ACE Applied Cognitive Engineering Ltd. developed a brain fitness product called IntelliGym that improves decision making for athletes. While it initially targeted basketball and hockey markets in North America, sales declined in recent years. The team proposes focusing on the competitive sports industry, simplifying products, and expanding globally. They recommend developing a generic product for all ball games, targeting markets in Asia and Europe, and pursuing partnerships. An aggressive marketing strategy around events like the 2010 FIFA World Cup aims to increase annual sales to $50 million by 2014 and make ACE the cognitive training industry standard.

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Case Competition 2009
FACULTY OF MANAGEMENT, THE LEON RECANATI GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
THE ELI HURVITZ INSTITUTE OF STRATEGIC MANAGEMENT
ACE Applied Cognitive Engineering Ltd.
Team No 7 :
Gilli Rosenzweig
Yana Berkovits
Oded Naim
David Sugarman
How to slam dunk from an air ball ?How to slam dunk from an air ball ?

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Agenda
1
1. Company profile
2. Strategic analysis
3. Proposed solution
4. Summary

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Company Profile
About ACE Applied Cognitive Engineering Ltd.
Privately owned, Israeli based company, established in 2003
Developed a unique cognitive engineering model for brain fitness
IntelliGym® proved to improve real time decision making skills
Key resource - IP in cognitive engineering modeling
Outsourcing all functions apart from modeling
Current target markets: basketball and ice-hockey markets in
North America

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Current estimated Financials
Company Profile - Continue
2004 2005 2006 2007 2008
Revenues
Basket Ball $50 $100 $300 $600 $350
Total Revenues $50 $100 $300 $600 $350
Accumulative Revenues $50 $150 $450 $1,050 $1,400
Cost of Sales $50 $100 $150 $250 $150
Accumulative cost of sales $50 $150 $300 $550 $700
Gross Profit 0 0 150 350 200
Accumulative Gross Profit 0 0 150 500 700
Other revenue
R&D Grants
Investors $500 $300
Expenses:
Advertising and Promotion $50 $60 $70 $40 $20
NMS
R & D $200 $200 $150 $50 $50
Operating/GA $30 $60 $60 $30 $30
Total Expenses $280 $320 $280 $120 $100
Accumulative Expenses $280 $600 $880 $1,000 $1,100
Profit Before Tax $220 -$320 $170 $230 $100
Accumulating Balance $220 -$100 $70 $300 $400
P&L
in K US$

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Ace’s Vision & Goals
Vision:
To set the sports industry standard for cognitive brain training
Goals:
Expand Operations to reach accumulative sales of US$ 50 M
within 5 years
Increase cash flow and maintain long term sustainable revenue
growth
Improving our competitive positioning in the fast growing cognitive
brain fitness market

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Strategic Analysis
Brain fitness customer segments
Hyper competition - standards and rules are in flux
Positioning against hyper competition
1. Price and quality 2. Timing and knowhow
3. Strongholds 4. Deep pockets
0
20
40
60
80
100
General self-improvement
products
Health & Insurance providersK12 school systemsCorporate – Fortune 1000
companies; military & Sport
teams
US$ M
Changes in USA Market Volume

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Unique Cognitive Engineering expertise
Professional's positive opinion
Proven 30% improvement game performance
Unique and unmatched cognitive fitness niche
Reliable investor and promoters committed for future
product
High entrance barriers for non-cognitive market, only 20
specialist in the world, 3 committed to Ace
Strengths
Strategic Analysis - SWOT

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User Interface and product website
Limited marketing
Pricing module
Long time business model
Outsourced operations
Weaknesses
Strategic Analysis - SWOT

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Hypercompetition growing market
Competitors have not exploited all potential markets
Sports segment under saturated with no dominant solution provider
in Cognitive fitness
BIRD commitment for investing and marketing support for a new ice
hockey product
Opportunities
Strategic Analysis - SWOT

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Strong Australian, Israeli & other cognitive
market players
Relatively low entrance barriers for the cognitive industry players
Wide array of products that offer to improve players performance
Need to raise funds to match BIRD support (challenge)
Threats
Strategic Analysis - SWOT

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Strategic Analysis - Continue
Increased emphasis on brain maintenance for retirement
communities (becoming standard in residential facilities)
Physical and mental exercise will be better integrated
Broad government initiative
Better and more widely available assessments of cognitive function
Brain training will be added to corporate wellness and leadership
initiatives
Increased differentiation to reach specific segments
Brain Training Future Trends

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Proposed Solution
Business Model
Focus on the competitive sports industry
Simplify products and services
Different marketing and pricing models for various target markets
Develop a generic product for ball games, an affordable solution for non-
professionals
Expand global positioning in countries with large populations, technological and
gaming consumer culture
Fund raising
Substantial change in Marketing and distribution strategies
Explore global partnering/JV opportunities

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Strategy Alternatives
Core
Business
Expansion
Products
Segments
Geography
Vertical Integration
New products
• Generic
• Ice Hockey
• Scouting Tool
Geographic
• Asia
• Europe
No Change
Horizontal Integration
Innovative
Business
Expansions
Explore Complementary new
companies
(Cogstate / Cognifit)
Proposed Solution - Continue

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Proposed Solution - Continue
Generic “ONE Ball”
Soccer training system
Candidate evaluation system
for Scouters
Referees tool
Back to the Game
MARKETING STRATEGY - NEW PRODUCTS
CATCH THE CUSTOMER!
ONE BALL FOR ALL

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Proposed Solution - Continue
Aggressive marketing
The World is our playground – Global exploration
Targeting promising markets: European Ice-Hockey
and Asia Pacific basketball
Distribution through chain stores
Cooperation with leading sports brand companies
Focus on International sports events: FIFA World Cup 2010,Olympic games 2012
Advertise in our products
Friendly user interface
Recruit leading trend setting professionals
MARKETING STRATEGY

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Proposed Solution - Continue
The
products
Revenue model
ACTION PLAN
Version release.
Marketing
Business model varification process
Segmentation
Market penetration
Steady annual growth
Customer satisfaction
Target Actual
MEASURES

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Proposed Solution - Continue
Present Future Additions
Segments Sports :
Basketball & Ice-Hockey
Generic product, basketball, soccer, ice-hockey
and others.
Products Basketball & Ice-Hockey
Cognitive trainer.
Generic ball game trainer, soccer trainer,Judge
trainer, Candidate evaluation (for scouters), back
to the game testing, new editions & revised
pricing
Geographic North America Europe, Japan, China, Korea
Competitive
advantages
1. Cognitive know how
of the basketball game
2. Highly regarded in the
coaching community
1. Better feedbacks on the relativity of current
player performance to actual basketball playing
2. Cognitive data comparison to professional
levels: college players, NBA players etc
3. Growing DB of players’ performance
SOLUTIONS SUMMARY

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Proposed Solution - Continue
Financials
2009 2010 2011 2012 2013 2014 (Q1&2) Accumulated
Revenues
Basket Ball $220,000 $462,000 $706,200 $1,170,620 $1,567,062 $1,231,706 $5,358,988
Hockey $0 $440,000 $854,000 $1,185,400 $1,568,540 $881,854 $4,929,794
All Play $0 $300,000 $1,530,000 $4,153,000 $10,415,300 $10,041,530 $26,439,830
Scouting $0 $0 $200,000 $420,000 $642,000 $464,200 $1,726,200
Referees $0 $0 $100,000 $260,000 $426,000 $292,600 $1,078,600
Foot Ball $350,000 $1,135,000 $1,863,500 $2,736,350 $1,723,635 $7,808,485 $15,616,970
Back to the Game $0 $0 $0 $450,000 $945,000 $694,500 $2,089,500
Other Revenues
Advertising revenues $100,000 $200,000 $300,000 $300,000 $200,000 $1,100,000
Total Revenues $570,000 $2,437,000 $5,453,700 $10,675,370 $17,587,537 $21,614,875 $58,339,882
Accumulative Revenues $570,000 $3,007,000 $8,460,700 $19,136,070 $36,723,607 $58,338,482
Cost of Sales $171,000 $701,100 $1,576,110 $3,112,611 $5,186,261 $6,424,463 $17,172,245
Cost of Units $0
Personal $0
Proffesional $0
Total Cost Of Sales $700
Accumulative cost of sales $171,000 $872,100 $2,448,210 $5,560,821 $10,747,082 $17,171,545
Gross Profit $399,000 $1,564,900 $3,005,490 $5,114,549 $6,840,455 $4,443,331 $21,368,424
Accumulative Gross Profit $399,000 $1,963,900 $4,969,390 $10,083,939 $16,924,394 $21,367,724
Other revenue
R&D Grants $800 $800 $1,600
Investors $2,000,000 $2,000,000 $4,000,800
Expenses:
Advertising and Promotion $350,000 $2,000,000 $2,000,000 $2,000,000 $3,000,000 $1,500,000 $10,850,240
NMS $50,000 $50,000 $50,000 $150,000 $150,000 $150,000 $600,000
R & D $500,000 $1,000,000 $1,000,000 $250,000 $250,000 $250,000 $3,250,650
Operating/GA $300,000 $500,000 $400,000 $400,000 $450,000 $250,000 $2,300,210
Total Expenses $1,200,000 $3,550,000 $3,450,000 $2,800,000 $3,850,000 $2,150,000 $17,001,100
Accumulative Expenses $1,200,000 $4,750,000 $8,200,000 $11,000,000 $14,850,000 $17,000,000
Profit Before Tax $800,200 $15,700 $1,555,490 $2,314,549 $2,990,455 $2,293,331 $8,369,724
Accumulating Balance $800,200 $784,500 $770,990 $3,085,539 $6,075,994 $8,369,324

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Focus on the sports industry with global expansion
Develop branded products
Generic product for the non – professionals.
Professional solutions for selected competitive sports
Using IP & the DB to develop candidate evaluation tool for scouters
Aggressive marketing targeting FIFA World Cup 2010
Focused financial plan and management cost reduction
Explore global partnering opportunities
Raise additional funds and research grants
Implementation will increase sales up to $50M by 2014
Become an industry standard
Substantial ROI
Summary and Conclusions

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Thank You