1. S I M U L A T I O N M A R K E T I N G M G T. University of Alaska-Anchorage * College of Business & Public Policy * Marketing Management Simulation * Course Intro & Overview

2. S I M U L A T I O N M A R K E T I N G M G T. Professor Ed Forrest Telephone : –(O)786-4161 –(c) 854-8784 Email : –EdwardF@cbpp.uaa.alaska.eduEdwardF@cbpp.uaa.alaska.edu W3site : http://www.cbpp.uaa.alaska.edu/afef/ http://www.cbpp.uaa.alaska.edu/afef/

3. BA343 Principles of Marketing BA460 Marketing Management BA447 International Marketing BA635 Current Marketing Issues Seminar BA686 Management Simulation Vita/Resume´Vita/Resume´ * MBA ProgramMBA Program

4. By End of this Course you will have : Conducted a situational analysis of consumers, competitor & market conditions Conducted a situational analysis of consumers, competitor & market conditions Developed & implemented strategies & plans to enhance organizational performance Developed & implemented strategies & plans to enhance organizational performance Selected—according to operant competitive strategy-- appropriate performance assessment measures Selected—according to operant competitive strategy-- appropriate performance assessment measures Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated, implemented & assessed effectiveness of distinct competitive strategies Formulated, implemented & assessed effectiveness of distinct competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Conducted a situational analysis of consumers, competitor & market conditions Conducted a situational analysis of consumers, competitor & market conditions Developed & implemented strategies & plans to enhance organizational performance Developed & implemented strategies & plans to enhance organizational performance Selected—according to operant competitive strategy-- appropriate performance assessment measures Selected—according to operant competitive strategy-- appropriate performance assessment measures Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated a business plan based on the results of a market situation & SWOT analysis. Formulated, implemented & assessed effectiveness of distinct competitive strategies Formulated, implemented & assessed effectiveness of distinct competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies Determined & implemented specific tactical decisions that demonstrate functional alignment w/ selected competitive strategies

5. S I M U L A T I O N M A R K E T I N G M G T. Test your business acumen “Sharpen” Strategic Development & Mgt Skills Demonstrate the criticality of functional integration to profitability/success…. Test your business acumen “Sharpen” Strategic Development & Mgt Skills Demonstrate the criticality of functional integration to profitability/success…. Overarching Objectives: Finance Production HR R&D Marketing

6. S I M U L A T I O N M A R K E T I N G M G T. your “study” of business … piece-meal and in isolation!

7. S I M U L A T I O N M A R K E T I N G M G T. Ultimately- Real Learning Occurs Not from parroting information gleaned from books & lectures! ….But from the consequences of your own actions

8. S I M U L A T I O N M A R K E T I N G M G T. Course Format

9. S I M U L A T I O N M A R K E T I N G M G T. Lecture- Learning ‘ Hear-Facts Store Facts Spit facts ‘ Hear-Facts Store Facts Spit facts Superficial short-term knowledge Superficial short-term knowledge

10. S I M U L A T I O N M A R K E T I N G M G T.

11. Strategic Thinking- the ten big ideas Strategic Thinking- the ten big ideasStrategic ThinkingStrategic Thinking Strategic Thinking- the ten big ideas Strategic Thinking- the ten big ideasStrategic ThinkingStrategic Thinking Simulation proffers you opportunity to experience every key aspect of strategic thinking developed in past 100 years

12. S I M U L A T I O N M A R K E T I N G M G T. Strategic thinking: the ten big ideas 1.Long-range planning- considers the external factors that affect success & integrates the various functional strategies. 2.Strategic analysis –Market segmentation –The lifecycle. –SWOT analysis. –Industry structure.

13. S I M U L A T I O N M A R K E T I N G M G T. Strategic thinking: the ten big ideas 3.Quality –Total quality management (TQM) and business process reengineering (BPR) 4. Portfolio theory- –GE-(three-by-three matrix, using business strength & market attractiveness as variables). –The Boston Consulting Group (BCG) introduced its two-by-two matrix-(invest in the stars, divest the dogs, milk the cows, and solve the question marks)

14. S I M U L A T I O N M A R K E T I N G M G T. Strategic thinking: the ten big ideas 5. Scenario planning - formulation of alternative possible futures for firm & its environment as means of exploring utility of different strategies. 6. Resource allocation models – Porter: strategic choices are set of basic generic strategies (low cost, differentiation, market focus)

15. S I M U L A T I O N M A R K E T I N G M G T. Strategic thinking: the ten big ideas 7. Corporate culture- corporate behavior, and in particular the resistance of the organization to change, is inevitably a function of its culture (Prof Thomas/ Penn St. able to predict final standings w/in 1 place 90% of time –after observing initial group interaction) 8. Leadership craft- Leaders responsible for assuring strategy links values of firm with its vision & that firm can successfully implement strategy thru effective HR mgt.

16. S I M U L A T I O N M A R K E T I N G M G T. Strategic thinking: the ten big ideas 9. Metrics that matter DuPont formula = concept of return on investment Balanced score card- a system that attempts to balance financial performance w/ consideration of customer's perspective, learning & growth perspective, & internal business process perspective 10. Strategic organization design - The strategic business unit (SBU) -- broadly defined as sets of related products & services marketed to similar customers against common competitors

17. S I M U L A T I O N M A R K E T I N G M G T. Looking back & ahead For years, corporate planners have based strategic choices on some combo of 3 beliefs: 1.the validity of their intuition 2.the wisdom of their peers 3.the robustness of last's year's strategy Recent Exception – “The promising attempts to apply scientific method to strategy formulation, ---notably the profit impact of market strategy (PIMS) research”

18. S I M U L A T I O N M A R K E T I N G M G T. Profit Impact of Market Strategy (PIMS) 1 st significant attempt to study correlation betw: strategic position & financial performance –Suggests: specific characteristics of an industry less important than shared strategic attributes, such as market share, quality, and investment intensity

19. “Generically, profits are driven by the company’s asset base and by its efficiency working those assets”

20. S I M U L A T I O N M A R K E T I N G M G T.

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

22. Your Product Line: SENSORS:

23. S I M U L A T I O N M A R K E T I N G M G T. Concepts & Processes Equally Applicable If Simulation Service Based : Instead of Sensors Sold-- Units of Production= –Customers served –Seats sold –Rooms rented –Patients seen –Members joined –Donations raised

24. Analyze the market, consumer, your company & competitive situationAnalyze the market, consumer, your company & competitive situation Discern & implement your corp. growth & competitive strategiesDiscern & implement your corp. growth & competitive strategies Must make & integrate decisions in & across all functional areas (Marketing, Research & Development, Production, Human Resources and Finance).Must make & integrate decisions in & across all functional areas (Marketing, Research & Development, Production, Human Resources and Finance). YOU…

25. YOUR JOB Take on key management positions w/in your corporationTake on key management positions w/in your corporation Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…

26. You will Compete against other members of this class –running 5 other Corp’s …. AndrewsAndrews BaldwinBaldwin ChesterChester DigbyDigby ErieErie FerrisFerris

27. Plus… your decisions & business performance will be compared against 1000+ other teams competing at other universities… around the world

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

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

30. 2001 Top Ten Teams, World-Wide, for Round 8 Top Ten Teams, World-Wide, for Round 8 by success measurement There are currently 940 active teams that have played Round 8. For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then 5.0% Asset Turnover less then 8.0 Profit for Round 8 Round 8 - Mean - $ 25,324,003 Top Ten Teams, World-Wide, for Round 8 by success measurement There are currently 940 active teams that have played Round 8. For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then 5.0% Asset Turnover less then 8.0 Profit for Round 8 Round 8 - Mean - $ 25,324,003 Top Ten Active Teams Professor School/Course Simid Team Value Top Ten Active Teams Professor School/Course Simid Team Value 1 Dr. Minu Afza College of Business - Bloomsburg University 93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245 2 Mr. Bill Gardner Penn State University -Fayette Campus Contemporary Business Seminar CAP1513 Andrews $ 193,853,427 3 Dawn DeTienne University of Colorado at Boulder Senior Seminar CAP1656 Andrews $ 184,258,599 4 Prof. Howard Feldman University of Portland Managerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390 5 Dr. Ed Forrest University of Alaska Marketing Management CAP1611 Baldwin $ 163,281,864 6 Dr. Eric Wiseman University of Colorado at Boulder Business Senior Seminar CAP1818 Chester $ 157,930,382 7 Dr. Murrow Drury College Strategy and Policy Formulation CAP1838 Erie $ 149,235,238 8 Dr. Pettus Millikin University Business Policy CAP1748 Baldwin $ 147,967,873 9 Doug Mayer Hartwick College Management VII-secA CAP1811 Digby $ 137,339,216 10 Dr. Bruce A. Schooling Point Loma Nazarene University Strategic Management CAP1794 Digby $ 121,2891 Dr. Minu Afza College of Business - Bloomsburg University 93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245 2 Mr. Bill Gardner Penn State University -Fayette Campus Contemporary Business Seminar CAP1513 Andrews $ 193,853,427 3 Dawn DeTienne University of Colorado at Boulder Senior Seminar CAP1656 Andrews $ 184,258,599 4 Prof. Howard Feldman University of Portland Managerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390 5 Dr. Ed Forrest University of Alaska Marketing Management CAP1611 Baldwin $ 163,281,864 6 Dr. Eric Wiseman University of Colorado at Boulder Business Senior Seminar CAP1818 Chester $ 157,930,382 7 Dr. Murrow Drury College Strategy and Policy Formulation CAP1838 Erie $ 149,235,238 8 Dr. Pettus Millikin University Business Policy CAP1748 Baldwin $ 147,967,873 9 Doug Mayer Hartwick College Management VII-secA CAP1811 Digby $ 137,339,216 10 Dr. Bruce A. Schooling Point Loma Nazarene University Strategic Management CAP1794 Digby $ 121,289 5 th

31. 2003 Top Ten Teams, World-Wide, for Round 8 For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0 Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: AllFor a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0 Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: All URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Date/Time: 04/12/2003 10:07:35 eNote:URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Date/Time: 04/12/2003 10:07:35 eNote:http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Text: Cumulative Profit for Round 8 - Mean - $ 125,355,000 Top Ten Active Teams Professor School/Course Simid Team Value 1 natalie marsh Strayer University Business Policy & Strategic Planning C4779 Baldwin $ 459,411,986 2 John Hall University of Florida Global Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583 3 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Erie $ 382,697,422 4 Peter Stanwick Auburn University Strategic Management C5095 Chester $ 353,185,127 5 John Pearce Villanova University Policy Administration C5033 Ferris $ 348,535,130 6 Gavin Fox Georgia Southern University BUSINESS SIMULATION C5041 Digby $ 343,761,703 7 Shirley Schooley Birmingham-Southern College Strategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002 8 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Ferris $ 339,568,171 9 Edward Forrest University of Alaska Marketing Management C4806 Chester $ 333,620,198 10 Donald Kreps Kutztown University mba capstone C4797 Digby $ 327,188,363Text: Cumulative Profit for Round 8 - Mean - $ 125,355,000 Top Ten Active Teams Professor School/Course Simid Team Value 1 natalie marsh Strayer University Business Policy & Strategic Planning C4779 Baldwin $ 459,411,986 2 John Hall University of Florida Global Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583 3 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Erie $ 382,697,422 4 Peter Stanwick Auburn University Strategic Management C5095 Chester $ 353,185,127 5 John Pearce Villanova University Policy Administration C5033 Ferris $ 348,535,130 6 Gavin Fox Georgia Southern University BUSINESS SIMULATION C5041 Digby $ 343,761,703 7 Shirley Schooley Birmingham-Southern College Strategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002 8 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Ferris $ 339,568,171 9 Edward Forrest University of Alaska Marketing Management C4806 Chester $ 333,620,198 10 Donald Kreps Kutztown University mba capstone C4797 Digby $ 327,188,363 9 th

32. 2005 - # 1

33. 2006- 5 th

34. and 8 th

35. 2007 3 rd

36. ROE for Round 8 - Mean - 15.62% Top Ten Active Teams ProfessorSchool/CourseSimidTeamValue 1Edward ForrestManagement SimulationC28608189.60% 2Steven WilliamsonAdv Strategic Mngmt & Business PolicyC28387Andrews104.15% 3Mike PettusCapstone SimulationC30105Andrews70.64% 4Dharam Pal IIM EGMP-11 IIMBC2869358.48% 5Edward ForrestManagement SimulationC2860853.79% 6k c oshaughnessybusiness strategyC2928650.12% 7Ray GrubbsStrategic Management: Concepts & ApplicationsC2844149.15% 8Edward ForrestManagement SimulationC3006148.65% 9Mike PettusCapstone SimulationC30105Digby48.50% 10Tracy StewartCapstoneC28364Andrews46.10% Your Industry C28608 was ranked:   completing round 8  by Apr 20, 2009. 1 st, 5 th & 8 th in ROE

38. Marketing Management Simulation

39. Today- we will : 1. Step back & take a look at the “Big Picture” 2. Overview the simulation 3. Incorporate & begin analysis of “your situation…”

40. The Big Picture C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

41. Initial Weeks Mirror Process of Planning & Evaluating Strategy Functional Planning: Marketing Production R&D, HR Finance Research: Situation & SWOT Analysis Strategic Planning Growth, Competitive, positioning Strategies PerformanceAssessment: Success Measures & Financial Ratios

42. C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Step#1 Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

43. Company Competitors Economic Analysis (costs, profitability) Company Fit (strengths, weaknesses, resources, culture, goals) Economic Analysis (costs, profitability) Company Fit (strengths, weaknesses, resources, culture, goals) Customers Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Conditions Political Economic Socio-cultural Technological Political Economic Socio-cultural Technological Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions) Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions)

44. SWOT Analysis Identifies: ©South-Western College Publishing S S W W O O T T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External

45. C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Step#2 Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

46. The Options: To Grow : Expand in current and/or new markets with current and/or new Products To Grow : Expand in current and/or new markets with current and/or new Products To Compete : To Compete : Proffer cheaper and/or better productsProffer cheaper and/or better products Focus on all or selected segments of the marketFocus on all or selected segments of the market To Grow : Expand in current and/or new markets with current and/or new Products To Grow : Expand in current and/or new markets with current and/or new Products To Compete : To Compete : Proffer cheaper and/or better productsProffer cheaper and/or better products Focus on all or selected segments of the marketFocus on all or selected segments of the market

47. Market Penetration Product Development Market Development PresentNew P R O D U C T New M A R K E T Present Growth StrategiesDiversification

48. Competitive Strategies Competitive Strategies

49. C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Step#3 Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

50. Need to Align Your Functional Strategies Cross- Functional Integration & Alignment

51. Only when— All Decisions made by & within all functional areas are in sync w/ one another… Only when— All Decisions made by & within all functional areas are in sync w/ one another… Execute & Achieve your Growth & Competitive Strategy-- MARKETING PRODUCTION FINANC E

52. Functional Alignment: In Achieving Cost Efficiency

53. Functional Alignment: Implementing Differentiation Strategy

54. C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Step#4 Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

55. S I M U L A T I O N M A R K E T I N G M G T. 1) Cumulative Profits 2) Market Share 3) ROA 4) ROS 5) ROE 6) Asset Turnover 7) Stock Price 8) Market Capitalization Capstone's Performance Measures Capstone's Performance Measures

57. Moving on : 1. Step back & take a look at the “Big Picture” 2. Overview the simulation 3. Incorporate & begin analysis of “your situation…”

58. SHAKE UP IN SENSOR INDUSTRY Management Teams Fired “After poor results, lackluster sales and angry customer reports……….. New dynamic leadership teams needed to take industry into the future!”

59. S I M U L A T I O N M A N A G E M E N T YOUR HIRED!

60. S I M U L A T I O N M A N A G E M E N T C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST 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 are responsible for:

61. M A N A G E M E N T S I M U L A T I O N Your duties include ALL those of the CEO – … define the mission-vision & strategic direction of your company

62. M A N A G E M E N T S I M U L A T I O N …and serve as manager of every functional domain Marketing Production Finance R&D HR

63. M A N A G E M E N T S I M U L A T I O N You’re will be responsible for: Planning, implementing & controlling your marketing strategy Target & Position ProductPlace Promotion Price As MARKETING MANAGER

64. M A N A G E M E N T S I M U L A T I O N Marketing Managers become one-w/ Relationships betw Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand

65. MARKETING MANAGER SIMULATION SPREADSHEET

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

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

68. M A N A G E M E N T S I M U L A T I O N As Production Mgr: Set automation levels Set automation levels Buy or sell capacity Buy or sell capacity Schedule production Schedule production Work overtime or automate Work overtime or automate

69. PRODUCTION MANAGER SIMULATION SPREADSHEET

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

71. M A N A G E M E N T S I M U L A T I O N Responsible for: Product Position Product Position Age & Quality Age & Quality New product development New product development As R&D Mgr Quality Age Prdt Line High High Eight Low Low One < < < SIZE A B Performance

72. R&D MANAGER SIMULATION SPREADSHEET

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

74. M A R K E T I N G M A N A G E M E N T As Human Resource Manager--Responsible for: Recruitment, Hiring, Training & Firing of all labor Recruitment, Hiring, Training & Firing of all labor 2 groups: 2 groups: – Assemblers – Technicians Wages Wages Benefits Benefits

75. SIMULATION SPREADSHEET

78. M A N A G E M E N T S I M U L A T I O N Acquire Capital Acquire Capital –Issue Stock –Short Term Debt –Issue Long Term Bonds Set Dividend Set Dividend Retire Long Term Bonds Retire Long Term Bonds Retire Stock Retire Stock Responsible for Emergency LoansResponsible for Emergency Loans Big AL The Loan Shark As FINANCIAL MANAGER

79. FINANCIAL MANAGER SIMULATION SPREADSHEET

81. Finally : 1. Step back & take a look at the “Big Picture” 2. Overview the simulation 3. Incorporate & begin analysis of “your situation…”

82. 1 st Reorganize Company: & allocate responsibilities: Marketing Production R&D Finance HR

83. 2 Co-CEO’s 2 Co-CEO’s

84. S I M U L A T I O N M A R K E T I N G M G T. C onsumer C ompany C ompetitors C onditions Begin Situation-Analysis Situation Analysis The SituationThe Situation-

85. Specifically…determine  Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…  How market is segmented; Level of & relevant factors that influence consumer demand & purchasing decisions  Your competitors relative market positions..  Macro-E considerations especially technological trends … C onsumer C ompany C ompetitors C onditions

86. Environmental Scanning 1 st part Situation Analysis is Environmental Scanning Environmental Scanning= The process of identifying the nature & magnitude of Uncontrollable forces in the external (macro) environment exerting significant influence on your strategies…

87. Social Technological Political Economic Competitors Demographic Psychographic trends EXTERNAL-UNCONTROLLABLE FORCES: EXTERNAL-UNCONTROLLABLE FORCES: Impacting Strategies Regulatory Technological Consumers

88. Your company & all competitors generating ~$100 million in sales. There no outside competitors or product substitutes. A favorable economic environment features moderate growth, low inflation, historically averaged interest rates No economic downturns or other surprises expected. At Outset your sim-environment a bit more benign than real world

89. ….want all strategic options available to you. That way- whatever happens as market evolves will be driven by the tactical execution of strategies, not by external factors. Sim designed this way for one reason

90. Opportunities & Threats: Ascertain how the market is organized, operates, influenced & evolving The MarketPlaceThe MarketPlace-

91. The Marketplace Initially one segment, now breaking into five Very different customer demands developing between the segments Diversification in the use and utility of the sensors

93. 5 4 2 3 1 Performance PERCEPTUAL MAP Drift Demonstration

94. PERCEPTUAL MAP Plot the drift of each segment circle as simulation proceeds thru 8 rounds ("Fine Cut" circles have a radius of 2.5 units, "Rough Cut" circles have a radius of 4 units)

95. Can track changing customer demand… Over next 8 years -- customers will demand faster – smaller-cheaper sensors Accordingly-- Market Segments will diverge Low Tech Traditional High Tech Performance Size

96. Your Consumers

97. Specifically…determine  Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…  How market is segmented; Level of & relevant factors that influence consumer demand & purchasing decisions  Your competitors relative market positions..  Macro-E considerations especially technological trends … C onsumer C ompany C ompetitors C onditions

98. Consumer Buying Criteria Determinant Attributes

99. Traditional customers seek proven products using current technology Low End customers seek old, simple & cheap tech. High End customers seek cutting-edge sensors in both size & performance Performance customers seek advanced tech., w/ high reliability & performance Size customers seek advanced sensors that focus on small size

100. Strive to meet customers preferences … Don’t spend limited resources (time & $) meeting lesser concerns KEY POINT

102. SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTH Sees the next 8 years as consistent growth. All market segments increase at a nice “clip,” according to market analyst. “I see the entire market growing at around 14% or 15% per year. The High Tech market alone will be growing at a whopping 16%.” I hope those companies out there are ready for that kind of expansion!”

103. Key Demand Consideration: Overall market growing @ ~ 14%/yr “Average” company should/could double - sales in 6 years Key Capacity Consideration:

104.  This analysis examines growth of customer demand as simulation proceeds thru 8 rounds.  For this exercise you need the Market Segment Analysis pages (pages 5 - 9) of The Capstone Courier- Round 0  W/in Segment Statistics-Use the Industry Unit Demand - top left corner DEMAND ANALYSIS

106. Demand Analysis 7387 7387 X 1.092=8067 Page 30 TMG Traditional Statistics Total Industry Unit Demand 7,387 Actual Industry Unit Sales 7,387 Segment % of Total Industry 32.4% Growth Rate 9.2% Page 5 capstone Courier

107. EXTERNAL Consumer, Competitive & Macro- Environment UNCONTROLLABLE Social Technological Political Legal Economic Corp./Business STRATEGY Corp./Business STRATEGY Finance Marketing/R&D Production/HR INTERNAL INTERNAL Environment CONTROLLABLE Competitive Demographic Psychographic trends Forces Regulatory

108. Specifically…determine  Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…  How market is segmented; relevant factors that influence consumer demand & purchasing decisions  Your competitors relative market positions..  Macro-E considerations especially technological trends … C onsumer C ompany C ompetitors C onditions

109. 2 Big Q’s 1. Is what you are making any good? 2. & is how you are making it—as good as it could/should be? 1. Is what you are making any good? 2. & is how you are making it—as good as it could/should be?

110. Company Portfolio Analysis Analyze company’s products w/ respect to :  How good your product is….  & How good is the market you sell it in Analyze company’s products w/ respect to :  How good your product is….  & How good is the market you sell it in

111. Boston Consulting Group’s Growth-Share Matrix High Relative Market Share HighLow LowDOGS CASH COWS Product-Market Growth (%) STARS PROBLEMCHILD 10x 4x 2x 1.5x 1x.5x.2x.1x

114. Evaluation Scheme: AttributePoorFairGood PriceTop1/3Mid1/3Bttm1/3 ReliabilityBttm1/3Mid1/3Top1/3 Age+1yr.6-1yr~.5yrs Position+1.5 units.6-1.5w/in.5 Awarenes s <50%50-80%80%+ Access<50%50-80%80%+ OverallHow RateOn Top 2 Attributes Customer Satisfaction

115. INTERNAL EXTERNAL S T O W From results… can determine Strengths & Weaknesses of current marketing mix: Product - Product - Positioning; age & quality (reliability)-- Current levels of support w/ respect to: Promotion Promotion Distribution Distribution (accessibility) Pricing - Pricing - policy/competitiveness

116. INTERNAL EXTERNAL S T O W What are the S & W’s w/ respect to your company’s production lines capacities & efficiencies 2nd Big Q

117. & Finally – need to Answer 5 key Financial Questions 1) How liquid is your firm? 2) How profitable is your Firm? 3) How effectively are you utilizing your assets ? 4) How are you financing your assets? 5) Are you providing your owners an adequate return on their investment ?

118. Ascertaining Your Company's Strengths & Weaknesses: Financials Production & HR Marketing & R&D

119. S I M U L A T I O N M A R K E T I N G M G T. Questions ?

120. S I M U L A T I O N M A R K E T I N G M G T. Can I be excused my brain is full..