© 2014 Capsim Management Simulations, Inc. Unforgettable Busin.docx

© 2014 Capsim Management Simulations, Inc. Unforgettable
Business Learning Unforgettable Business Learning
Introduction
An overview of the Capstone® Simulation
Tennessee
State
University
Business
Strategy
Policy
(MGMT
4500)
Unforgettable Business Learning Unforgettable Business
Learning
Why Simulate?
Risk-‐Free
View
Alterna1ve

Strategies
Enjoyable
Compresses
Time
(1
Round=1Year)
Selec1vity
vs
Integra1on
© 2014 Capsim Management Simulations, Inc.
Learning
Objectives of the Capstone Simulation
Demonstrate
effec-veness
of
mul--‐

discipline
teams
working
together.
Use
strategic
thinking.
Test
your
business
acumen.
Understand
overall
interac-on
and
impact
of
various
parts
of
a
business
on
one
another.

Grow
the
awareness
of
compe--on.
Take
away
prac-cal
skills
in
business
management.
Industry
Overview
Learning

The Story: Background on Your Company
Started
as
a
single
corpora-on
named
Sensors,
Inc.
Sold
sensors
as
main
product
Corpora-on
was
shut
down
by
FTC
due
to
monopolis-c
opera-ons

FTC required Sensors Inc. to be broken
up into separate companies:
Andrews Baldwin
Chester
Erie
Digby
Ferris
Your job: Operate one of the
companies and make it successful.
Learning
The Start
When
Sensor
Inc.
breaks
up,
each
of
the
new
companies
starts
off
with
the
following

scenario:
$100
Million
in
Sales
5
Product
Lines
5
Market
Segments
Closed
Marketplace
Learning
Sensors: An Overview of Your Company’s
Product

Customers
(OEMs)
need
sensors
for
their
products
to
func-on.
Used
for
diverse
applica-ons
• Low
End
• Tradi-onal
• High
End
• Performance
• Size
Five
clear
market
segments

Customer
demands
vary
between
the
five
segments.
Learning
The Marketplace: A Look Into The Segments
Round
1
Consumer
Segment
Expecta1ons
Round
8
Consumer
Segment
Expecta1ons

Perceptual
map
used
to
track
changing
consumer
demands
in
size
and
performance
Each
year,
consumers
will
expect
faster
(higher
performance)
and
smaller
products

(lower
size)
• This
causes
the
segment
circles
to
driV
to
the
lower
right
constantly
Market
segments
con-nue
to
diverge
over
-me
*Note
the
driV
towards

the
lower
right(expecta-ons
of
faster
and
smaller
products).
Also
note
the
divergence
of
the
segments.
Learning
Low End Consumer Characteristics
What
the
customers
say

• Ideal
Age:
7
years
• Ideal
MTBF:
12000-‐17000
• Prefer
less
cu^ng
edge
products
(Bigger
Size
&
Low
Performance)
• Price
sensi-ve.

Prefer
price
to
be
lowest
possible.
Price
Posi-oning
Age
Reliability
I
want
to
spend
as
liale
money
as
possible!

I
want
them
to
have
been
around
for
a
while…no
beta
tes-ng!
They
have
to
be
moderately
reliable…but
not
enough
to
drive
up

the
price!
The
technology
doesn’t
have
to
be
cu^ng
edge.
Learning
Traditional Consumer Characteristics
• Ideal
Age:
2
years
• Ideal
MTBF:

14000-‐19000
• “Average”
Performance
and
Size
• Price
sensi-ve,
but
willing
to
spend
more
than
Low
End
consumers
Price
Posi-oning
Age
Reliability

I
want
these
sensors
to
be
moderately
cheap.
I
want
them
to
have
been
around
for
a
while…no
beta
tes-ng!

They
have
to
be
moderately
reliable…but
not
enough
to
drive
up
the
price!
I
want
good
sensors…
not
cu^ng
edge,
but
reliable.

What
the
customers
say
Learning
High End Consumer Characteristics
• Ideal
Age:
0
years
• Ideal
MTBF:
20000-‐25000
• High
Performance
and
Small
Size
• Not

price
sensi-ve,
willing
to
pay
highest
prices.
Price
Posi-oning
Age
Reliability
What
the
customers
say
Price
is
not
an
issue.
I

want
the
best
sensors
in
the
market!
I
want
the
newest
sensors
you
have!
Only
the
most
cu^ng

edge
products
will
sa-sfy
me!
We
need
the
total
package.
High
performance
and
miniaturized
for
our
products.
Learning
Performance Consumer Characteristics

• Ideal
Age:
1
year
• Ideal
MTBF:
22000-‐27000
• Highest
Performance
and
Less
important
Size
• Not
price
sensi-ve,
willing
to
pay
moderately

high
prices
Price
Posi-oning
Age
Reliability
What
the
customers
say
I
am
willing
to
pay
for
what
I
need.
I

want
them
to
have
been
around
for
a
while…no
beta
tes-ng!
Reliability
and
Performance
are
very
important
and
must
be
high.

I
prefer
newer
technology!
Learning
Size Consumer Characteristics
• Ideal
Age:
1.5
years
old
• Ideal
MTBF:
16000-‐21000
• Average
Performance
but
Maximum

Miniaturiza-on
• Not
price
sensi-ve,
willing
to
pay
moderately
high
prices
Price
Posi-oning
Age
Reliability
What
the
customers
say

I
am
willing
to
pay
for
what
I
need.
I
want
them
to
have
been
around
for
a
while…no
beta
tes-ng!
They
must
be

miniature
to
fit
our
technology
I
prefer
newer
technology!
Segment Growth
According
to
a
Market
Analyst,
there
will
be
con1nuous

growth
in
the
sensor
market.
I
see
the
en-re
market
growing
at
around
14%
or
15%
per
year.
The
high
tech
market
alone
will
be
growing
at

16%.
Your
goal:
Prepare
your
company’s
products
to
meet
the
needs
of
the
growing
market.
Business Learning
The
Decision
Making
Process

Learning
Decision Areas
Coordinate
strategy
and
tac-cs
across
the
following
areas
of
the
company:
Addi1onal
Modules
-‐
HR
-‐
TQM
-‐
Labor

Nego-a-ons
-‐
Advanced
Marke-ng
R&D
Marke-ng
Produc-on
Finance
Learning
R&D
Determine
the
specifica-ons
of
the
products
to
meet
customer

expecta-ons
Build
the
quality
and
reliability
(MTBF)
of
the
products
Ensure
the
perceived
age
of
the
product
meets
customer
demands
Invent
new
products
to
address

the
changing
marketplace
and
take
advantage
of
new
opportuni-es
Learning
Marketing
Set
the
price
for
each
product
Build
customer
awareness
through

inves-ng
in
promo-on
Establish
a
sales
force
and
distribu-on
channels
Set
the
sales
forecast
for
each
product
Set
Credit
Policies
(A/R
and
A/P)

Learning
Production
Purchase
machinery
to
automate
produc-on
facili-es
Buy
or
sell
capacity
on
product
lines
Set
produc-on
schedule
Manage
the
majority
of

the
company’s
fixed
assets
Staff
your
facility
with
workers
Learning
Finance
Acquire
capital
to
fund
growth
and
opera-ons
• Issue
Stock
• Short-‐Term

Debt
• Issue
Long-‐Term
Bonds
Issue
dividends
to
shareholders
Balance
debt
poroolio
Manage
Proformas
Learning
Proformas: A Look Into the Future
Business Learning
Proformas

use
decisions
made
in
the
current
year
to
project
company
performance
for
the
next
year
Analyzing
them
is
cri-cal
for
company

success
The
following
proformas
are
available:
• Balance
Sheet
• Income
Statement
• Cash
Flow
Statement
• Financial
Ra-os
Scoring

Methods
Learning
Learning
Success Measures
Success
Measures
• In
the
real
world,
companies
have
different
goals.

Using
the
same
success
measures,
YOU
get
to
choose
the
parameters
on
which
your
company
is
measured.
• Some
of
the
Criteria
that
are
used:
• Cumula3ve
Profits
• Average

Market
Share
• Average
ROS
(Return
on
Sales)
• Average
Asset
Turnover
• Average
ROA
(Return
on
Assets)
• Average
ROE
(Return
on
Equity)
• Ending
Stock
Price
• Ending
Market
Cap
• You

or
the
professor
choose
the
percentage
weigh-ng
for
each
selec-on.
Learning
Balanced Scorecard
Balanced
Scorecard
• Improving
company
financial

picture
in
prepara-on
for
final
debrief
• Point
System
• Gauges
company
performance
based
on
four
perspec-ves
• The
Customer
• Internal
Business
Process
• Innova3on
and
Learning
• Financials

• In
the
simula-on,
a
Proforma
Balanced
Scorecard
is
available
to
project
results
for
the
upcoming
year.
Learning
Analyst Report
Analyst
Report

• Evaluates
your
company
in
ten
categories:
• Margins
• Profits
• Emergency
Loans
• Working
Capital
• Market
Share
• Forecas-ng
• Customer
Sa-sfac-on
• Produc-vity
• Financial
Structure
• Wealth
Crea-on

Learning
Things to do each year (each round)
Establish
business
strategy
for
your
company
Analyze
Capstone
Courier
to
see
industry
results
Make
tac-cal
decisions
across
each
func-onal

area
(aligned
to
strategy!)
Upload
official
decisions
and
confirm
on
the
website
Await
results
when
Professor
processes
Rejoice
in
your
superior
business
acumen

Begin
the
process
again
by
confirming
alignment
of
your
results
with
your
company’s
strategic
goal.
Unforgettable Business Learning
Capsim
Management
Simula-ons
Inc.
55
E.
Monroe,

Suite
3210
Chicago,
IL
60603
Unforgettable Business Learning
Capsim
Management
Simula-ons,
Inc.
55
E.
Monroe,
Suite
3210
Chicago,
IL
60603
Good
Luck
and
Enjoy!

© 2014 Capsim Management Simulations, Inc. Unforgettable Busin.docx

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© 2014 Capsim Management Simulations, Inc. Unforgettable Busin.docx