Course Intro & Overview University of Alaska-Anchorage * College of Business & Public Policy * Marketing Management Simulation * Course Intro & Overview

Professor Ed Forrest ejforrest@alaska.edu Telephone: (cell) 854-8784 Email: ejforrest@alaska.edu

Review & Begin Situation Analysis/ Strategic Plan Overview Course Organize Companies Review & Begin Situation Analysis/ Strategic Plan 1st set of Deliverables

Your “study” of business … piece-meal & in isolation!

Marketing R&D HR Production Finance

Lecture-Learning

Learning & Retention 5% 75+%

THE CAPSTONE SIMULATION Most widely used Business – Simulation Program in the World Adopted by major Fortune 500 companies ..General Motors, General Electric, Honeywell, Dell, John Deere, Citibank, Alcoa, BP, Allstate, Samsung, Goldman Sachs, Microsoft…

Strategic Thinking the ten big ideas Simulation proffers you opportunity to experience every key dimension of strategic thinking developed to date: Strategic Thinking the ten big ideas

Economic Environment No outside competitors or product substitutes Moderate growth, Low inflation, Averaged interest rates No outside competitors or product substitutes No economic downturns or other surprises ...

Sim designed this way for one reason: Whatever happens will be result of your-tactical execution of strategies… not by external factors!

You Da’ Boss … run a $100M business ….

Your Product Line: SENSORS:

YOUR JOB: Make every decision In every Functional Domain to create, produce & successfully market your products…

…success contingent on strategic integration of decisions across all domains:

You will Compete against other members of this class –running 5 other Corp’s …. Andrews Baldwin Chester Digby Erie Ferris

Plus-- You will Compete Against Everyone Else in the World ...your decisions & performance will be compared against 1000+ other teams competing at other universities… around the world

& How –to date-- have we fared in this World-Wide Competition??

Spring 2016 1st & 6th in ROA 3rd & 4th in profit; 8th & 9th cum profit, 5th ROE; 4th & 8th ROS; 5th in Stock Price 4th in Asset Turnover

#1 Fall 2014 Profit for Round 8 - Mean - $ 16,856,185 Top Ten Active Teams   Professor School/Course Simid Team Value 1 Edward Forrest University of Alaska-Anchorage - Main Management Simulation C65883 Chester $ 179,894,270 2 Montchai Pinitjitsamut Kasetsart University - Main AgStrategy1 C63414 Erie $ 150,718,034 3 Erin Nelson DePaul University - Main GSB 599 C66845 $ 117,376,727 4 Veer Mehta Great Lakes PGPM - Main Great Lakes PGPM C66539 $ 102,062,415 5 Michael Stoica Washburn University - Main Strategic Analysis C66272 Baldwin $ 100,603,573 6 Vasant Sivaraman S.P. Jain Institute of Management and Research - Main Decision Analysis (Business Simulation)- C C65322 $ 99,817,375 7 Igor Gvozdanovic Zagreb School of Economics and Management - Main Maximizing and Measuring Corporate Value_CAPSTONE C67613 Andrews $ 97,578,131 8 IIM Shillong - Main IIM Shillong C61259 $ 97,216,158 9 $ 96,520,602 10 Dharam Pal BIMTECH India - Main BIMTECH India C65546 $ 95,719,172

As Well As….previous “Top 10” Finishes : Spring : 2001- 5th Profit Spring : 2003- 9th Cum Profit Fall : 2005- 1st Profit Spring : 2006- 5th Cum Profit & 8th Profit Spring : 2007- 3rd Profit Fall : 2009- 1st Cum Profit & Stock Price Spring : 2010- 9th Asset Turnover; 1st, 6th & 8th ROE Fall : 2010- 6th Cum Profit Spring :2011- 3rd & 9th ROE; 8th ROS;  9th Cum Profit Fall : 2013-   4 in & # 10 in profit  #5 in Stock Price  #6 in ROE  #3 & #7 in ROA   #8 in Asset Turnover

1st Organize Companies Register @ http://ww2.capsim.com/login/

Leaders responsible for assuring strategy links values & vision ... Strategic Thinking- the ten big ideas Prof Thomas/ Penn St. able to predict final standings w/in 1 place 90% of time –after observing initial group interaction... 7. Corporate culture & 8. Leadership craft... Leaders responsible for assuring strategy links values & vision ...

You are now the Captain… ... How’s your Company doing?

The Big Picture Company Consumers Competitors Conditions Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment Company Consumers Competitors Conditions PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration Profits Mrkt Share ROA ROS ROE Asset T/O Stock Mrkt Cap

Where are we?

Strategic Plan Answers 3 Critical Q’s: 1.Where are we now? 2.Where do we want to go 3.How do we get there? = Situation Analysis

Assignment #1 Company Consumers Competitors Conditions Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment Assignment #1 Company Consumers Competitors Conditions PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration Profits Mrkt Share ROA ROS ROE Asset T/O Stock Mrkt Cap

Begin Situation-Analysis INTERNAL ENVIRONMENT Your Company's Strengths & Weaknesses: Consumer Company Competitors Conditions EXTERNAL ENVIRONMENT Opportunities & Threats

You are finding answers re: How the market is segmented & the relevant criteria that influence consumers use in their purchasing decisions The nature & magnitude of the competition Existing & emerging Economic & Technological trends that will impact demand, pricing, product design & positioning Consumers Competitors Conditions

Strategic Thinking- the ten big ideas Long-range planning- considers the external factors that affect success & integrates the various functional strategies. Strategic analysis Industry structure Market segmentation The lifecycle. SWOT analysis.

Market Segments: Big, old & cheap high-reliability & performance proven sensors w/ current tech advanced sensors w/ focus on small size cutting-edge in both size & performance

Consumer Buying Criteria

5 SEGMENTS

DEMAND ANALYSIS: How Many Sensors / Segment want to buy across next 8 years: Multiply the Round 0 demand by the growth rate and add the result to the Round 0 demand. This will give you a close approximation of Round 1 demand. Copy this number into the Demand cell for Round 1. If you prefer, you can use the following shortcut. For example, assume the Traditional growth rate is 9.2%. Convert the percentage to a decimal (9.2% = 0.092) and add 1 to it (1.092). Multiply the Round 0 Traditional demand by 1.092 then round to the nearest whole number. This will give you a close approximation of Total Industry Demand for Round 1.

SENSOR INDUSTRY ONGOING GROWTH ..the entire market growing at around 14 - 15% per year.

Complete Demand Analysis @ CapSim Intro |  Perceptual Map 1 |  Perceptual Map 2 |  Demand Analysis |  Capacity Analysis |  Margin Analysis |  Consumer Report

Drift Demo Cheaper too-$.50 drop in price/year Cheaper too-$.50 drop

MARKET SEGMENT DYNAMICS Intro |  Perceptual Map 1 |  Perceptual Map 2 |  Demand Analysis |  Capacity Analysis |  Margin Analysis |  Consumer Report Calculate each Segment's IDEAL SPOT LOCATION -- rounds 1 thru 8 ( @ Getting Started/ Complete Online Situation Analysis/ Perceptual Map 2)

MARKET SEGMENT VALUE Herein- is an example of relative dollar value of each segment at present (year 0) and 5 years out.

Calculate the relative $-value that each segment could/would generate for your company in Round 4 & 8... based on:  The Probable $-Contribution margin in each Segment  X  Your projected unit sales based on Fair Share (which is 1/6th of total Demand) 

Questions?