LOral e-Strat Challenge 3 The Business Plan Guide

CONTENTS:

1) THE AIM OF THE BUSINESS PLAN 2) SCORING SYSTEM 3) CRITERIA FOR SCORING 4) FORMAT & HOW TO SEND 5) FOR WHOM & TIME LIMIT 6) THE BUSINESS PLAN IN DETAIL 7) THE BUSINESS PLAN FAQs 8) THE STEP-BY-STEP GUIDE FOR THE CORRECT POSTAGE OF YOUR PAPER COPY BACK-UP BUSINESS PLAN 9) YOUR LOCAL FEDEX CALL CENTRE NUMBER

1) THE AIM OF THE BUSINESS PLAN As the Managing Directors of PRIMA, it is your job to:

- establish production, marketing and financial objectives for your company - develop strategies to achieve those objectives - implement those strategies with appropriate tactical decisions

As is the case for any Management Committee, you present periodic reports of your activities to the Board of Directors and the shareholders of your firm. Today, after 2 1/2 years of running PRIMA, you will defend your overall strategy, explain profit levels and justify the results! 2) SCORING SYSTEM The score for the Business Plan will be combined with the Share Price Index, and both scores will be normed on a scale from 0 to 100 to enable their amalgamation, in a ratio of 40:60 (Business Plan : SPI). This will be calculated at the end of the sixth run to determine the final overall score, and will determine the teams ranking in both its zone and worldwide. The complete official grading scale is monitored by a notary public, and will be made available online along with the results on 19 March 2003 at 18:00 Paris time . The Business Plan is divided into five parts, as explained below, each weighted as follows:

1) Market Analysis, Rounds 1 5 20 points 2) Situation Analysis, Round 6 15 points 3) Forecast Results, Round 6 20 points 4) 3- Period Forecast, Rounds 7 - 9 15 points 5) Key Learning Points 15 points Overall Quality / Professionalism 15 points

GRAND TOTAL 100 points

3) CRITERIA FOR SCORING Your board of directors will judge your success using the following criteria:

a) Quality of your analysis of the market situation, appreciation of consumer trends b) Coherence of your decisions, overall strategy and the accuracy of your long-term

vision c) Efficacy of the means selected to enhance performance, and their suitability with

respect to brand portfolio management techniques d) Your ability to predict sales and profitability e) Your sensitivity to strategic issues specific to your market f) Clarity, concision of expression, persuasiveness of argument g) Originality of approach, creativity of ideas

4) FORMAT & HOW TO SEND In order to ensure fairness and clear, concise expression, the Business Plan should be in the following form: a Microsoft WORD file, of a maximum of 8 pages of standard A4 format (2cm margins on all four sides, Times New Roman font, 11pt., 1.5 line spacing). For our US players, the US legal letter format should be used. An appendix of 2 additional pages, containing a maximum of 4 charts, graphs or tables may be also included. The Business Plan should be sent both as an electronic mail and on paper by post. Further details concerning the sending of your documents will be provided on notification of selection for Round 6. 5) FOR WHOM & TIME LIMIT For those 175 teams who have been selected to take part in Round 6, your report must be submitted by 9:00 am on 10 March 2003, for consultation prior to the meeting. The top teams from each of the 7 zones, and the 3 top teams worldwide, will be invited to defend their Business Plans, live in front of an executive jury in Paris, preceded by a few days of well-deserved fun! 6) THE BUSINESS PLAN IN DETAIL The Chairman of the Board would like you to address the following points:

1) Your analysis of market performance for Rounds 1 5: What was your initial assessment of the market situation, for both your firm and its competitors? What were the key factors affecting performance during these rounds? What were your initial objectives and how did you achieve them? How did a changing market place affect your strategy and decision-making?

2) Situation analysis, Round 6:

How would you define the key success factors that drive superior performance in your specific market? How do you think todays leading firms achieved their current position? Looking forward, how do you think that these key factors will evolve as the market matures in rounds 7 10? How does this affect your strategy for these rounds?

3) What levels do you forecast in Round 6:

For volume and value market share, sales, cumulative net contribution, share price index and EBIT?

4) 3-period Forecast:

What is your detailed strategy in terms of products? Market segments? Sales volume? Market share? Profits? How do you rate your firms chances of success?

5) Key Learning Points:

In what position have you left your company after 3 years in control? In realistic terms, what are its prospects for the future? Finally, what are your three key learning points from the e-Strat Challenge?

7) THE BUSINESS PLAN FAQS 7.1 When is the deadline for the electronic copy? We expect to receive your electronic copy, as stated previously, before 9:00 a.m. Paris time on Monday 10th March, and we will be taking that day to ensure that all teams have sent in their Business Plans. We are unable to alter this deadline, due to the sheer volume of work in analysing and marking these documents. We are committed to giving your hard work the treatment it deserves! 7.2 When is the NEW deadline for the back-up paper copy? The postmark on the envelope (paid for by LOral) of your back-up paper copy should prove that you have telephoned FedEx before 12:00 midday Paris time on Tuesday 11th March. Note, this copy does not have to arrive at LOral Paris before this deadline, as we will have received your electronic copy at this time. This is to remove extended differences in postage times from distant countries. 7.3 Why must we send a paper back-up copy of the Business Plan, and who pays? LOral will send you the envelope in which you need to place your paper copy Business Plan. This will be pre-addressed to LOral, and the postage pre-paid for, with the courier service FedEx. The purpose of sending in a paper copy of your Business Plan is for three reasons:

In order to ensure that no team finds itself unable to send a large file electronically, as a "safety measure" or back-up.

To enable the clear and aesthetic presentation of your Business Plan, without fearing for the size of the electronic document. This does not necessarily mean that the two versions should be any different from each other. Please observe the format specifications detailed in the Business Plan Guide.

To mirror the real business world as much as possible. Professional proposals or reports are nearly always also presented as a paper copy, for ease of reading.

7.4 Why has the deadline been pushed back by 24 hours? This is simply for logistical reasons, as according to the old deadline (9:00 a.m. Paris time Monday March 10th), those players who live in the Americas would be at a distinct disadvantage, as they would have less time to complete their Business Plans. This is because some of these teams would have been forced to send their paper copy before the end of the working day, Friday March 7th, to be sure that FedEx received it before the old deadline. This is

because FedEx may not work over the weekend in their country and post offices may not be open. Thus, residents of the Americas are now able to send their paper copies before the end of the day of Monday March 10th to meet the new deadline (12:00 midday Paris time Tuesday March 11th), so are at no real disadvantage compared to players of other countries around the world. Moreover, you have all received an extra 27 hours to produce a really professional paper copy of your Business Plan.

7.5 When is the NEW deadline for the decisions for the end of Round 6 of the simulation? To ease the workload in Round 6, we have decided to give you at least an extra day to send in your final decisions. Thus, you have until 12:00 midday Paris time Tuesday March 11th to e-mail us your Round 6 decisions. This is the same deadline as the telephone call that you must make to FedEx so they can come and collect the paper copy of the Business Plan (paid for by LOral, and in the envelope previously sent to the address of one of the players by LOral). 7.6 Why do we have to submit our decisions for Round 6 as well as the Business Plan? This is too much work! Round 6 is the culmination of all of your work in the preceding rounds, it is thus important that the Competition runs its full course. For your decisions taken in the previous rounds to bear fruit, you must complete the final round to gauge the efficacy of your strategy. The final round is also your last chance to help realise the overall vision that you wish to pursue. Besides, we want to be sure that what strategic vision you have detailed in your Business Plan is consistent with the decisions you have made in Round 6. It is especially important that we can see the coherence between your responses to parts 2 and 3 of the Business Plan, which analyse this part of the competition, and your decisions. We also wished to raise the level of the game in the semi-finals to be sure to select the best teams for the international final. By introducing a written element of expression to the competition we hope to reward those teams who not only possess strong numerical skills, but also are capable of clear and well-reasoned written analysis. 7.7 Which is more important, my final SPI, or my result in the Business Plan? Both your final Share Price Index, and the mark for your Business Plan, will be combined in a ratio of 60:40 (respectively). Both these scores will be normed on a scale from 1 to 100, so they can be combined to give an overall score for both parts of the competition. Thus, the business plan is two-thirds as important as your final SPI after all 6 rounds. However, it is very important, as explained in FAQ 1), that your Business Plan is consistent with the decisions you have made in round 6 rounds, which is the proof of your strategic vision in practice. So, make sure that you dont neglect your Round 6 decisions, they are still important! 7.8 To whom will the envelope for the paper copy be sent? A pre-addressed and stamped envelope for the paper copy of your Business Plan (addressed to the LOral headquarters and paid for by LOral) will be sent from Paris, on Monday 3rd March,

by FedEx, to the address of the team member that was specified in your response to the e-mail requesting one address per team. 7.9 I am French, FedEx will not deliver to me, what do I do? Indeed, FedEx does not operate within the country from which it sends mail. What you need do is wait for your pre-paid envelope, sent via chronopost, and follow the instructions that are included inside the envelope. You will need to go to your local post office before the same deadline (12:00 midday Paris time on Tuesday 11th March). 7.10 How do we send the paper back-up copy? Your paper back-up copy should be sent via FedEx in the stamped, addressed envelope provided and paid for by LOral. All you need do is telephone the number of your local FedEx office (provided in the envelope and in the FAQs) before 12:00 midday Paris time March 11th and they will come to collect your Business Plan at address marked on the envelope and forward it to Paris. LOral will meet all postage costs. So, make that call, and save yourself the journey to your local post office! 7.11 When should I telephone FedEx? You should make two telephone calls to your local FedEx office (see below for the telephone number):

As soon as you receive your envelope you should telephone your local FedEx office to find out their opening hours. If, due to the time difference, because you live in a time zone which is behind GMT, then you will probably have to telephone FedEx Monday 10th March, before your local FedEx office closes. The telephone call to FedEx to pick up your envelope should be made before MARCH 11th AT 12:00 MIDDAY Paris time. 7.12 How do I find out the opening hours of my local FedEx office? As explained in 19.11, please call your national FedEx office, as soon as you receive the telephone number by post, to work out when you should call FedEx to be sure that your Business Copy reaches Paris before the deadline. If you have any extra questions or concerns please write to the specially created hotline for all paper copy enquiries, hotline.fedex@loreal.com. 7.13 Will we get any advice sent in the envelope to help us take the right steps? Fear not, as a detailed step-by-step guide to posting the paper back-up copy of your Business Plan will be provided inside the envelope has been provided inside the envelope that has been sent to the home address of one of your team members. 7.14 What should I do to ensure that LOral records the postage of my paper copy? After you have telephoned your local FedEx office for them to pick up your Business Plan, you should send an e-mail to the FedEx headquarters, to the address: spetchikowsky@fedex.com. The e-mail should contain:

a) the reference number of your envelope,

b) the order number given by your local FedEx office,

c) your country of residence,

d) your team name,

e) and the date and time of your telephone call to your local FedEx office.

This will act as an extra precaution to ensure that LOral is aware that you have telephoned FedEx, and your envelope is soon to be collected.

7.15 Why cant we send our paper back-up copy by normal post? LOral prefers all Business Plans to be sent by recorded delivery to cover the costs of postage and increase speed and reliability. Different countries postage systems are more efficient than others, and we would be forced to make the deadline earlier for the paper copy, to be sure to receive it in time. This is also a precaution to ensure that LOral has an official receipt of when the paper copy of the Business Plan was posted for our records. We can thus be sure that you have sent your copy before the deadline, and are still qualified to enter the final, even if there are problems with its postage. This also saves you some time, money and worry! 7.16 Will we be penalised if FedEx loses the paper copy? FedEx has an excellent reputation for speed and reliability, thus the chances of your paper copy being lost are extremely slim. However, in the event of a problem with the postage of your Business Plan, we will have a record of your telephone call and e-mail to FedEx, and your envelope having been collected. Thus, we will be know if we do not receive the paper copy that it is not your fault. 7.17 Structure how should we structure the Business Plan? It is your choice how you decide to structure your answers and present your arguments. This gives you the freedom to show an original and creative approach, while ensuring that your report is clear and well organised. Bear in mind that all five aspects of the Business Plan must be addressed (as detailed in Part 2 of The Business Plan Guide) to be eligible for the points available for each section. Note, the scoring system can be used as a rough guide for the length of each of your responses to these sections. Check the updated scoring table in FAQ 0. 7.18 Format how many charts, graphs and tables and where? The main body of the Business Plan should just contain text. Any charts, graphs or tables that you wish to include should appear in an appendix, attached to the 8 pages (maximum) of the main document. The sum total of any combination of charts, graphs and tables may not exceed 4, and should not be longer than 2 pages of standard A4. 7.19 Are we allowed a front cover and contents page in addition to the 8 pages? Yes, if you wish to include a front cover of one page, and a table of contents of one page, these two pages will not be counted as part of the 8 pages of content of the text of the Business Plan. For the back-up paper copy the page limit is less strict. 7.20 Which leading firms are you referring to in section 6, 2 of the Business Plan Guide? When we ask, "How do you think todays leading firms achieved their current position?", we are referring to the ones in the simulation (Bella, Vista, etc), and to the other Primas around the real world. In playing e-Strat you are both competing against the virtual companies in the game, and against the other teams around the world. Therefore, to give a full answer you should comment on both sorts of competition that you face.

7.21 Will we receive detailed feedback on why we have received a certain overall score? You will receive a mark for each section and a total score for the Business Plan, with your final SPI, but for further details concerning the breakdown of your score for the Business Plan we will not have sufficient time to provide such a detailed personalised analysis of your work. However, after all the Business Plans have been marked we will provide general explanations on the web site on 19th March at 18:00 Paris time for the reasons behind the awarding of high or low scores for different sections. If you should need a personal de-brief for your studies, please write to the hotline after the posting of the results, and we will do our best to respond to you individually. 7.22 We are not semi-finalists, but can we send you our Business Plan anyway? We regret that the size of the task of marking the 175 Business Plans of the qualified semi-finalists is too large to enable us to accept any more. However, we encourage you to visit the web site after the semi-finalists Business Plans have been marked, as you will be able to judge your performance yourselves, by referring to our analysis of the work received. You may also want to share your work with other playing colleagues or a professor. We are sorry to not be able to respond personally, but we invite you to register next year, or even better, apply for a job or internship to do the real thing! 7.23 In Part 4 of the Business Plan, for which three periods should we forecast? We would prefer it if you forecasted for periods 6, 7, and 8, as we compare what you forecast with the reality of the simulation, that is your Round 6 results. 7.24 The points for the final score of the Business Plan did not add up to 100! This is true, well spotted! We are impressed by your attention to detail. The number of points now shown in the Business Plan Guide will be awarded for each of the six parts of the Business Plan. This is the official marking system for the Business Plan scores. 7.25 Will my country be holding a national final for those who do not make it to Paris? Some countries are indeed to hold their own national finals, giving teams who played in Round 6, but who did not qualify for the international finals, a chance to present their Business Plans. To discover whether your country is to hold its own national e-Strat final, and details about his event, please wait to be informed by your countrys recruiter, or by the e-Strat web site, in due course. 7.26 If I am too late to send in the paper back up copy of my Business Plan will I be disqualified from Round 6? No, but you may receive a lower score for the final, overall part of the Business Plan marking system, Overall Quality / Professionalism. This is because, for a true business presentation, you would be expected to provide a paper version of your proposal or report. Also, other teams who submit a professionally presented paper copy of their Business Plan will perhaps be awarded a higher score for this section. Note: it is not necessary for you to submit a different version for the paper copy of your Business Plan. You may add a front cover page or other pages of your choice, should you wish; but this is NOT a requirement.

7.27 Is it too late for me to send my postal address to you to be sent the FedEx envelope? Yes, but you can contact your local FedEx office call centre (see below for the telephone number) and pay them to send off the back-up paper coy of your Business Plan. You can include the invoice for the postage costs with FedEx in your envelope, and LOral will reimburse you. 7.28 Will I receive a diploma for my participation in the e-Strat challenge? All teams that were still qualified to play e-Strat 2003 at the end of Round 5 will indeed receive a diploma to recognise the effort and achievement that such an experience has afforded them. Note: this does include those teams who submitted their Round 5 decisions on time , but did not qualify for Round 6. Those of you who qualified to become semi-finalists, or finalists, will receive a diploma which specifies the level of your achievement. This will be sent to your home address after the competition. 7.29 Could I have a copy of the e-Strat Challenge Power Point background page? Yes, of course! If you should like to be sent the official e-Strat Power Point page, we would be happy to e-mail it, should you wish to use it to illustrate your Business Plan.. Also, if you should like to download the e-Strat screen saver to show your friends, please go to the e-Strat home page. 7.30 Should the Business Plan be written in English? Yes, as for each part of the Challenge you must be able to express yourself well in English. This reflects the importance of the English language in todays business world.

7.31 Can we use a different style font and size in our Business Plan from Times New Roman, 11pt? Only for titles and headings can you use a different font style and 12pt font size. However, the main body of your text should remain Times New Roman, 11pt. This is to ensure that each team has an equal volume of text in which to present their Business Plan. Any text of the main body of the Business Plan that differs from the above requirement will not be accepted. 7.32 Can we send the electronic copy of our Business Plan as a zipped file? Yes, this is possible, and it would allow you to send a larger file, if necessary.

7.33 Do you want to know what we intend to do in each of the rounds 7 to 9 for each product or just our main intentions and strategy for the products in that period? The Business Plan deals with the bigger picture more than the detail. Thus, it is enough to describe your overall strategy for the periods 7-9, without needing to go into too much detail about exactly what you plan to do with each brand in each period. However, if you think that using specific examples will reinforce certain arguments, or effectively illustrate particularly innovative ideas, please do provide detail. Nonetheless, it is important to remember that the concise communication of your intentions is the key, rather than an exhaustive account of every decision you plan to take. 7.34 Can I buy and sell brands or change other rules of the game in my Business Plan? No, you should remain within the parameters of the game outlined in the Manual and the FAQs. For example, if you would like to detail a strategy which involves acquiring and selling brands, this should only be briefly referred to, as part of a What if scenario. The main body of

your responses to the five sections of the Business Plan should only explore what you are able to do within the scope of the e-Strat rules. 8) THE STEP-BY-STEP GUIDE FOR THE CORRECT POSTAGE OF YOUR PAPER COPY BACK-UP BUSINESS PLAN Remember that :

Most importantly, you should have sent the electronic copy of your Business Plans before MARCH 10th AT 9:00 A.M. Paris time. This is the official version to be received with maximum priority.

The TSX file of your Round 6 decisions should be sent by electronic mail, and FedEx should be telephoned to send the back-up paper copy of your Business Plan, by MARCH 11th AT 12:00 MIDDAY Paris time.

1. Telephone your local FedEx office to find out their opening hours, and by what date and time you will need to call them to be sure to meet the Paris time deadline. Find the list of all the local FedEx call centre telephone numbers for all the countries with players in Round 6 attached. Look down the list for your country and dial the number.

2. Telephone your local FedEx office to post your paper back-up copy Business Plans by MARCH 11th AT 12:00 MIDDAY Paris time . Tell the FedEx call centre employee the address where they need come to pick up the envelope, and the following order number : 116040042, to cover transport costs.

3. Fill out your address in the senders part of the label (No.1, in the top left-hand corner, marked From); and the Total Weight (as marked in part 4 of the label). This should be the address where FedEx comes to collect your envelope that contains your Business Plan. If you do not have access to scales, most packages will weigh around 500 grams. The FedEx official form should then be replaced in its plastic holder on the outside of the envelope and resealed.

4. Send an e-mail to the FedEx headquarters, to the address: spetchikowsky@fedex.com. The e-mail should contain:

a) the reference number of your envelope, b) the order number given by your local FedEx office, c) your country of residence, d) your team name, e) and the date and time of your telephone call to your local FedEx office.

This will act as an extra precaution to ensure that LOral is aware that you have telephoned FedEx, and your envelope is soon to be collected.

9) YOUR LOCAL FEDEX CALL CENTRE NUMBER

COUNTRY TELEPHONE NUMBER TOWN OF DEPARTURE

Argentina 64-9-256-5300 BUENOS AIRES Australia 13-26-10 SYDNEY Brazil 0800 90 3333 RIO DE JANEIRO Canada 800 463-3339 MONTREAL Chile 115115751884 SANTIAGO China 800-8102338 PEKING Finland 80090092 HELSINKI Germany 0800 123 0800 FRANKFORT Greece 302109943100 ATHENS Hong-Kong 852-2730 3333 KOWLOON India 91 222570 8888/ 1600226161 BOMBAY Indonesia 6221-522 4636 JAKARTA Isral 972-357-777-88 JERUSALEM Italy 800123800 MILAN Japan 0120-003200 TOKYO Latvia 0-800-5300 RIGA Malaysia 1 800 88 6363 KUALA LUMPUR New Zealand 64-9-256-5300 JOHANNESBURG Norway 47-63-940300 OSLO Peru 115115751884 LIMA Poland 48 22 868 1710 WARSAWA Portugal 0800-244144 LISBON Russia 7-095-234-3400 MOSCOW Singapore 1 800-7432626 SINGAPORE South Africa 27 11 923 8000 JOHANNESBURG South Korea 080 023 8000 SEOUL Spain 900 100 871 MADRID Taiwan 0800-075-075 TAIPEI Thailand 662-367-3222 BANGKOK Turkey 90 212 549 0404 ISTAMBUL UK 0800 123 800 LONDON Uruguay 5982-628-0100 MONTEVIDEO USA 800 463-3339 NYC

Keep your fingers crossed that in a month and a half you will be flying on your way to Paris for the international final! Good luck!