Capstone Business Simulation - Learnings

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Capstone is a rich, complex business simulation designed to teach strategy, competitive analysis, finance, cross-functional alignment, and the selection of tactics to build a successful and focused company. As part of our tragic and disastrous campaign as Digby, we have put our learnings in the form of a presentation to save ourselves from getting a C grade !!

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Capstone Business Simulation - Learnings

  1. 1. M/s Digby’s Business Strategy AnalysisBusiness Avenue, 4214, Postal code 80.250-210 / Singapore +65 3836 55 55 +65 9685 55 55| | www.SOS.com M/s Digby’s Business Strategy Analysis
  2. 2. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Agenda Digby Company Profile Sensor Market in 2012 Current Scenario - 2016 Production – Learnings Sales & Marketing – Learnings Research & Development– Learnings Finance – Learnings TQM & HR– Learnings
  3. 3. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Digby Company Profile
  4. 4. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis DIGBY Research & Devp (R&D) Production Sales & Marketing Human Resources (HR) Total Quality Mgmt (TQM) Finance Sidd Ravishankar Head – R&D Varun Mahajan Head – Production Robin Agarwal Head – Sales & Mktg Shashank Shinde Head – TQM & HR Shirish Bansal CEO & Head – Finance
  5. 5. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Sensor Market in 2012
  6. 6. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Sensor Manufacturers in Market Market Share Market Cap No. of Products Markets Served Andrew 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Baldwin 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Chester 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Digby 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Erie 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Ferris 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Market Scenario - 2012
  7. 7. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Current Scenario - 2016
  8. 8. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Andrews 14% Baldwin 15% Chester 20%Digby 13% Erie 15% Ferris 23% Market ShareFinancial Statistics Sales Breakup 34.25 26.15 14.48 30.88 12.12 0 5 10 15 20 25 30 35 40 2010 2012 2014 2016 2018 Share Price Shar…
  9. 9. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis • DazeTraditional Segment • DellLow Segment • DaveHigh Segment • DotPerformance Segment • DuneSize Segment Digby Products
  10. 10. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Production – Learnings
  11. 11. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Mr. Varun Mahajan Production Head “We are looking at maximum market share after 4 years and we shall go full steam to increase capacity in the initial years.” “Hopefully we shall be able to take advantage of a growing market !”
  12. 12. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis FY 2012 FY 2013 Production - Learning # 1 Capacity should be increased only considering short term market growth and not long term market growth as it also carries depreciation cost Add fixed capacity in small increments as the demand grows !
  13. 13. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Production - Learning # 1 All other players sold off capacity and hence had more cash at hand for investments. FY 2013
  14. 14. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis FY 2013 Production - Learning # 2 • Conservative approach followed in selling off excess capacity FY 2014 Correct your errors in the first shot !
  15. 15. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Production - Learning # 3 Due to cash crunch owing to excess spending on increasing capacity, Digby fell short of cash to Automate their plants resulting in lower contribution margin and higher costs in years to come FY 2012 FY 2013 Cost control is extremely important !
  16. 16. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Production - Learning # 4 Poor Plant Utilization • Ideal plant utilization - 198% of the plant capacity • Digby’s Plant utilization level was 72% in 2013 and increased to 160% in 2016 • This showed Digby’s over spending on plant expansion in the first years resulted in poor Asset Turnover Ratio 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 2013 2014 2015 2016 Optimum Capacity Utilization Industry Average Utilization Digby Average Utilization
  17. 17. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Production - Learning # 5 Poor Forecasting led to unsold inventory. Tradeoff between Stock Out and Inventory carrying cost was not calculated FY 2013
  18. 18. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Poor Forecasting led to unmet market demand as all companies had stock out Production - Learning # 6 FY 2015 Market Demand > 1.8 Total Capacity
  19. 19. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Sales & Marketing – Learnings
  20. 20. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Sales & Marketing - Learning # 1 Higher Customer visibility comes at a price ! 100% Customer Awareness & 100% Accessibility 75% Customer Awareness & 75% Accessibility Less than 50% Customer Awareness & Less than 50% Accessibility
  21. 21. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Sales & Marketing - Learning # 2 • The product with a higher Customer Survey Score (CSS) tends to outsell the others which have a lower CSS CSS Promotion Budget AR Policy Customer Buying Criteria Sales Budget
  22. 22. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis • Pricing needs to be done carefully within a band that attracts the customer • Market will not accept your product if it is priced beyond a certain limit Sales & Marketing - Learning # 3 FY 2015
  23. 23. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Research & Development – Learnings
  24. 24. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Research & Development - Learning # 1 • Timely release of product is CRITICAL in gaining market share and competitive advantage FY 2013
  25. 25. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Research & Development - Learning # 2 • Product positioning must be as per the needs/wants of the target segment FY 2013
  26. 26. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Research & Development - Learning # 3 • Failed product transitioning in Dixie • No R&D was conducted on Dixie under the expectation that it would drift into the Traditional market segment • It ended up as an abandoned product which was a misfit everywhere Product Transitioning needs to be PLANNED in advance
  27. 27. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Research & Development - Learning # 4 • R&D time depends on R&D being conducted on various products simultaneously • Continuous improvements should be done on products every year FY 2016
  28. 28. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance – Learnings
  29. 29. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance - Learning # 1 • Higher the Cash at hand, Lower is the Risk to the organization! • Poor prediction of cash at hand resulted in an Emergency Loan to Digby and Andrews Finance should not drive business, business should drive finance! - Prof Manish Agarwal However, business should also hear out Finance..
  30. 30. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance - Learning # 2 • Inventory Carrying Cost needs to be looked at as poor sales results in a high inventory carrying cost • Also, inventory at hand results in a conservative forecasting often resulting in a STOCK OUT and lost market potential in the following year
  31. 31. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Mr. Shirish Bansal CEO & Finance Head “We should follow our tradition of issuing dividends to our shareholders” “I’m optimistic of an increased market share and increased stock price in the coming year”
  32. 32. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance - Learning # 3 • Digby paid 4 million as dividend and the same year Digby faced an emergency loan of 4.9 million • Digby should have reinvested to increase the value of the firm as it did not have excess cash. FY 2013 Customer is my CEO, who pays my salary; but I am not a Slave ! Mr. Boman Moradian
  33. 33. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance - Learning # 4 • Debt/Equity ratio should always be between 1.8 and 2.8 • If the ratio is high one should go for equity and if the ratio is low one should go for loan • A company with a high D/E ratio is seen as a risky company Debt is not necessarily bad !
  34. 34. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Finance - Learning # 5 • Long term loan should be used for plant & equipment purchase, capacity increase etc. for long term use • Current loan should be taken to pay to suppliers or for short term use • Wrong selection will lead to unnecessary interest Debt should be taken according to requirement
  35. 35. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis TQM & HR – Learning’s
  36. 36. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Human Resource – Learning # 1 Productivity can be increased by: • Continuous Manpower training • Spending on recruiting to hire high caliber workers FY 2016
  37. 37. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Total Quality Management – Learning # 1 No money spent on TQM initiatives in round 3 whereas the competitors in the industry invested heavily FY 2015
  38. 38. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Total Quality Management – Learning # 1 In spite of spending on TQM in 2016, the demand for other companies products increased FY 2016
  39. 39. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis #2. #1.
  40. 40. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis #3. #4.
  41. 41. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis #5. #6.
  42. 42. M/s Digby’s Business Strategy AnalysisM/s Digby’s Business Strategy Analysis Lets now go to the Boardroom
  43. 43. M/s Digby’s Business Strategy Analysis Thank You Team D – Industry C51962 - Shirish Bansal - Siddharth Ravishankar - Shashank Shinde - Robin Agarwal - Varun Mahajan

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