Welcome to the Capstone® Welcome to the Capstone® Business Simulation Business Simulation

ObjectivesDemonstrate 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 five

Very different customer demands developing between the segments

Diversification in the use and utility of the sensors

The Marketplace

LowTech

Traditional

HighTech

Performance

Size

In our industry we track the changing customer demand on a perceptual map

Over 8 years customers will Over 8 years customers will demand much faster and smaller demand much faster and smaller sensorssensors

Market Segments will continue to diverge

The Marketplace

“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 End & Traditional Customers

You’renot 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 GROWTHSees 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!”

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Year2

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Year5

Year6

Year7

Year8

COMPANYCOMPANYOVERVIEWOVERVIEW

SEC ANNOUNCES BREAKUP OF MONOPOLYFOR 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 Lines5 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 ToWelcome ToYour New Your New CompanyCompany

Students need to coordinate strategy and tactics across the following areas of their company:

R&DR&D

ProductionProduction

FinanceFinance

MarketingMarketing

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

““Our productsOur productsare not wellare not well

positioned inpositioned inthe the

marketplace.”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 our

product exists.”product exists.”

MarketingMarketing

Purchase machinery to automate Purchase machinery to automate our facilitiesour facilities

Buy or sell capacity of product Buy or sell capacity of product lineslines

Schedule production for each Schedule production for each lineline

Manage the majority of the Manage the majority of the companies fixed assetscompanies fixed assets

Establish your workforce Establish your workforce complementcomplement

““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 companyAnalyze Capstone Courier to see industry resultsAnalyze Capstone Courier to see industry resultsMake tactical decisions across each functional area (aligned to Make tactical decisions across each functional area (aligned to strategy!)strategy!)Upload official results and confirm on the websiteUpload official results and confirm on the websiteAwait results when Professor processesAwait results when Professor processesRejoice in your superior capitalistic acumenRejoice in your superior capitalistic acumenBegin the process again by confirming alignment of your results Begin the process again by confirming alignment of your results with your company’s strategic goal.with your company’s strategic goal.

Things to do on an Annual Basis

Good Luck and Enjoy!Good Luck and Enjoy!