ERIE

1. ERIE Stockholder Debriefing

2. Company officers • Lori Bean • Lisa Hernandez • Lisa Hubbard • Jennifer VanDerLoop

3. SIMULATION RECAP Round 1 Sales Round 1 Profit • Andrews $55,365,219 • Baldwin $51,115,280 • Chester $46,730,222 • Digby $39,466,904 • Erie $48,104,640 • Ferris $41,859,174 • 3rd • Andrews $4,999,912 • Baldwin $4,643,551 • Chester $4,710,231 • Digby $4,770,858 • Erie $5,586,996 • Ferris $3,369,561 • 1st

4. Balancing production with promotion with r&d with finance with r&d with production with promotion with production with r&d with promotion with production with R&D with….

5. AUTOMATION AND TQM

6. FINANCIAL MISSTEP

7. Reorganization • Focus on selling excess inventory. • Focus on cutting costs. • Focus on better forecasting and marketing. • New meeting style. RESULTS Sold excess inventory. Highest rated high tech product. Round 5

8. ROUND 6 • Led industry with Contribution Margin over 50% ! • Erie’s Productivity Index led the industry.

9. ROUND 7 – Continued success • FISCAL RESPONSIBILITY • Contribution Margin again over 50%! • Stock Price rose by $6.16 to close at $14.40 • Paid $2.00 dividend to Stockholders. • Finished the year with the lowest amount of current assets, choosing to pay off debt and invest in fixed assets.

10. Erie feels they are in an excellent position for future success. We are a small volume company that is lean and poised to expand, achieving great future success.

11. PERFORMANCE ANALYSIS • Original Strategy = Have the best product in both market segments at a competitive price. • Round 1 – Highest profits in the industry. • Round 2 – Best low tech product. • Round 3 – Inadequate financing of plant improvements, Poor positioning of newly introduced high tech product. Overproduction which resulted in excess inventory.

12. PERFORMANCE ANALYSIS CONT. • Round 4 – Cut costs resulted in poor awareness for out low tech product. The high tech product had exact customer buying criteria but we failed to capitalize due to low awareness. Overproduction in the last round caused termination of 483 employees.

13. MORE PERFORMANCE ANALYSIS • Part of Erie’s strategy was to introduce a second high tech product as Easy aged. The financial crisis in Round 3 kept us from doing that. • Round 5 – Road to Recovery • Renewed focus on the basics. • New approach to team meetings and decision making.

14. Performance analysis conclusion • Round 6 – Industry leading Contribution Margin of over 50%. • Round 7 – Again had Contribution Margins over 50%. • Erie finished the simulation with a handle on keeping expenses low and our focus for the future will be to increase production which will increase profits and Stockholder earnings.

15. QUESTIONS

16. “What was your original strategy?” • Have the most desired products in both market segments. • As our original high tech product aged, introduce another. This part of the strategy was aborted when we had major financial trouble in Round 3.

17. “How did you live up to your strategy and mission statement?” • When our products were competitive in their positioning we missed on awareness or sales and vice-versa. Overall we did offer a product that the consumers liked. • The low tech product was in the industry’s top three desired in Rounds 2, 3, and 4. The high tech product was in the industry top three in Rounds 1, 4 and 6.

18. Mission statement • The word Erie will become synonymous with electronic sensors. Manufacturers will not refer to our product as an “Erie sensor”, but as an “Erie” . • Erie Sensors, Inc will be the world leader in the design, production and distribution of electron sensors. We will equally value the small customer as much as we value the large company. We will put equal effort to producing sensors for established equipment as we do to sensors for exciting cutting edge inventions.

19. MISSION STATEMENT CONT. • Erie did serve both the low tech and high tech market segments well. The respective products were among the top three in the industry three times each. • Erie is not yet synonymous with “sensors” but we are confident that with attention to product specification, we soon will be.

20. “which market segments did you emphasize and how did you manage them?” • We emphasized low tech and high tech equally. • Low tech did better in Rounds 2, 3, and 4 while high tech did better in Rounds 1, 4, We found the high tech product easier to get to customer buying preferences because the coordinates for size and performance are known where the exact price customers want for low tech falls in a $20.00 range.

21. “Which two rounds were most critical for your team’s performance?” • Round 3 where we had a critical failure in financing plant improvements which haunted us until Round 7 when we brought our simulation cumulative profit into the positive. • Round 5 & 6 (tie) where we regrouped and made changes to our focus and team meeting operations. This showed immediate results with low expenses/high Contribution Margins in Rounds 6 and 7.

22. “If you had four years to manage, what changes would you make?” • Erie would cross train team members to be proficient in at least one additional product. • We would plan for another high tech product because Easy is now 2.6 years old. • R & D would use projected sales for several future years for product development and introduction.

23. “What have you learned about business from playing the simulation?” • Decisions cannot be made on anything but hard data. Numbers don’t lie. • Decisions have to be made as a team. Officers of a company have to work together to made strategy decisions. • We learned the interdependence of the departments to each other. We operated separately in the beginning. When we regrouped and made all decisions together our company became more efficient and profitable.

24. “What have you learned about business from playing the simulation?” • The outside environment has a big impact on your business. Great products can still be affected by the products and sales of other companies and events going on in society. • The higher the level of management, the less they can let up on their efforts to run the company. An executive’s life must be very exhausting as they must be consumed at all times with events and potential decisions that have to be made.

25. “What would you do differently if you were to play the simulation again?” • Begin with every area having a person assigned to make decisions and a back up person to make decisions in their absence. • We would make sure we never took an emergency loan. The fall out from the emergency loan was greater than from any other error we made. • We would look for an online meeting forum with the capability of keeping records of our chat. This would help in evaluating why we did what we did.

26. TEAM PERFORMANCE

27. How we worked as a group • STRENGTHS • We accommodated each other’s schedules. We made the online format work. • We all liked the simulation and genuinely wanted to succeed, not just for the grade. • WEAKNESSES • We lived in different towns so that meeting in person was not possible. • We just weren’t aware of the importance of communication in the begging of the simulation.

28. THREE CRITICAL SITUATIONS • The three most critical situations were rounds 3, 4, and 5. The financial disaster and how we worked as a croup to recover showed our strength as a team. • It would have been too easy to quit and take a W in the class for the two members who aren’t graduating this semester and for any of us to get a bad attitude and give less than full effort. This did not happen.

29. HOW DID WE CREATE A TEAM ATMOSPHERE? • We meet consistently via MSN Messenger. • We had some similarities that we could relate to. Two of the group are graduating this semester, three are parents, two work outside the home. Things like this helped chit-chat that helped us be more comfortable with each other. • We had a common interest in having this class go well. None of us wanted to let the others down.

30. Overall accomplishments • Ended the simulation with an overall profit. • Steady growth in Balanced Scorecard score since Round 3. • Steady stock growth over the past two rounds and paid Stockholder dividends of $2.00 in Round 7 • Have a handle on controlling operating expenses and can now concentrate on building customer demand. • Scored 4 out of 5 stars on the Round Analysis for Round 7. Sign of steady growth as this was our highest score for the entire simulation.