WELCOME TO THE CAPSTONE BUSINESS SIMULATION

1. WELCOME TO THE CAPSTONE BUSINESS SIMULATION

2. The Four S’s • SWOT/Situation Analysis • Set your Strategy • Success Measurements • Structure

3. THE MARKETPLACE Very different criteria Changing demands Sustainable growth 5 market segments Two Stage Must fit minimum criteria Customer Survey Buying Process Position Price Age Reliability Customer Criteria

4. YOUR COMPANY 1 in each segment Poor positioning Low Contribution Margin 5 Products Low Awareness Poor Accessibility Low plant utilization No direction Functional Issues Junk Bond Status Mis-utilization of Assets Financial

5. Broad Differentiator Broad Differentiation A Broad Differentiation strategy, maintaining a presence in every segment. We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, and easy accessibility. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand.VISION STATEMENTPremium products for the industry: our brands withstand the tests of time. Our primary stakeholders are customers, stockholders, management, and employees. Fine Cut Rough Cut Ideal Spot Product

6. Broad Cost Leader Broad Cost LeaderA Broad Cost Leader strategy, maintaining a presence in every segment. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our Cost Leader orientation will allow us gain a competitive advantage based upon low prices. Our products will keep pace with the market, offering improved size and performance. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run second shift/overtime. VISION STATEMENTLow priced products for the industry: our brands offer solid value. Our primary stakeholders are bondholders, customers, stockholders and management. Fine Cut Rough Cut Ideal Spot Product

7. Niche Cost Leader (Low End) Niche Cost Leader A Niche Cost Leader Strategy, concentrating on the Traditional and Low End segments. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our Cost Leader orientation will allow us gain a competitive advantage based upon low prices. Our products will keep pace with the market, offering improved size and performance. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run second shift/overtime.VISION STATEMENTReliable products for low technology customers: our brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management. Fine Cut Rough Cut Ideal Spot Product

8. Niche Differentiator (High End) Niche DifferentiationA Niche Differentiation strategy that focuses upon the high technology segments (High End, Performance, and Size). We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and product extenders. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand.VISION STATEMENTPremium products for the technology oriented customers: our brands define the cutting edge. Our primary stakeholders are customers, stockholders, management, and employees. Fine Cut Rough Cut Ideal Spot Product

9. Cost Leader with a Product Life Cycle Focus Cost Leader with a Product Life Cycle Focus A Cost Leader with a Product Life Cycle Focus strategy, concentrating on the High End, Traditional, and Low End segments. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our "product life cycle" focus will allow us to reap sales for many years on each new product we introduce into the High End segment. Products will begin their lives in the High End, mature into Traditional, and finish as Low End products before they are retired and their assets harvested. VISION STATEMENT Reliable products for mainstream customers: our brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management. Fine Cut Rough Cut IdealSpot Product

10. Differentiation Strategy with a Product Life Cycle Focus Differentiation Strategy with a Product Life Cycle FocusDifferentiation Strategy with a Product Life Cycle Focus, concentrating on the High End, Traditional, and Low End segments. We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and product extenders. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand. VISION STATEMENTPremium products for mainstream customers: our brands withstand the tests of time. Our primary stakeholders are customers, stockholders, management, and employees. Fine Cut Rough Cut IdealSpot Product