FOUNDATION BUSINESS SIMULATION

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FOUNDATION BUSINESS SIMULATION
Assessment Analysis
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Foundation Provides Several Tools to Assist in
Results Assessment Analysis

• Benchmarking Reports website only
• Round Analysis
• Analyst Report

The Round Analysis Analyst Report provide
coaching

• Industry Team Reports both website
  foundation.xls
• Foundation FastTrack
• Annual Reports

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Benchmarking Coaching
Round Analysis Report

• The Round Analysis Report uses five simple
  benchmarks for
• Profit
• Margins
• Emergency Loan status
• Inventory Management
• Stock Price
• Students are quickly pointed towards potential
  problem areas.

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Benchmarking Coaching

• Comprehensive scoring for each team for every
  round of competition.
• The Analyst provides detailed coaching on each of
  ten categories
• Margins
• Profits
• Emergency Loans
• Working Capital
• Market Share
• Forecasting
• Customer Satisfaction
• Productivity
• Financial Structure
• Wealth Creation

Analyst Report
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Foundation FastTrack
Page 1- Front Page

• Page 1 and Page 2 report the big picture
  headline-grabbers -- Sales, Profits, Margins,
  Market Share, Return Measures, Stock Prices,
  Earnings Per Share, etc.
• What constitutes good or bad results? Benchmarks
  are provided on the website in the Analyst
  Report, and the Round Analysis report.
• Compare your results against competitors in the
  FastTrack. Remember that overall customer demand
  is growing at somewhere around 14 a year, which
  means Sales -- and Profits -- should likewise be
  on the increase.

Pages 1 2 report what happened.
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Foundation FastTrack
Page 2 - Stocks Bonds

• Closing Stock Price
• Earnings Per Share (EPS)
• Market Capitalization
• Dividend Payouts
• Bond Rating (SP)
• SP rating of BBB and higher - considered a good
  credit risk
• BB and below is junk bond rating
• The Analyst Report on the website (Wealth
  Creation category) provides extensive coverage of
  Stock Price issues

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Foundation FastTrack

• Cash Flow Statement helps diagnose Emergency
  Loans and analyze use of working capital. Numbers
  in parenthesis? Money is being sucked out of the
  cash account. Excessive inventory and un-funded
  Plant Equipment investments are two common
  causes for Emergency Loans.
• Balance Sheet Survey what does a large value
  for the Plant Equipment line on the Balance
  Sheet Survey suggest? Either that team wants to
  be a cost leader (automation increases/capacity
  expansions), or they have added new products.
• Income Statement Survey allows teams to compare
  cost structures and RD/Marketing expense return
  rates against competitors. More detailed Income
  Statement provided as part of teams private
  Annual Reports.

Page 3 Financial Analysis
Pages 3-9 illustrate why.
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Foundation FastTrack

• Assess plant utilization, inventory management,
  analyze competitors plant automation and capacity
  changes, and compare unit sales figures.
• Good number for plant utilization? At least 100,
  150 to 180 is better (as long as it doesn't end
  up in a warehouse as excess inventory).
• Ideal inventory position? One unit in each line -
  rarely happens. About 10 worth of sales is a
  good benchmark for inventory when developing
  sales forecasts. If you sold 1M units, about 100K
  in inventory would be fine.
• Stockouts are costly 1) The SGA costs have
  already been recovered, so missed sales would
  have gone more heavily towards profit
  2) Competitors often pick up additional
  sales as a result of your stockout.

Page 4 Production Analysis
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Foundation FastTrack
Pages 5-6 Market Segment Analysis

• Assess market penetration, effectiveness of
  Marketing expenses, competitor RD revision
  dates.
• Get a consumers perspective on products in the
  market (December Customer Survey).
• "Statistics" box - was all customer demand met?
  If not, how much missed opportunity was left on
  the table? (Unmet demand doesn't carry forward to
  the next round).
• Market Share Actual vs. Potential graph shows
  the impact of stockouts.
• Detailed product comparison

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Foundation FastTrack
Page 7 Market Share Report

• Quick reference for checking whether market
  customer demand was met (chart on the left), and
  assessing where each team is placing emphasis
  (chart on the right).

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Foundation FastTrack
Page 8 Perceptual Map

• Shows where all products are positioned at the
  end of the round. The more products, the more
  intense the competition.
• Products positioned outside the parameters of
  all segments will generate zero customer demand.
• Products positioned outside the solid line, but
  inside the dotted line, will generate decreased
  demand within that segment.
• Products that straddle the fence between
  segments may be sofa-beds not great sofas, not
  great beds.
• Products positioned at the trailing-edge of any
  given segment will have lower material costs than
  they would have at the leading-edge of the
  segment (given an identical MTBF rating).

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Annual Reports
Company Annual Reports are provided on the
website and in the foundation.xls spreadsheet
program
Balance Sheet Cash Flow Statement Income
Statement Same Format as Proforma Reports
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Annual Reports
Income Statement
Detailed by product An indispensable tool for all
Managers Compare to Proforma Income Statement to
identify tactical mistakes