®
©2014 KEAW

Kelley Undergraduate Capstone Classes
J401  &  J402
Case  Method
J411
Capstone ®  Simula@on
Comp-­‐XM  ®  Assessment
PRIMARY
PRINCIPLES
‘PBLs’
Critical
Thinking
Written
Communication
✚
Collaboration & Communication
Management & Leadership
Professional Competencies
2


History of Sensor Industry
   Industry Direction
   Taking Over Your Company

Functional Areas

Measuring Success

Suggestions and Schedule
Capstone Business Simulation 3


Electronic Sensors – Light Industrial

Medium/High Technology
•
Patented technological advances
•   Extraordinary value propositions

One Company Dominated the Marketplace
•
Forced out the competition
•
Lost strategic focus and direction
•
Allowed past strengths to deteriorate
•
Courts responded to complaints

Industry Break Up
into 6 equal & similar companies
Capstone Business Simulation 4


Customers (OEMs) need sensors for their products

Initially one market segment, now breaking into five

Very different demands developing between the market segments http://www.ctscorp.com
Capstone Business Simulation 5

Low
End
Perform- ance
Traditional
Size
High
End
   In our industry we track the change in customer demands on a perceptual map
   Over 8 years the customers will demand much faster and smaller sensors
   Market segments will continue to diverge with less overlap between segments
Capstone Business Simulation 6

“I want these sensors to be cheap.”
“I want them to have been
around for a while –
no Beta Testing!”
“They have to be
moderately reliable.”
“The technology doesn’t have to
be cutting edge.”
Capstone Business Simulation 7

“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.”
Capstone Business Simulation 8

Sees the next 8 years as consistent growth .
All market segments increase at a nice ‘clip’ , according to market analysts.
“I see the entire market growing at around 14% or 15% per year. The High
End market alone will be growing at a whopping 19.8%.”
I hope those companies out there are ready for that kind of expansion!”
70000
60000
50000
40000
30000
20000
10000
0
Year
1
Year
2
Year
3
Year
4
Year
5
Year
6
Year
7
Year
8
Capstone Business Simulation 9

Low
End Perform- ance
Traditional
Size
High
End
Size &
Performance are only 2 of 5 criteria needed to meet customer segment requirements
‘Ideal Position’ =
Circle Center +
Ideal Spot Offset
Initial ‘Ideal Position’ & Importance
Differences for Each Segment
Ideal
Performance
Position MARKET
Size SEGMENT
Price
$
Age
Years
Reliability
MTBF
1.7
2.5-0.8
16%
18.3
17.5+1.8
LOW $15-
$25
END
7 yrs
53% 24%
12k-17k
7%
5.0
21%
15.0 TRADI- $20-
$30
2 yrs
TIONAL 23% 47%
14k-19k
9%
9.4
8.0+1.4
29%
16.0
17.0-1.0
PERFOR- $25-
$35
1 yr
MANCE 19% 9%
22k-27k
43%
Remain the
SAME
Over Time
•
Age
•
Reliability
CHANGE or drift
Over Time
•
Circle Center
Size & Performance
•
Price (-$.50/yr)
4.0
3.0+1.0
43%
8.9
7.5+1.4
43%
10.6
12.0-1.4
SIZE $25-
$35
SEGMENT 9%
11.1
12.5-1.4
Capstone Business Simulation
HIGH $30-
$40
END 9%
1.5 yr 16k-21k
29% 19%
0 yr
29%
20k-25k
19%
10

A NDREWS
SIX
COMPANIES
$100 million in Sales
B ALDWIN
5 Product
Lines
C HESTER
Closed
Marketplace
D IGBY
E RIE
F ERRIS
Capstone Business Simulation 11

Company Fires Management Team
After poor results, lackluster sales and angry customer reports, the Chairman of the Board of Directors has announced the immediate termination of the
Management Team.
“This is a black day for our company,” said Chairman
‘Killer Ken’ Wendeln, “We need to hire dynamic and strategic thinking leadership who will be able to take this company into the future and keel the competition!”
“Due to this urgent and challenging opportunity, I have hired the Kelley ‘Dream Team’ to start immediately. I expect to see great things from this Executive Team!”
Capstone Business Simulation 12

Last management team left the company in poor shape:

No clear strategy or direction

Products are not meeting customers buying criteria

Most of your customers do not even know your products exist

Sales force and distribution channels deteriorate

Misallocation of assets

Under investment in automation and training

No financial policy or structure
Capstone Business Simulation 13

Production
R
&
D
Fin ance
Marketing
Capstone Business Simulation 14

“Our products are not priced optimally.
And many of our customers don’t even know our product exists.”
   Set the price of our products in the marketplace
   Build customer awareness through promotion
   Establish a sales force and distribution channels

Set the sales forecast for our products

Set Credit Policies AR/AP
Capstone Business Simulation 15

   Establish the specification of the products to meet customer demand

Build the quality and reliability (MTBF) into the products

Ensure the perceived age of the product meets customer demands
   Create new products to meet the changing marketplace
“Our products are not well positioned in the marketplace.”
Capstone Business Simulation 16

“We are paying too much for labor costs.
Our capacity to produce is far greater than the demand.”
   Schedule production for each line

Purchase machinery to automate our facilities
   Buy or sell capacity of product lines

Manage the majority of the company’s fixed assets
   Establish and train your workforce complement
Capstone Business Simulation 17

   Acquire capital to fund capital expansions
$
Stock
$
Long Term Bonds
$
Short Term Debt
$
‘Emergency’ Loans
   Issue dividend to our shareholders
   Balance our debt portfolio

Manage your proformas –
Financials & Balanced Scorecard
“We have no financial policy statement.
We have poor cash flow and substandard financial ratios.”
Capstone Business Simulation 18

A management tool to compare
‘WHAT-IF’ scenarios by the company.

Balance Sheet

Profit & Loss

Cash Flow

Financial Ratios

Balanced Scorecard
WARNING: use your judgment, does NOT take into account the competitors’ decisions .
Capstone Business Simulation 19

Capstone Business Simulation 20

Low End Buying Criteria
Capstone Business Simulation 21

High End Buying Criteria
Capstone Business Simulation 22

“I skate to where the puck is going to be … not where it has been.”
- Wayne Gretzky
Capstone Business Simulation 23

Market
Segment
Round
0
Annual
Growth
Rate
Round
1
Round
2
Traditional 9.2%
Round
3
Round
4
Round
5
Round
6
Round
7
Round
8
Low End
High End
Pfmn
Size
11.7%
16.2%
19.8%
18.3%
Market Segments have different but constant annual growth rates
Capstone Business Simulation 24

Market
Segment
Traditional
Product
Name
First Shift
Capacity(000)
Second Shift
Capacity(000)
Firm Industry Firm Industry
1,800 3,600
Automation
Level
4.0
Cost to
Double
Capacity
$39.6M
Cost to
Raise
Automation to 10.0
$43.2M
Low End
High End
Pfmn
Size
Capstone Business Simulation 25

Market
Segment
Traditional
Low End
High End
Performance
Size
Product Margin
Potential
Traditional
Low End
High End
Performance
Size
Product
Name
Price
$30.00
Material
Cost
$8.00
Labor
Cost
$3.36
Second
Shift (Y/
N)
N
Y
N
N
N
Product Margin
$ %
N
N
N
N
N
$18.64 62%
Capstone Business Simulation 26

Traditional
Price
Reliability
Age
Positioning
Awareness
Accessibility
Overall
Low End
Price
Reliability
Age
Positioning
Awareness
Accessibility
Overall
High End
Price
Reliability
Age
Positioning
Awareness
Accessibility
Overall
Performance
Price
Reliability
Age
Positioning
Awareness
Accessibility
Overall
Size
Price
Reliability
Age
Positioning
Awareness
Accessibility
Overall
Capstone Business Simulation 27

Market ing
R & D   Product ion
28

Fin ance
Debt
Stock holders
29

I
1.
You determine & submit your strategy.
2.
Select the criteria & relative weighting to measure the success of your strategy at the END of each of CR#5 thru CR#8 :

ROE  STOCK PRICE

ROS  CUMULATIVE PROFIT

ROA  ASSET TURNOVER

MARKET CAPITALIZATION

MARKET SHARE
3.
Presentation of your strategy, results, and ‘lessons learned’ during last class session.
Capstone Business Simulation 30

II
Externally evaluates your company in ten categories of management performance:
1 2 3 4 5 6 7 8 9 10 1000
Capstone Business Simulation 31

III
(BS)
✔ ✔ ✔ ✔
Internal evaluation of management’s performance across 4 categories with up to 19 criteria
Capstone Business Simulation 32

III
✔ ✔
Recap of:
Average
Cumulative
Ending
Results
33 Capstone Business Simulation

IV
YOU determine the weighting of your Success
Measures prior to CR #5 with your Strategy
Capstone Business Simulation 34

ORGANIZATION

Determine and select the skills

Setup a flexible structure

Assign responsibilities

Rotate roles & responsibilities
MEETINGS

Set time aside for face-to-face meetings, initially 2 to 3 hours

Have an agenda & stick to it

Be respectful of others’ time

Record your board minutes starting with competitive rounds
STRATEGY

Do a Situation Analysis for the market and for your company

Create a purpose & direction for your company ( vision/mission )

Determine viable strategic options

Do initiate the strategy you want to try during the 1 st or 2 nd round

Don’t try to pre-determine the other 5 strategies – you won’t
DECISION MAKING

Read the Student Guide and use the Capsim on-line tutorials

Do use ALL of the data in the reports and Capstone Courier

Don’t become a victim of
‘Analysis – Paralysis’

Use the proforma tools - and save often

Allow for midcourse corrections, don’t over-react/over-commit
Capstone Business Simulation 35

J411 Capstone - Schedule of Events
CAPSTONE®  SimulaAon
Individual  Rehearsals
Individual
Ar@cles  &  Readings
for
Class  Discussion
Team  PracAce  Rounds
#PR1  –     with  Advanced  Marke9ng
#PR2  –     adds  HR
#PR3  –       adds  TQM
#PR4  –     with  AM,  HR  &  TQM
Team  CompeAAve  Rounds
IniAal  Strategy
Final  Strategy
#CR1  –     with  Advanced  Marke9ng
#CR2  –     adds  HR
#CR3  –       adds  TQM
#CR4  –     with  AM,  HR  &  TQM
#CR5  –
#CR6  –
#CR7  –
#CR8  –
Team  PresentaAons
Last  Class  Periods
Team  Decisions
Due  by  Scheduled
Date  &  Time
COMP-­‐XM®  Self-­‐Competency  Review
Available  aQer  CR#8  –  Complete  by  final  examinaAon  date/Ame
Allow  6-­‐8  hours  total  in  up  to  5  separate   sittings
AACSB
Accredita@on
Requiremen t
36

You must register (and pay the Capsim fee) to participate in the J411 required
Capstone Business Simulation and Comp-XM Self-Competency Review http://www.capsim.com
Your Industry Number
See Syllabus
Capstone Business Simulation 37

Intro, Rehearsal Tutorial & Situation Analysis
✔
✔
Capstone Business Simulation
✔
✔
38

Intro, Rehearsal Tutorial & Situation Analysis
✔
✔
✔
✔
Capstone Business Simulation 39

Additional Modules – Marketing, HR & TQM
✔
✔
Capstone Business Simulation 40

“If you don’t have a strategy you will be . . . part of somebody else’s strategy.”
- Alvin Toffler
Capstone Business Simulation 41