Welcome to the Foundation® Welcome to the Foundation® Business SimulationBusiness Simulation
School: CBUProfessor: Dr. Cayce Lawrence
Class: MGMT 498
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
SENSORSENSORINDUSTRYINDUSTRYOVERVIEWOVERVIEW
Customers (OEMs) need sensors for their products
Initially one segment, now breaking into two
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace
Low Tech
High Tech
In our industry we track the changing customer demand on a perceptual map
Over 8 years customers will demand Over 8 years customers will demand much faster and smaller sensorsmuch faster and smaller sensors
Market Segments will continue to diverge
LowTech
HighTech
The Marketplace
You’renot giving me what I want
“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.”
Low Tech Customers
And I’m not getting what I
want!
“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.”
High Tech Customers
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%.”
I hope those companies out there are ready for that kind of expansion!”
COMPANYCOMPANYOVERVIEWOVERVIEW
The Competition$40 Million in Sales
1 Product Line2 Segments
Closed Marketplace
6 Companies
Andrews Digby
Baldwin Erie
Chester Ferris
Welcome ToWelcome ToYour New Your New CompanyCompany
Students need to coordinate strategy and tactics across the following areas of their company:
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
““Our productsOur productsare not wellare not well
positioned inpositioned inthe marketplace.”the marketplace.”
R&DR&D
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
““Our productsOur productsare not pricedare not priced
optimally.optimally.
And many of ourAnd many of ourcustomers don’tcustomers don’teven know oureven know ourproduct exists.”product exists.”
MarketingMarketing
Purchase machinery to automate our Purchase machinery to automate our facilitiesfacilities
Buy or sell capacity of product linesBuy or sell capacity of product lines
Schedule production for each lineSchedule production for each line
Manage the majority of the companies Manage the majority of the companies fixed assetsfixed assets
Establish your workforce complementEstablish your workforce complement
““We are payingWe are payingtoo much fortoo much forlabor costs.labor costs.
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demand.”meet demand.”
ProductionProduction
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
““We have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratios.financial ratios.
We have noWe have nofinancial policyfinancial policy
statement.”statement.”
FinanceFinance
A great management tool driven by forecasts and projections. Allows “What if” Scenarios by the company.
Balance SheetBalance Sheet
Profit & LossProfit & Loss
Cash FlowCash Flow
Financial RatiosFinancial Ratios
ProformasProformas
Scoring MethodsScoring Methods
Success Measures:Success Measures:Select a minimum of two
criteria to be measured by:
oROEoROSoROAoCumulative ProfitoStock PriceoMarket CapitalizationoAsset TurnoveroMarket ShareoWeight each selection
Analyst ReportAnalyst Report
Running your CompanyRunning your Company
Establish business strategy for your companyEstablish business strategy for your company Analyze Foundation FastTrack to see industry resultsAnalyze Foundation FastTrack to see industry results Make tactical decisions across each functional area (aligned to strategy!)Make tactical decisions across each functional area (aligned to strategy!) Upload official results and confirm on the websiteUpload official results and confirm on the website Await results when Professor processesAwait results when Professor processes Rejoice in your superior capitalistic acumenRejoice in your superior capitalistic acumen Begin the process again by confirming alignment of your results with your Begin the process again by confirming alignment of your results with your
company’s strategic goal.company’s strategic goal.
Things to do on an Annual Basis
Good Luck and Enjoy!Good Luck and Enjoy!