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!