345 and Stellantis are offering two Peugeot models for under £24,000. The infiltration of low-cost electric cars from China into the European market, particularly from MG and BYD, is also putting pressure on prices, as well as profits.
为了应对销售放缓和竞争加剧的影响， 领先的制造商已经开始降低其电动车型的价格。 特斯拉在 2023 年前四个月内五次降价，一马当先。 其他公司现在也正在向市场推出相对低成本的电动和/或混合动力汽车；即将上市的全电动 Dacia Spring 起价为 14,345 英镑 ， Stellantis 推出两款标致车型，售价低于 24,000 英镑 。 来自中国的低成本电动汽车 （尤其是 MG 和比亚迪） 涌入欧洲市场 ， 也给价格和利润带来了压力 。

It is possible that some companies may introduce scrappage schemes that encourage people to trade in older cars for more efficient and environmentally friendly models. In addition, some electricity supply companies are offering incentive packages to employers who offer salary incentive schemes for employees to purchase electric cars.

Marketing

To maintain sales volumes, effective promotional campaigns are essential within the car industry, and choice of the methods to use for advertising must be made very carefully, to maximise impact. Between 2020 and 2023, when manufacturers were unable to meet demand, they took the opportunity to cut costs by reducing their marketing budgets but, with competition resuming, 2025 and beyond is likely to see a return to full blown marketing strategies.

Historically, television has always been the most successful media for advertising by the automotive industry, but its share has been declining slightly year on year. It is now being challenged by digital marketing (the internet, social media, tablets, smart phones) as the preferred option for promotional investment. In addition, many industry observers are predicting major changes in the retailing of motor vehicles using the power and influence of digital technology. With online sales increasing rapidly, some corporations are already restructuring dealerships in anticipation of this trend. More information on the effect of the various forms of promotion is given in Appendix II, page 25.

Forecast

Now that supply chain issues have ended, manufacturers of both components and passenger cars are looking to increase production. However, the backlog of orders that boosted sales in 2023 and to a lesser extent -2024, has been fulfilled and the industry is to be once again dependent on new sales. This is likely to open competition between manufacturers and could possibly result in more discounts being offered, than have been evident in the past 5 years. This is likely to apply more to electric vehicles than ICE cars, as competition is severe, particularly from imports.

Overall, there are concerns about profitability, as pressure is put on prices and wages soar. It is predicted that profits could be 15% to 25% lower than in 2024. Some help will come from an expected fall in raw material costs, but even this is not certain while the war in Ukraine persists, and the impact of tariffs introduce uncertainties.

In terms of sales, the backdrop of high interest rates, inflation and elevated pricing restricted growth to between 2.5% and 5% in 2024, with the growth mainly coming from sales of HEVs.

Promoting and sustaining recovery in the car market will vary between European governments and the measures they take to support car manufacturers, as well as incentives to stimulate growth in the industry. Part of this is the need to boost the roll out of the charging and refuelling infrastructures in all countries. This would stimulate accelerated growth in the EV market, helping both the industry and the environment.

For the car makers, as always, success will also depend on whether new products are good enough to attract new buyers and recapture old ones. Strong growth is historically linked with companies launching several new models, as well as giving facelifts to existing models, with the aim of enticing consumers into purchasing new vehicles. This theory has been proven time after time and the leading manufacturers continue to work on this premise.

New additions to the market in 2024 included the Ford Puma electric which joined Ford’s best-selling Puma range, Also the mid-sized Renault Scenic E-Tech and the clever Renault 5 Electric retro model which has been awarded World Car of the Year for 2025. Others included the Audi A6 and Q6 e-tron SUV, the Mini Cooper EV, and the Volkswagen ID.7, a flagship electric saloon with long-range capability.

Between £25,000 and £35,000 there is the Fiat 500X, a small hybrid SUV and Alfa Romeo’s first all-electric car, the Milano, a small SUV that will become available towards the end of the year (also available with a petrol engine). In the higher price brackets, there is the Abarth 600e (Stellantis), the Cupra Tavascan, a striking coupe SUV, which will be the brand’s second all-electric offering, set to compete with the likes of VW’s ID5, VW’s ID.7, BMW’s iX2., E-Tech, and the Kia EV9,

New cars for 2025 to be offered with a petrol or diesel (ICE) engines are relatively scarce. These include the new Audi A5, the T-Roc 1.5. the small SUV from VW, the Lotus Elmira Turbo SE, and the low volume Mustang GD Daytona.

Facelifted models included the Golf Mk8.5, with revised instrumentation, Hyundai Ionic 5 with new body revisions, wheels, fascia changes and more, Skoda Octavia that will include an Estate model in the range for the first time, the third generation Dacia Duster with the option of a petrol (MHEV) or hybrid engine, Hyundai’s Ioniq 5 N BEV hatchback and the Ford Puma Gen-e, an electric version of the successful Puma that also has an updated design. By the end of the year there will also be three updated Minis available.

All facelifted and new models are being launched with the intention of boosting sales throughout Europe.

When designing new products, manufacturers have the opportunity to exploit consumer demand in terms of fuel choice and emission control. Fluctuating fuel prices primarily tend to impact on sales of the large car market. Rises in taxation levels must also be considered. With emission controls at the forefront of legislation in Europe, the big push is to turn to hybrid and electric engines as the industry standard. Development of long-range and fast-charging batteries is gaining speed and efforts are being made to improve charging infrastructures. However, charging points are still relatively limited in comparison with the ambitious plans to move entirely to electric powered cars.

The high cost of buying an electric car has historically been a barrier for many consumers but a flurry of low-cost vehicles has been entering the marketplace. At the moment these are limited to small cars with a low mileage range but as manufacturers pour money into R&D in these areas, others are sure to follow.

There has been a move to use technology that will supercharge small ICE engines rather than use large, high fuel consumption, large engines. Interestingly, BMW, Toyota, Stellantis and Hyundai are working on hydrogen powered fuel cell engines, known as Fuel Cell Electric Vehicles (FCEVs), alongside the focus on releasing more electric models.

Finally, it should be remembered that when times are difficult, buyers will look for a safe option where reliability is assured, as is the case with BMW, Mercedes and VW.

These factors show a way forward, but economic turmoil coupled with the war in Ukraine, political instability in the Middle East and now US tariffs, means that market conditions are likely to remain unsettled for some time.

It is into this highly chakllenging environment, that you are launching your new automobile company.

BUSINESS SIMULATION PARAMETERS

Introduction

You will have been allocated into a team of between 5 and 8 students and will be competing against the other ‘live’ companies (teams) in your simulation "World", as well as the usual background market competition of the other major players. There will be 5 "Worlds" operating in parallel. The simulation event will run for 4 trading periods, each trading period is a full financial year of 12 months (50 weeks).

You are advised to keep a record of the decisions being made and changed as you work in case they need to be referred to at a later stage. A decision form summarising the decisions to be made is given in Appendix V on page 32 and is also available on Canvas. You will be able to view the decisions that have been submitted in all rounds/years via the simulation (see the Decisions Report from the Results drop-down menu).

Using the “what-if” forecasting model you will be able to evaluate your business decisions before submitting them for processing in the master simulation. When the decisions are processed, the decisions made by your competitors will have a direct impact on your business performance and results. Therefore, being aware of the nature of the market, the environment and the competition will be important considerations.

The Starting Position

All companies (teams) will sell cars into the European marketplace. Production facilities are in the UK. You have :

A green field site

£500 million in the bank raised from the issue of 5 million £100 shares.

No production facilities

No workforce

In the first year of operation two different models of car must be produced. A maximum of five models is allowed but only one new model can be introduced each year (see the section on New Models on page 13 for more details).

The Simulation Economic Environment

The currency is £ sterling.

All costs rise with inflation annually. Inflation at the start of the simulation is around 2.2%. The economic outlook is very uncertain, both in Europe and globally.

The Marketplace

The marketplace is the European Community which currently has the capacity of between 11m and 16m new car sales per annum, with a prediction of between 12.5m and 13m for the forthcoming year.

A GUIDE TO MAKING DECISIONS

Company and Model Names

Initially a name must be given to your company. This cannot be changed after the first year without consultation with administrators.

Names must also be given to the two models that will be produced in year 1. These can be changed if required.

The names of the company and models have no bearing on success within the simulation. The only reason to make changes to either, is if you decide that you want to implement a rebranding project.

Selection of Target Market

Market research informs us that statistically the car market is divided into 16 sectors relating to the car platform/size and the target age group, as identified in the following grid. The first objective is to identify where each product's potential market lies. This is probably the most important decision to be made by the company as it will be used as the basis for many other production and marketing decisions.

Car Size Buyer's Age Group	Small e.g. Fiat 500	Medium e.g. VW Golf	Large e.g. Audi A6	Luxury e.g. Mercedes AMG
Under 25	1	2	3	4
25 to 40	5	6	7	8
41 to 55	9	10	11	12
Over 55	13	14	15	16

One of the sectors must be selected for each car model as the target market. Once a sector has been chosen the size of car cannot be changed, however, it is possible to target it a different age group.

Note : When making and submitting decisions online you will have to enter the actual car size and target age group but the market sectors in the table will be referred to in the results/reports.

At the beginning of the exercise, the market share of each sector is as follows:

The car sizes are categorised by selling price ranges as follows, although they can overlap. The models at the high end of the price ranges are usually for the luxury and performance derivatives; some may exceed the upper price limit given, including those that are powered by electric and other alternative fuels :

Small: up to £39,000; Medium: £20,000-£48,000; Large: £27,000-£60,000; Luxury: £60,000 to over £100,000.

Setting Selling Price

The simulation works based on a single market price for the car, it does not provide for incremental pricing depending on the number of different options that are selected by the customer. The single selling price must be set taking into account the designs and options to be offered, and the market at which the model is targeted, as well as all other overheads, e.g. R&D, marketing, wages, etc.

In order to sell well and give a healthy profit, a model must be priced higher than its overall production cost but low enough to make it good value for money. The selling price of a basic car, i.e. the shell only, is given on the Cost&Data Sheet, see Appendix III on page 30 for more details.

Although an indication of market selling prices is given in section 6.2, remember that you will be working in a competitive environment and this is likely to have a bearing on your pricing policy. You need good judgement when thinking about the pricing and market positioning of your products.

Product Portfolio Decisions

Design features, including body shape and engine size, may be chosen and options can be made available for purchasers to add to the basic car. The cost of model designs and options are listed on the Cost & Data Sheet.

Designs

Every car produced must be built with a minimum of one of the body designs and one of the engine sizes offered.

More than one design and engine size can be offered to increase customer choice.

There will be a body design and an engine cost added to every car. For cost calculation purposes, use an average of the cost of the designs offered plus an average of the engine sizes offered.

The appropriateness of the shapes and engines offered in relation to the target market will have a direct bearing on the success of the model.

Options

Not all cars will be built with all the options offered - only those chosen by each individual customer (some cars may leave the factory without any additional options at all).

The proportion added will depend on the popularity and appropriateness of the options offered.

The cost of including options per car will only be a percentage of the total. For cost calculation purposes, an average of a 33% uptake can be used.

See page 35 for an example of how option estimates are calculated.

Option Packages

Some of the customer choice options are available in the form of packages. Examples of what these packs include are given in the table below.

Research Projects

Research and development investment is an important part of your business decisions.

Investment can be made in research and development projects for each model.

When successful, the new technology will increase the model's value in the long-term.

There is the possibility that the project will fail, except for the following projects which are considered 'failsafe' and guaranteed to succeed :

1. Product Relaunch  21. Ultra Low Emissions

2. Facelift  27. Improved Build Quality

Hydrogen Fuel Cells

If a project does fail it is possible to re-invest and begin again or accept that the investment is lost. Similarly, it is possible to stop a project before it is available (online), but the money already invested will be considered a loss and written off. The cost of each Individual project is given on the Cost & Data Sheet.

R&D projects are divided into two phases :

Phase 1 : The research phase which is comprises the initial work in preparing the project. This is likely to include matters like customer and technical research, prototype development and testing in a laboratory.

Phase 2 : The development phase which involves taking the prototype work and developing it for production. This is likely to include design engineering, application, material selection and tooling for manufacturing.

Details of the times needed for each phase for individual projects are given in the following table.

TIME (in years) - the first figure is for Research, the second is for Development. Projects in bold are failsafe.

The research phase of projects only needs to be carried out for one model as it is a company venture that can be used for all products. When a project is being researched on one model, the R&D decision screen for the other models will show it as "Being Researched" and it will not be available for selection until the project is online for that model (or fails).

Once online for one model, a project will become available to begin the development phase for other models, as required. The project will show as (researched) on the R&D screen and can be added to the models by selecting it as usual. The project will then come online on the additional vehicles once the development time is complete. Please note that it is still possible that a project will fail for one or more of the other models.

There are three exceptions, which are model specific and research needs to be carried out on every model as required. They are:

1. Product Relaunch

2. Facelift

27. Improved Quality Build

NB: Until the project is online, the box must be checked for it to continue, if unchecked the project will be stopped and the money already invested lost.

The status of all projects and the year they are expected to come online (or failed) is provided on the Research and Development Report in the Results drop down menu in the simulation.

Once online, the Product Relaunch project will become available for selection again after 5 years and the Facelift project after 3 years.

Research and Development costs on the Profit and Loss Statement also include 50% of any investment in a new model (see the section on Production/New Models on page 13).
损益表中的研发成本还包括对新车型投资的 50%（请参阅第 13 页“生产/新车型”部分 ）。

Continuous investment in R&D can produce a "Centre of Excellence" capable of delivering projects at significantly lower cost.
持续投资于研发可以创建一个能够以更低的成本交付项目的“卓越中心”。

Production
生产

Factories
工厂

Factories are required to house the workforce and production lines  .

The cost of a factory is given on the Cost & Data sheet  .

The purchase of the first factory will be shown on the Cash Flow Statement at the end of year 1 (£765m)  .

Each factory has the capacity for 4,000 workers (production and management employees) and unlimited amounts of automation
每家工厂可容纳 4,000 名工人（生产和管理员工）并实现无限量的自动化.

New factories are automatically purchased if the workforce exceeds 4,000 or multiples thereof, e.g. if between 4,001 and 8,000 people are employed, two factories will be purchased  .

If the number of employees falls to 4,000 or below, additional factories will automatically be sold  .

If a factory is sold, it will realise 60% of its book value  .

Any number of cars may be produced in a factory  .

Car production 

The number of each model built will depend on the workforce put on the model, productivity for the model size and investment in automation. Productivity is given as cars/worker/year: 

Small cars  : 44 

Medium cars  : 42 

Large cars  : 41 

Luxury cars  :  9 

NB : these are base figures only. Productivity will be affected by wage rates, investment in training and overtime levels. Good employment practices will result in a generally happy workforce and a rise in productivity rates. The converse will apply. 

A productivity target must be set for each model. Low targets may allow time for improved build quality whilst high targets may require overtime and can affect product quality  .

The target set will be the maximum number of cars produced in the year  .

Automation 

Automation can be introduced and purchased in units of £1m (rising annually with inflation)  .

The minimum investment in is for one unit  .

Each unit is as productive as ten workers, e.g. 4,000 workers + 1 unit of automation will give the equivalent of 4,010 workers. The equivalent workers are not taken into account in the total factory capacity, i.e. 4,000 workers + 10 units of automation will still only necessitate one factory  .

Each unit of automation requires manning to be effective – one man per unit  .

Automation must be divided between the models – assign a percentage to each one on the decision screen. (This allows some models to be highly automated whilst leaving others to be predominantly hand built.) 

To keep the automation working at full capacity it must be properly maintained, which costs approximately 10% of the original investment per year  .

Investment in automation is optional and must be entered in the automation decision box  .

New Models 

Two models are produced in the first year and there are no upfront investment costs associated with these, just the production costs as specified by you  .

It is possible to launch one new model each year with financial investment  .

The investment must be made the year before production commences  .

Decisions relating to the new model are made during the following year/round of the simulation, e.g. invest in year 1, launch model/make decisions in year 2  .

The average investment needed for a new model is given on the Cost&Data Sheet (£400m in year 1) but half to twice this figure is acceptable. 

The amount invested will have an impact on the quality and degree of success of the new model. 

On the financial statements 50% of the investment will be shown on the P&L as R&D and 50% on the cash flow for production costs. The cash investment is then added to the assets on the Balance Sheet and depreciated by 10% annually. 

Once a decision has been made to launch a new model the project cannot be stopped but the launch can be delayed by allocating the minimum 100 workers to the model. The model specification will still have to be made as the workers will be producing a limited number of prototypes and pre-launch products for demonstration purposes.  

Personnel 

Wages 

There is a minimum wage in force (£465 per week in year 1)  .

The industry average wage is shown on the entry screen and the Cost & Data Sheet (£715 per week in year 1)  .

Redundancy payment is 12 weeks salary. 

Workforce 

The workforce may be moved from production of one model to another  .

If employees are laid off, redundancy payments will have to be paid and bad industrial relations may develop  .

It is not possible to reduce the workforce for any one model below 100  .

A working year is 50 weeks  .

An acceptable rate of absenteeism is 4 days per year  .

Training 

Investing in training the workforce will improve their skills and subsequently product quality and productivity. 

Management training improves industrial relations. 

An average training budget is 2% of the wage bill  .

Marketing and Communications 

Promotion (Advertising) 

The Company and its products can be promoted/advertised via the media listed below. 

Television § Dealer Incentives 

Radio § Promotional Offers  

Magazines/Newspapers § Sponsorship 

Digital Media 

Products are promoted individually  .

There is also the opportunity to invest in Corporate Promotion (via the Company Decisions section of the decision entry screens)  .

It is important to choose the areas that will be most effective in relation to the target market  .

Cost of Advertising 

There is an average cost for each method of advertising (see the following table)  .

This average amount is the level of investment required to create enough product awareness to raise sales by a good margin  .

Investing less than the average will still have some effect within the marketplace and spending more will further increase customer awareness and sales  .

There is a saturation point and investing more than twice the average amount will have a negligible or zero effect  .

General market research on promotion/advertising methods is given in Appendix II (page 25). 

Product Image 

The company must decide on the image to be portrayed by each model  .

One or more of the perceptions below must be given a weighting relating to the way in which the company wants each car to be perceived by the marketplace: 

Comfort § Safety 

Speed § Green 

Style § Hi-Tech 

The total for each model must be 100% (it is possible to have a 0% weighting for some areas if they are not appropriate)  .

The overall perception should have optimum appeal to the target market, as well as relating to the designs, selection of options and R&D projects for the model  .

Market and Competition Research 

Once the simulation has started it is possible to purchase research information on the marketplace and competition as follows. 

Market Research 

Invest in general market research that is generated by the computer (£5m in year 1)  .

The market research comprises market predictions and information on competitors’ investments, expenditure and products. 

Data on Competition 

Invest in detailed data on the competition (£10m in year 1)  .

The data on competition report provides details of all products in the marketplace, their pricing and sales, performance and information relating to more general business and financial performance  .

Market Perception Report 

Invest in a Market Perception Report (£5m per model in year 1)  .

The report provides feedback on the effect of your promotion, popularity of your chosen options, designs and R&D projects and provides information on the requirements of the marketplace  .

Finance 

Funding 

To support the funding of this enterprise you have £500m in the bank raised from shareholder equity. This will be insufficient when the following costs are taken into consideration: 

factory  : £765 million 

automation  : £1m per unit 

market research  : £5 million (computer generated) 

data on competition  : £10 million (computer generated detailed data) 

market perception report : £5 million per model (£10m for two models in year 1) 

wages : minimum £465, average £715 per week 

raw material, designs and options, research & development, costs - see separate Cost & Data Sheet for these details. 

Raising money 

It is possible to request a loan from the bank or to issue new shares to cover any cash shortfall  .

In the event of the bank balance at year end being negative, an overdraft will automatically be granted  .

Loan/overdraft interest rates 

Interest on loans will be charged as follows: 

negotiated loan : inflation + 5 

overdraft  : inflation + 8 (minimum 15%) 

Share Issue 

It is possible to raise money from the stock market by issuing new shares - a maximum of 10% of the issued share capital in any one financial year. 

Shares can only be issued if the current share price is above the share face value of £100.  

A share issue is notified a year/round in advance, the success of the issue will depend upon the performance of the share price in the current year/round. 

Issuing shares may dilute the equity of the company and adversely affect the share price and should therefore only be done if the company needs extra cash. 

The share price is dependent on three factors: 

the performance of the company 

the dividend paid 

the demand for the share. 

It is important to bear in mind that you need to obtain shareholder approval before seeking fresh equity investment.  

Loan Repayment 

Loans can be repaid from positive cash balances as and when you wish to do so. 

An overdraft is paid off when the bank balance rises above zero. It should be noted that overdrafts are fully repayable on demand and are not considered to be a part of core business funding. 

Investment 

Bank Account 

Interest rate on balances in credit : inflation + 1.5 

Gilts 

You may invest in gilts.  

Gilts must be held for five years/rounds, with a fixed rate of interest being paid over that period. 

At the end of the five years/rounds, the original investment value is repaid. 

The interest rate will depend upon the prevailing inflation rate in the year/round the gilts were issued. The figure is given on the News Bulletin report, it is calculated as: 

Interest on gilts : 2.5 x inflation (minimum 6%) 

Shares 

Shares in competitors can be purchased. 

Not more than 10% of the issued shares of any company can be bought in any one round, but as large a stake as required can be accumulated over a number of years/rounds. 

Shares must be bid for in multiples of 1000 by entering the maximum price you are prepared to pay for those shares. 

Shares purchased can be sold at a later time. Any proportion of the shares held may be sold by entering the minimum price you are prepared to accept for them. 

When buying or selling shares, the number bought or sold will depend upon the stock market demand for them and the price you are prepared to bid or accept. 

Dividends 

A dividend per share may be declared each year if the company is in profit, i.e. showing a positive retained profit. This may be calculated with reference to the profit projections provided by the whatif model, otherwise an estimate of post-tax profit should be calculated, a proportion allocated for distribution to shareholders and this figure divided by the number of shares issued to give the dividend per share.  

Dividends are shown on the P&L Report at the end of the year in which they are announced but are not taken out of the cash flow until the following year. 

The figure entered in the decision screen is the price to be paid per share, not the total amount. 

Tax 

Corporation Tax is charged at 22% of pre-tax profit. 

Organisational Overheads 

All organizations have overheads. Such expenses cover management costs and expenses, administration, communications, IT, HR, financial and legal management and all the other costs associated with the day to day running of a business. In the simulation, overheads are calculated using the following formula: 

10% x wage bill +  

  7½% x materials used + 

  5% x opening book value of fixed assets 

Payment Periods 

You must set the number of days that you give customers to pay after an order has been placed and the number of days that you will wait before paying suppliers after purchasing materials. 

Giving customers a long credit period will appeal to buyers 

Delaying too long before paying your bills will cause suppliers to raise their prices 

The maximum period permitted for both parameters is 99 days 

Assets 

Fixed assets: 

Factories 

Automation 

50% of any investment in a new model launch 

All will depreciate at 10% of their book value per annum 

Stock assets are valued at materials plus the amount spent on wages to produce the cars left in stock 

Stock will cost 15% of each car's production cost to keep them up to specification 

FINALLY … 

Executive will provide you with a very dynamic learning experience. Each team will develop uniquely, based upon how it interacts competitively, what products are introduced, and how these products are supported. The economy will have its ups and downs, customer needs will evolve, and competition will intensify. A well-planned strategy is essential. 

INSTRUCTIONS FOR USING EXECUTIVE 

The Executive simulation is run online and contains a number of control features that make sure that your decisions remain within quite a wide range of parameters. It is important to remember that the software is primarily a communication tool that enables you to submit your decisions for processing in an easy and efficient manner. The use of the simulation should not detract from the crucial strategy development and business planning that is key to the exercise.  

Once the company's strategy and plan are in place, a set of decisions must be made. These decisions are then entered into the Executive user screens and a POTENTIAL predicted outcome is displayed. If required, the decisions can then be changed before finalizing them and submitting them for processing in the Master simulation where teams will compete interactively. 

7.1 Basic Parameters 

a. There are 5 groups of teams (worlds) operating in the simulation and there are up to 9 unique teams in each group. 

b. Each team will have its own secure simulation file  

c. Your game files are unique to the team and cannot be accessed by any competitors, provided you do not disclose your secure links to them.  

Executive Operating Instructions 

Accessing the software and your team’s game file 

The nominated member(s) of your team will receive an email containing a team number, a password and a link similar to: 

http://executive.trainingsimulations.co.uk//PlayerLogin/index.php

Click on the link to run the simulation and enter the team password in the relevant box. 

The first screen of the exercise will be displayed. 

Opening Screen 

From the opening screen, there are two main buttons for selection: 

'View Market Data', which enables you to view the Cost & Data Sheet for the current round. From round/year 2 this button will read 'Show Round X Results' and will enable you to view the results from the previous round and view the current Cost & Data Sheet. 

At the beginning of any new decision-making period it is strongly recommended that the results from the previous year are analysed and used as the starting point for discussions and decisions relating to the current round/year. The new Cost & Data Sheet will also be needed as prices will have risen with inflation since the previous year. 

The Reports and Cost & Data Sheet can be saved to a file or printed by using the icons on the top right hand side of the screen. 

'Go Straight to Decisions' to begin entering decisions immediately. This option is only likely to be used when re-entering the simulation after a break from decision making. 

Other options on this screen: 

The bottom of the screen there is the option to view previous round results - from here you can view the results for any year/round; 

There is also the option to exchange messages with the simulation administrators by using the message board. 

Entering Decisions 

To begin entering decisions select the Enter Decisions button, which can be found at the top and the bottom of the screen. 

There is a generic help screen on each screen and beside each individual decision box there is a  

There is a main category decision box for each model and the company. These can be accessed directly at any time by using the menu bar on the left-hand side of the screens. 

Begin by entering the Company Name then move through the Model Decision boxes and finally the Company Decisions Box. 

Each category box has a Status button at the top right-hand corner. This will be red and say pending until all decisions have been entered when it will change to green and say complete. It is not possible to proceed to the next stage of the simulation until all these boxes are categorized as complete. 

To leave the simulation at any time, and retain any decisions already entered, select the LOGOUT option from the top black tool bar. Log back in once ready to make more decisions or proceed to the next step. 

Once all decisions have been entered select the green Proceed button at the bottom of the screen. You will then be able to view a set of projected results. 

Viewing Projected Results 

Executive will display a forecast set of results for the round and there is also a drop-down menu giving the option to view any of the results from the previous round/year. The previous or projected results can be saved to a file or printed by selecting the appropriate icons. 

NB : The predicted results are only a guide to what the possible outcome could be with that particular set of decisions, when processed in the Master simulation, the background competition, the decisions of the other teams/companies and environmental and economic factors will influence the actual outcome. 

Once the projected results have been viewed it is possible to return to the main decision-making screens and change any of the data entered. To do this select the Change Decisions button at the bottom of the screen.  

This can be repeated as many times as required, however, it is strongly recommended that changes made to decisions to try to improve performance are managed carefully. If too many changes are made at the same time, it will not be possible to identify which one(s) have made an impact. It is best to make as few changes as possible each time the "what-if" model is run. 

There may also be a charge for each time you return to the decision screen to make changes. The tutor will inform you of any charge before the decision period begins. 

Saving Decisions 

To save the decisions and submit for processing select the green Finalise Decisions button at the bottom of the screen. NB: Once this button has been selected it will NOT be possible to view or make any further changes to the decisions. 

Viewing, Printing And Saving Results 

From year/round 2 onwards the button below will be displayed at the top left hand side of the opening screen. It will give access to the results from the previous year/round and the Cost and Data Sheet for the prevailing year/round. 

At any time during an exercise the results from previous years/rounds can be viewed by selecting "view previous round results" at the bottom of the login page. 

To print or save any report, display it on the screen and use the icons at the top right hand of the screen. 

APPENDIX I : SCHEDULE OF ACTIVITIES 

A summary of the key dates and events that you will experience during the simulation are given in the table below. All times are UK local time. 

NB : A template of an annual management report will be available on Canvas. It is recommended that this is completed after each round/year of the simulation. This information can then be used to help analyse the company's performance when preparing the Shareholder Presentation at the end of the module. 

Likewise, there is a period of reflection set at the end of every day. A Group Review document will be available on Canvas as a template for recording your findings. Completion of this is optional but will be useful to you for the reflective part of the assessed presentation and poster. 

Note for schedule below : April Training is the company that provides the simulation. 

Appendix II : List of Executive Roles Available 

CHIEF EXECUTIVE OFFICER 

Purpose of Job 

To deliver shareholder value and ensure compliance with accepted standards of corporate governance 

Key Tasks 

Formulation of company strategy 

Presentation of Annual Report to shareholders and investors 

Recommendation of investment proposals and plans 

Effective management of the Executive Management Board 

Approval of company marketing and promotional programmes 

Approval of capital plans up to a maximum annual investment of 5% of annual turnover 

Ensure complete compliance with bank requirements and demands 

Performance Indicators 

Delivery of increased shareholder value year on year 

Achievement of the annual profit and cash plan 

Timely presentation of the annual and city/investor report 

Annual reduction in the cost  

Achievement of gross margin target on all product lines 

STRATEGIC PLANNING EXECUTIVE 

Purpose of Job 

To ensure that the company's strategic plan is developed and implemented to achieve the agreed business goals and objectives 

Key Tasks 

Work with the CEO and other Executives to create the strategic plan for the company 

To monitor the activities of the firm’s marketplace and identify market and competitor trends 

To recommend changes to the strategic plan in the light of these trends 

To prepare an annual report for the CEO and the Non-Executive Board on the firm’s strategic achievements and capabilities 

Performance Indicators 

Alignment of company activities to meet the needs of the strategic plan 

Delivery of Annual Report for CEO and Non Executive Board 

Achievement of end position to ensure the continued growth and development of the firm 

MANUFACTURING EXECUTIVE 

Purpose of Job 

To deliver the annual production plan to budget and quality targets 

Key Tasks 

Preparation of the annual manufacturing resource and output plan 

Development of the training skills plan 

Setting and managing the finished stock policy 

Preparation of capital plans for automation 

Performance Indicators 

Achievement of optimum productivity performance indicators 

Stock levels in accordance with the annual/strategic plan 

Annual reduction in the cost of warranty claims 

Achievement of gross margin target on all product line 

FINANCE EXECUTIVE 

Purpose of Job 

To ensure that the company achieves its key financial performance indicators and stays within its borrowing limits  

Key Tasks 

Preparation of the annual budget plan 

Presentation of the annual financial statement 

Evaluating capital plans and requests from manufacturing and engineering departments 

Compliance with established practices and protocols in corporate financial management 

Effectiveness of the IT and business planning systems 

Performance Indicators 

Achievement of the annual financial plan 

Effective management of the cash and borrowings policy 

Timely presentation of the financial report to investors and the Board 

Financial capability of all Executive managers 

TECHNICAL AND ENGINEERING EXECUTIVE 

Purpose of Job 

To ensure that all products and specified correctly and that new design ideas are introduced to manufacturing in accordance with best practice 

Key Tasks 

Preparation of the technical specification for each vehicle product 

Assessment of new trends in vehicle engineering concepts 

Quality of supplied parts and components 

Clarity of understanding with manufacturing and marketing about new product introductions 

Performance Indicators 

Engineering performance 

Technical excellence of product design and engineering 

Use of cross platform technology 

Annual reduction in the cost of warranty claims (in association with manufacturing) 

Value engineering, cost down projects 

SALES AND DEALER NETWORK EXECUTIVE 

Purpose of Job 

To set and achieve the annual sales budget in both volumes and value of product sold 

Key Tasks 

Preparation of the annual product sales plan 

Company sales pricing strategy and policy 

Development of the dealer network 

Setting and managing the finished stock policy (with the Manufacturing Manager) 

Initiation of sales promotions and campaigns 

Performance Indicators 

Delivery of sales targets 

Quality and effectiveness of sales promotion campaigns 

New product ideas 

Sales profit margins (price responsibility) 

HUMAN RESOURCE EXECUTIVE 

Purpose of Job 

To establish, implement and manage the company's HR strategy and policy 

Key Tasks 

Establishment of the HR policies 

Development of the annual training programme 

Setting of the annual wage rates for all grades 

Management of the company's redundancy and employee benefit schemes 

Represent company on Government HR Task Force (when required) 

Review of Executive performance 

Performance Indicators 

Productivity performance 

Employee absence levels 

Effectiveness of training programmes 

Days lost through undue industrial unrest 

Effectiveness of Executive Board 

MARKETING EXECUTIVE 

Purpose of Job 

To prepare and deliver the company's marketing and brand development strategy and plan 

Key Tasks 

Preparation of the product marketing plans 

Formulation of the media and advertising strategy and plan 

Development of the brand strategy 

Gathering of market intelligence to inform the product development programme for existing and new products 

Performance Indicators 

Delivery of the marketing plan to budget 

Protection of the brand image of the company 

News and Media PR responses 

Preparation of recommendations for upgrades of existing and new products introductions 

Appendix III : Market Research on Promotion/Advertising 

Effects of Promotion (Market Survey) 

The Motor Industry is said to be the largest buyer of advertising in the world. Expenditure is high and therefore it is important that it is used effectively. The following information summarises April Training's findings on the effects of various forms of promotional advertising on the purchase decisions of a cross-section of car buyers. 

Television is expensive but extremely effective and has the most noticeable overall success throughout all age groups and all car markets. It has been proven that campaigns which include TV are 35% more effective than those without TV at delivering improved business. It remains the medium that is the most effective at "driving and recall"; a research study found that 76% of people who saw a car advertisement on TV remembered it, compared to 25% who viewed in on a mobile phone, 17% on a desktop and 16% on the radio. 25% of those who had seen the advert on TV then took action to find out more, compared to 11% who had seen it on a mobile, 6% on a desktop and 4% on radio. In this digital age, it is still TV advertising that drives the consumer to take the next step in purchasing a product. Three quarters of British people use screen devices while watching television (93% of under 25s) and therefore they can do instant research as the advert is being watched on TV. They will then continue the search before finally visiting a dealership for a test drive and, hopefully, make a purchase. 

For the purposes of the simulation, TV advertising includes TV in the home and the use of advertising at large sporting occasions or music arenas, e.g. football and rugby games. This was traditionally on large screens but now includes the use of virtual advertising around the edge of the pitch/arena, this enables the adverts to change depending on the country where the event is being viewed and the TV channel being watched. This is a very effective medium but can be expensive when used at premium venues and events.  

TV remains a very popular medium of advertising for automakers and the fast-growing car selling websites. However, with the move from traditional TV viewing to watching via a tablet or laptop, the success of TV is giving way to digital advertising as the preferred form of advertising.  

Local radio advertising is a fast, low-cost method of transmitting a message to a captive audience. It is recognised as being particularly effective for the automotive industry. 

More than 89% of the UK population tune into radio at least once a week, providing a large audience. Listeners tend not to change radio stations in the way that viewers flick through TV channels and people often listen for hours at a time, remaining loyal to one station. People listening to the radio in cars and those who drive for a living are particularly open to radio advertising. Digital radio offers an ever-increasing number of specialist stations that give advertisers the opportunity to target specific age ranges and social groupings. Digital radio not only provides an improved service but can also reach a wider audience via the internet, digital TV and mobile phones.  

Advertising via the radio has a higher return on investment than TV in some sectors, in the UK the return is said to be £6 on every £ spent (across 42 campaigns). Promotions and offers work particularly well with this form as advertising, as radio often initiates a quick response. 

Approximately eight car manufacturers within the top 20 spend on radio advertising. It has been a growth area in recent years and, although it has now stabilised, it is thought that it will maintain or possibly increase its share over the next few years. 

Magazines/Newspapers are effective for all car sectors, but it is usually the over 30s that will take the time to read reviews. There is a risk element involved as a bad article can have a negative impact. The growth of reviews as a validation method for some buyers, is enhancing the role magazines and newspapers play in the buying process. Carwow has recently purchased AutoExpress and Evo magazines, which could lead to further developments in this sector. 

Digital Media advertising, for the purposes of the simulation, consists of paid search engines (e.g. google ads), banners and pop-ups on websites, displays and posting on social media and email sites, classified ads and audio and video streaming, for instance, Mercedes, Jaguar and BMW have made short advertising films, starring high profile actors/singers, for the internet, targeting first time luxury buyers, and Mazda, Lexus, Nissan and BMW are just some of the companies that have promotional videos showing on YouTube. With the domination of Smart phones in the mobile phone market and the success of the tablet market, the access to websites and the use of social media has grown rapidly and with it the power of the internet, making it one of the largest forms of media for automotive advertising. 

Digital marketing was initially aimed at younger buyers in higher income brackets but as use of the internet has spread so has its use by wider age and income groups; the increase in the percentage of "silver surfers" is particularly notable. It is the fastest growing form of media for advertising, however, the growth in its use in the auto industry has been slower than other industries such as retail and travel but in some parts of the world it has now overtaken television as the preferred method of advertising. European consumers primarily use digital media to research the car market but, for now, still prefer to go to dealerships to make the actual purchase. However, as they use the internet for considering and comparing different brands and models, which is a large part of the decision-making process, it is important that manufacturers have a strong online presence. 

Research has been carried out to identify the types of website that are visited by owners of each car brand. This information is intended to help car manufacturers target advertising on the most relevant sites as well as on their own websites, e.g. it emerged that Ford owners have a preference for travel and finance sites, while Stellantis owners choose sites related to the automotive sector, such as Direct Line Insurance and Halfords. Internet review centres also encompass the auto industry and are another tool to be used when customers decide which car they will purchase. 

Instigated by the closure of showrooms during the COVID-19 pandemic, manufacturers/dealers moved to click and collect or delivery sales online. This trend that is growing in popularity, which means that digital advertising is fast becoming a direct link to purchasing as well as purely for promoting research. Organisations like CarWow, Cazoo, AutoScout24 and many others are steadily taking market share from dealers and rapidly enhancing the car buying/selling experience. 

The highest percentage spend on digital marketing is through mobile phones, taking up to 70% of the digital advertising budget. 

Dealer incentives have a high cost, e.g. it is reported that, for a three-month period a few years ago, VW offered its dealers €928 for each used car that was traded in for a new Golf. The incentives may be in the form of cash, travel or gifts. As well as giving sales staff the opportunity for increased personal gain, when in the form of cash, it also provides them with the scope to offer customer discounts. The exception is in the luxury market, where the impact is minimal. Within the simulation, dealer incentives covers not only dealerships, but all retailers of cars, such as direct delivery and online companies. 

Promotional Offers are very effective in all age groups, especially for the under 25s. Historically, promotional offers were made late in a model's lifecycle to maintain sales levels. Inducements to purchase include extended warranties for 3-5 years, no deposit, 0% finance, free car insurance, free roadside assistance, e.g. Skoda offered 12-months free insurance on the Fabia when taking out a finance agreement, and many manufacturers offer 5-day driveaway free insurance. Peugeot is offering a 3-year finance package that includes road tax and roadside assistance, while Volvo offered free servicing with their financing contracts for the MHEV or PHEV XC60 or XC90. At the luxury end of the market, examples of promotional offers are a case of champagne, a track day experience or a tour of their manufacturing plant.  

Sponsorship will only be noticed by those interested in the events concerned. It is no longer restricted to motor sport events, although this remains a major element, with car manufacturers sponsoring other events to widen the audience. Football is now a key area of sponsorship for car manufacturers, the industry is the second largest sponsor of top- flight football club shirts and has agreements for advertising with leading European clubs, e.g. Audi is one of the sponsors of Bayern Munich football club, BMW replaced Audi as a sponsor of Real Madrid in June 2024, ending a 20-year partnership, Cupra (the sport brand of VW Seat) is one of the sponsors of Barcelona FC and the Chinese manufacturer BYD sponsored the EURO 2024 football finals, covering 23 countries, using the platform to launch its electric family of vehicles. Outside of football, Renault is one of the sponsors of the Roland Garros tennis tournament (replacing Peugeot in 2022), providing transportation for top players and displaying its logo on nets, as well as sponsoring programmes to develop young players; the manufacturer also has links with the French Rugby Federation. Peugeot is the main sponsor of Stade Toulousain rugby team in France, providing all kits. BMW has an agreement with the Ryder Cup Golf Tournament that enables viewers to watch the tournament from inside their cars, as well as sponsoring Golf Australia. 

All the top 20 automakers by revenue are involved in some level of sponsorship. However, it is an area when companies feel they can save money in times when profits are under pressure. There is also pressure from environmentalists to ban car manufacturers from sponsoring sport, or to limit the amount that can be spent. 

In conclusion, it is our opinion that manufacturers concentrating on the under 25 age group should consider television, promotional offers, digital media, radio advertising and to some extent sponsorship as the most cost-effective options, the 25–40-year-old segment should be targeted via television, digital media, promotional offers and, to a lesser extent, radio. Between the ages of 41-55, television advertising, dealer incentives, promotional offers and magazines/newspapers appear to be the most effect media and, finally, the older age groups (55+) respond best to television advertising, magazines/newspapers, dealer incentives and promotional offers  .

Expenditure on Promotion 

In 2018, car brands spent a collective €5.2bn (£4.68bn) on marketing in the largest five European markets (Germany, UK, France, Italy and Spain). Renault was the highest spender at €409.3m (£368m), a 3% decrease in investment compared to 2017, followed by VW at €384.7m (£346.2m), 5% less than in the previous year. UK manufacturers' annual spend rose by 5% to €511m (£460m). In 2019, the automotive industry in Germany invested over €1bn in advertising, a record figure that represented a 9.6% increase on 2018 expenditure. During the COVID-19 pandemic in 2020/21 expenditure on advertising by automakers was cut dramatically. Expenditure grew by approximately 15% between 2021 and 2022 restricted production levels meant they had no cars to sell  .

In general, the average advertising expenditure by the major motor manufacturing companies is £200-£600 per car sold, but can be £1,000 or more. A notable exception is the electric car manufacturer Tesla who reportedly spends very little on advertising, instead the focus is on R&D, with an investment of more than double the average amount spent by other manufacturers. There is of course a lot of free publicity achieved by the activities of their CEO Elon Musk. 

Prestige marques such as BMW and Mercedes can spend less than the average, probably because their enviable reputations sell the products without as much advertising. The figures given include spending on direct mail, cinema and billboard marketing as well as the categories listed previously. Marketing budgets are usually based on a percentage of total sales revenue and can vary from 1-14%, with the majority spending between 3% and 5%. There does seem to be a correlation between sales and higher investment in promotion and those that spend more than 10% seem to reap the rewards.  

Out of the total budget, until recently most companies would spend more than 50% on television advertising. However digital marketing is now taking a larger portion of the budget. In 2024, Automakers allocated 45-55% of the total advertising budget to digital media, focussing mainly on social media, e.g. lnstagram, TikTok and online videos on channels such as YouTube  .

Television is still highly regarded, and research indicates that, on average, when considering over 700 brands in seven markets, a £1m increase in TV investment yields a £4.9m increase in sales. TV advertising, at 20-30% of the promotion budget in 2024, is still a significant driver, sometimes directing consumers to the internet initially. The leading manufacturers still invest billions in TV advertising during new product launches, large televised events such as the Champions League football final, the Olympics and the Super Bowl in the US. 

The next highest investment, at the 5-10% level in 2024, was on promotional offers and dealer incentives. Investment in print advertising, magazines and newspapers has dropped over the years and was 5-10% in 2024. , but is still important, mainly for the older age groups  .

Expenditure on radio advertising attracts, on average, about 2-5% of the promotional budget. 

In general, investment in advertising is currently unpredictable as the nature of the car market changes. However, following a period of budget limitations, it is expected that there will be a surge in advertising to promote new electric models, as the market evolves  .

Effect of Promotion Investment in Executive 

The figures in the tables represent the effectiveness of each type of advertising for each category, ranging from 0 to 10, as set within the simulation. 

Appendix IV : cost & data sheet for year 1 

Model Costs 

Cost of Options £ 

Cost of Designs £ 

Cost of Research and Development (£m per Annum)