#NSBG17. Aalto Introduction to Services

Transcription

1 #NSBG17 Aalto duction to Services

2 Arindra Das, Toni Mäki, Håkan Mitts

3 A different kind of business game Focus on business co-operation and network building Simulating a future service business: Space tourism Aalto duction to Services

4 Learning objectives Understand the networked nature of modern (services) business Practice key business skills such as negotiation, pricing, management Understand how fundamental business decision impact business success Aalto duction to Services

5 Skills needed for service business Services are created by companies co-operating Different type of selling: negotiation All companies of a significant size buy services Service buying is a very important skill Contracts play a big role in service business Understanding the basics of service contracts Serving the customer together All services must be co-ordinated for optimal customer experience Aalto duction to Services

6 Experiential learning basics Opportunity Attitude Effort Result Game Your responsibility

7 Space tourism business fundamentals

8 Business objectives of game Offer a space experience to customers Run a company in the space tourism industry Co-operate with other businesses Be profitable Help partner businesses to succeed Aalto duction to Services

9 Key game concepts - 1 Group Students (~2-4) form a group that runs a company Company: Operational unit of game 4 different types Ecosystem or network Companies co-operating to serve customers Requires all 4 types of companies to serve customer Aalto duction to Services

10 Key game concepts - 2 Rounds: the game is played in 3 rounds Round 1: Setting up the companies Round 2: Forming initial ecosystems Round 3: Doing business Fiscal year (FY): Round 2 = 1 fiscal year Round 3 = 2 fiscal years Aalto duction to Services

11 Register for game Group and company assignments Round 1 Form the company Company business model/bmc/pitch Round 2 Form the networks Negotiate contracts Fiscal year 1 business decisions Round 3 Operate businesses Update business plans and contracts Fiscal years 2-3 business decisions Aalto duction to Services

12 Space tourism business fundamentals

13 Understanding the business Space tourism industry report Business Times News in your toolbar Latest updates on all aspects of space tourism Aalto duction to Services

14 Four companies operating together 1. Sales and marketing 2. Customer operations 3. Ground operations 4. Space vehicle Aalto duction to Services

15 Customer operations Sales and marketing Ground operations Space vehicle Aalto duction to Services

16 The customer Consumer of the space trips Characteristics: Lives in a market (3-4 markets) Chooses the services between the different offerings available in the market Has some market specific preferences for service quality and price Service user experience (quality) is a key decision driver Aalto duction to Services

17 Sales and marketing Think travel agency Sells space trips to the customer Roles/responsibilities Chooses what market to sell services in Sets the price of the space trips Marketing effort defines accessible market Buys space tour packages from Ground operations company Aalto duction to Services

18 Ground operations Think airport Operates the spaceport Roles/responsibilities Sets the launch capacity of the network Selects/buys Customer operations Selects/buys Space vehicles Sells ready to fly launches to Marketing c. Aalto duction to Services

19 Customer operations Think air hostesses + business class lounge Responsible for all pre-, in- and post-flight services Roles/responsibilities Defines the customer experience level of the trip Tightly coupled to the price Sells customer service level to to Ground operations company Aalto duction to Services

20 Space vehicle Think space shuttle Develops and sells space vehicle capacity Roles/responsibilities Defines the size of the space vehicle (in number of customers/launch) Sells capacity to Ground operations company Aalto duction to Services

21 Markets

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23 Dual role of markets Customers are located in markets Markets influence customer behavior Companies operate ( have offices ) in markets To co-operate (make a contract), two companies must operate in the same market Aalto duction to Services

24 Market characteristics - customer Markets have a size How many customers are potentially buying a service Companies in the same market compete for the same customers Customers have price preferences Customers buying habits and price preference impacted by customer satisfaction Aalto duction to Services

25 Markets evolve Customer preferences change Market sizes change Markets can grow or shrink between fiscal years Market events Certain (negative or positive) events can occur in markets Check the news Aalto duction to Services

26 Changing market Sales and marketing company can only sell to ONE market at any time Sales and marketing company can change markets they sell to at any time Market changes have a cost Aalto duction to Services

27 Markets where companies operate Game terminoloy: Supply chain markets All companies except Sales and Marketing can operate in 1 or more markets Initial market selection done in round 1 To sign a contract companies must have one shared market in which they operate If there is no shared market, one of the companies must expand into a new market Expanding into a new market has a cost Aalto duction to Services

28 Costs and prices

29 Launch Launch = one trip into space A launch can take a max number of passengers Seats = capacity Defined by Space vehicle company Maximum number of launches/year Defined by Ground operations company Aalto duction to Services

30 Revenue from customers Networks get revenue (only) from customers Price in the customer interface is per customer Revenue from a launch = number of actual customers * price Aalto duction to Services

31 Business-to-business The revenue from customers is shared between the companies No other forms of income Revenue is shared based on the contracts negotiated and signed between companies Aalto duction to Services

32 Business logic of launches Companies sell/buy launches Nr of launches actually flown is a critical success factor If an ecosystem cannot sell their full capacity, some launches might be flown at partial capacity Revenue between companies based on launches actually flown All companies share in the risk of not being able to sell the full capacity Aalto duction to Services

33 Max capacity of launches in a network: (launches ) x (space vehicle capacity) Capacity utilization for maximum nr of customers Capacity utilization for when less customers than capacity Not flown Aalto duction to Services

34 Company cost structure

35 3 main concepts Fixed costs Basic investment into company capabilities Is not affected by the number of launches flown Variable costs Costs associated with each launch actually flown Impacts the customer experience Working capital The amount of money that a company can spend on fixed costs Can be increased by taking a loan Aalto duction to Services

36 Business model fixed costs 1. Investments Investment into the value producing output of each company Can be changed each fiscal year 2. Investment in quality Makes variable cost more effective in terms of generating customer satisfaction Think investment in a quality department Can be changed each fiscal year 3. Additional costs Costs from loans Costs from market changes Penalties etc Aalto duction to Services

37 Business model variable costs 1. Company s own variable costs per launch Impacts customer satisfaction Set in Business plan section Can be changed for each fiscal year 2. Costs from contracts For launches actually flown Based on contracts signed Aalto duction to Services

38 Company total cost and revenue Total cost = fixed cost + (costs per launch * nr of launches operated) Revenue = (price per launch * nr of launches operated) total cost Aalto duction to Services

39 Profitability ~ cash flow Costs in game annual operating costs Roughly think cash flow Spending limited by working capital If you know accounting, close your eyes J Aalto duction to Services

40 Working capital Company s bank account Must always be bigger than planned fixed costs If companies planned fixed costs exceed working capital, a company must take a loan Profit -> increase the working capital Loss -> reduce the working capital Working capital can become negative Aalto duction to Services

41 Loans Can be taken during any round Loans have an interest Loans taken when working capital is negative, will have 2x interest rate (risk premium) Loans are short term, must be repayed by the end of the game + 1 year Aalto duction to Services

42 Contracts

43 Contracts Establish relations between companies Ecosystem implicitly defined by the existing contracts Consists of Cost/launch Duration (in Fiscal years) Penalty cost for breaking contract Done During Round 2 (for Fiscal Year 1) Between fiscal years during Round 3 Aalto duction to Services

44 Contracts and markets In order to sign a contract, the two companies must operate in the same market If companies are in different markets, one of the companies must expand its operations into a new market Expanding operations into a new market has a fixed cost which will be added to the companies fixed costs Aalto duction to Services

45 Account Manager (AM) Person responsible for negotiating with a specific company Seller or buyer Sole manager of the contract/offer process for designated company Each player can be AM for multiple companies Every player in the team must be an Account manager for at least one company Members not assigned an account manager role will prevent the team from moving to the next round Aalto duction to Services

46 Contract model RFP: request for proposal sent by possible buyer to possible seller eg: marketing to operator Proposal: sent by seller to buyer Contains proposed price per launch Contract: agreement between seller and buyer Fixes the price between seller and buyer Duration defined in contract Aalto duction to Services

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48 Contracts expire when 1. Duration expires No penalty Minimum 1 year 2. When a contract is broken The party that breaks the contract gets a penalty Penalty agreed between parties in contract 3. When a contracts is terminated by mutual agreement No penalty Expired contracts must be renegotiated Aalto duction to Services

49 Orphan companies A company becomes orphan if It does not have the necessary contracts Is a member of an incomplete ecosystem that lacks some company An orphan company Incurs fixed costs (but no variable costs) Can negotiate new contracts An orphan company that does not actively make new proposals is terminated No credits for the game Aalto duction to Services

50 Playing the game Aalto duction to Services

51 Setting up a company Basic company information: Name Company description Logo Visible on public company page Player roles Select a role for each player (out of 5) Aalto duction to Services

52 Starting your Paper trail Companies are expected to document their actions and decisions Applies to game companies as well Management team meeting minutes aka game paper trail A written document managed outside the game platform Key game decisions (markets, investments, price,..) Detailed justifications for decisions Aalto duction to Services

53 Paper trail guidelines Your game grade (50% of course grade) Maintained in parallel with your game activities A good paper trail consists of Good current state analysis Correct analysis on how to improve your situation Decision needed to execute on the analysis Returned at the end of the game Note winning the game does not provide a good grade for the game, having a good paper trail does! Aalto duction to Services

54 Aalto duction to Services

55 Round 1 Aalto duction to Services

56 Create a business model Analyze the space tourism market Based on consultants report Define company business concept Fill in business model canvas Choose target market Choose business parameters Costs (and price for Sales and marketing c.) Aalto duction to Services

57 Business Model Canvas (BMC) To go on to Round 2, BMC must be Filled in Approved Between round 1 and 2, BMC will be graded Pitching session October 4th at 16:00 19:00 Good BMC grade gives you more working capital Aalto duction to Services

58 Aalto duction to Services

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60 Round 1 deliverables Business model canvas filled in And approved submit it in time Business pitch 4 th of October Initial business numbers On game platform Paper trail updated with Round 1 minutes Handed in only after Round 3 Aalto duction to Services

61 Round 2 Aalto duction to Services

62 Build networks Target: create a viable ecosystem 4 companies with complementary roles Based on negotiations Fixed with contracts Aalto duction to Services

63 Round 2 deliverables Networks formed by way of contracts If a company is not in a network by end of round 2, the company cannot play (game grade: fail) Note: contract prices cannot be changed for FY1 once a contract is signed Business parameters for FY1 Paper trail updated with Round 2 minutes Handed in only after Round 3 Aalto duction to Services

64 Round 3 Aalto duction to Services

65 1+2 years of business Target: operate the companies 1+2 fiscal years First year will start at the end of Round 2 React to changes in market and own decisions You live and you learn 3 rd year results are the final result of the game Aalto duction to Services

66 Between fiscal years Renegotiate expired (or broken) contracts Companies can change ecosystem in round 3 Companies: find a more profitable ecosystem Ecosystems: find partners that perform better Adjust business parameters Change markets Aalto duction to Services

67 Round 3 deliverables Business operations Game played to end Orphan companies have made offers Paper trail updated with round 3 minutes One set of minutes for each FY2 FY3 Aalto duction to Services

68 Special requirements

69 Player activity Participation and group membership confirmation All players must contribute to the game activity in all rounds/fiscal Years Round 1: Fill in assigned Business Model Canvas domain Rounds 2&3: Act as Account manager for a relationship with an other company Inactivity of a player will prevent the team from moving to the next round If your team has a member that becomes inactive, notify the game master and that player will be removed (and fail the course) Aalto duction to Services

70 Ethical behavior Modelled on basic business ethics OK In negotiations with other companies (as an official company representative) present any information that a company possesses to other parties present NOT OK Give information about other companies to 3 rd parties Publicly post information about company business plan (BMC can be published) Ask for either of the above Aalto duction to Services

71 Passing and grading

72 3 or 6 ECTS Two course versions 3 credits + No game + 6 credits + Lectures + exam (personal, 50%) + Game (team, 50%) based on paper trail Aalto duction to Services

73 NSBG is also a competition

74 Game objective: To win Aalto duction to Services

75 Best in class 1. Best company of each type 2. Defined by 1. Highest FY3 profit (ie. not cumulative) 2. Contract partners must be profitable in FY3 Aalto duction to Services

76 Final words

77 Wed Game introduction Thu :00 Game registration DL Mon :00 Teams formed. Round 1 opens 12:00 Mon :00 DL for returning BM canvas. Round 1 closes in game system. Wed Thu :00 Teams pitch their business model. Time reserved 5min + 10min discussion. Reserve slots Pitch and BM evaluation results in the game. Round 2 opens 18:00. Teams begin forming networks of 4 companies and prepare for FY 1. Wed :00 Round 2 and FY1 closes 08:00 Mon :00 Wed :00 18:00 FY2 opens FY 2 closes 18:00 FY 3 opens FY 3 closes. Thu :00 Game results Aalto duction to Services

78 Guides Game user guide In mycourses Check the guide before asking in discussion group Space tourism industry report In mycourses All the business information you will get No point asking for more business info ;-) Aalto duction to Services

79 Help, I need help! Game support For bug reports and questions for which you need and answer during the game. Monitored by staff Peer support encouraged (but remember ethics rules) Read before posting (first instructions, then other posts) Sensitive subjects Eg removing group members who block the group progress to olli.kesseli@aalto.fi Aalto duction to Services

80 Next - register With your REAL NAME and AALTO On Thursday, Sep 21 the latest Confirm registration (link sent in ) You will be assigned to a group by staff By Monday, Sep 25 Confirmation group membership ( ) On Tuesday, Sep 26 the latest Only now you have been registered for the game! The game begins on Tuesday, Sep 26 Aalto duction to Services

81 After you have registered Log in to the game to find out the names and addresses of the rest of your group Your group has been assigned a company Start operating the company Aalto duction to Services

82 May the game begin! aalto-nsbg.herokuapp.com Join the discussion on: Aalto duction to Services