What is the current situation in the baseline scenario?
The firm's credibility is founded on its commitment to honour its obligations. To achieve this purpose it must always have sufficient cash to pay for its expenses. Thus the policy of the firm is to have minimum available cash in any given month to pay for next month expenses.
The simulation methodology is based in comparing the baseline scenario with the target scenario, then management has to analyse the action to be taken to reach the objective, such as increase capital, increase market share, increase in unit prices, decrease costs, and increase in bank borrowing. Finally implement the action.
We will explain the theoretical foundation to analyse each action, followed by the use of the Business Game to provide a theoretical and a practical approach.
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