GMC vs. Reality

The Global Management Challenge (GMC) is an economic simulation of the market with products where companies led by students compete in the company strategic management in order to reach the highest value of the shares. The whole competition is conducted electronically and the decisions of the competing teams are evaluated by special software.

If you want to know more about sucessful strategy for the competition and learn some tips, you can visit GMCHelper.com – a site about Global Management Challenge with software, reports and manuals that will help you to achieve success.

At first it could seem that the Global Management Challenge is only a „computer game“, which has no connection to the real world. Real managers don´t sit behind their computers and don´t manage the company by entering numbers into forms. The contestants of GMC however do not compete against the computer, but against each other and thanks to this their decisions influence each other. And there is more on the Global Management Challenge that is worth mentioning.

Studying the Characteristics of the Business

The students have to get to know the company they manage in the contest as well as in the real world. We can see the classic characteristics of the company (marketing, production, accounting and finances etc.) in GMC. To know that these aspects exist and to try to influence them is not enough to succeed. One has to know how they work and how to forecast them. How exactly can product’s properties influence their demand? How will the changes affect the expenses? What capacities the firm needs for the required number of products and how to secure them? How to forecast things? These are only some of the questions the teams must answer.

The contestants have about 50 pages of the relatively dense manual to help them study the basics of the Global Management Challenge. But it still lacks the important information. It contains the principles, but lacks specific figures and examples. The teams are forced to deal with the insufficient information and make their own analysis and strategies. Here comes the problem – what exactly to analyze? The organizers of GMC do not give away any data on which the teams could build their analysis and so the contestants have to look elsewhere – contact domestic and foreign teams and try to share the experience and acquired information.

Analysis of the Current State of the Company and Planning

After the contestants receive the company history for the last 5 quarters, it is necessary to analyze it and consider future possibilities. The accounting is closely monitored as in reality, as well as the progress of the important indicators; efficiency of the production and logistic operations are analyzed etc. In terms of the competition it is necessary to assess how well the company handles its research and development activities and what markets are attractive and what aren’t. One can use the usual procedures of the strategic management during the analysis in the Global Management Challenge – such as SWOT analysis, GE matrix, setting up the targets, assess various strategies (price versus quality), analysis of the costs and benefits, etc.

Strategy Implementation

The analysis is not the only important action, but also the implementation of the suggested strategy, because there are many existing ways how to reach the same target. It is also necessary to estimate the behavior of the competition. A bad implementation of the well intended process can cause problems to the company. It is important to calculate all decisions and look for the optimum all the time.

Identification of the Key Business Activities and Opportunities

In the Global Management Challenge there are 3 markets and 3 products. This means there is 9 combinations available, the decisions about them are made somewhat differently. Individual products have slightly different characteristics (for example the price elasticity) and the same goes about the individual markets (various effects of the advertising on EU market, NAFTA and internet). Then there are macroeconomic influences in GMC and some of the markets can become attractive suddenly (for example the impact of change in exchange rates on orders).

The fight with the competition offers further opportunities. Initially doomed market can become attractive because the competition left it. Same factors are monitored and used also in reality.

Creating the Economic Model

A team that wants to aim for the first place in the Global Management Challenge must be able to quantify the variables in the simulation. This involves at least a simple accounting model and a marketing prediction model of orders considering all influences.

The contestants can have very complex tools at their disposal in the advanced stage of the contest, these enable them to predict the effect of the competition or calculate the value of the shares in the whole group. With enough effort it is possible to create a complex economic model that can simulate the whole company and optimize partial decisions. And with a really lot of effort you can even duplicate the whole simulation model which I heard was done in Russia.

And the same can be observed in the real economy – very complex models and tools are created to simulate the real environment. Thus the challenge can provide a very good practice in making these and brainstorming about them.

Competing Team

According to the rules of the Global Management Challenge the teams are created by 3-5 people. Due to the fact, that maximum number of players in the team is limited, the team’s options are limited as well. Other people could join in, but this is not the common practice, since those people would gain nothing and would not be motivated like the contestants are.

The contestants have limited amount of time they can use for their work. This factor plays a big part in the competition since analyses are extremely difficult and time consuming.

The composition of the team is another important factor. This is the same as in reality. You can only fill 5 positions and therefore is important to consider who will become a part of the team, what skills will the person bring, etc. Particular demands are placed on the team leader, who must coordinate the other members of the team.

Organization of Work

From the organization point of view the Global Management Challenge provides a lot of options how to distribute work within the team. Most of the beginners try to distribute the work into the individual „company departments“: into marketing, production, human resources and finance department. This doesn’t have to be a bad approach if they can manage to coordinate the skills of individual members and create a compact unit.

It has worked out for our team that everybody knew everything with regards to the simulation. It was possible to assign specific tasks in such an environment where people showed their own initiative. A person with programming and analytical skills was able to find important variables in the system despite the fact being initially given the control of human resources, etc. Then it was possible to assign the tasks depending on how time-consuming they were and how much time each member of the team had available.

In the Global Management Challenge you can use the classic process of work planning, its implementation and follow-up. It is desirable that everyone has access to everything and can bring his/her own ideas which will move the team forward.

Decision Making

An experience from the challenge is priceless when it comes to the decision making. The national and international final rounds of the Global Management Challenge played within one day are especially beneficial. The great number (up to a few hundred) of decisions has to be made during several hours and they can have far-reaching impact. If something goes wrong it is necessary to find the solution in the matter of minutes.

In the finals there are extreme stress conditions and every minute is precious. Everything that is not important has to be left aside. The full concentration is needed for the whole time interrupted only by brief pauses. The efficiency of the work in the finals of GMC and commitment are comparable to the performances of the top sportsmen. The only thing that matters at the end is which of the 40000 teams from around the world will be the best one.

Conclusion

GMC’s contribution to the practical skills of top participants cannot be denied. To win the national round and succeed in the international finals means not only to be great in the above described in Global Management Challenge but also in reality.

 

Please share your opinion on practical impact of Global Management Challenge in the comments. How the competition changed you? How did it help you?

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