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To Capstone

W E L C O M E. To Capstone. ®. An Interactive Business Simulation. Why Simulate?. Risk Free. Innovate and explore alternative strategies and tactics. Big Picture. Decisions and their impacts will be examined within the context of overall business operations - across functional boundaries.

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To Capstone

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  1. W E L C O M E ToCapstone ® An Interactive Business Simulation

  2. Why Simulate? • Risk Free.Innovate and explore alternative strategies and tactics. • Big Picture. Decisions and their impacts will be examined within the context of overall business operations - across functional boundaries. • Develop Critical Thinking Skills. You will analyze, assess, plan, make decisions, evaluate, and adjust. • Compresses Time. Several years worth of decision-making will play out during the term.

  3. The Business • $100M electronic sensor manufacturing firms. All teams begin with an identical profile. • Oligopoly - market dominated by handful of firms. • No outside competitors or product substitutes. • Benign environment – no recessions, no disruptive new technologies. Focus on competition.

  4. Performance - 11% Low End - 31% Traditional – 32% Size - 10% High End - 16% Markets Defined By Segments Percentage in dollars($)

  5. Large Small Slow Fast Introduction To Perceptual Maps Marketing tool used to depict product positioning. Illustrates how customers distinguish between products that are similar in nature. Electronic Sensors Size (how big is the sensor?) Performance (how sensitive is the sensor, and how fast does it process data?)

  6. Defines five market segments • There are five distinct segments of the market: • Traditional • Low End • High End • Performance • Size • The customers in each segment have different priorities and evaluate the product according to their own needs. Large Low End Performance Traditional Size Size High End Small Slow Fast Performance Perceptual Map

  7. Segments Differentiated By Name Large Low Pfmn For example, Low End Segment customers look for large, slow sensors, representing nearly obsolete technology. Their primary concern is price. While High End Segment customers want the latest & greatest technology. They’re willing to pay more to get very small, high performance sensors. Trad Size Size High Small Slow Fast Performance Perceptual Map

  8. Segments drift over time Large Low Customer expectations are constantly changing. They expect the sensors to become smaller in size and better in performance. Pfmn Trad Size High Size Small Fast Slow Performance Perceptual Map

  9. Segments drift over time Large Low Pfmn Trad Size Size High Small Fast Slow Performance Perceptual Map

  10. Segments drift over time Large Low Trad Pfmn Size Size High Small Fast Slow Performance Perceptual Map

  11. Size 1. Product must be positioned within the segment. Able Able 2. Product must fall within price guidelines. Performance Price Able Segments Reli-ability 3. Product must fall within reliability guidelines Segments Customers Go Through a Two-Stage Purchase Decision Process Stage 1 - Match Product to Market

  12. Two-Stage Purchase Decision Stage 2 - Rank Best Product Reliability 1. Positioning 2. Age 3. Reliability 4. Price Position Ideal Spot AB 0 Yrs 1 Age Price 20000 25000 HIGH END $30 $40

  13. Product Ranking Criteria by Market Segment Traditional Segment Low End Segment High End Segment Performance Segment Size Segment 1 - Age 2 - Price 3 - Position 4 -Reliability 1 - Price 2 - Age 3 - Position 4 - Reliability 1 - Position 2 - Age 3 - Reliability 4 - Price 1 - Reliability 2 - Position 3 - Price 4 - Age 1 - Position 2 - Age 3 - Reliability 4 - Price Listed in order of importance for each market segment.

  14. Basic Functional Areas • R&D • Re-position products • Launch New Products • Set product reliability rating (MTBF) • Production • Schedule production • Increase/decrease plant production capacity • Change automation levels • Finance • Issue/buy-back stock • Set dividend policy • Borrow short or long-term • Pay-down debt • Basic Marketing • Set prices • Set Promotion budgets • Set Sales budgets • Input sales forecast

  15. Optional Modules TQM Labor Negotiations HR Advanced Marketing

  16. Decision Making • Each firm begins with identical profile • Decisions are made January 1st each year • Tactical plan should align with chosen success measurements (Profit, Stock Price, ROE, ROS, ROA, Asset Turnover, Market Share, Market Capitalization) • Responsibilities may be divided up by Product Manager, Functional Manager, or Market Segment Manager roles • Every member of the firm is able to create and upload decisions - communication and teamwork is vital!

  17. Proformas Sample Proforma Income Statement Created Automatically in Decision Software • Balance Sheet • Income Statement • Cash Flow • Financial Ratios Print Proformas from software after making decisions each round, then compare to actual results

  18. Student Activity Overview Each student registers at www.capsim.com Personal Web page is created Introductory lessons under “Getting Started” section heading on website Team completes “Situation Analysis” exercise as a group Teams compete for up to eight simulated years Team develops Strategic Plan (success measurements) Team completes Practice Round(s) decisions Wrap-up reports Celebrate Winners

  19. Student Resources • Team Member Guide • Website (www.capsim.com) - Demo’s - Tutorials - Help Files - Round Analysis - Tech Support Staff 1-888-472-7554 or techsupport@capsim.com Sample Student Website Page

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