Transcript Product - Junior Achievement

Sponsored By:
THE AT&T YOUTH BUSINESS CHALLENGE
&
JA TITAN
JA TITAN:
We will discuss the following key topics related to running a business:
•
o Price
o Production
o Research and Development (R&D)
o Marketing
o Capital Investment
o Charitable Giving
• These concepts will be applied in the JA Titan business simulator – on
line computer game.
empowering young people to
own their economic success
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THE AT&T YOUTH BUSINESS CHALLENGE
&
JA TITAN
AT&T Youth Business Challenge
• A high school competition among 16 local high schools
• Team of four students from each school will use JA Titan business
simulator to compete. Teacher will select your school’s team
• $10,000 in scholarships to be given out
Saturday, December 6th / UALR College of Business
8:30 – 9:00
Registration
9:00 – 1:00
Competition
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SESSION #1
Price & Production
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PRICE
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Price is the money value of a good or service it’s what is
charged for a product
It is important to set a price that ensures a business will
make, or at least not lose money
Determine amount that will earn the most profit (calculate
costs, rent, labor)
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BREAK EVEN & PRODUCTION
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Break-even point: point at which income from sales
equals costs. Below this point, a business shows a loss;
above it, a profit
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Do not overprice products. If competitors’ prices are lower, they
may have information that allows them to produce and market an
item for less
Production: process of changing resources into goods to
satisfy the needs or wants of customers. It is a critical
element in determining the success or failure of a business
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COST & DIMINISHING RETURNS
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An important aspect of production is cost. Fixed costs are
costs that remain the same no matter how much of a product
is produced. (Ex. property mortgage or rent, taxes and
insurance)
Variable Costs are costs that change with the amount or
speed of production (Ex. wages, power, material, machines,
etc.)
Law of Diminishing Returns occurs when increasing
amounts of variable resources crowd fixed resources,
resulting in reduced production
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RESOURCES
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Resources are something of value that serves a need.
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Natural Resources are air, water, minerals or trees that are
provided by nature
Human Resources are people who do work that a business needs
Capital Resources are facilities, tools, and machines used to make
a product
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Session #1
ACTIVITY
• Students log in to http://titan.ja.org/
• Use Decision Worksheet:
– Price
– Production
– Use Decision Worksheet:
• Student Complete Three Quarters
*Classroom volunteer/mentor: Set up simulation for 9 quarters,
turn off all decisions except price and production, manually close
each quarter,
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SESSION #2
R&D / Marketing
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R&D / PRODUCT LIFE CYCLE
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Research and Development is the investigation into developing new
or improved products, processes and services
Product life cycle progression of a product from it introduction
into the market through it growth, maturity, and decline.
• Long term demand for a product depends less on salespeople and
advertising than on the product itself.
• If customers no longer want your product or they find one that does
a better job, they are unlikely to continue buying yours, even if you
advertise more.
• To keep future orders high, businesses spend money on market
research and product development to continually improve current
products and develop new ones.
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R&D
What are some products that have been improved since they first came into
existence?
• Computer printers (dot matrix to laser)
• Telephones (dial to push button)
• Music (cassettes to CDs to digital MP3)
• Car locks (keys to remote)
What steps may a company have taken to improve it’s product?
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MARKETING
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Marketing is the process of planning and executing the
conception, pricing, distribution and promotion of a
product or service
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It is not enough to have a great product or service. It must be
available widely, priced appropriately, and advertised well to make
a profit.
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FOUR P’S OF MARKETING
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Product- must be what consumers want, and it must
have qualities and features expected
Price- must cover costs of production and operations to
reach the break-even point. While the price must rise
above this point to make a profit. If prices are too high a
product becomes unaffordable.
Place- “location, location, location!” make a product
readily accessible in a store or through the internet, on
home-shopping networks, or in mail-order catalogs.
Promotion- If consumers do not know about it, they will
not buy it.
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Session #2
ACTIVITY
• Students log in to http://titan.ja.org/
• Use Decision Worksheet:
– R&D
– Marketing
• Student Complete Three Quarters
*Classroom volunteer/mentor: Turn on all decisions except capital
investment & charitable giving, manually close each quarter
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SESSION #3
Capital Investment / Charitable
Giving
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CAPITAL INVESTMENT
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Investors can be stockholders, bondholders, venture capitalists of
financial institutions. The money they provide is called Capital
Investment, the money paid to purchase buildings, tools, and
machines t create goods and services.
Cash flow is the amount of money going into and out of a business
during regular business operations
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CHARITABLE GIVING
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Many businesses choose to be a part of their local
community or make a larger impact through Charitable
Giving, the voluntary effort to improve the well-being
of humankind through money, material, or time.
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Session #3
ACTIVITY
• Students log in to http://titan.ja.org/
• Use Decision Worksheet:
– Capital Investment
– Charitable Giving
• Student Complete Three Quarters
*Classroom volunteer/mentor: Turn on all decisions, manually
close each quarter
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SESSION #4
Applying ALL Concepts /
Competition Prep
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APPLYING CONCEPTS
Ideas and strategies to
apply these concepts
in the “real world”
and at the AT&T
Youth Business
Challenge
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STRATEGY
Price
Your businesses (in the Titan simulation) will produce and
sell the same product (Holo-Generators)
• As you advance in the simulation additional product features can be
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added to your product
How will you sell the most Holo-Generators?
o Set the lowest price?
• What do you have to be careful of when trying to set the lowest price?
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o You need to make money or at least not lose money
Why is it important not to overprice your product?
o Less sales, competitor may be able to produce for a lower cost,
inventory…
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STRATEGY
Production
• In the computer simulation your business will control only
the production level (amount of units produced), not how
different factors that control production are being used
• In the computer simulation, production is most efficient at
80 percent capacity. Please keep this in mind when making
your production decisions.
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STRATEGY
Marketing
Why would someone not by your hologram device?
• Price
• Availability
• Appearance
• Unfamiliarity
• Lack of understanding
• Features
Marketing involves all the processes that occur between production and
purchase. Marketing includes activities designed to increase sales of a good or
service
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STRATEGY
Price and Production
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Low Price/High Volume
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Mid-range Price/Mid-range Volume
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Success may include lowering production costs
Success may include balancing cost along with successful
marketing
High Price/Low Volume
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Success may include producing a higher quality product
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STRATEGY
Capital Investment
Why might you want to increase capital investment
for your Holo-Generator companies?
The reason is to increase the factory’s capacity to produce
more Holo-Generators. This means a need for more factories,
tools, and equipment.
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STRATEGY
Long and Short Term
Short-term refers to an action that takes place in a short period of time in the near
future
Long-term refers to a longer period of time before an action occurs
Is the following a long-term, short-term or both?
Raising or lowing the price
o Both- effect on sales and revenue can be quick
Buying or not buying new equipment
o Long-term – takes time to purchase, install, test and train
Increasing or decreasing production
o Short-term, however if increase is large enough to require additional
capital investment then it could be long-term
Increasing or decreasing R&D
o Long-term – takes time to design and put into production the changes to an
existing product or production of a new product
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Session #4
ACTIVITY
• Students log in to http://titan.ja.org/
• Student Complete Three Quarters
*Classroom volunteer/mentor: You are free to adjust game
parameters.
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THANK YOU
Classroom Teacher: be sure you select
your team of four and register them by
11/21/14
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