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

Your Product Line: SENSORS:

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

…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 Semester

Over last 2 years… 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

…41 times across last 16 years… 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 …41 times across last 16 years…

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

You’re will be responsible for: As MARKETING MANAGER You’re will be responsible for: Planning, implementing & controlling your marketing strategy Target & Position Product Place Promotion Price

Marketing Managers become one-w/ Relationships betw Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand

MARKETING MANAGER SIMULATION SPREADSHEET

Set price of your products in the marketplace Set the sales forecast for our products Build customer awareness through promotion Establish a sales force and distribution channels Set Credit Policies AR/AP

Marketing also selects media vehicles & message weights AND determines composition of sales/distribution staff ..and allocation of their efforts by segment & Brand

As Production Mgr: Set automation levels Buy or sell capacity Schedule production Work overtime or automate

PRODUCTION MANAGER SIMULATION SPREADSHEET

Buy or sell capacity of product lines Schedule production for each line Buy or sell capacity of product lines Purchase machinery to automate our facilities Establish your workforce complement

As R&D Mgr Responsible for: Product Position Age & Quality Performance SIZE Responsible for: Product Position Age & Quality New product development High High Eight < < < Low Low One Quality Age Prdt Line

R&D MANAGER SIMULATION SPREADSHEET

Establish product positioning to meet customer demand Build quality & reliability (MTBF) into products Ensure age of product meets customer demands Create new products

As Human Resource Manager--Responsible for: Recruitment, Hiring, Training & Firing of all labor 2 groups: Assemblers Technicians Wages Benefits

SIMULATION SPREADSHEET

FINANCIAL MANAGER SIMULATION SPREADSHEET

As FINANCIAL MANAGER Acquire Capital Set Dividend Issue Stock Short Term Debt Issue Long Term Bonds Set Dividend Retire Long Term Bonds Retire Stock Responsible for Emergency Loans Big AL The Loan Shark

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 ...

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

You now run the Ship… ... How’s your Company doing?

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

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

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.

Find 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

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!

1st Deliverable

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)

Resources & Tutorials Capstone Courier- Video Tutorial-Parts 1 & 2  / Decision-Making Resource: Courier/ Results - across full 8 round simulation Help > On-Line Guide Help > Tutorials and Animated Demonstrations

Reports Industry Reports Industry Conditions Report Capstone® Courier   Debrief Reports Analyst Report Capstone® Debrief Rubric Latest Round Debrief Sim Results To Date Ethics Debrief Balanced Scorecard Balanced Scorecard Top Ten Round Analysis Final Score Relative Final Score Ranking   Industry Reports Industry Conditions Report Capstone® Courier Annual Reports Ethics Reports Financial Summaries  

Questions?