WELCOME TO CAPSTONE BUSINESS SIMULATION

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WELCOME TO CAPSTONE BUSINESS SIMULATION
Dr. Karl Knapp Assistant Professor of Business
Administration School of Business University of
Indianapolis Credit to Dr. Terry Shindler
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Objectives

• Demonstrate effectiveness of multi-discipline
  teams working together.
• Use strategic thinking to an advantage.
• Test your business acumen.
• Understand overall interaction and impact of
  various parts of a business on one another.
• Grow an awareness of competition.
• Take away practical know-how to improve the
  effectiveness of your business.

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Why Simulate

• Risk-Free Learning in a Safe Environment
• Develop and Test Alternative Strategies
• Enjoyable Way to Experience Conquering the
  Competition
• Compresses Time (1 Round1Year)
• Selectivity ltgt Integration

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SENSOR INDUSTRY OVERVIEW
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The Marketplace
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
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The Marketplace
In our industry we track the changing customer
demand on a perceptual map
Low Tech
Performance
Traditional
High Tech
Size
Over 7 years the customers will demand much
faster and smaller sensors
Market Segments will continue to diverge
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Low Tech Traditional Customers
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 doesnt have to be cutting edge.
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High Tech, Size Performance Customers
These sensors have to be small, like micro, and
fast
I need them to be right out of RD, Im talking
ZERO years on the market
Ill pay more to get what I want.
I like a pretty high reliability.
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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 will be
growing at a whopping 20. I hope those
companies out there are ready for that kind of
expansion!
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COMPANY OVERVIEW
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SEC ANNOUNCES BREAKUP OF MONOPLOY
FOR IMMEDIATE RELEASE
William Donaldson, Chairman of the SEC, took
dramatic action today by breaking up the
monolithic corporation Sensors, Inc. In a
statement to the press Chairman Donaldson
outlined the reason and the outcome of this
move. We cannot allow monopolies of this sort
to impact an entire industry! stated Donaldson.
The OEMs 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.
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The Competition
ANDREWS
DIGBY
6 Companies
100 Million in Sales
BALDWIN
ERIE
5 Product Lines
Closed Marketplace
CHESTER
FERRIS
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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 Knapp, 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 fully expect this new
group of Executives to lead us into the future!
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WELCOME TO YOUR NEW COMPANY!
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Functional Areas
Production
RD
Finance
Marketing
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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 product meets
  customer demands
• Create new products to meet the changing
  marketplace

Our products are not well positioned in the
marketplace.
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Marketing

• 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 products are not pricedoptimally. And many
of our customers dont even know our product
exists.
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Production

• Purchase machinery to automate our facilities
• Buy or sell capacity of product lines
• Schedule production for each line
• Manage the majority of the companies fixed
  assets
• Establish plant floor compliment

We are payingto much forlabor costs. Very
soon we will run outof capacity to meet demand.
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Finance

• 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 poorcash flow and substandardfinancial
ratios. We have nofinancial policystatement.
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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

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Scoring the Game

• Criteria you will be measured by
• ROE
• ROS
• ROA
• CUM PROFIT
• STOCK PRICE
• MARKET CAPITALIZATION
• ASSET TURNOVER
• MARKET SHARE

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Scoring the Game

• Assigned percentages for four criteria you will
  be measured by
• ROE (10)
• ROS
• ROA
• CUMULATIVE PROFITS (15)
• STOCK PRICE
• MARKET CAPITALIZATION (20)
• ASSET TURNOVER
• MARKET SHARE BY VOLUME (15)
• Weight each remaining criteria or increase of
  the selected criteria to comprise the remaining
  40.

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RUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASIS
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To Do List

• Establish a vision and business strategy for your
  company
• Analyze Capstone Courier to see industry results
• Make tactical decisions across each functional
  area (aligned to strategy!)
• Upload official results and confirm on the
  website
• Await results when Professor processes
• Rejoice in your superior capitalistic acumen
• Begin the process again by confirming alignment
  of your results with your companys strategic
  goals.

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Questions?