1. Welcome to the Capstone® Business Simulation

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

3. Why Simulate?  Risk Free  View Alternative Strategies  Enjoyable  Compresses Time (1 Round=1Year)  Selectivity Integration

4. SENSORINDUSTRYOVERVIEW

5.  Customers (OEMs) need sensors for their products  Initially one segment, now breaking into five  Very different customer demands developing between the segments  Diversification in the use and utility of the sensors The Marketplace

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

7.  “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.” Low End & Traditional Customers You’re not giving me what I want

8. High End, Size & Performance Customers  “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’m willing to pay more to get what I want.”  “I like a pretty high reliability.” And I’m not getting what I want!

9. 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!”

10. COMPANYOVERVIEW

11. SEC ANNOUNCES BREAKUP OF MONOPOLY FOR IMMEDIATE RELEASE The SEC, took dramatic action today by breaking up the monolithic corporation Sensors, Inc. In a statement to the press, the SEC outlined the reason and the outcome of this move. “We cannot allow monopolies of this sort to impact an entire industry! 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.”

12. The Competition $100 Million in Sales 5 Product Lines 5 Segments Closed Marketplace 6 Companies AndrewsDigby BaldwinErie ChesterFerris

13. 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 Dorado-Banacloche, “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 1 st. I expect to see great things from this Executive Team!

14. Welcome To Your New Company

15. Students need to coordinate strategy and tactics across the following areas of their company: R&D Production Finance Marketing Additional Modules - HR - TQM - Advanced Marketing - Labor Negotiations

16.  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.” R&D

17.  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.” Marketing

18.  Purchase machinery to automate our facilities  Buy or sell capacity of product lines  Schedule production for each line  Manage the majority of the companies 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.” Production

19.  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.” Finance

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

21. Scoring Methods

22. Success Measures: Select a minimum of two criteria to be measured by: o ROE o ROS o ROA o Cumulative Profit o Stock Price o Market Capitalization o Asset Turnover o Market Share o Weight each selection

24. Analyst Report

26. Running your Company

27.  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. Things to do on an Annual Basis

28. Good Luck and Enjoy!