WELCOME TO CAPSTONE BUSINESS SIMULATION
Jan 06, 2018
WELCOME TO CAPSTONE BUSINESS SIMULATION
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment, now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over the 7 years, the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech & Traditional Segment Customers
“I want these sensors to be cheap”
“I want them to have been around for a while – no Beta Testing!”
“The technology doesn’t have to be cutting edge.”
“They have to be moderately reliable.”
You’renot giving me what I
want
High Tech, Size & Performance Segment Customers
“These sensors have to be small, like micro, and fast”
“I need them to be right out of R&D, I’m talking ZERO years on the market”
“I like a pretty high reliability.”
“I’ll pay more to get what I want.”
And I’m not getting what I
want!
Strategic MapLarge
SmallSlow Fast
Size
Performance
Large
Small
Slow Fast
Low
Trad
Size High
Perf
Sweet Spot
Each Segment has a Sweet Spot
Price
Two Stage Purchase DecisionStage 1 - Match Product to Market
1. Product must plot within the segment. Size
2. Product must fall within price guidelines.
3. Product must fall within quality guidelines
Quality
Two Stage Purchase DecisionStage 2 – Competitive Rankings of
Best Products
Position
Age
Quality
Price
1. Positioning
2. Age
3. Quality
4. Price
Sweet Spot
0 1Yrs
20000 25000
$30 $40HIGH END
Segment Criteria Ranking
Traditional SizePerfHigh EndLow End
• Age• Price• Position• Quality
• Price• Age• Position• Quality
• Position• Age• Quality• Price
• Quality• Position• Price• Age
• Position• Age• Quality• Price
Functional Areas and Value Creation
R&DR&D
MarketingMarketing
ProductionProduction
FinanceFinance
HRMHRM
SupportActivities
Primary Activities
Value Chain Analysis
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Headquarters Activities
Technological Development
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Firm Infrastructure
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MARGIN
MARGIN
Capstone Value Chain Activities
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Raw materials and components receiving
Warehousing
Materials handling
Inbound Logistics
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Relatively Few Management Layers to Reduce Overhead
Effective Training Programs to Improve Worker Efficiency and Effectiveness
Timing of Asset Purchases
Efficient Plant Scale to Minimize Manufacturing Costs
Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Policy Choice of Plant Technology
Organizational Learning
Efficient Order SizesO
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Capacity and production levels
Production schedule
Automation levels
Labor force utilization levels
Improve efficiency
Production
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
National Scale Advertising
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Effective Product Installations to Reduce Frequency and Severity of Recalls
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Efficient Order Sizes
Interrelationships with Sister Units
Out
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Packaging
Warehousing
Inventory management
Shipping and distribution
Outbound Logistics
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Sales forecasting
Pricing strategy
Marketing strategy and budget
Sales force management
Marketing
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Customer relationsWarrantees, guaranteesSpare partsTech helpRepair
Service
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Procurement
Purchasing
Vendor relations
Business services outsourcing
Procurement
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Technological Development
Establish the specification of the products to meet customer demand
Build the quality and reliability (MTBF) into the products
Create new products to meet the changing marketplace
Manage new product cycle times
R&D
Research & Development
• Set Product coordinates (Position)
• Set MTBF rating (Quality)
• Drives Perceived age (Age)
• Drives breadth of product line
Quality Age Breadth
High High Eight
Low Low One
<<
<
Cycle time affected by:• Automation level of production line
• Number of projects underway
• Distance moved on perceptual map
R & D Factors on Existing Products
High
LowAutomationAutomation
LevelLevelNumber ofNumber ofProjectsProjects
High
Low
High
LowDistanceDistancemovedmoved
< < <Short
Long
Cycle TimeCycle Time
<
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Human Resource Management
Production line staffing
Recruiting and training of new employees
Wages and benefits for employees
Negotiate with labor union
HRM
Supp
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Technological Development
Human Resource Management
Firm InfrastructureIn
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Firm Infrastructure
Strategy and decision making
Finance and Accounting
Government relations
Public relations
General Counsel
HQ Activities
Success MeasurementsPractice Rounds: All criteria equally weighted
Competitive Rounds: YOU choose at least TWO• Ending Stock Price must be at least 20%• Others – Your choice:– Cumulative Profit– Avg. Market Share– Asset Turnover– Avg. ROA– Avg. ROE– Avg. ROS
• Criteria and weights will remain proprietary throughout the simulation
Capstone Scoring Report
0
1
2
3
4
5
6
Andrews
BaldwinChester
Digby
Erie FerrisW
inne
r !
Win
ner
!
Assignments & Grading
ITEM WEIGHTFinal Simulation Score 70%Initial Strategy eMemo 10%Board of Directors Briefing 20%
Computers and Facilities
31 AUGWeds
SIM: Round 2 Decisions DUE 11:00
Meet: Rounds 1-2 Debrief 1:00
SIM: Round 3 Decisions DUE 6:00
SIM: Round 2 Decisions DUE 11:00
Meet: Rounds 1-2 Debrief 2:00
SIM: Round 3 Decisions DUE 6:00
Industry 1SimId: C12084
Industry 2SimId: C12085
A typical “day” of Capstone
Assignments for This Week MONDAY-TUESDAY• Subscribe to Capstone
– See pg. 2 of syllabus• Tutorials (esp. Spreadsheet Demonstrations)• Solo Rehearsal
WEDNESDAY• Upload Practice Round 1 decisions by 11:00 a.m.• Results available 12:00 p.m.• Meet for Debriefing at 1:00 p.m. or 2:00 p.m.• Round 1 (for real!) decisions due by 6:00 p.m.• Submit Strategy eMemo by 7:00 p.m.
Good Luck and Enjoy!