1. Team Andrews
(Opening Slide)
Annual Debriefing

2. Team Andrews
Intro to Simulation Recap
Simulation Recap

3. Team Introductions Sheri Kellnhofer Sarah Mock Barbara Oehler
Tonya Oertel
Lisa Riedel
Team Andrews discovered an element critical to our success right away: while the simulation seemed very overwhelming and quite frustrating at first, it ended up being very exciting and interesting, helping to fuel our thirst to win!

4. Net Profits
The Andrew’s Company took a healthy 2nd place in the competition and the company grew quite well from round one to round eight. One success measurement is how much net profit the company is making each year. As indicated in the graph below, the Andrews Company started with a net profit of $.17 million and grew to $24.0 at the end of round eight. Net profit is determined by subtracting interest, taxes, profit sharing, and other costs from the amount of money earned in sales. We attempted to keep low inventory levels and expenses, while increasing sales. We also tried to keep automation and capacity expenses in control by only spending money on them only when needed. Monitoring the products size, age, price, MTBF, and performance, while paying attention to customer demands as well as the competition, is vital to the success of your products and company.

5. Contribution Margin
Another performance measurement that is vital to the success of your company is the contribution margin. The contribution margin is calculated subtracting variable costs from your sales. A contribution margin of over 30% is a good benchmark. This means that for every dollar of sales, we would have $.30 to spend on other costs or as profit alone. Repositioning the product standards contribute to material costs, however, they also increase sales. The Andrews company struggled to achieve this goal at first, but by playing with items in Research and Development, such as size, performance, and reliability, we were able to achieve this goal, and very well indeed!

6. Stock Price
Another very important measurement, and in many cases the most important, is the value of the company’s stock. The owners of the company, the stockholders, determine how the company is performing in terms of cash, profit, sales, and stock price. When the Andrews Company needed to spend money for example, on automation and capacity, we needed to issue stock to be able to fund the long-term investment. Our stock price was not faring the very best initially, however at the end of round eight, we were doing very well, and stockholders were very happy. We only had one emergency loan in the beginning of the game, and we quickly discovered that did not impress the stockholders. At the end of round eight, our Earning Per Share was $7.70, which is calculated by dividing the net profit by the number of shares outstanding. Our stock price at the beginning of the game was $9.68 compared to $59.43 at the end of the game. In closing, we all learned very important information in terms of vocabulary as well as the important details that are vital to the success of a product and company. It isn’t as important to necessarily focus on sales and profit, but to always be watching the competition and most importantly, to what the customer demands are in a product. Making sure you have a well-rounded management staff, which works together, is just as important. There isn’t one particular department that is most important, however, having a team that is knowledgeable in Marketing, Production, TQM, Human Resources, Finance, and Research and Development, will lead to a successful company.

7. Team Andrews
Intro to Performance Analysis
Performance Analysis

8. Original Strategy
To successfully develop new products and/or improve existing products that will generate a net profit in order to expand the business operations and become a leader in the industry by gaining a competitive advantage over our competition.
Andrew’s Team original strategy was based on the Broad Cost Leader Strategy 10.3 from capsim.com. The team was able to accomplish our strategy by maintaining a presence in the low tech segment with our Able and Apple products and in high tech segment with our Adam product.
Our original strategy was to have a competitive advantage by offering products that were lower priced then others in the industry. However it became apparent in rd 4 that in order to reach a viable contribution margin and stay competitive with other companies that we would need to increase our prices and at the same time lower our cost of production. Although we did not have the lowest price in the low tech segment we did have one of the lower prices with a solid and wanted product by consumers.

9. Living Up To The Strategy and Mission Statement
Tactics
Marketing
Production
Financing
In Tactics for R& D we did keep the product Able from rd 1 all the way through rd 8 and was to be our low tech product but sold in both low tech and high tech segments. The product Adam was introduced in rd 2 and established Andrew into the high tech market as well. In rd 5 we introduced another low tech market product named Apple that may have been a good product except it seemed to compete along with our other low tech product Able.
Originally we wanted to have our prices lower than others in this industry however after deciding to increase the prices we still remained one of the company’s that maintained a viable market share that ranged from 18% to 21%. The management team was able to keep our products up to date by modifying specifications in pfrm, size and mtbf along side customer buying criteria while increasing automation to lower production costs with only moderate increases in pricing.
In Marketing we did not spend modestly but instead started aggressively in promoting and selling budgets for the products. Then once awareness and accessibility was at 100% for a particular product the budget was reduced, however if the awareness and accessibility went below 100% or significant modifications were made this budget was increased to maintain or reach a 100% rating for both.
Production tactics were to increase automation at a moderate rate and remained focused on increasing automation more in the low tech segment products than in the high tech segment products. We did not prefer second shift/overtime to capacity instead our focus was more on increasing capacity in order to keep overtime to a minimal.
Financing was primarily funded in the beginning through stock offerings then changed this to financing the investment activities through use of borrowing and issuing bonds. Once the company utilized more debt financing then equity financing the management team started to reduce the stockholders equity by retiring stocks that were currently outstanding. Dividends were paid at a minimal amount but increased over the 8 rounds to $1.00 at the end. The debt/equity ratio did not maintain a 2.0 to 3.0 % ratio rather the team maintained a ratio of 1.4 to 1.8 instead. Measuring performance was done in terms of market share, return on equity and net profit margins.

10. Market Segment Management
Low Tech Segment
Able
Apple
High Tech Segment
Adam
The Andrew’s Team had a presence in both low and high tech market segments however there were two products specified for the low tech segment. Since our “Able” product sold so well for us we decided to have another low tech product “Apple”. This product was started in rd 4 and completed in rd 5 with a release date of April 17, The management team realized at the end of rd 4 that due to not increasing capacity sufficiently this product could not be produced as we had planed therefore did not sell until rd 6 after management team increased capacity to 966 in rd 5. The “Apple” product was produced in rd 6 and sold to 9% of the low tech market segment. Further modifications to automation and capacity in rd 6 increased the sales for “Apple” to 10% in rd 7 and rd 8.
This product was similar to our “Able” product and was initially developed to replace this product however management decided to keep the Able product as it was still in great demand in the low tech segment and continued to sell in both segments. It was then decided that the “Apple” product would be modified slightly to more closely match one of the competitors specifications we were closely competing with in that segment as was done with the “Adam” product for the high tech segment and our main competition in that particular segment.
Management closely monitored the main competition in both segments and the pfmn, size, mtbf and age of all products making changes when necessary to remain more competitive and increase the appeal to consumers for our products over that of others in this industry.

11. Critical Turning Points
Round 7
Contribution Margins
Round 8
Stock Prices
One of the rounds that was critical in Andrew’s performance was at rd 7 when our contribution margin jumped from 36.9% to 46.3%, which was the most significant increase during the simulation. This was due to utilizing TQM more efficiently to significantly reduce our R&D cycle time by 30.30% and Administration costs by 58.54%. The other round that was significant to the company was during round 8 when our stock price increased by $17.54 and EPS increased to 7.70 per share. This was the highest increase for the Andrew team and was accomplished by retiring the max allowed in the simulation.
This is significant because investors look for the return they will receive from the investment when deciding on investment opportunities as well as how profitable the company is or will be in the future. As stock market price increases and profits increase along with EPS it has an influence on the investor’s decision to or not to invest in a particular company. The more profitable the company is and the higher the investors ROI, the more the company can raise by stock issues for improvements in the future. The stock price increased because our contribution margins and net profit increased in rd 8 by increasing automation and changes in TQM which lowered the costs of production and increased the company’s net profit along with lowering the number of stocks outstanding.

12. Future Potential Marketing Production Finance Research and Development
Marketing was a strong area for us. Our prices were great and our customers loved our products. Production was rocky at times. We had a few problems in how to build capacity and how to produce more. We got it together in the end I believe. Finance was solid all the way through other than the one emergency loan we took. She managed our stock and bond prices well and we had an excellent S and P rating. R&D had a slow start up but did well over all keeping up with the demand specs and what the customers wanted. We are very well off now for the future. I think we would have won with another couple good rounds under our belts.

13. Potential Room for Change
Customer Needs
Get more information on our customers’ needs and wants. I would keep some of our products, because all the way through our customers loved our products. I would keep tweaking them a bit after a couple rounds to bring down the age. I think that we would continue to improve over the next four years. If you look at our fast track we went up each round, and I believe it would continue.

14. Learning Points Focus Competition Caution Carry On Keep Your Eyes Open
Be Prepared
Know Your Customers
Know Your Market
To never take your eye off the ball
To make sure that you know what your competitors are doing
To keep in mind that this was fun and a game but not to make any ending decisions-keep going like you are never ending your business
Be aware that there are obstacles that are thrown at you
You just have to be prepared to deal with the problem
Keep your customers in mind
Always know your market and what they want. It will make you a much needed and a stronger business.

15. If We Had It To Do All Over Again…
Start Strong…
Done more to have a stronger start so we had a better foothold in the market throughout the whole simulation. I actually think that we did a great job. I think that I would have watched the competitors a little more to see where their market was standing.

16. Team Andrews
Intro to Team Performance
Team Performance

17. Strengths and Weaknesses
Individual Knowledge
Strength
Communication Barriers
Weakness
I believe that our teams’ steady upward progression in the simulation shows that we performed well together. Our strengths were varied. Our individual knowledge in our departments kept the simulation running well.
Our weaknesses lied in the fact that we had difficulty in the beginning finding a forum to communicate through. The chat room that we were supposed to use wasn’t functioning. There was an issue in finding an alternative way to meet. There was a miscommunication as to how we should keep each other posted, and along the way, we lost a team member.

18. Team Atmosphere The 3 C’s Communication Competitive Nature Compromise
It was a little bit of work for us to get on the same page in regards to a forum to communicate through. The chat room in BlackBoard didn’t work and as far as I know, was never fixed. We worked through it and found an alternative that worked for us to be able to communicate regularly and weekly to get our assignments completed.
I think the first thing that helped create our team atmosphere were our efforts to get together. It was through our difficulty that we developed the teamwork necessary to get the simulation completed. We had voices that were different; but like a chorus, it made a “melody” that worked out well in the end.
The second thing was the fact that we had a common goal in developing our products, giving them a competitive edge, increasing the profit margins, and making the company successful. We learned that we had to watch the customer specifications and the products that the other company’s sold and developed.
The third thing was compromise, we all came to the understanding that this was a group project and that everyone’s voices needed to be heard and realized. Concessions need to made to work the project to completion.