Player's manual

From Virbus

[edit] 1 The purpose of this manual

This manual gives you an outline of VIRBUS simulation game. You can use this manual to prepare yourself for the VIRBUS simulation game especially when you are studying on your own. It is recommended that You study the whole manual before starting the game. Once you have starting the simulation game you may use the manual as a reference. If you are studying under the guidance of the teacher he/she will give you more detailed instructions for your studies.

Following are the short instructions for learning with VIRBUS

Player's manual

[edit] 2 What is VIRBUS?

[edit] 2.1 Meeting contemporary learning needs

VIRBUS simulation is a virtual learning environment designed to meet the challenges of contemporary learning contexts and needs. VIRBUS aims to represent real hospitality business management operations as realistic as possible. The general objectives of VIRBUS are

• to improve business management skills and competences of students and employees in the fields of the hospitality and destination managements as well as general business
• to increase the understanding of the business life cycle as a whole
• to connect real business life and include aspects of it into the teaching and learning

VIRBUS simulation is tailored for diversified university and lifelong student groups as well as employees working in the field of hospitality aiming to give them capabilities to work in national, European and global hospitality business environments.

In the focus of VIRBUS is a student with individual needs, expectations and learning approaches. VIRBUS assist the range of student learning variation which can be applied in a different ways in a classroom or remotely:

• designing a learning process for large groups, small group learning, peer learning and individual learning;
• using various learning methods;
• tutor’s role can be applied at different levels;
• learning in an international environment.

VIRBUS is a simulation game representing a real life phenomenon – complex and dynamic system of hospitality and tourism business management in a national and global market place along the tourist service chain – in which the variables for manipulation illustrate variables in real life situations. Learners are offered to learn in an environment of imitating concrete activities which they will face in their professional life. Specifics of companies from hospitality and destination management business are conveyed, the player will gain and apply specific skills and knowledge from these sectors. Students can engage in activities imagine themselves as successful managers and problem solvers. Starting from university or lifelong learning environment VIRBUS leads them to new directions.

[edit] 2.2 Description of VIRBUS simulation game

In VIRBUS simulation game specifics of companies from hospitality and destination management business are conveyed. The player will gain and apply skills and knowledge needed in these sectors. VIRBUS simulation game has 3 phases – Start up and stabilization, Growth and Destination Management. Each phase follows the same process:

• 1) analysing market situation
• 2) planning of own business
• 3) decision making and acting in running of own business
• 4) analysing results

Each phase is defined as a separate game. There is no direct interconnectivity between the phases. However You may save Your game results in each phase in excel-file and use them as an instrumental in the next phase.

Game has no winner or looser. Neither there is no right or wrong answer. The focus of the game is your capability to make decisions, solve problems and analyze your performance. Your solutions are solely individual and they are influencing each other in a cause and effect pattern. Based on your individual results You learn to think collateral and understand complex systems.

In order to play the game You have to have basic knowledge about tourism, hospitality, restaurant and destination management industry, as well as knowledge about excel and internet applications. You may have to pass a pre-knowledge quiz before you may enter the game. Also after rounds in each Phase you may have to pass a quiz in order to prove that you have knowledge needed to go on to the following round in that phase.

You may play phase I in a classroom by a quidance of your tutor or individually outside the school campus. In order to play the game outside the school campus you need to install the game platform (server and client) into your own computer. You will find the platform download instructions as an appendix.

[edit] 3 VIRBUS Game Tools and How to use them?

You will use following tools when playing the simulation game (see navigation bar in the left):

MediaWiki platform www.virbusgame.eu is your access to VIRBUS simulation game. In MediaWiki you will find instructions for playing the game and there you may choose a game (Phase) that you want to play. See the video clip "Introduction of VIRBUS simulation learning environment" http://www.virbusgame.eu/virbus/introduction.html

The Business Planning Tool is an excel-based learning tool which assists you to prepare your business plan. With the help of it you will do different cost calculations for your business plan step by step. At the end you will see the effects of your decisions and at this point you may change your inputs. At the beginning of the Business Planning Tool there is some market data information that you may use on the basis of your business plan. Business Planning Tool

Instructions for use of Business Planning Tool (See also the video clip "How to use BPT" http://www.virbusgame.eu/virbus/bpt.html):

BPT is saved with Excel Office version 2003. In order to use the BPT you need to have the excel version 2003 or newer one in your computer.

Notice: BPT file includes macros. Before you start to use the BPT you have to allow your computer to use macros.

1) Enable macros

In Excel 2003 as follows:

• Start Microsoft Excel
• Click on Tools
• Highlight Macro
• Click on Security
• Click on either Medium or High to select it
• Click on OK
• Close the excel file

In Excel 2007 as follows:

• Click the "Office" button
• Excel Options
• Trust Center
• Trust Center Settings
• Macro Settings
• Enable all macros
• OK

2) Save BPT into your computer by rightclicking and choosing "Save target as"

3) Open BPT from location you saved it with macros enabled

Business Planning Tool is now ready to use. First read the instructions how to use the BPT in the table of content page.

In each BPT sheet you will be given detailed instruction which data you have to insert. On the basis of your input variables some automatic calculations will be done. Some data is already fixed and some data will be automatically transferred from one sheet to another from already inserted data or from other calculations.

Whatever changes you will do in the BPT you have to save the changes in the table of content page.

Country_specific_data includes links to hospitality specific market information from Estonia, Finland, Germany and Slovenia. You may use this information on the basis of your business plan.

A library of Theory_Topics gives You the opportunity to study special topics. Theory topics are devided to Planning, Analyzing and Evaluation tools as follows:

Planning Tools:

• Business Plan
• How to organise a company
• Human Resource Management
• Market Positioning
• Pricing Management
• Strategic Management

Analyzing Tools:

• Balance Scorecard
• Porter’s Five Forces Analysis
• SWOT Analysis

Evaluation Tools:

• Key Performance Indicators
• Financial Statement Analysis
• Service Quality Management

A Glossary gives You the opportunity for quick knowledge of unknown concept.

VIRBUS community is a setting where teachers, students and other users of VIRBUS simulation game are able to develop their professional understanding and expertise in the field. Key of VIRBUS community is to provide opportunities for reflection, evaluation and exploration of new ideas for different VIRBUS users.

VIRBUS game platform is a game tool for realizing your business idea. There is a separate game platform for each VIRBUS phase. VIRBUS game platforms for phase1 and phase2 are working with java version 1.4. or newer one and platform for phase3 is web-based. You will find links to VIRBUS platforms and video clips how to use VIRBUS games from here Platform_Download

Evaluation of VIRBUS simulation game is very important factor in developing the game. Students are asked to answer the evaluation questionnaire after having played the game.

[edit] 4 How to start the game?

• Choose the game phase You want to play in MediaWiki under VIRBUS Game Phases
• Save the phase related Business Planning Tool onto your computer (see instructions here Excel Planning Tool
• Download the phase related Game Platform onto your computer (see instructions here Platform Download
• Choose the phase in MediaWiki
  • Read the phase related instructions
  • Read the phase related rules
  • Start the game from round 1

Phase related as well as round related learning objectives show you what kind of knowledge you will gain and apply during that specific game/round.

[edit] 5 Phase I: Start up and stabilisation

VIRBUS Phase I game market consists of hotels. The starting point of the Phase I game is that there is need for the idea of new accommodation company in the hospitality market. Your goal is to achieve the following in your chosen local setting :

• create a sustainable and realistic business plan
• secure resources and stabilize business operations for the first year
• run operations with good service quality
• generate expected return on the investment (ROI) for owners
• fulfill all legal aspects and expectation of key stakeholders

The game takes place in a static business environment. You play parallel and compete against 2 dummy hotels (against values given ready in the game). Your decisions do not influence other players. Phase I comprises 7 rounds (rounds 3 – 6 represent each 1 quarter of a fiscal year). The Phase I rounds are (note that you have to play rounds 3-7 at the same time):

• Round 1: Setting up the business
• Round 2: Organising operations
• Round 3: Operating and analyzing the business of quarter 1
• Round 4: Operating and analyzing the business of quarter 2
• Round 5: Operating and analyzing the business of quarter 3
• Round 6: Operating and analyzing the business of quarter 4
• Round 7: Closing the business year

You will find more detailed information about the content, skills and competencies that will be gained as well as the theory backround of each round in Introduction to the Game Phase I.

[edit] 5.1 Phase1 - short guide

You will find information about tools, prior knowledge and actions needed in Phase1 here Player's guide to Phase1

[edit] 5.2 Phase1 tasks in detailed

Following are more detailed description of Phase1 tasks.

[edit] 5.3 Round I : Setting up the business

In round 1 You will go through the following steps.

[edit] 5.3.1 Analyze the hospitality market

In Phase I You can choose one market

• a) Finland
• b) Estonia
• c) Slovenia
• d) Germany

You will analyze and select information from average national market data in order to establish your own business idea. You will be provided with some relevant market data information (i.e. available properties, hospitality industry and market data for different destinations, country specific hospitality data), that will help you to prepare your business idea.

For each market the figures/parameters are completely different based on each country national empiric real life statistic data (past time statistics, company reports, business forecasts, links to official organisation’s homepages etc.). The market situation (supply and demand) is based on stylized country specific data (statistics, company reports, business forecasts, links to official organization’s homepages etc.) Customer demand is based on real life data but also contains fake data (quarters 1 and 3 reflect high season /quarters 2 and 4 reflect low season).

[edit] 5.3.2 Write a business plan

After analysing the hotel market in your proposed destination in detail you will formulate an elaborate business plan with realistic sales and financial cost calculations as well as profit forecasts. Business Planning Tool assists you to prepare your business plan.

Writing a business plan includes the following sub-tasks.

[edit] 5.3.2.1 Description of business idea

You will describe your business idea by considering the following items:

• a) what will be your product ( 3, 4 or 5 star hotel in which destination)
• b) who will be the customers.

[edit] 5.3.2.2 Revenue Calculation

5.1.2.2.1. Basic data of your hotel

Your first task is to decide what is your hotel destination, the star level of your hotel and the numbers of rooms available in your hotel. This decision will stay as a basic data in the rest of the game.

5.1.2.2.2. Sales Revenue Calculations

Next you need to calculate the revenue for the first five years of performance. Your first task here is to decide on price (average room rate – ARR) and room occupancy level for the first five years of operation. By setting the price and realistic room occupancy level you have to consider the market situation in your destination.

5.1.2.2.3. Seasonality

For business planning not only calculating revenue on the yearly basis, but also the calculating revenue on the monthly basis is very important. In tourism industry we normally face with seasonality factors. We need to take the seasonality factors into account if we want to define the working capital needed. Therefore your next task is to define the seasonality in you destination, that will be the basis for monthly revenue calculation. You have two options to choose - high or low. High season in the certain month means that you expect more than 7 % of tourist overnight stays in the certain month. Low season means that you expect less that 7% of tourist overnights.

5.1.2.2.4. Payment conditions

By starting your business you need to predict also the payment conditions. You have to asses how much of your services will be paid immediately (within the next 30 days). In the game we assume that the highest possible % of payments within 30 days is 30%. We assume that the rest will be paid in next month of hotel's performance. Your task is to insert the share of payments, that you plan to be paid immediately. Note that in real business also other payment conditions are possible.

[edit] 5.3.2.3 Cost Calculation

Your second set of tasks is to calculate all cost for your hotel for the first five years of hotel's performance. In accordance with the scope of hotel business performance we distinguish two main groups of costs, variable and fixed costs. Variable costs move in line with scope of the business. Fixed costs don’t change with changing the scope of the business. The variable costs in the game are calculated automatically. It is a simplification that is made for the first phase of the game. But you have to calculate main fixed costs of your hotel. The main fixed costs are: marketing cost, administration costs, permanent stuff costs and depreciation.

5.1.3.1. Variable costs

Normally the hotel sells also restaurant and many other services. But In the phase I of this game it is assumed that only hotel rooms are sold. Therefore the variable costs in the hotel include only the costs of room material, water and energy. The costs for room cleaning are calculated separately within the stuff cost calculation. All calculations are made automatically on the basis of previous inserted or calculated data. Variable costs for each year are calculated as share in revenue. The share of variable costs in revenue differ in dependence of hotel stars category as follows:

• Hotel 3* calculated share in revenue is 10%.
• Hotel 4* calculated share in revenue is 20%.
• Hotel 5* calcutated share in revenue is 25%.

5.1.3.2. Marketing costs

Marketing costs includes all cost for marketing activities of the hotel. Your task is to insert marketing costs per room per year that you plan for your hotel.

5.1.3.3. Administration costs

Administration costs include all other general expenses, like maintenance, insurance, transportation. Your task is to insert administration costs per room per year for your hotel.

5.1.3.4. Total permanent staff costs for 5 years

You have to decide how many employees you need to employ to ensure the best possible service quality of your hotel. Note that competence level of your employees means the level of your service quality. Your task is to fill in the total number of:

• operational personnel by their competencies,
• middle managers by their competencies,
• senior managers by their competencies for the first five years of operation.

The computer will automatically calculate the sume of operational personnel, middle managers and senior managers.

Your next task is to fill in the total costs of permanent employees per month. There are 5 levels of competence of the employees. Competence 1 means the least competencies (the beginner, with no experiences in hospitality business). Competence 5 means the best competence level (very well skilled, with many experiences in hospitality business). You are asked to fill in the stuff costs for competence level 3. Note that in total costs of permanent employees also costs for training are included. Stuff costs for lower and higher competence levels are calculated automatically as follows:

• competence level 1 - 15% less than competence level 3
• competence level 2 - 10% less than competence level 3
• competence level 4 - 10% more than competence level 3
• competence level 5 - 20% more than competence level 3

The total stuff cost per year for each group of personnel and total stuff costs per year are calculated automatically. On the basis of inserted data the computer will automatically calculate also the average level of competence of your employees.

5.1.3.5. Depreciation/year

Your task now is to insert the value of building and the value of equipment, which you have chosen for the game. The depreciation per year and per month are calculated automatically.

[edit] 5.3.2.4 Profit and Loss Statement

The profit and loss account (P&L) is the main financial statement, which shows you how much profit or loss your hotel will make in next five years, if the hotel perform as you predict in your business plan. The negative earnings before interests and taxes (EBIT) means, that you have loss. You should improve your calculations. Otherwise you have no guarantee for successful performance of your hotel.

[edit] 5.3.2.5 Cash Flow Statement

Cash flow statement shows you the amount of cash generated and used by your hotel in the first five years of hotel's performance. Cash flow is crucial to your hotel's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If you won't have enough cash to support your operations, means that your hotel is insolvent, and a likely candidate for bankruptcy, if the insolvency continues. The consolidated cash flow statement is presented according to the indirect method. Cash and cash equivalents include checks, cash at bank and cash on hand. The effects of any changes in the consolidation range were eliminated and stated in the cash flow from investing activities.

[edit] 5.3.2.6 Loan Calculation

From the cash flow calculation comes out the amount of working capital that you will need to start up your business to assure liquidity of your business performance. The amount of working capital, that you need for your hotel is calculated automatically in the phase I of the game. It is calculated on the basis of your predicted payment conditions for your customers (see revenue calculation) and in the game predicted payment conditions of your suppliers (see costs calculation). You need a bank loan for working capital. Your task now is to find information about actual bank loans interest rates and to fill in the interest rate for your loan. You have to fill in also, for how many years do you intend to get a loan.

[edit] 5.3.2.7 Balance Sheet

Balance sheet shows you the balance between assets and total liabilities and owner’s equity at the end of each year of business performance.

[edit] 5.3.2.8 ROI Dupont Scheme (see theory topics in MediaWiki)

[edit] 5.3.2.9 Performance Indicators

Basic data of your hotel is transferred automatically from already inserted data. Room Occupancy Level is transferred automatically from other calculations (where?) and other key performance indicators are calculated automatically (from where?). You will find more detailed explanation of key performance indicators in the theory.

[edit] 5.3.2.10 Sensitivity Analysis

The main aim of sensitivity analysis is to find out how much the increase of costs or decrease of sales revenue, that you have planned in your business plan, influences the performance of your hotel. You have to fill in the certain percentage (from 5 - 10%) of increase of costs or of decrease of sales recenue. The profit & loss account is recalculated automatically on the basis of new data. If EBIT becomes negative after inserting new data, means that your business is very sensible on changes in cost or in revenue. You have to have this in mind during the operation.

[edit] 5.3.3 Present your business idea

You have to present your ideas to a bank manager in order to receive the acceptance for your loan requirement to start your own business.

Here some instructions how to make a good presentation.

[edit] 5.3.4 Get feedback from your business idea=

[edit] 5.4 Round 2: Organizing operations

After received the seed capital from the bank you can start realising your business idea by organising operations. Balance Scorecard is a tool with which you can set the objectives for you business.

[edit] 5.5 Rounds 3 -6: Running and analyzing the business in quarters 1-4

After getting loan you can start realizing your business idea by setting up your internal business environment. You will run your own business in four quarters. After each quarter you will analyze your financial reports by making Financial statement analysis and comparing your performance to your initial plans. You will also evaluate your performance with some Key Performance Indicators and comparing your performance to your initial plans as well as against your competitors’ performances.

VIRBUS game platform is a tool to run your business. First you will define (note: this parameters are valid and same for each quarter):

• Number of rooms (50, 100, 150, 200, 250)
• Number of stars (3,4,5)

In each four business quarters (rounds 3-6) you will make the following decisions by setting a parameter for each decision.

• Number of personel oper. (10, 20, 25, 30, 35)
• Number of personel med. (0, 1, 2, 3)
• Number of personel sen. (1, 2)

For all types of personel you will set

• Personel competence (1, 2, 3, 4, 5)
• Price (temp guidelines 3* 80-100, 4* 100-120, 5* 170-190)
• Marketing costs (per hotel room per quarter, minimum and maximum is set between 156-)

At the end of each business quarter you can see the results of your decisions and can take these as the basis for analysing results in a quartely report.

At the end of the business year you can see the results.

The annual results of the game has to been transferred to Excel as follows:

• Open the new Excel file
• Data
• Import External Data
• Import Data
• Select the *.cvs -file from server-folder
• Open
• Go With Next to step 2 on 3
• Mark semicolon-tab as Delimiters
• Finish
• OK

[edit] 5.6 Round 7: Analyzing the business year

At the end of the business year the computer simulates the whole business year on the basis of your quarterly decisions and input variables. You are asked to prepare an annual report and analyze your performance during the business year according to the following criteria:

• Profitability
• Efficiency
• Liquidity
• Stability
• Investment Return

[edit] 6 Phase II: Growth

After you successfully started up your new business hotel in Phase I and were able to stabilize the business performance you are asked by your investors for expansion proposal. If your expansion concept convinces them they will provide you with a certain amount of money which covers fixed assets and working capital.

By analyzing the first business year performance you realized that there is a growing demand for food and beverage in your hotel. One option for expansion is to start-up a restaurant that serves guest of your hotel as well as outsiders. In phase II you will develop the restaurant business concept.

Your task in game phase II is to start up a restaurant and maximize profit and add value to the business when operating both hotel and a restaurant in order to satisfy your investors and other stakeholders’ expectations.

[edit] 6.1 Phase2 - short guide

You will find information about tools, theory knowledge and actions needed in each Phase2 tasks here Player's guide for Phase2

[edit] 6.2 Phase2 tasks in detailed

Following are more detailed descriptions of Phase2 tasks.

[edit] 6.3 Round I : Developing the restaurant business concept

Before you start creating the restaurant business idea you have to analyse the market. There is only demand for five types of food: buffet, seafood, french, italian and local. By doing internal and external analysis (for example SWOT Analysis) you decide which type of food you want to offer. Then you can start to plan your business and write a business plan. The outcome of the first round is the restaurant business concept.

Basic information about the market is available for you for free. In order to get additional information, which give you some hint about customers food preferences, you can buy the latest restaurant business news.

[edit] 6.4 Round II : Defining corporate strategy

After you have a business idea you will be developing the corporate strategy: the future goals and activities of your business. With the help of the Balanced Scorecard tool you define your vision and derive the corporate business strategy for your proposed restaurant. The overall goal should be to break down to four different perspectives incorporated in the Balanced Scorecard: financial, customer, internal process and resources.

[edit] 6.5 Round III : Writing the business plan

[edit] 6.5.1 Write a business plan

After you made yourself clear about main corporate goals for your business you now have to translate this into detailed business action plan.

[edit] 6.5.1.1 Investments

According to your business idea first you need to insert values of building and equipment according to the type of your restaurant and the numbers of seats available in your restaurant.

[edit] 6.5.1.2 Revenue calculation

6.3.1.1.2.1 Basic data of your hotel

According to your business idea you need to insert the basic data for the restaurant you have chosen: the destination, the type of your restaurant and the numbers of seats available in your restaurant.

6.3.1.1.2.2 Estimated median purchase price

In order to estimate the median purchase price you have to enter the percentage of sales distribution from all the restaurant sales. Then you have to choose different products, their prices and share of sold items per product category.

6.3.1.1.2.3 Sales forecast per week

You are asked to decide how many purchases are made during the day and evening. You must take into account the number of seats in your restaurant.

6.3.1.1.2.4 Sales revenue calculation

Now you need to calculate the revenue for years 1 to 5. Your task is to decide restaurant occupancy level, average food and beverage price for years 2-5. You should extrapolate these data considering the market situation in your destination. Some market data on your destination are available in MARKET DATA SHEET. All prices do not include VAT (value added tax). You may want to estimate COST's and come back there to change inserted data accordingly to:

6.3.1.1.2.5 Seasonality

For business planning calculating revenue on the monthly basis is very important. In tourism industry we normally face with seasonality factors. We need to take the seasonality factors into account if we want to define the working capital needed. Therefore your next task is to define the seasonality in you destination, that will be the basis for monthly revenue calculation. You have two options to choose - high or low.

6.3.1.1.2.6 Payment conditions

By starting your business you need to predict also the payment conditions. You have to asses how much of your services will be paid immediately (within the next 30 days). In the game we assume that the highest possible % of payments within 30 days is 95%. We assume that the rest will be paid in next month of hotel's performance. Your task now is to insert the share of payments, you plan to be paid immediately. In real business also other payment conditions are possible.

[edit] 6.5.1.3 Cost Calculation

6.3.1.1.3.1 Cost calculation

Your task is to calculate all cost for your restaurant for the first five years of restaurant's peromance. In accordance with the scope of restaurant business performance we distinguish two main groups of costs, variable and fixed costs. Variable costs move in line with scope of the business. Fixed costs don’t change with changing the scope of the business. The variable costs in the game are calculated automatically. But you have to calculate main fixed costs of your restaurant. The main fixed costs are: marketing cost, administration costs, permanent stuff costs and depreciation. You will find more detailed explanation about variable costs as well as more detailed information about fixed costs calculation for your restaurant in a further instructions. You may want to estimate COST's and come back there to change inserted data accordingly to:

6.3.1.1.3.2 Variable cost calculation

The variable costs in the restaurant includes the costs of raw material and energy. All calculations are made automatically on the basis of previous inserted or calculated data. Variable costs for each year are calculated as share in revenue. The share of variable costs in revenue differ in dependence of restaurant type as follows: Buffet restaurant raw material calculated share in revenue is 30%.

6.3.1.1.3.3 Marketing cost

Marketing costs include all cost for marketing activities of the restaurant. Your task is to insert marketing costs per seat per year that you plan for your restaurant. You will find relevant data about marketing costs per seat for your restaurant statistics

6.3.1.1.3.4 Administration cost

Administration costs includes all other general expences, like maintainance, insurance, transportation,… Your task is to insert administration costs per seat per year for your restaurant. You will find relevant data about administration costs in RESTAURANT INDUSTRY STATISTICS

6.3.1.1.3.5 Working hours and staff needed calculations

You have to decide how many employees you need to employ to ensure the best possible service quality of your restaurant. First of all, you have to figure out the working hours of your restaurant. Then you have to decide how many hours do you need kitchen personell and waitresses stay at work. Then you will get automatically the hours in week and the hours in month. Be aware, that this is a minimum number that suits only for small restaurant. You will get additional benchmarks for staff planning in RESTAURANT INDUSTRY DATA. 6.3.1.1.3.6 Staff costs

You have to decide how many employees you need to employ to ensure the best possible service quality of your restaurant. You will get the average number of employees from the previous table, but you may have to adjust this in accordance with number of seats in restaurant and the type of restaurant You will find such kind of information in RESTAURANT INDUSTRY DATA Your task now is to fill in the number of:

• kitchen personel by their competencies,
• waitresses by their competencies,
• supervisors by their competencies for the first five years of operation.

There are 5 levels of competence of the employees in the game. Competence 1 means the least competencies (the beginner, with no experiences in restaurant business). Competence 5 means the best competence level (very well skilled, with many experiences in restaurant business). The computer will automatically calculate the sum of kitchen personel, waitresses and supervisors. On the basis of inserted data the computer will automatically calculate also the average level of competence of your employees. Have in mind that competence level of your employees means the level of your service quality! You will find average data on number of employees in the hotels in RESTAURANT INDUSTRY DATA.

Your next task is to fill in the total costs of permanent employees per month. The average salaries are pointed out in the previous table. You will find average data on stuff costs per month in RESTAURANT INDUSTRY DATA. The data, which you will fill in means the stuff costs for competence level 3. Stuff costs for lower and higher competence levels are calculated automatically as follows:

• competence level 1 - 15% less than competence level 3
• competence level 2 - 10% less than competence level 3
• competence level 4 - 10% more than competence level 3
• comptence level 5 - 20% more than competence level 3.

In total costs of permanent employees also costs for training are included. The total stuff cost per year for each group of personel and total stuff costs per year are calculated automatically. Local restaurant raw materia calculated share in revenue is 35%. Italian restaurant raw materialcalcutated share in revenue is 40%. French restaurant raw material calcutated share in revenue is 45%. Sea food restaurant raw material calcutated share in revenue is 50%. Energy costs do not depend on the type of restaurant and their calculated share in reveneue is constantly 10%

[edit] 6.5.1.4 Financial analysis

6.3.1.1.5.1 Cost of capital and capital structure

Working capital loan is meant for financing shortage of cash in everyday operations. Long term loan and equity capital is meant for financing fixed assets. 50% of fixed assets are financed by long-term loan and 50% by equity. In order to insert the amount of working capital loan, you have to analyze every month's cash account. This cannot be negative. So, you have to take the loan as much as every month's cash balance is positive. If you do not have any negative accounts, for safety reasons, you should take an amount of loan, which is at least two months operating costs. Probably you have to try it many times at the same time looking the cash accounts changing. If you have a very negative performance (look profit and loss account), you may take a big loan, but it will not make your cash accounts positive. You FAILED! You also have to insert the tax rate in your country and cost of capital. You will get this benchmark information in RESTAURANT STATISTICS.

6.3.1.1.5.2 Ebit-eps analysis First of all, you have to determine the stock (issue) price. All other calculations are automatic.

6.3.1.1.5.3 Loan calculation

You have to decide, for how many years do you intend to get a loan.

[edit] 6.5.1.5 Profit and loss statement

Here is your first result of your calculations. The profit and loss account (P&L) is the main financial statement, which shows you how much profit or loss your restaurant will make in next five years, if the restaurant perform as you predict in your business plan. The negative earnings before interests and taxes (EBIT) means, that you have loss. You should improve your calculations. Otherwise you have no guarantee for successful performance of your restaurant. You can read more about the Profit & Loss statement in the Mediawiki learning environment, see theory topics financial statement analysis

[edit] 6.5.1.6 Balance sheet

Balance sheet is the next financial statement. It shows you the balance between assets and total liabilities and owner's equity at the end of each year of business performance. You can read more about the Balance sheet in the Mediawiki learning environment, see theory topics financial statement analysis

[edit] 6.5.1.7 Cash flow statement

Cash flow statement shows you the amount of cash generated and used by your restaurant in the first five years of restaurant's performance. Cash flow is crucial to your restaurant's survival. Having ample cash will ensure that creditors, employees and others can be paid on time. If you won't have enough cash to support your operations, means that your restaurant is insolvent, and a likely candidate for bankruptcy, if the insolvency continues. The consolidated cash flow statement is presented according to the indirect method. Cash and cash equivalents include checks, cash in banks and in cash. The effects of any changes in the consolidation range were eliminated and stated in the cash flow from investing activities.

[edit] 6.5.1.8 Capital budget

All the calculations are automatic. You have to analyse the operating cash flows and discounted cash flows. You have to notice how cash flows differ from profit. Discounted cash flows take into account the required return by owners.

[edit] 6.5.1.9 Performance indicators

Here you can see the key performance indicators for your restaurant. You will find more detailed explanation of key performance indicators in the Mediwiki learning environment, see theory topics.

6.3.1.1.9.1 ROE and ROA There you can see ROE and ROA with sensitivity bars

6.3.1.1.9.2 Du-Pont charts

Here you can see the Du-Pont scheme for your restaurant. You will find more detailed explanation of key performance indicators in the Mediwiki learning environment, see theory topics. You have to compare the charts and analyze the reasons in ROE dynamics

[edit] 6.5.1.10 Sensitivity analysis

The main aim of sensitivity analysis is to find out how much the increase of variable costs or decrease of sales revenue, which you have planned in your business plan, influences the performance of your restaurant. You have to fill in the certain percentage (from 5 - 10%) of increase of variable costs or of decrease of sales revenue. The profit&loss account is recalculated automatically on the basis of new data. If EBIT becomes negative after inserting new data, means that your business is very sensible on changes in variable cost or in sales revenue. You have to have this in mind during the operation. Remember! You can change only one parameter (whether increase of variable costs or decrease of revenue) at once. Sensitivity analysis is the final step to complete your business plannings. Now you can go back to the Mediawiki learning environment and continue with "Setting up the business - Present your business idea". Please don't forget to save this file on your desktop!!

Please evaluate the changes in revenue and variable costs to ROE and ROA There you can see the sensitivity extent of costs and revenue using ERROR BARS (original value). There is also PROFIT change visible.

The aim of the leverage analysis is to find out the operating (business) risk and financial risk. Business risk is measured by DOL (degree of operating leverage) and financial risk by DFL (degree of financial leverage). The higher the number, the higher the risk. High risk means that the profit levels are very sensitive to changes in input variables. If you have a high leverage and you cannot sell as much as you predicted or your variable or fixed costs will be higher than expected, you will probably have a big loss.

You have to insert actual WACC and occupancy level. You can find this information in financing and revenue calc. sheet

[edit] 6.6 Round IV : Business plan presentation to the shereholders

Since you realized that External capital is needed you will present your business idea to two possible sources of getting external capital: The shareholders can provide you with investments in terms of owner's capital and from the bank you can get a loan that serves as working capital. You make a presentation for shareholders using The Business Planning Tool worksheet Executive summary. Your presentation skills should underpin the arguments and calculations of your business forecasts. Convince your shareholders of a prosperous future of the business.

[edit] 6.7 Round V : Business plan presentation to the bank

The second presentation of your business idea will be to bank financiers from whom you want to get a loan in terms of working capital.

[edit] 6.8 Round VI : Operating and analysing the business in quarters 1-4

Before you can begin operations in the first business quarter, you have to build and equip your restaurant according to your business plan. You have to make the following decisions: how many seats your restaurant will have, to choose the quality of the furnishings and equipment, and decide about staff. All these decisions should reflect your vision and mission statement.

VIRBUS game platform for Phase 2 is a tool to run your business. First you will define (note: this parameters are valid and same for each quarter):

• Number of seats (20, 40, 60, 80, 100)
• Type of food (1 buffet, 2 local, 3 italian, 4 french, 5 sea food)

In each four business quarters (rounds 3-6) you will make the following decisions by setting a parameter for each decision.

• Number of personel supervisor (1, 2, 3)
• Number of personel waitress (1, 2, 3, 4, 5)
• Number of personel kitchen (1, 2, 3, 4, 5)
• Personel competence (1, 2, 3, 4, 5)
• Price (1:5-10, 2:10-15, 3:20-30, 4:30-50, 5:50-70)
• Marketing costs (per seat per quarter, minimum is set)

According to results from the previous quarter you plan improvement of your performance for the next quarter. After you have analyzed the results of the previous business quarter and compared them to your competitors' outcomes, you know how to operate the next quarter in order to optimize for achieving satisfactory results.

[edit] 6.9 Round X : Closing the business year

After the second business year is over you have to analyze the performance of business year. All interested parties are interested in financial information. You will analyze the financial information contained in the Profit and Loss Statement, the Balance Sheet and the calculation of significant ratios between figures in the accounts. Analyses will be made according to the following categories:

• Profitability
• Efficiency
• Liquidity
• Stability
• Investment Return.