Transcript FOUNDATION BUSINESS SIMULATION

SENSOR
INDUSTRY
OVERVIEW
FOUNDATION BUSINESS
SIMULATION
FOUNDATION SIMULATION
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$40 Million electronic sensor manufacturer.
 Sensors are devices that observe physical
conditions
 New sensor businesses are created every day in
diverse areas
Market dominated by six firms.
Sensors is a Business to Business market
Applications
The Marketplace
• Customers (OEMs) need
Large
sensors for their products
• Initially one segment, now
breaking into two
Size
• Very different customer
demands between the two
segments
Low Tech
• Diversification in the use
and utility of the sensors
High Tech
Small
Slow
Performance
Fast
The Marketplace
• In our industry we track the
changing customer demand on
a perceptual map
Low
Tech
High
Tech
• Perceptual maps are used
to plot customer
preferences for two
product characteristics
• Clusters show groups of
customers with similar
preferences
• Over time, the customers will
demand sensors that are faster
and smaller
• Market Segments will continue
to diverge
Each Segment has an Ideal Spot
Large
Perceptual Map
Low
Tech
Size
High Tech
Ideal Spot is that
point where, all
other things being
equal, customer
demand is highest
Small
Slow
Performance
Fast
Low Tech Customers
You’re
not giving
me what I
want
“I want these sensors to be inexpensive”
“I want them to have been around for a
while – no Beta Testing!”
“They have to be moderately reliable.”
“The technology doesn’t have to be
cutting edge.”
High Tech Customers
“These sensors have to be small, like
micro, and fast”
“I need them to be right out of R&D, I’m
talking ZERO years on the market”
“I’ll pay more to get what I want.”
“I like a pretty high reliability, but it’s
not that important.”
And I’m not
getting what I
want!
SENSOR INDUSTRY ANALYST PROJECT ONGOING
GROWTH
Sees the next 5 years as consistent growth. Both market segments
increase at a nice “clip,” according to market analyst.
“I see the entire market
growing at around 14%
or 15% per year. The
High Tech market will be
growing at a whopping
20%.”
8000
7000
6000
5000
4000
3000
2000
I hope those companies
out there are ready for
that kind of expansion!”
1000
0
Year 1
Year 2
Year 3
Low Tech
Year 4
High Tech
Year 5
The Competition
ANDREWS
BALDWIN
6 Companies
$40 Million in Sales
COMPANY
OVERVIEW
DIGBY
ERIE
1 Product Line
CHESTER
Closed Marketplace
FERRIS
SHAKE UP IN SENSOR INDUSTRY
Company Fires Management Team
After poor results, lackluster sales and angry customer reports, the
Chairman of the Board of Directors has announced the immediate
termination of the Management Team.
“This is a black day for our company,” said Chairman Patrick Nuss,
“We need to hire a dynamic leadership group who will be able to
take this company into the future!”
“Due to this immediate need I have hired the “Dream Team” to start
on January 1st. I expect to see great things from this Executive Team!
Functional Areas
WELCOME TO
YOUR NEW
COMPANY!
Research & Development
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Establish the specification of the
products to meet customer
demand
Build the quality and reliability
(MTBF) into the products
Ensure the perceived age of the
product meets customer
demands
“Our product
straddles both
market segments.
Create new products to meet
the changing marketplace
It isn’t a great
low tech product,
or a great high
tech one.”
Marketing
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“Our product
isn’t priced optimally
for either market.
And many of our
customers don’t
even know our
product exists.”
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Set the price of our products in the
marketplace
Build customer awareness through promotion
Establish a sales force and distribution
channels
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Set the sales forecast for our products
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Set Credit Policies AR/AP
Production
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“We are paying
too much for
labor costs.
Very soon we
will run out
of capacity to
meet demand.”
Purchase machinery to automate our
facilities
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Buy or sell capacity of product lines
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Schedule production for each line
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Manage the majority of the companies
fixed assets
Establish workforce compliment
Finance
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Acquire capital to fund capital
expansions
 Issue Stock
 Short Term Debt
 Issue Long Term Bonds
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Issue dividend to our shareholders
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Balance our debt portfolio
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Manage our Proforma
“We have poor
cash flow and
substandard
financial ratios.
We have no
financial policy
statement.”
Proformas
A great management tool driven by forecasts
and projections.
Allows “What if” Scenarios by the company.
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Balance Sheet
Profit & Loss
Cash Flow
Financial Ratios
Scoring the Simulation
1.
2.
3.
Analyst Report
Round Analysis
Balanced Scorecard
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Balanced scorecards allow companies
to gauge their performance by
assessing measures in four categories:
1.
2.
3.
4.
Financial– includes profitability,
leverage and stock price;
Internal Business Process– ranks,
among other measures, contribution
margin, plant utilization and days of
working capital;
Customer– examines the company's
product line, including how well it
satisfies buying criteria and
awareness/ accessibility levels;
Learning and Growth– evaluates
employee productivity.
Good Luck and Enjoy!