SENSOR INDUSTRY OVERVIEW FOUNDATION BUSINESS SIMULATION FOUNDATION SIMULATION $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 Large • Customers (OEMs) need sensors for their products • Initially one segment, now breaking into two • Very different customer Size Low Tech demands between the two segments • Diversification in the use and utility of the sensors High Tech Small Slow Fast Performance The Marketplace • In our industry we track the changing customer demand on a perceptual map • Perceptual maps are used Low to plot customer Tech preferences for two High Tech 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 Ideal Spot is that Size Low point where, all Tech other things being equal, customer High Tech demand is highest Small Slow Fast Performance 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 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’ll pay more to get what I want.” “I like a pretty high reliability, but it’s not that important.” 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. 8000 “I see the entire market 7000 growing at around 14% 6000 or 15% per year. The 5000 High Tech market will be growing at a whopping 4000 20%.” 3000 2000 I hope those companies 1000 out there are ready for 0 that kind of expansion!” Year 1 Year 2 Year 3 Year 4 Year 5 Low Tech High Tech COMPANY OVERVIEW The Competition ANDREWS 6 Companies DIGBY $40 Million in Sales BALDWIN ERIE 1 Product Line CHESTER FERRIS Closed Marketplace 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! WELCOME TO YOUR NEW Functional Areas COMPANY! Research & Development 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 “Our product product meets customer straddles both demands market segments. It isn’t a great Create new products to meet low tech product, the changing marketplace or a great high tech one.” Marketing Set the price of our products in the marketplace Build customer awareness through promotion “Our product Establish a sales force and distribution isn’t priced optimally channels for either market. Set the sales forecast for our products And many of our customers don’t even know our Set Credit Policies AR/AP product exists.” Production Purchase machinery to automate our facilities Buy or sell capacity of product lines “We are paying too much for labor costs. Schedule production for each line Very soon we will run out Manage the majority of the companies of capacity to fixed assets meet demand.” Establish workforce compliment Finance Acquire capital to fund capital expansions Issue Stock Short Term Debt Issue Long Term Bonds “We have poor Issue dividend to our shareholders cash flow and substandard financial ratios. Balance our debt portfolio We have no Manage our Proforma financial policy statement.” 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 the Simulation 1. Analyst Report 2. Round Analysis 3. Balanced Scorecard Balanced scorecards allow companies to gauge their performance by assessing measures in four categories: 1. Financial– includes profitability, leverage and stock price; 2. Internal Business Process– ranks, among other measures, contribution margin, plant utilization and days of working capital; 3. Customer– examines the company's product line, including how well it satisfies buying criteria and awareness/ accessibility levels; 4. Learning and Growth– evaluates employee productivity. Good Luck and Enjoy!
Pages to are hidden for
"FOUNDATION BUSINESS SIMULATION"Please download to view full document