FOUNDATION BUSINESS SIMULATION

Demonstrate effectiveness of multi-discipline teams working together. Use strategic thinking to an advantage. Develop your business expertise. 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. Objectives

Risk Free View Alternative Strategies Enjoyable Compresses Time (1 Round = 1Year) Selectivity <> Integration Why Simulate

SENSOR INDUSTRY OVERVIEW SENSOR INDUSTRY OVERVIEW

Customers (OEMs) need sensors for their products Initially one segment, now breaking into two Very different customer demands between the two segments Diversification in the use and utility of the sensors High Tech Low Tech The Marketplace

Perceptual Map Large Small Slow Fast Size Performance

Perceptual Map Large Small Slow Fast Size Performance Defines two market segments High Tech Low Tech

Low Tech High Tech In our industry we track the changing customer demand on a perceptual map Over 8 years the customers will demand much faster and smaller sensors Market Segments will continue to diverge The Marketplace

Perceptual Map Large Small Slow Fast Size Performance Low Tech High Tech Spot Where Customer Demand Is Highest Each Segment has an Ideal Spot

You’re not 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’ll pay more to get what I want.” “I like a pretty high reliability, but it’s not that important.” High Tech Customers

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. “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!”

COMPANY OVERVIEW COMPANY OVERVIEW

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 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.”

6 Companies $40 Million in Sales 1 Product Line Closed Marketplace ANDREWS BALDWIN CHESTER DIGBY ERIE FERRIS The Competition

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 John Mathis, “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 1 st. I expect to see great things from this Executive Team!

WELCOME TO YOUR NEW COMPANY!

R&D Production Marketing Finance Functional Areas

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 Research & Development “Our product straddles both market segments. It isn’t a great low tech product, or a great high tech one.”

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 Marketing “Our product isn’t priced optimally for either market. And many of our customers don’t even know our product exists.”

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 workforce compliment Production “We are paying too much for labor costs. Very soon we will run out of capacity to meet demand.”

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 Finance “We have poor cash flow and substandard financial ratios. We have no financial policy statement.”

Balance Sheet Profit & Loss Cash Flow Financial Ratios A great management tool driven by forecasts and projections. Allows “What if” Scenarios by the company. Proformas

1. Analyst Report 2. Round Analysis 3. Success Measures Select a minimum of three criteria to be measured by: ROE ROS ROA CUM Profit Stock Price Market Capitalization Asset Turnover Market Share Weight each selection. Scoring the Game

To Do List Establish business strategy for your company Analyze Foundation FastTrack to see industry results Make tactical decisions across each functional area (aligned to strategy!) Upload official results and confirm on the website Await results Rejoice in your superior capitalistic acumen Begin the process again by confirming alignment of your results with your company’s strategic goal. Running Your Company

Good Luck and Enjoy!