Exercise or example to reinforce idea of functions?
I saw the light at the end of the fiber optic cable as soon as you said that these are students of electronics. There is nothing more modular and encapsulated than that! Software is simply electronics without the hardware part. 

If you said to them, "What are the building blocks of a simple AM radio receiver?" they would (hopefully) reply something like: antenna, tuning, rectification, filter, audio output... A crystal radio has all of those. They already know that it is pointless to build the antenna in to the filter, or duplicate the tuning parts more than once. They know that they can work in teams to produce parts that fit together to make a complete radio.

So speak to them in a language they already know: the functional relationship of parts and wholes. Using globals instead of parameters would be like having extra cables going outside the radio to connect different parts of it to the signal path or the power supply. Can you say "Rube Goldberg"? I knew you could. 

Man, let me teach them. I have been studying electronics on my own since before anyone I knew even had seen a computer. Electronics students should be the easiest audience in the world to teach programming to. Use examples they already know.