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CAPSIM Top Management Presentation: Broad Cost Leader

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Matthew Griffin & Jordan Law

Team Erie - Industry ID : C109621

TMP 120 - Dr. Eric J. Zackrison

Summer A - 8:00 AM

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Vision & Mission Statement

Vision Statement - Erie is a sensor company devoted to providing a dynamic range of competitive sensors that will accelerate productivity in the 21st century at an affordable cost.

Mission Statement - To provide the tools that spark creativity and innovation, fueling the future with a dynamic range of competitive sensors that are valuable, effective, and are accessible to everyone.

Who are we? ...and Where do we want to go?

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Review of Strategy

  1. Keeping Pace with the Market
    1. Maintain Presence - Every Segment
  2. Competitive Advantage
    • Lower Prices
    • Keep Costs to a Minimum
  3. Increase Margins
    • Automation & Accept Overtime
  4. Primary Stakeholders
    • Bondholders, Customers, Stockholders, Management

Using the Broad Cost Leader Strategy

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Review of Goals

  1. Research & Development
    1. Keep Presence in Every Segment
    2. Industry Standards & Exceeding Expectations
  2. Marketing
    • Affordable Prices
    • Aggressive Awareness & Accessibility
  3. Production
    • High Automation & Overtime
    • Meet Customer Demand
  4. Finance
    • Stocks & Long-Term Bonds
  5. Human Resources
    • Recruiting Costs - Modest
    • Training Days - Conservative

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Round by Round Retrospective

• Intended Strategy - Initial Plan

  • Broad Cost Leader Strategy
  • Refer to Practice Round Information - “Keep Head Above Water”

• Emergent Strategy - Actual: What Happened?

  • Stay Competitive: Meet Standards on All Product Segments
  • Spend Less: Produce & Market Modestly
  • Finance: Long-Term Debt & Stocks

• Realized Strategy - Your Response and Why?

  • Better ROI from Low & Traditional Segments
  • Invest more into L & T, Automate All, Limit Capacity
  • Marketing Heavily Across All Product Lines

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Our Process:

(Rounds 0-1)

(Rounds 2-3)

(Rounds 4-5)

  • Retire Stock
  • Cutting back on ineffective investing activities

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Full Financials: Income Statement & Balance Sheet - All 6 Years

Overview:

Income Statement: Net Profit Increasing Per Round by an Average of 28.45%

Balance Sheet: Rates of Returns

  • ROA: 11.2
  • ROE: 17.7
  • ROS: 9.0
  • Asset Turnover: 1.2

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Income Statement & Balance Sheet: Year 0

2019:

  • Sensor Monopoly Break-Up

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  • Equal Starting Point

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  • No Barriers to Entry

Highlights

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Income Statement & Balance Sheet: Year 1

2020:

  • 2nd in Plants Investments

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  • 3rd in Sales

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  • 3rd in Profit

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Highlights

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Income Statement & Balance Sheet: Year 2

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2021:

  • 2nd in Plant Investments

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  • 2nd in Sales

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  • 3rd in Profit

Highlights

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Income Statement & Balance Sheet: Year 3

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2022:

  • 2nd in Plant Investments

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  • 2nd in Sales

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  • 2nd in Profit

Highlights

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Income Statement & Balance Sheet: Year 4

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2023:

  • 2nd in Plant Investments

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  • 1st in Sales

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  • 1st in Profit

Highlights

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Income Statement & Balance Sheet: Year 5

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2024:

  • 2nd in Plant Investments

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  • 1st in Sales

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  • 2nd in Profit

Highlights

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Actual Results vs. Full Goals

Goals: Be the Profit Leader - By Round 4

Actual Results:

  • Capture Highest % of Total Market Share by Round 5
  • Sell at Least 75% of Our Inventory Each Round
  • Maintain an Overall Contribution Margin 30% > Each Round

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What did we wish to accomplish? How did we do?

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Actual Results vs. Full Goals

Estimated Balance Sheet

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  • Plan - No Current Debt

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  • Positive & Steady Increase in Cash & A/R

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Actual Results vs. Full Goals

Estimated Income Statement

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  • 12% growth in Sales

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  • Everything proportionally follows

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Assumptions

“The Market Will Demand These Changes”

Specs:

Traditional

Low

High

Performance

Size

Pfmn

+0.7

No change

+0.9

+1.0

+0.7

Size

-0.7

No change

-0.9

-0.7

-1.0

Change in Consumer Preferences (Each Round):

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Our Products by Round

Round 0

Round 1

Round 2

Round 3

Round 4

Round 5

  • Prices

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  • Plant Utilization %

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  • Low End Segment
    • Most Sales

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  • Automation Levels

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  • Marketing

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  • Spec Improvements

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Actual Results

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Our Firm vs. The Industry

Team Erie:

    • Sales: 1st! → $245,129
    • Specs & Prices: Had best price/spec combo on low, traditional, size
    • Others were competitive enough to maintain market share
      • 2nd in Performance to Ferris (Computer)
      • Tied for 2nd in High with Chester

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How our Firm compares to Industry Competition

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Application in “Real Life”

Hard Skills

    • Data Analytics
    • Logistics & Operations Management
    • Financial Analytics
    • Business Development Strategy

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Soft Skills

    • Emotional Intelligence
    • Interpersonal Communication
    • Teamwork
    • Leadership Development
    • Time Management & Flexibility

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Our Team’s Business Learnings from CAPSIM Simulation:

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Team Interaction

  1. Communication & Professionalism
    1. Mutual Understanding
    2. Relaxing & Comfortable experience
  2. Democratic Partnership
    • Collaborative Work Environment
    • Motivating Each Other
  3. Strong Organizational Structure
    • Clear Goals & Vision
    • Better able to Respond to Challenges
      1. Heavy Workload → Work Twice as Hard
      2. Better Understanding: Aspect Connections & Process
    • Higher Efficiency
      • Higher Productivity
      • Less Liability

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How Challenges create new opportunities

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