1. Junior Achievement-Titan Sponsored By:

2. THE AT&T YOUTH BUSINESS CHALLENGE & JA TITAN JA TITAN: We will discuss the following key topics related to running a business: o Price o Production o Research and Development (R&D) o Marketing o Capital Investment o Charitable Giving These concepts will be applied in the JA Titan business simulator – on line computer game. 1

3. THE AT&T YOUTH BUSINESS CHALLENGE & JA TITAN AT&T Youth Business Challenge A high school competition among 16 local high schools Team of four students from each school will use JA Titan business simulator to compete. Teacher will select your school’s team $10,000 in scholarships to be given out Saturday, December 6 th / UALR College of Business 8:30 – 9:00Registration 9:00 – 1:00Competition 2

4. PRICE ▲ Price is the money value of a good or service it’s what is charged for a product ▲ It is important to set a price that ensures a business will make, or at least not lose money ▲ Determine amount that will earn the most profit (calculate costs, rent, labor) 3

5. BREAK EVEN & PRODUCTION ▲ Break-even point: point at which income from sales equals costs. Below this point, a business shows a loss; above it, a profit ▲ Do not overprice products. If competitors’ prices are lower, they may have information that allows them to produce and market an item for less ▲ Production: process of changing resources into goods to satisfy the needs or wants of customers. It is a critical element in determining the success or failure of a business 4

6. COST & DIMINISHING RETURNS ▲ An important aspect of production is cost. Fixed costs are costs that remain the same no matter how much of a product is produced. (Ex. property mortgage or rent, taxes and insurance) ▲ Variable Costs are costs that change with the amount or speed of production (Ex. wages, power, material, machines, etc.) ▲ Law of Diminishing Returns occurs when increasing amounts of variable resources crowd fixed resources, resulting in reduced production 5

7. RESOURCES ▲ Resources are something of value that serves a need. ▲ Natural Resources are air, water, minerals or trees that are provided by nature ▲ Human Resources are people who do work that a business needs ▲ Capital Resources are facilities, tools, and machines used to make a product 6

8. R&D / PRODUCT LIFE CYCLE Research and Development is the investigation into developing new or improved products, processes and services Product life cycle progression of a product from it introduction into the market through it growth, maturity, and decline. Long term demand for a product depends less on salespeople and advertising than on the product itself. If customers no longer want your product or they find one that does a better job, they are unlikely to continue buying yours, even if you advertise more. To keep future orders high, businesses spend money on market research and product development to continually improve current products and develop new ones. 7

9. R&D What are some products that have been improved since they first came into existence? Computer printers (dot matrix to laser) Telephones (dial to push button) Music (cassettes to CDs to digital MP3) Car locks (keys to remote) What steps may a company have taken to improve it’s product? 8

10. MARKETING Marketing is the process of planning and executing the conception, pricing, distribution and promotion of a product or service – It is not enough to have a great product or service. It must be available widely, priced appropriately, and advertised well to make a profit. 9

11. F OUR P’ S OF M ARKETING ▲ Product- must be what consumers want, and it must have qualities and features expected ▲ Price- must cover costs of production and operations to reach the break-even point. While the price must rise above this point to make a profit. If prices are too high a product becomes unaffordable. ▲ Place- “location, location, location!” make a product readily accessible in a store or through the internet, on home-shopping networks, or in mail-order catalogs. ▲ Promotion- If consumers do not know about it, they will not buy it. 10

12. C APITAL INVESTMENT ▲ Investors can be stockholders, bondholders, venture capitalists of financial institutions. The money they provide is called Capital Investment, the money paid to purchase buildings, tools, and machines t create goods and services. ▲ Cash flow is the amount of money going into and out of a business during regular business operations 11

13. C HARITABLE GIVING Many businesses choose to be a part of their local community or make a larger impact through Charitable Giving, the voluntary effort to improve the well-being of humankind through money, material, or time. 12

14. APPLYING CONCEPTS Ideas and strategies to apply these concepts in the “real world” and at the AT&T Youth Business Challenge 13

15. STRATEGY Price Your businesses (in the Titan simulation) will produce and sell the same product (Holo-Generators) As you advance in the simulation additional product features can be added to your product How will you sell the most Holo-Generators? o Set the lowest price? What do you have to be careful of when trying to set the lowest price? o You need to make money or at least not lose money Why is it important not to overprice your product? o Less sales, competitor may be able to produce for a lower cost, inventory… 14

16. STRATEGY Production In the computer simulation your business will control only the production level (amount of units produced), not how different factors that control production are being used In the computer simulation, production is most efficient at 80 percent capacity. Please keep this in mind when making your production decisions. 15

17. STRATEGY Price and Production Low Price/High Volume Success may include lowering production costs Mid-range Price/Mid-range Volume Success may include balancing cost along with successful marketing High Price/Low Volume Success may include producing a higher quality product 16

18. STRATEGY Marketing Why would someone not by your hologram device? Price Availability Appearance Unfamiliarity Lack of understanding Features Marketing involves all the processes that occur between production and purchase. Marketing includes activities designed to increase sales of a good or service 17

19. STRATEGY Capital Investment Why might you want to increase capital investment for your Holo-Generator companies? The reason is to increase the factory’s capacity to produce more Holo-Generators. This means a need for more factories, tools, and equipment. 18

20. STRATEGY Long and Short Term Short-term refers to an action that takes place in a short period of time in the near future Long-term refers to a longer period of time before an action occurs Is the following a long-term, short-term or both? Raising or lowing the price o Both- effect on sales and revenue can be quick Buying or not buying new equipment o Long-term – takes time to purchase, install, test and train Increasing or decreasing production o Short-term, however if increase is large enough to require additional capital investment then it could be long-term Increasing or decreasing R&D o Long-term – takes time to design and put into production the changes to an existing product or production of a new product 19

21. THANK YOU http://titan.ja.org/ Go to this site to test these concepts and to practice for AT&T Youth Business Challenge. 20