foundation business simulation sensor industry overview
TRANSCRIPT
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FOUNDATION BUSINESS SIMULATION
SENSORINDUSTRYOVERVIEW
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FOUNDATION SIMULATION
$40 Million electronic sensor $40 Million electronic sensor manufacturer.manufacturer. Sensors are devices that observe Sensors are devices that observe
physical conditionsphysical conditions New sensor businesses are created New sensor businesses are created
every day in diverse areasevery day in diverse areas Market dominated by six firms.Market dominated by six firms. Sensors is a Business to Business marketSensors is a Business to Business market
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Applications
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• Customers (OEMs) need sensors for their products
• Initially one segment, now breaking into two
• Very different customer demands between the two segments
• Diversification in the use and utility of the sensors
High Tech
Low Tech
The Marketplace
Large
Small
Slow Fast
Size
Performance
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LowTech
HighTech
• In our industry we track the changing customer demand on a perceptual map
• Perceptual maps are used to plot customer preferences for two product characteristics
• Clusters show groups of customers with similar preferences
• Over time, the customers will demand sensors that are faster and smaller• Market Segments will continue to diverge
The Marketplace
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Perceptual MapLarge
Small
Slow Fast
Size
Performance
Low Tech
High Tech
Ideal Spot is Ideal Spot is that point that point where, all where, all other things other things being equal, being equal, customer customer demand is demand is highesthighest
Each Segment has an Ideal Spot
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You’renot
giving me what I want“I want these sensors to be
inexpensive”
“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 Tech Customers
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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.”
High Tech Customers
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SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 5 years as consistent growth. Both 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 will be growing at a whopping 20%.”
I hope those companies out there are ready for that kind of expansion!”
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
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6 Companies
$40 Million in Sales
1 Product Line
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
The CompetitionCOMPANYOVERVIEW
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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 Patrick Nuss, “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!
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Functional AreasWELCOME TO YOUR NEW COMPANY!
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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 productOur productstraddles bothstraddles bothmarket market segments.segments.
It isn’t a greatIt isn’t a greatlow tech low tech product,product,or a great highor a great hightech one.”tech one.”
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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 productOur productisn’t priced isn’t priced optimallyoptimallyfor either for either market.market.
And many of ourAnd many of ourcustomers don’tcustomers don’teven know oureven know ourproduct exists.”product exists.”
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Production
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 workforce compliment
““We are payingWe are payingtoo much fortoo much forlabor costs.labor costs.
Very soon weVery soon wewill run outwill run outof capacity toof capacity tomeet demand.”meet demand.”
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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 Proforma
““We have poorWe have poorcash flow andcash flow andsubstandardsubstandardfinancial ratios.financial ratios.
We have noWe have nofinancial policyfinancial policystatement.”statement.”
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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.
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Scoring the Simulation
1. Analyst Report2. Round Analysis3. Balanced Scorecard
Balanced scorecards allow companies to gauge their performance by assessing measures in four categories: 1. Financial– includes profitability,
leverage and stock price; 2. Internal Business Process–
ranks, among other measures, contribution margin, plant utilization and days of working capital;
3. Customer– examines the company's product line, including how well it satisfies buying criteria and awareness/ accessibility levels;
4. Learning and Growth– evaluates employee productivity.
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Good Luck and Enjoy!