1. Organizational Strategy MANA 4322
Assurance of Learning

2. The University of Texas at Arlington is…
A 100+ year old comprehensive research, teaching, and public service university offering
89 baccalaureate degree programs
71 master degree programs
30 doctoral degree programs
One of the largest members of the UT System

3. The UT Arlington College of Business is…
Accredited by AACSB International – The highest most respected accreditation in the World
1 of only 5 Business Schools based in the D/FW metroplex to have earned this distinction
1 of only 168 Business Schools accredited at all levels, and in both its business and accounting programs
Only 15% of Business Schools in the world have achieved this level of accreditation
Consistently recognized as one of the Best Graduate Business Schools by U.S. News & World Report and other media outlets

4. Assurance of Learning Learning Objectives
1. Display understanding of multiple business functions (finance, marketing, etc.) and inter or cross-functional problems and issues.
2. Show evidence of problem solving and decisional ability in dealing with strategic and other business problems and situations.
3. Exhibit awareness of global business and economic systems.
4. Demonstrate knowledge of basic business research methods and data analysis techniques.
5. Understand importance of leadership, teamwork, and interpersonal skills in building/managing a successful organization.
6. Demonstrate knowledge of information technology and its impact on effective management of the enterprise.
7. Understand the values and practices associated with the ethical and legal responsibilities of managing organizations.
8. Demonstrate competency in oral and written communication through presentation of clear and concise information.

5. FOUNDATION BUSINESS SIMULATION

6. Objectives
Demonstrate effectiveness of multi-discipline teams working together.
Use strategic thinking to an advantage.
Test your business acumen.
Understand overall interaction and impact of various parts of a business on one another.
Grow an awareness of competition.
Take away practical know-how to improve the effectiveness of your business.

7. Why Simulate Risk Free View Alternative Strategies Enjoyable
Compresses Time (1 Round=1Year)
Selectivity <> Integration
Learn consequences of good and bad decisions

8. SENSOR
INDUSTRY
OVERVIEW

9. The Marketplace Customers (OEMs) need sensors for their products
Low Tech
Initially one segment, now breaking into two
Very different customer demands between the two segments
High Tech
Diversification in the use and utility of the sensors

10. The Marketplace
In our industry we track the changing customer demand on a perceptual map
Low
Tech
High
Tech
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge

11. not giving me what I want
Low Tech Customers
You’re
not giving me what I want
“I want these sensors to be cheap”
“I want them to have been around for a while – no Beta Testing!”
“They have to be moderately reliable.”
“The technology doesn’t have to be cutting edge.”

12. And I’m not getting what I want!
High Tech Customers
And I’m not getting what I want!
“These sensors have to be small, like micro, and fast”
“I need them to be right out of R&D, I’m talking ZERO years on the market”
“I’ll pay more to get what I want.”
“I like a pretty high reliability, but it’s not that important.”

13. 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 20%.”
I hope those companies out there are ready for that kind of expansion!”

14. COMPANY
OVERVIEW

15. SEC ANNOUNCES BREAKUP OF MONOPLOY
FOR IMMEDIATE RELEASE
Christopher Cox, Chairman of the SEC, took dramatic action today by breaking up the monolithic corporation Sensors, Inc.
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move.
“We cannot allow monopolies of this sort to impact an entire industry!” stated Donaldson. “The customers that utilize these sensors are being held hostage.
“Effective immediately Sensors, Inc will be dissolved into the Andrews, Baldwin, Chester, Digby, Erie and Ferris companies.”

16. The Competition 6 Companies $40 Million in Sales 1 Product Lines
ANDREWS
DIGBY
6 Companies
$40 Million in Sales
BALDWIN
ERIE
1 Product Lines
Closed Marketplace
CHESTER
FERRIS

17. SHAKE UP IN SENSOR INDUSTRY
Company Fires Management Team
After poor results, lackluster sales and angry customer reports, the Chairman of the Board of Directors has announced the immediate termination of the Management Team.
“This is a black day for our company,” said Chairman Jeffrey E. McGee, “We need to hire a dynamic leadership group who will be able to take this company into the future!”
“Due to this immediate need I have hired the Dream Team to start on January 1st. I expect to see great things from this Executive Team!

18. WELCOME TO YOUR NEW COMPANY!

19. Functional Areas
Production
R&D
Finance
Marketing

20. Research & Development
Establish the specification of the products to meet customer demand
Build the quality and reliability (MTBF) into the products
Ensure the perceived age of the product meets customer demands
Create new products to meet the changing marketplace
“Our products
are not well
positioned in
the marketplace.”

21. are not priced optimally.
Marketing
Set the price of our products in the marketplace
Build customer awareness through promotion
Establish a sales force and distribution channels
Set the sales forecast for our products
Set Credit Policies AR/AP
“Our products
are not priced optimally.
And many of our
customers don’t
even know our
product exists.”

22. “We are paying too much for labor costs. will run out of capacity to
Production
Purchase machinery to automate our facilities
Buy or sell capacity of product lines
Schedule production for each line
Manage the majority of the company’s fixed assets
Establish your workforce complement
“We are paying too much for labor costs.
Very soon we
will run out of capacity to
meet demand.”

23. Finance Acquire capital to fund capital expansions Issue Stock
Short Term Debt
Issue Long Term Bonds
Issue dividend to our shareholders
Balance our debt portfolio
Manage our proformas
“We have poor cash flow and
substandard financial ratios.
We have no financial policy statement.”

24. Proformas Balance Sheet Profit & Loss Cash Flow Financial Ratios
A great management tool driven by forecasts and projections. Allows “What if” Scenarios by the company.
Balance Sheet
Profit & Loss
Cash Flow
Financial Ratios

25. Scoring the Game Performance criteria is measured by: ROE ROS ROA
CUM PROFIT
STOCK PRICE
MARKET CAPITALIZATION
ASSET TURNOVER
MARKET SHARE
Each reflects 12% except Market Capitalization which reflects 16% of overall performance

26. RUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASIS

27. To Do List Establish business strategy for your company
Analyze Capstone Courier to see industry results
Make tactical decisions across each functional area (aligned to strategy!)
Upload official results and confirm on the website
Await results when Professor processes
Rejoice in your superior capitalistic acumen
Begin the process again by confirming alignment of your results with your company’s strategic goal.

28. Types of Business-Level Strategies
Business-level strategies are intended to create differences between the firm’s position relative to those of its rivals
To position itself, the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals

29. Five Generic Strategies
Competitive Advantage
Cost
Uniqueness
Cost Leadership
Differentiation
Broad target
Integrated Cost
Leadership/
Differentiation
Competitive Scope
Five Generic Strategies
Business-Level Strategy (p. 141)
Firms choose from among five business-level strategies (see Figure 5.1 in the text) to establish
and defend their desired strategic position against rivals:
• Cost leadership
• Differentiation
• Focused cost leadership
• Focused differentiation
• Integrated cost leadership/differentiation
Examples of cost leadership and differentiation strategies are discussed on later slides.
Narrow target
Focused Cost Leadership
Focused Differentiation

30. No Clearly Defined Strategy…
MY FIRM HAS
A COMPETITIVE
ADVANTAGE
MY FIRM HAS
A COMPETITIVE
ADVANTAGE
STUCK
IN THE
MIDDLE 14

31. CAPSTONE STRATEGIES
Strategies are declared in corporate mission statements
Capstone firms may develop and execute any strategy (or none at all - though that isn’t advisable). Basic strategies include:
Overall Cost Leader
Cost Leader with Focus (Low Tech or Product Life-Cycle)
Differentiator
Differentiator with Focus (High-Tech or Product Life-Cycle)
STRATEGY
Mission Statement
INDUSTRY AND MARKET
ANALYSIS
S.W.O.T Analysis
Competitor Analysis
Competitive Analysis
PERFORMANCE
ASSESSMENT
Success Measurements
Analyst Report
Round Analysis - Star
Summary
FUNCTIONAL PLANNING
R&D
Marketing
Production HR
Finance
TQM

32. OVERALL COST LEADER
An overall cost leader will attempt to be the low-cost producer in every segment of the market. They will have good profit margins on all sales while keeping prices low for price-sensitive customers.
Firm Profile:
More likely to re-position products than introduce new ones to the market
Capacity improvements are unlikely to be undertaken (may run overtime instead)
Automation may be pursued to increase margins
Investments will be financed with debt and/or stock issues
Tend to spend less on promotion and sales
Focus on Market Share, Profits, and Stock Price

33. COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments. Their aim is to set prices below all competitors - and still be profitable.
Firm Profile:
Multiple product lines in the low-tech segments (Low & Traditional)
Invest heavily in automation
Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
Investments financed with debt and/or stock issues
Focus on ROS, ROE, and Profits

34. COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise. Products will be allowed to age and change in appeal from high-tech, to traditional, and eventually low end buyers.
Firm Profile:
Minimum presence in “specialty” segments (Size & Performance)
Low R&D spending (very little re-positioning & new product every 2-3 years)
Invest in automation early in the product’s life-cycle
High spending on promotion and sales
Focus on ROE, ROS, and Profits

35. DIFFERENTIATOR
A Differentiator will seek to create maximum awareness and brand equity. They want to be well known as makers of high quality/highly desirable products.
Firm Profile:
High R&D spending to keep products fresh
Maintain a presence in all market segments
Spend heavily on advertising and sales to create maximum awareness and accessibility
Prices tend to be higher
Focus on Market Share, Profits, and Stock Price

36. DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products.
Firm Profile:
Multiple product lines in high-tech segments (High, Performance, and Size)
Minimum focus in other segments
High promotion and sales investments to create maximum awareness and accessibility
High R&D expenditures to continually introduce new product lines and keep existing products fresh
Unlikely to invest in increased automation or production capacity
Focus on ROA, Asset Turnover, and ROE

37. DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments.
Firm Profile:
Multiple product lines in targeted segments (High, Traditional, and Low)
Minimum focus in other segments
High promotion and sales investments to create maximum awareness and accessibility
High R&D expenditures to continually re-position product lines and keep products fresh
Unlikely to invest in increased automation or production capacity
Focus on ROA, Stock Price, and Asset Turnover

38. SUMMARY
There is no "magic bullet," guaranteed winning strategy. Each simulation has a unique competitive dynamic.
Successful firms will focus on planning, strategic alignment, teamwork, competitor analysis, and tactical adjustments.

39. Comp-XM
After competing in the Foundation® Business Simulation game, each student will be required to complete Comp-XM® individually.
This exercise entails participating in an additional four similar, yet different rounds (years) of another simulation. After each simulated year, you will complete a short quiz, called a “Board Query,” that contains questions tailored to your specific situation.
Although every student in the course will use the same software, the environment, rules and competitive environment change. Consequently, each examination is unique, because each student is tested on the decisions and results in his/her own company — decisions and results that will be different from those of any other company.

40. Comp-XM
The Comp-XM® industry has four market segments. Each individual participant is the sole decision maker for the Andrews company. Andrews competes against three computer companies, Baldwin, Chester and Digby.
The Comp-XM® simulation runs four rounds.
Simulation performance is judged using a Balanced Scorecard. Each round, a score is generated based on performance measures in these categories:
􀂃 Financial
􀂃 Internal Business Process
􀂃 Customer
􀂃 Learning and Growth
At the end of Round 4, a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4.

41. Good Luck and Enjoy!