1. Avoid loans at all costs during the initial rounds. These will weigh your company
down in later rounds and destroy your future margins.
2. Release products in low tech segments such that they form a horizontal perceptual
map of high tech and low tech products. Ideally, one product should be launched
before year 3 and 2 after that.
3. Low tech products launched initially would move to low tech segments. Keep
revising old products to hold market share
4. Production automation - AVOID!!! this is a waste of money because the simulation
does not allow for a long enough time period to offset the costs of further automation
5. Target 75% awareness, this will provide you with the greatest cost to awareness
ratio, and the additional awareness will not benefit you adequately.
Round when the product is launched - 900
Subsequent rounds till awareness reaches 75% - 1200
After awareness reaches 75% - 1800 to maintain dominance
Target 75% accessibility and keep spending on sales till you reach this stage.
The spending could follow this
Round when the product is launched - 3000
Subsequent rounds till awareness reaches 75% - 3500
After accessibility reaches 75% -3000 to maintain 75%
6. 1500-1800 is the maximum market share for a product in a competitive market.
7. Sales forecast can be determined by taking the total of potentials for each segment
of your product * 2 (this is the secret to winning because you cannot underrate the
amount of product that you will sell. It will hinder you in early rounds and you will not
be able to catch up)
8. Give dividends immediately, this will keep shareholders happy and provide you a
positive boost to your initial stock prices which will allow it to be sold for a high price.
9. Whenever cash available, give additional dividends. These are key to getting a high
score on this simulation.
10. At each round, keep an eye on Balanced score card proforma. Your target in each
round can be
Rounds 1-3 : 40+
Rounds 4-6: 70+
Rounds 7-8: 85+
READ THE TEAM MEMBER GUIDE BECAUSE IT PROVIDES YOU WITH
INVALUABLE INFORMATION.
A lot of
capsim can be applied to real life business. Since you WILL need to learn those things,
you
may as well start now.
1)
R&D
R&D is the backbone of your company. Whatever strategies you use, you need to
R&D something every year. If you're ever not R&Ding something, then you're doing
something wrong.
First of all, do NOT R&D your products according to the Capstone Courier.
Why? Because Capstone Courier gives you the data for LAST YEAR's products. If you
follow it, then your products are outdated. You should R&D the products to its ideal
spots 1 or 2 year in advance, according to several factors.
Invent new products in the least competitive segment. This is self-explanatory. At
Round 1 or 2 you may not know which segment is the least competitive, but by
Round 3 you should be able to with the help of Courier. The more products you have
earlier, the greater advantage you'll be in in the future.
However do NOT invent all 4 additional products in Round 1 because you won't have
the budget for it.
2) Marketing
This section is probable the most important aspect of Capsim. It deals with your
pricing, marketing & sales budget as well as your sales forecast, which will be shown
in Proforma Income Statement.
Pricing: Price your Low End at the bottom third of the price range, your Traditional at
middle range and your High End/Size/Performance at max price. Try not to get into
price war early because it'll kill both you and your competitors. Lose-lose.
Some of you may wonder why not simply set the lowest price for Low End,
considering price is 47% of the Buying Criteria. During my simulations, I found out it
is not decision. For example the price range is $10 - 20. My competitors set price at
$10 while I set mine at $11.50. He sells 2800 units while I sell 2600 units. Yes his
sales is bigger, but I rake a lot more profits than him.
It is simply not worth to set the lowest price while getting only a bit more sales. This
also works in reverse on why I said set max price for High End/Size/Performance
products. By lowering the price you can sell a bit more, but your overall profit will go
down.
Promo & Sales Budget: Promo budget raises your product's awareness while Sales
budget increase your product's segment accessibility. Noticed the difference? Promo
budget is according to EACH product while Sales budget for each SEGMENT. If you've
4 products in Traditional segment, you may need to spend $1400 Promo budget for
each product, but you can set $1000 Sales budget for a combined $4000 Sales budget
in Traditional Segment.
There is a diminishing amount for both budgets. Found out more in your Team
Member Guide. I purposely do not include the figures to force you to read (you'll
thank me).
If Advanced Marketing module is activated, do not worry because it is essentially the
same thing. Refer to the end of this entry for more info.
Sales Forecast:
NEVER EVER USE the computer prediction for your sales
forecast, except may be in Round 1 but even then it is not reliable. How do you do a
sales forecast then?
This depends on so many variables that it's impossible for me to provide you with a
magic formula. However there is one simple way to set a benchmark.
Here's how:
Read up Courier and scroll down to your product's segment.
Look at "Total Industry Unit Demand". Get this number and multiply it by the 1+growth
rate to know the demand next year. Now scroll down to "Market Share" report and look
at your product's POTENTIAL market share. Sometimes it can have % in different
segments, but just take the biggest number. This percentage multiply by the industry
demand we calculated next year will give you a rough idea on how many units you will
sell. Ofcourse this depends if you can maintain the same percentage of buying criteria
and whether your competitors improve or not.
Why do you need to get the numbers right?
2 BIG reasons: Production & Proforma
Income Statement. If you estimate you'll sell 1,000 units, you can tell Production to
produce 1,000 units. If in fact the demand is only 500 units, you LOSE MONEY
because you need to store those extra units somewhere. If it turns out the demand is
greater than 1,000 units, you LOSE POTENTIAL MONEY. Either case is bad for you.
The second reason is your Sales Forecast determine your PROJECTED profit/loss.
One word of advice: if your projected profit is $10,000, expect your actual profits to
be only 50% of that. You make financing decisions based on your projected profit/loss,
hence why Marketing is the most important decision function of Capsim.
3) Production
Production is an extension of Marketing. You get Marketing right, Production is easy
for most parts. You do a worst-best case scenario with Marketing and Production. If
you expect to sell 1,000 units, but feel at worst you'll sell 800 units and at best you sell
1,200 units, you can enter both. Under Marketing, you input 800 units and under
Production you produce 1,200 units. This way your projected profit/loss is the worst
case.
This section is self-explanatory. You take the amount of units you expect to sell and
minus it by inventory on hand. The adjusted number is the actual number of products
you'll get minus a few defect products, but it's only like 0.89% lower so don't bother
yourself with the number.
The big thing about Production is Capacity and Automation Rating. Remember
you can employ 2nd shift workers to produce double your capacity. Having too much
capacity is not an efficient way to run your company while having too many is also
bad investment. Remember any additional Capacity and Automation Rating will take
place NEXT ROUND AND NOT IMMEDIATELY. Plan ahead.
Automation Rating is a complicated. The higher the rating, the more machines you
use and the less workers you need. Less workers mean less wages, which means
cost-savings on your part. However higher automation rating also means longer R&D
cycle. You can safely set 10 for Low End and Traditional. However for High
End/Size/Performance, 10 may or may not be a good thing, depending your strategy.
Either way do NOT increase your automation to 10 right away from the start
because it cost a lot of money. Refer to the end of entry for more help.
4) Finance
Finance is all money related. If you are accounting major, this is a piece of cake for
you. Simply put, raise as much money as you can through Issuing Stock, Current
Debt and Long Term Debt for Round 1-3. Trust me, you'll need the extra money even
if you think you don't.
Stock: Issuing stock is a great way to make money. However if you use share price
or market cap as one of your success measures, it gets complicated. One thing
though: do NOT pay dividends ever. If you need to raise your stock price, simply buy
back stock. You need to plan in advance though. Issuing stock is not free: it has
brokerage fees. It doesn't make sense to issue $5m worth of stocks this year only to
buy it back next year. You pay twice brokerage fees.
Current Debt: There are 2 ways to use Current Debt. One is rolling it. If you borrow
$10,000 Current Debt, then when it is due next year, you borrow that same amount.
The result is $10,000 of free money minus the interests. However the interest is
higher than the Long Term Debt, hence the 2nd way of playing it: Never use Current
Debt unless in emergencies. With its higher interest rate, Current Debt will only hurt
your Income Statement. How you play it is up to you.
Long Term Debt: Greet your bestest friend in Capsim. Round 1-4, you should issue
MAX Long Term Debt to fund your production improvements. Beyond that, you may
need to issue even more. I've won several rounds while issuing max amount Round
1-8. I've also won many simulations by having 0 Long Term Debt. It's a tough thing to
balance whether to issue or retire.
4) HR & TQM
Human Resource and Total Quality Management are additional modules.
HR is easy. ALWAYS have 80 Training Hours. This will boost your Productivity Index
and in turn will save you on employee cost. Recruiting Spend is set at $5,000
depending on its benefits. Try inputting $5,000 and see the benefits. Then try to set
$0 and see if extra money is worth the benefit.
Labor Negotiation is another advanced module. In this part, ALWAYS set your offers
at its max. This way your employees will never strike and if the other teams don't follow
your suit, THEIR employees will strike and you'll make more money off them.
TQM is also easy, yet highly important. The optimal figure is $1,500 per category.
Although you can set at $2,000, but I found that number is too much. Remember the
benefits are cumulative. The first round TQM is activated, put $1,500 into categories
that reduce your R&D cycle time and $750 in all other categories. Next round, do the
same. However start putting $0 in one category and see if the benefits changes or
not. After certain point, $100 can give you the same benefit as $1,500.
5) Reports
You should always read up your Capstone Courier. It has a wealth of VITAL
information.
Also remember your Proformas are projected numbers and they WILL change once
the round has been processed. Use them as benchmarks, but don't depend on
them.
That's all. This section is not really a guide, but just a reminder to read your reports.
TO WIN THE COMPETITION:
Read and understand the “Team Members Guide!” Refer back to it often during the
competition. The spreadsheet is based on the guide, the Industry Condition Report,
the Situation Analysis guide, Analyst Report criteria, and a few added touches I found
useful.
Pick a strategy and make consistent decisions that support the chosen
strategy. Don’t change the strategy unless it is not working and you understand why
it is not working.
Use a spreadsheet, or some other tool, to help organize the data. If you do not use
my spreadsheet, make one yourself.
Download and use the CAPSIM Excel application from the CAPSIM website. After
making your decisions, review the Proformas, the Balance Score Card, and the Annual
Report against the Analyst Report criteria. The CAPSIM Excel application can save
the team decisions to the hard drive. My spreadsheet is designed to import the
saved file. This will save a lot of time reviewing and typing data from the CAPSTONE
Courier into the spreadsheet.
Read the CAPSTONE Courier every round. Download it and save it for trend
analysis.
Forecasting industry demand is critical. Every team in my competition, and the other
class, struggled with forecasting. The guide states that the customer survey score
drives demand. The higher the score the more demand for the product. Reading the
guide and understanding how the score is increased will give the team a competitive
advantage.
Understand how your team will be scored will give the team a competitive
advantage.
The Capstone Simulation Analyst Report evaluates your team in ten
categories of management performance; (1) Margins, (2) Profits, (3) Emergency
Loans, (4) Working Capital, (5) Market Share, (6) Forecasting, (7) Customer
Satisfaction, (8) Productivity, (9) Financial Structure, and (10) Wealth
Creation. Decisions should be evaluated against the scoring criteria. Decisions
consistent with the team strategy, and which improve the scores on the Analyst
Report should be made.
If we can not complete all suggestion, try to come as close as possible.
Try to use all the budget available in the first 3 rounds and more if possible
The KEY to win Capsim is to control Automation as early as possible. The more
automation is better.
Round 1 – Production
1. Upgrade original Low End sensor from 5.0 to 6.7 automation
2. Upgrade original Traditional sensor from 4.0 to 5.0 automation
3. Create 500 capacity with automation 5.0 for the new Low End sensor
4. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total available budget.
Round 2 – Production
1. Upgrade original Low End sensor from 6.7 to 8.4 automation
2. Upgrade original Traditional sensor from 5.0 to 6.0 automation
3. Create 500 capacity with automation 5.0 for the new Traditional sensor
4. Upgrade new Low End sensor from 5.0 to right 8.4 automation.
5. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total available budget.
Round 3 – Production
1. Upgrade original Low End sensor from 8.4 to 10.0 automation
2. Upgrade new Low End sensor from 8.4 to 10.0 automation.
3. Upgrade original Traditional sensor from 6.0 to 7.0 automation
4. Upgrade new Traditional sensor from 5.0 right to 7.0 automation
5. Create 400 capacity with automation 3.0 for the new High End sensor
6. Add extra capacity for new Low End sensor
7. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total available budget.
Round 4 – Production
1. Upgrade original Traditional sensor from 7.0 to 8.0 automation
2. Upgrade new Traditional sensor from 7.0 to 8.0 automation
3. (Optional) Reduce Capacity for segments that are being exited, such as
Performance and Size
4. Upgrade original High End sensor from 3.0 to 4.0 automation
5. Upgrade new High End sensor from 3.0 to 4.0 automation
6. Add extra capacity for all needed sensors
NOTE: check the bottom right corner to see if we use close to total available budget.
Round 5 – Production
1. Upgrade original High End sensor from 4.0 to 5.0 automation
2. Upgrade new High End sensor from 4.0 to 5.0 automation
3. (Optional) Reduce Capacity for segments that are being exited, such as
Performance and Size
4. Add extra capacity for new High End sensor
5. Add extra capacity for all needed sensors
NOTE: check the bottom right corner to see if we use close to total available budget.
Round 6 and 7 – Production
1. Add extra capacity for all needed sensors
Round 8 – Production
1. Last round of the game, do not add any capacity or automation
Note to check Workforce needed and Workforce complement, if the box is editable,
make sure to match the needed with This Year to save money. Otherwise we waste
money.
We will increase automation every round.
Traditional to 8.0 (4.0 – 5.0 – 6. 0 – 7.0 – 8.0)
Low End to 10.0 (5.0 – 6.7 – 8.4 – 10)
High End to 5.0
Performance to 6.0
Size to 6.0
SETTING PRODUCTION
Production amounts should always be 112% of Sales Forecast.
This allow some extra inventory to take advantage of competitors suffer from stock
out. This often happens.
When we calculate production, we need to take into account inventory from previous
round.
We can use excel file to calculate PRODUCTION more conveniently If we see that
year we have Stock out, we can increase production more than 112% to 120% or
even 125%. If we see some inventory, we can reduce for that segment back to
112%.
ADDING MORE CAPACITY
Our goal is to keep our plant production at 150% (full first shift and 50% second
shift).
This allows more flexibility to deal with short term market changes.
Remember that added capacity isn’t available until next round. So if we add capacity
in round 2, it will be available in round 3.
If we see any factory with more than 150% capacity, we can add more capacity to
that, just simply multiple the excess over 150% with total capacity. For example
180% of 2.000 factory, we will add 30% surplus = 30% x 2.000 = 600
NOTE:
We do not sell factories, even we are not using 100% at the current round.
NOTE:
We only reduce the segments we want to exit to 1. By doing so, we can still sell the
rest of inventories in that segment at full price, not 50% price
Recommended Links:
Quick Start for
Capstone Round 1: http://www.youtube.com/watch?v=yjKTzfaR3No
Capsim 2 - Research and Development Part I: http://www.youtube.com/watch?
v=sDhrQmCGWPE
Capsim 3 – Marketing: http://www.youtube.com/watch?v=VawiU4pllHs
Capsim 4 – Production: http://www.youtube.com/watch?v=gUI4-QAQkxY
Capsim 5 – Finance: http://www.youtube.com/watch?v=cQdjTC_YLPQ
CAPSIM R&D: http://www.youtube.com/watch?v=WUgrYFfTbwY
CAPSIM marketing: http://www.youtube.com/watch?v=RDWppBNPQ0w
CAPSIM production: http://www.youtube.com/watch?v=W38fyQnnIZ4
It is important to invest in HR because productivity is measured in the Balanced Score
Card and also this investment will reduce labor costs.
Usually HR has a few options available are Recruiting Spending, Training Hours
Aim for the maximum of $5.000 recruitment spending and 80 hours training every
round.
If you have limited funds, try $2.000 and 40 hours training.
If the Labor negotiations are available, we can use half way, win – win strategy,
between
demanded and current contract.
NOTE:
when input number here, double check to make sure correct numbers and avoid labor
strikes
CAPSIM 2023 - THE QUICK GUIDE AND TIPS TO WIN CAPSIM CAPSTONE 2023
IN 1 HOUR
- Capsim Capstone has 8 rounds, and you will manage sensor manufacturing
company to compete with 5 other strong competitors (can be controlled by PC or by
the other class teams)
- Each round you will have to make decisions for R&D, Marketing, production, HR,
Finance (and also TQM from Round 3)
- For R&D:
- Update products each round, increase PFMN and reduce SIZE
- Add new product in round 1-2-3 is also a key to win in later rounds
- Check the Industry and Condition report to find best numbers to update product each
round
- NOTE TO use Excel file to calculate R&D each round faster - you can download the
free excel file, check to link in comments
You have 5 products in 5 segments
For MTBF, use
Traditional - 17500
Low end - 14000
High End - 23000
Performance - 27000
Size - 21000
Each round adjust Product as follows
Traditional - increase PFMN + 0.7, reduce SIZE - 0.7
Low End - increase PFMN + 0.5, reduce SIZE - 0.5
High End - increase PFMN + 0.9, reduce SIZE- 0.9
Performance - increase PFMN + 1.0, reduce SIZE - 0.7
Size - increase PFMN + 0.7, reduce SIZE - 1.0
NOTE
- Also adjust by Drift rate to sell better
- Check Industry Condition report for Drift Rate to ideal spot
For marketing
- Set prices each round for 5 current products and new products if any
- Check the Courier report to see prices of competitors
- Each round can reduce prices by $0.50 to keep product competitiveness
- Also check Courier report to see the customer preference for each criteria of products
in different segment
- In marketing, it is important to calculate sales forecast. To do that, check Courier
report to find out Last round sold volume of each product, then multiple with segment
growth rate. Again, find this information in Courier report of last round
To set decisions for Prices
Traditional - start with $29.5
Low End - $21.5
High End - $39.5
Performance - $34.5
Size - $34.5
For Production
- This is the key to win the simulation 8 rounds
- Calculate Production plan = sales forecast - inventory
Can add 10% to avoid stock out, in case of products selling well
Note to add new products in round 1-2-3 to double sales and profit from round 4 to 8
And also note to add new capacity for new products
And increase product automation each round.
To set decisions for Production
Round 1
Production Plan = (Sales forecast - Inventory) * 115% (add 15% to avoid stock out)
Automation setting
Traditional - increase to 6.5 - 8 - 9 - 10 from Round 1
Low End - increase to 8 - 9 - 10 from round 2
High End - increase to 4-5-6 from round 4
Performance - increase to 4-5-6 from round 4
Size - increase to 4-5-6 from round 4
Note: if you prefer a segment to sell more, reduce prices, increase Promo and Sales
For HR
- Use $3000 for recruitment and 40 hours for training in round 1 -2 -3 and 4
- Use $5000 for recruitment and 80 hours for training from round 5 to round 8
For Finance
- Use max three sources of funds in round 1-2-3 to support R&D, Marketing,
Production expansion, automation increase (or use about $20000 each sources)
- From Round 4 to 6, use long term loans
- From Round 7 can buy back stock, pay loans, and pay dividends
For TQM
- Spend $1000 for each TQM initiatives
- Use for 4 rounds to gain max TQM effectiveness
THIS IS THE QUICK GUIDE FOR CAPSIM CAPSTONE 2023
If you need more details decisions for each round or need FREE support for 2 rounds
Send an email, I will set decisions for each round, then you can view all decisions and
adjust as you like to get top results.
Have a good time with Capsim
TQM
In TQM focus on setting $1.500 to $2.000 per round for each item,
select the most useful initiatives first. Continue this for three round
and then stop spending money into that initiatives, because it will no
longer make any significant changes. We can see this from graphs at
the end of screen.
NOTE
$5.000 is the maximum budget for each initiative for the whole game.
Optimal way to add money is $2.000 – $2.000 and $1.000 or $1.500
– $1.500 and $1.000 depends on maximum allowed for each round.
Priority order for TQM initiative benefits:
1. Reduce material costs
2.
3.
4.
5.
Reduce labor costs
Reduce R&D costs
Increase demands
Reduce SG&A expense
There are generally the best initiatives to put money in first:
1.
2.
3.
4.
5.
6.
CCE/6 Sigma Training
GEMI TQEM Sustainability
CPI Systems
Vendor /JIT
QIT
QFDE
We can apply try with different initiatives to see which one will bring
more effects or most effective. Then in later rounds, we spend money
in less effective initiatives when we have more extra money.
We can see the suggestions in the following tables.
PRODUCTION – 8 Round
by Round Strategy
If we can not complete all suggestion, try to come as close as possible.
Try to use all the budget available in the first 3 rounds and more if
possible
The KEY to win Capsim is to control Automation as early as possible.
The more automation is better.
Round 1 – Production
1. Upgrade original Low End sensor from 5.0 to 6.7 automation
2. Upgrade original Traditional sensor from 4.0 to 5.0 automation
3. Create 500 capacity with automation 5.0 for the new Low End
sensor
4. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total
available budget.
Round 2 – Production
1. Upgrade original Low End sensor from 6.7 to 8.4 automation
2. Upgrade original Traditional sensor from 5.0 to 6.0 automation
3. Create 500 capacity with automation 5.0 for the new
Traditional sensor
4. Upgrade new Low End sensor from 5.0 to right 8.4 automation.
5. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total
available budget.
Round 3 – Production
1.
2.
3.
4.
5.
Upgrade original Low End sensor from 8.4 to 10.0 automation
Upgrade new Low End sensor from 8.4 to 10.0 automation.
Upgrade original Traditional sensor from 6.0 to 7.0 automation
Upgrade new Traditional sensor from 5.0 right to 7.0 automation
Create 400 capacity with automation 3.0 for the new High End
sensor
6. Add extra capacity for new Low End sensor
7. Add extra capacity for original Low End sensor
NOTE: check the bottom right corner to see if we use close to total
available budget.
Round 4 – Production
1. Upgrade original Traditional sensor from 7.0 to 8.0 automation
2. Upgrade new Traditional sensor from 7.0 to 8.0 automation
3. (Optional) Reduce Capacity for segments that are being exited,
such as Performance and Size
4. Upgrade original High End sensor from 3.0 to 4.0 automation
5. Upgrade new High End sensor from 3.0 to 4.0 automation
6. Add extra capacity for all needed sensors
NOTE: check the bottom right corner to see if we use close to total
available budget.
Round 5 – Production
1. Upgrade original High End sensor from 4.0 to 5.0 automation
2. Upgrade new High End sensor from 4.0 to 5.0 automation
3. (Optional) Reduce Capacity for segments that are being exited,
such as Performance and Size
4. Add extra capacity for new High End sensor
5. Add extra capacity for all needed sensors
NOTE: check the bottom right corner to see if we use close to total
available budget.
Round 6 and 7 – Production
1. Add extra capacity for all needed sensors
Round 8 – Production
1. Last round of the game, do not add any capacity or automation !!