Harold Washington College Business Simulation Challenge Spring 2017 Bral Spight, Instructor Business Simulation Challenge Spring 2017 Unforgettable Business Learning © 2014 Capsim Management Simulations, Inc.

View Alternative Strategies Selectivity <=> Integration Why Simulate? View Alternative Strategies Risk-Free Compresses Time (1 Round=1Year) Enjoyable Selectivity <=> Integration © 2014 Capsim Management Simulations, Inc.

Objectives of the Foundation Simulation Demonstrate effectiveness of multi-discipline teams working together. Use strategic thinking. Test business acumen. Understand overall interaction and impact of various parts of a business on one another. Grow the awareness of competition. Take away practical skills in business management. © 2014 Capsim Management Simulations, Inc.

The Story: Background on the Companies FTC required Sensors Inc. to be broken up into separate companies: Andrews Baldwin Chester Digby Erie Ferris Started as a single corporation named Sensors, Inc. Sold sensors as main product Customers (OEMs) need sensors for their products to function across diverse applications Corporation was shut down by FTC due to monopolistic operations Two clear segments exist with varying demands Each team was charged to operate one of the companies and make it successful. $40 Mil in sales, 2 segments, 1 initial product, closed marketplace © 2014 Capsim Management Simulations, Inc.

The Marketplace: A Look into the Segments Perceptual map used to track changing consumer demands in size and performance Each year, consumers will expect faster (higher performance) and smaller products (lower size) This causes the segment circles to drift to the lower right constantly Market segments continue to diverge over time *Note the drift towards the lower right (expectations of faster and smaller products). Also note the divergence of the segments. Round 1 Consumer Segment Expectations Round 8 Consumer Segment Expectations © 2014 Capsim Management Simulations, Inc.

Low Tech Consumer Characteristics What the customers say Ideal Age: 3 years Ideal MTBF: 14000-20000 Prefer less cutting edge products (Bigger Size & Low Performance) Price sensitive. Prefer prices at lowest possible. Price Positioning Age Reliability I want to spend as little money as possible! I want them to have been around for a while…no beta testing! They have to be moderately reliable…but not enough to drive up the price! The technology doesn’t have to be cutting edge. © 2014 Capsim Management Simulations, Inc.

Low Tech Consumer Decision Making MTBF - Demand scores fall rapidly for products with MTBFs beneath the segment’s guidelines. Products with an MTBF 1,000 hours below the segment guideline lose 20% of their customer survey score. Products continue to lose approximately 20% of their customer survey score for every 1,000 hours below the guideline, on down to 4,999 hours, where the customer survey score is reduced by approximately 99%. At 5,000 hours below the range, demand for the product falls to zero. Positioning - The farther they are from the fine cut circle, the more the scores are reduced. Just beyond the fine cut, scores drop 1%. Halfway across the rough cut, scores drop 50%. Scores drop 99% for products that are almost to the edge of the rough cut. Pricing - Sensors priced $10.00 above or below the segment guidelines will not be considered for purchase. Those products fail the price rough cut. Sensors priced $1.00 above or below the segment guidelines lose about 10% of their customer survey score (orange lines, Figure 3.2). Sensors continue to lose approximately 10% of their customer survey score for each dollar above or below the guideline, on up to $9.99, where the score is reduced by approximately 99%. At $10.00 outside the range, demand for the product is zero. Age - The age criteria do not have a rough cut; a product will never be too young or too old to be considered for purchase. © 2014 Capsim Management Simulations, Inc.

High Tech Consumer Characteristics What the customers say Ideal Age: 0 years Ideal MTBF: 17000-23000 Needs Smaller and Faster Sensors Not price sensitive, willing to pay higher prices. Price Positioning Age Reliability Price is not an issue. I want the best sensors in the market! I want the newest sensors you have! We need the total package. High performance and small sensors for our products. Only the most cutting edge products will cut it! © 2014 Capsim Management Simulations, Inc.

High Tech Consumer Decision Making MTBF - Demand scores fall rapidly for products with MTBFs beneath the segment’s guidelines. Products with an MTBF 1,000 hours below the segment guideline lose 20% of their customer survey score. Products continue to lose approximately 20% of their customer survey score for every 1,000 hours below the guideline, on down to 4,999 hours, where the customer survey score is reduced by approximately 99%. At 5,000 hours below the range, demand for the product falls to zero. Positioning - The farther they are from the fine cut circle, the more the scores are reduced. Just beyond the fine cut, scores drop 1%. Halfway across the rough cut, scores drop 50%. Scores drop 99% for products that are almost to the edge of the rough cut. Pricing - Sensors priced $10.00 above or below the segment guidelines will not be considered for purchase. Those products fail the price rough cut. Sensors priced $1.00 above or below the segment guidelines lose about 10% of their customer survey score (orange lines, Figure 3.2). Sensors continue to lose approximately 10% of their customer survey score for each dollar above or below the guideline, on up to $9.99, where the score is reduced by approximately 99%. At $10.00 outside the range, demand for the product is zero. Age - The age criteria do not have a rough cut; a product will never be too young or too old to be considered for purchase. © 2014 Capsim Management Simulations, Inc.

Industry Segment Growth Recession Period Unforgettable Business Learning © 2014 Capsim Management Simulations, Inc.

R&D Decision Areas Marketing Production Finance Students need to coordinate strategy and tactics across the following areas of their company: R&D Marketing Production Finance Additional Modules HR TQM © 2014 Capsim Management Simulations, Inc.

How the Contest Was Evaluated Balanced Scorecard Improving company financial picture in preparation for final debrief Point System Gauges company performance based on four perspectives The Customer Internal Business Process Innovation and Learning Financials In the simulation, a Proforma Balanced Scorecard is available to project results for the upcoming year.

How HWC Compared to Last Year – Year 8 2015 2017 2016 20 Products Introduced 24 Products Introduced 26 Products Introduced

How HWC Compared to Last Year 2017 2017 Versus 2015/2016 Lower interest and registration Log-ins fell off slightly as some teams faced attrition Unlike last year teams focused on the same segments this year, compounding the issues with forecasting and dealing with uneven growth Despite that BSC Recap scores were roughly comparable and BSC aggregate scores actually increased The winning team did not have a walk this year, much more competitive! 2016 2015

How HWC Compared Nationally 2017 Versus Community Colleges Nationally 86 – 179 Community Colleges have attempted the simulation depending on rounds run Typical industry structure in real life Unclear how many incorporate a recession scenario into the simulation Inventory management and forecasting were key challenges to profitability nationally Despite the challenges typically 2-3 HWC teams recovered well enough to compare favorably with national norms by round 8 Other key indicators told a similar story: Stock Price ROS/ ROE/ ROA Asset Turnover

How HWC Compared Nationally 2017 Versus Community Colleges Nationally Comparison vs. 997 – 1972 four-year colleges that have attempted the simulation depending on rounds run Typical industry structure in real life Unclear how many incorporate a recession scenario into the simulation Inventory management and forecasting were key challenges to profitability nationally Despite the challenges typically 2-3 HWC teams performed well enough to compare favorably with national standards

APPENDIX SLIDES © 2011 Capsim Management Simulations, Inc. 8.23.11

How HWC Compared Nationally - 2016 2016 Versus Community Colleges Nationally 68 – 157 Community Colleges have attempted the simulation depending on rounds run Inventory management and forecasting were key challenges to profitability nationally Despite the challenges typically 2-3 HWC teams recovered well enough to compare favorably with national norms by round 8 HWC consistently placed 3 teams above the 50th percentile across all key indicators, not always the same 3! Other key indicators told a similar story: Cumulative Profit Stock Price ROS/ ROE/ ROA Asset Turnover