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Welcome to the Capstone® Business Simulation Objectives Demonstrate effectiveness of multi-discipline teams working together. Use strategic thinking. Test your business acumen. Understand overall interaction and impact of various parts of a business on one another. Grow the awareness of competition. Take away practical know-how to improve the effectiveness of your business. Why Simulate? Risk Free View Alternative Strategies Enjoyable Compresses Time (1 Round=1Year) Selectivity <=> Integration SENSOR INDUSTRY OVERVIEW The Marketplace Customers (OEMs) need sensors for their products Initially one segment, now breaking into five Very different customer demands developing between the segments Diversification in the use and utility of the sensors The Marketplace In Low Tech Performance Traditional Size High Tech our industry we track the changing customer demand on a perceptual map Over 8 years customers will demand much faster and smaller sensors Market Segments will continue to diverge Low End & Traditional Customers “I want these sensors to be cheap” “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.” You’re not giving me what I want High End, Size & Performance 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’m willing to pay more to get what I want.” “I like a pretty high reliability.” And I’m not getting what I want! SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTH Sees the next 8 years as consistent growth. All 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 alone will be growing at a whopping 16%.” 70000 60000 50000 40000 30000 I hope those companies out there are ready for that kind of expansion!” 20000 10000 0 Year Year Year Year Year Year Year Year 1 2 3 4 5 6 7 8 COMPANY OVERVIEW SEC ANNOUNCES BREAKUP OF MONOPOLY FOR IMMEDIATE RELEASE The SEC, took dramatic action today by breaking up the monolithic corporation Sensors, Inc. In a statement to the press, the SEC outlined the reason and the outcome of this move. “We cannot allow monopolies of this sort to impact an entire industry! The customers that utilize these sensors are being held hostage.” “Effective immediately Sensors, Inc will be dissolved into the Andrews, Baldwin, Chester, Digby, Erie and Ferris companies.” The Competition $100 Million in Sales 5 Product Lines 5 Segments Closed Marketplace 6 Companies Andrews Digby Baldwin Erie Chester 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 Dorado-Banacloche, “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! Welcome To Your New Company Students need to coordinate strategy and tactics across the following areas of their company: R&D Marketing Production Finance Additional Modules - HR - TQM - Advanced Marketing - Labor Negotiations 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 Create new products to meet the changing marketplace R&D “Our products are not well positioned in the marketplace.” Marketing “Our products are not priced optimally. And many of our customers don’t even know our product exists.” Set the price of our products in the marketplace Build customer awareness through promotion Establish a sales force and distribution channels Set the sales forecast for our products Set Credit Policies AR/AP Purchase machinery to automate our facilities Buy or sell capacity of product lines Schedule production for each line Manage the majority of the companies fixed assets Establish your workforce complement Production “We are paying too much for labor costs. Very soon we will run out of capacity to meet demand.” Finance “We have poor cash flow and substandard financial ratios. We have no financial policy statement.” Acquire capital to fund capital expansions •Issue Stock •Short Term Debt •Issue Long Term Bonds Issue dividend to our shareholders Balance our debt portfolio Manage our Proformas Proformas A great management tool driven by forecasts and projections. Allows “What if” Scenarios by the company. Balance Sheet Profit & Loss Cash Flow Financial Ratios Scoring Methods Success Measures: Select a minimum of two criteria to be measured by: oROE oROS oROA oCumulative Profit oStock Price oMarket Capitalization oAsset Turnover oMarket Share oWeight each selection Analyst Report Running your Company Things to do on an Annual Basis Establish business strategy for your company Analyze Capstone Courier to see industry results Make tactical decisions across each functional area (aligned to strategy!) Upload official results and confirm on the website Await results when Professor processes Rejoice in your superior capitalistic acumen Begin the process again by confirming alignment of your results with your company’s strategic goal. Good Luck and Enjoy!