A business simulation game my colleague Paolo and I won in London, fall 2010

1. “Caves d’Ausone S.A.”
Wine MBA London 2010
Richard Sagala and Paulo Lopes

2. Structure
 Our strategy
 Our market forecast
 Our pricing strategy
 Our marketing strategy
 Our social strategy
 Our investment strategy
 Our profitability
 Our operational results
 Learning outcomes

3. Our strategy
Maximizing income generation and increasing the
profitability, while being socially responsible using the
best management practices
Brand A
Increase the mark-up per unit, if possible increasing the
market share in a mature market
Brand B
Increase the sale volume in a growing market, being lean
and efficient and increasing the mark-up per unit

4. Our forecast market
y = 1504.9e0.5959x
R² = 0.9941
0
20,000
40,000
60,000
80,000
100,000
120,000
2005 2006 2007 2008 2009 2010 2011 2012
Totalmarket(units)
Time (years)
Brand A_Forescast
Brand A_Real
Brand B_Forecast
Brand B_Real

5. Our pricing strategy
1000
1200
1400
1600
2010 2011 2012
Priceperunit(€)
Time (years)
A
B
Cave d'Ausone
D
Brand A

6. 800
900
1000
1100
1200
2010 2011 2012
Priceperunit(€)
Time (years)
A
B
Cave d'Ausone
D
Our pricing strategy
Brand B

7. Our marketing strategy
0
500
1000
1500
2000
2500
3000
2010 2011 2012
Marketingbudget(K€)
Time (years)
P.R.
Sales
Comm.
Brand A
Brand B

8. Our social strategy
Indicator 2010 2011 2012
Salary (€) 23 324 24 023 24 503
Social budget (K€) 500 500 500
Productivity (%) 4 4 4
Resignation (%) 0 0 0
Satisfaction sign 103 103 104
Good salaries and generous benefits

9. Our investment strategy
Plant 2010 2011 2012
A (K€) - 8 008 4 656
B (K€) 17 882 - 6 207
Financement 6 022 - -
Raising equity 7 622 - -
Raise debt in 2010, self finance 2011 and 2012

10. Our profitability
31.9
36.19
38.3
30
32
34
36
38
40
42
44
15000
20000
25000
30000
35000
2010 2011 2012
MDC/Turnover(%)
Salesquantity(units)
Time (years)
Sales MDC/Turnover
Brand A
Consistent progression of mark-up while product is losing momentum

11. Our profitability
Brand B
-19.91
2.67
11.05
-30
-20
-10
0
10
20
30
10000
15000
20000
25000
30000
2005 2006 2007
MDC/Turnover(%)
Salesquantity(units)
Time (years)
Sales MDC/Turnover
Robust progression of mark-up and sales while product is gaining
momentum

12. Our profitability
Ratios 2010 2011 2012
Net result/turnover (%) 4.1 9.5 12.1
(ROE) Net result/SH equity (%) 7.7 20.5 23,1
Fin. debts/SH equity (%) 55.0 29.6 12.9
Debts/SH equity (%) 72.5 46.3 29.2
Net treasury (K€) 8 4 341 7 548
Increasing profitability ,SH equity and cash , while decreasing debt

13. Our operational results
Ratios 2010 2011 2012
Operation result (K€) 17 578 21 515 25 637
Fin. costs/Op. result (%) 9.7 6.6 3.1
Op. result/Econ. capital (%) 30.9 41.6 44.5
Increasing management and operational efficiency

14. Learning outcomes
Accurate forecasting of underlying market trends
Timely investment to anticipate future production needs
Good social policy pays
Strategic focus and consistency, while remaining flexible
 Price strategy a bit conservative
 Miscalculation in work force kept some employees idle
for a while
 Occasional costly inventories