Widgets

Welcome to the Widgets 2000, a simulation for the 21st century. Widgets simulates the interaction between producer - parts supplier - labour supplier - government in a small country . You are assigned to one of the groups below.

Group	Function	Number of groups
Producer	Produces & sells widgets.	2
Parts Supplier	Produces parts and sells them to producers	2
Labour Supplier	Supplier's labour to producers and parts supplier	2
Government	Domestic decision maker	1

Business and trade takes place in the following manner. The labour groups supply workers to the parts suppliers and the producers. The parts suppliers import raw material and manufacture parts. They then sell these parts to the producers. The producers turn the parts into widgets (a widget is a gadget) which they then sell to the market. The government collects taxes in the form of corporation taxes from the producers and the parts suppliers and income tax from the labour groups. The government pays out unemployment benefit to any workers who are unemployed. The government also regulates the business environment through laws and leadership.

The international bodies interact with the government and in some cases can fine the government or pass & repeal laws. They can also supply capital loans in some cases. You country recently signed the WTO charter and is a member of the UN.

A labour contract is a contract between a labour group and a parts or producer group agreeing to supply a certain number or workers for a certain wage. Labour contracts have to be re-negotiated every year. Once the contract has been made it cannot be changed for that year. If too many workers are hired, the company has to pay all workers. (It's utilization will be less than 100%) If too few are hired, the company will not be able to reach it's target production. IF A CONTRACT IS NOT AGREED TO, THE PREVIOUS YEARS CONTRACT WILL BE USED.

Parts contracts are made between producers and parts suppliers. They are agreements to supply a certain number of parts at a certain price. They must be re-negotiated every year. Once a contract has been made, it cannot be changed for that year. If the producer buys too many parts they will go to his parts stock. If he buys too few, he will not reach his target production. IF A CONTRACT IS NOT AGREED TO, NO PARTS WILL BE SUPPLIED.

Every year, an economic and financial report for that year will be published. It will predict the increase in demand for widgets, retail price inflation, raw material inflation and national wage increases in other business sectors. You need to study this report carefully. It will be the basis for selling price increases, wage increase demands and raw material price increases.

Your government is committed to EMU by the year 2004. If you qualify for EMU, it is estimated that the widgets market will expand by 10% and the raw material price will decrease by 5%. In order to qualify for EMU your debt ratio must be below 60%, deficit ratio less that 3% and widget's price inflation less than 10% in the year 2004. Please assist your government in meeting this target.

Group	Members	Location
Producer 1	Do Jun Woong, Ha Hyun Ki, Lee Tae Young	Near Lobby
Producer 2	Kim Young Keun, Cheon Myun Hwan	Far Lobby
Parts Supplier 1	Kim Chung Gi, Jung Bong Gi, Cho Sung Uk	Room 2
Parts Supplier 2	Jeong Cheol, Nam Kyeong Soon, Kim Gi Jin	Far Lobby
Labour Supplier 1	An Jong Hwan, Lee Dong Ju, Kim Duk Ki	Room 4
Labour Supplier 2	Ha Yang Keun, Chang Sue Ho, Lee Tae Young	Room 1
Government	Kim Yong Rok, Kim Jeong Bum, Cho Sung Ho	Video Lab

Every team should stick their critical factors chart on the wall just outside their room for everybody to see. This chart should be updated every year and will form the basis of your performance analysis.

Mission Statement: We strive to improve our company's performance through increased profits and market share. We recognize that our parts suppliers and labour suppliers are an integral part of our operation and try to harmonize relations with them.

Your main source of income is from the sale of Widgets that you produce. Your major expenditure is to buy parts for your widgets (parts costs) and to pay the workers (labour costs). If you have stock, you will also incur stock costs. Your gross profit is taxed by the government Occasionally you may have to pay capital costs, such as fines set by the government.

You set the target production for each year and the selling price for each widget. If it's not possible to achieve the target production, then your actual production will be less that target. This may occur if you don't have enough parts or you don't have enough labour.

The number of widgets sold depends on the total demand and your market share. If you produce more than you can sell then the excess goes to your widget stock. You can sell these next year.

You negotiate with the parts supplier for the required number of parts. If they produce less that you request, then your request will be scaled back. If you request more than you can use for production of widgets then the excess go to the parts stock. Note: one part is required to make one widget. IF A CONTRACT IS NOT AGREED TO, NO PARTS WILL BE SUPPLIED.

You have two stocks, a widgets stock for unsold widgets and a parts stock for excess parts. You should develop a stock policy and assign somebody in your group to be a stock manager. You have to decide whether to keep widgets and parts in stock and thus incur a cost, or run them empty thus risking the chance of running short of parts or widgets.

You have to negotiate with the labour groups to supply labour. You have to specify the quantity of workers you need and their hourly wage. If there are not enough workers then your request will be scaled back. The workers are contracted to work 40 hours per week for 50 weeks per year. This cannot be changed. IF YOU DO NOT MAKE A CONTRACT THEN THE PREVIOUS YEARS CONTRACT WILL APPLY. The labour group can withdraw their labour though by notifying you and the government that they are carry out a strike. Avoid this situation at all costs.

You market share is a function of you previous market share plus you selling price. If you selling price is higher than the other producers, then you market share will decrease and vice versa. However, if you decrease your selling price too much (to increase market share) your profit margin will suffer.

The government has wide powers including: the right to audit (inspect) your books anytime, increase or decrease corporation tax rates, pass & repeal laws, fine groups. Try to establish a good relationship with the government from the start

Your potential market represents the desire the consumer has to buy your widgets. It depends heavily on your selling price compared to the average market price.

If you produce less than your potential market then you actual market share will be less than your potential market share. Conversely, if another producer produces less that their potential market, you may sell more than your potential. In this case your actual market will be higher than your potential.

Mission Statement: We strive to improve our company's performance through increased profits and market share. We recognize that our customers and labour suppliers are an integral part of our operation and try to harmonize relations with them.

Your main income is from the sale of parts to the producers. Your major expenditure is on the raw materials to produce the parts and labour costs. If you have stock you also incur stock costs. Your gross profit is taxed by the government. Occasionally, you may have to pay capital costs, such as fines set by the government.

You set the target production for each year and negotiate with the suppliers to fix a selling price for each part. If it is not possible to achieve the target production, then your actual production will be less than target. This may happen because of a shortage of raw material or labour.

Your raw material is imported. You specify how much you want (in tons) and if there is enough supply, you will get what you request. If you order too much, the excess will go to your raw material stock. Note: one ton of raw material can make 1,000 parts.

You have two stocks, a parts stock for unsold parts and a raw material stock for excess raw material. You should develop a stock policy and assign somebody in your group to be a stock manager. You have to decide whether to keep parts and raw material in stock and thus incur a cost, or run them empty thus risking the chance of running short.

The government has wide powers including: the right to audit (inspect) your books anytime, increase or decrease corporation tax rates, pass & repeal laws, fine groups. try to establish a good relationship with the government from the start

Mission Statement: We aim to achieve harmony and cooperation between the various groups to maintain full employment, improve the economy of our country and help maximize profits. We strive to cooperate with the international bodies in their attempt to develop globalized free market practices and prosperous labour conditions. We show strong leadership through action. We are committed to European Monetary Union (EMU) as specified in the Maastrict Treaty.

You collect income from the producers and parts groups through corporation tax and from the labour groups through income taxes. Additional sources of income come from fines and occasionally from the international bodies.

Your expenditure takes on the form of Budget Costs, Unemployment Benefit paid to unemployed workers at the labour groups, capital costs and occasionally fines set by the international bodies. The budget costs will increase by inflation every year.

You have to prepare a financial and economic report each year and distribute it to the various groups. You can get the information required from the instructor. When you get it, decide on what you want to tell the various groups in the simulation. Make sure they get the report, understand it and act on it. Don't hide information.

If the labour groups cannot agree with the producers or parts supplier on a contract then the previous years contract will apply. However, the labour group can withdraw their labour and go on strike if they want. If so, they must notify you and the relevant company in advance. You may or may not decide to pay unemployment benefit under these circumstances. AVOID STRIKE SITUATIONS AT ALL COSTS.

Your government is a member of the EU and recently signed the Maastrict Treaty along with the 14 other member states which committed you to monetary union providing you meet certain criteria in the year 2004. If you qualify for EMU, it is estimated that the widgets market will expand by 10% and the raw material price will decrease by 5%. In order to qualify for EMU your debt ratio must be below 60%, deficit ratio less that 3% and widget's price inflation less than 10% in the year 2004.

You need to be proactive. You need to be creative. You need to lead. Don't try to control the production and wage levels too much. Try to encourage cooperation between all the groups at all time. Don't favour one group, such as the labourers or the producers. Try to make sure everybody gets a piece of the cake. Set up meetings between you and other groups (such as parts-producer) to try to even out problems. Be arbitrators in this situation. Avoid strike action at all costs. Most of all - GET OUT AND LEAD!

Mission Statement: We strive to improve working conditions for our workers and maintain full employment for our members. We recognize that the parts suppliers and producers are an integral part of our lives and try to harmonize relations with them.

Your main source of income is from the wage paid to your people by the producers and parts suppliers. If any of your workers are unemployed the government will probably pay unemployment benefit.

Your major expenditure is on living costs. You also have to pay income tax on your earned income. Occasionally, you may occur capital costs in the form of fines

Every year, you receive fresh workers and some workers retire. The balance is your "Total for next yr" which you can contract out the next year.

You have to negotiate with the producers and parts suppliers to supply labour. You have to specify the quantity of workers needed and their hourly wage. The workers are contracted to work 40 hours per week for 50 weeks per year. IF YOU DO NOT MAKE A CONTRACT THEN THE PREVIOUS YEARS CONTRACT WILL APPLY. The labour group can withdraw their labour though by notifying the relevant company and the government that they are carrying out a strike. Avoid this situation at all costs.

The government has wide powers including: the right to audit (inspect) your books anytime, increase or decrease income tax rates, pass & repeal laws, fine groups. Try to establish a good relationship with the government from the start

Use this form for capital transfers from one group to another (eg: fines, loans etc)