In this Management Accounting simulation, students act as the finance management team of a global company, trading in watches. Students begin by completing an internal and external analysis of each of the market segments their company operates in: smart watches, luxury watches, modern watches and sports watches. They also need to look out for simulated news events that may affect them. The next stage is for teams to decide on their strategy and create their business plan. When they are ready - the teams can begin to implement their business plan and take tactical actions which will affect their companies performance. The simulation is played in rounds, where one round is equal to one year of operations, students are able to change their decisions every round using the information available to them in order to beat the competition.
Within each team and company there are several different departments which require financial decisions. Therefore, students can determine their team members’ roles within the management team. For example, one team member could be the CFO, monitoring the overall financials for each round, and planning out the necessary investments and price-points. Other team members could take the roles of CEO, marketing finance manager or the operations manager. Alternatively, roles can be divided into different market segments, allowing team members to monitor the financials for the market they have responsibility for (e.g. the smart watch market, or the luxury watch market, etc). In the end all team members share the responsibility of reaching the targets they have set themselves in the Balanced Scorecard.
In order to be successful in this simulation, calculations need to be made to achieve the best possible outcome for your company. One key calculation that can be made revolves around sales and inventory, students are able to calculate the cost per unit for each supplier they choose for each segment. Each supplier has their benefits and weakness, some are high quality and dependable but with a high price, while other are low quality and low price. By estimating the cost per unit for each supplier they are able to choose the amount they wish to purchase, while also taking into account the demand they need to service. This is just one of the many calculations that can be made within the simulations, with some others being HRM (salaries, training, size), R&D costs and marketing. All costs and other financials can be seen in the results page, with detailed figures.
The CFO Challenge simulation is usually assessed in several ways. Below you will find the most popular options: