WELCOME TO
CAPSTONE
BUSINESS
SIMULATION
Dr. Shook
Auburn University
Objectives
• Demonstrate effectiveness of multi-discipline
teams working together.
• Use strategic thinking to an advantage.
• Test your business acumen.
• Understand overall interaction and impact of
various parts of a business on one another.
• Grow an awareness of competition.
• Take away practical know-how to improve the
effectiveness of your business.
Why Simulate
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Risk Free
View Alternative Strategies
Enjoyable
Compresses Time (1 Round=1Year)
Selectivity <> Integration
SENSOR
INDUSTRY
OVERVIEW
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
Low
Tech
Performance
Traditional
Size
High
Tech
In our industry we track
the changing customer
demand on a perceptual
map
Over 8 years the
customers will demand
much faster and smaller
sensors
Market Segments will
continue to diverge
Low Tech & Traditional
Customers
“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.”
You’re
not giving
me what I
want
High Tech, Size &
Performance 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’ll pay more to get what I want.”
“I like a pretty high reliability.”
And I’m not
getting what I
want!
SENSOR INDUSTRY ANALYST PROJECT
ONGOING GROWTH
Sees the next 8 years as consistent growth. All market
segments increase at a nice “clip,” according to market
analyst.
“I see the entire
market growing at
around 14% or 15%
per year. The High
Tech market alone will
be growing at a
whopping 16%.”
70000
60000
50000
40000
30000
20000
10000
I hope those
companies out there
are ready for that kind
of expansion!”
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COMPANY
OVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOY
FOR IMMEDIATE RELEASE
William Donaldson, Chairman of the SEC, took dramatic
action today by breaking up the monolithic corporation
Sensors, Inc.
In a statement to the press Chairman Donaldson outlined
the reason and the outcome of this move.
“We cannot allow monopolies of this sort to impact an
entire industry!” stated Donaldson. “The customers that
utilize these sensors are being held hostage.
“Effective immediately Sensors, Inc will be dissolved into
the Andrews, Baldwin, Chester, Digby, Erie and Ferris
companies.”
The Competition
ANDREWS
DIGBY
4 Companies
$100 Million in Sales
BALDWIN
5 Product Lines
Erie
Closed Marketplace
CHESTER
Ferris
SHAKE UP IN SENSOR INDUSTRY
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 Shook,
“We need to hire a dynamic leadership group who will be able
to take this company into the future!”
“Due to this immediate need I have hired the Dream Team to
start on January 1st. I expect to see great things from this
Executive Team!
WELCOME TO
YOUR NEW
COMPANY!
Functional Areas
R&D
Production
Finance
Marketing
Research & Development
• 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.”
Marketing
• Set the price of our products
in the marketplace
• Build customer awareness
through promotion
“Our products
are not priced
optimally.
And many of our
customers don’t
even know our
product exists.”
• Establish a sales force and
distribution channels
• Set the sales forecast for our
products
• Set Credit Policies AR/AP
Production
• Purchase machinery to
automate our facilities
• Buy or sell capacity of product
lines
“We are paying
too much for
labor costs.
Very soon we
will run out
of capacity to
meet demand.”
• Schedule production for each
line
• Manage the majority of the
companies fixed assets
• Establish your workforce
complement
Finance
• Acquire capital to fund capital
expansions
– Issue Stock
– Short Term Debt
– Issue Long Term Bonds
• Issue dividend to our
shareholders
• Balance our debt portfolio
• Manage our proformas
“We have poor
cash flow and
substandard
financial ratios.
We have no
financial policy
statement.”
Proformas
A great management tool driven by
forecasts and projections. Allows
“What if” Scenarios by the company.
• Balance Sheet
• Profit & Loss
• Cash Flow
• Financial Ratios
Scoring the Game
– Higher of Rank or
Relative Score
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ROE
ROS
ROA
CUM PROFIT
STOCK PRICE
MARKET CAPITALIZATION
ASSET TURNOVER
MARKET SHARE
RUNNING YOUR
COMPANY
THINGS TO DO ON
AN ANNUAL BASIS
To Do List
• Establish business strategy for your company
• Analyze Capstone Courier to see industry results
• Make tactical decisions across each functional
area (aligned to strategy!)
• Upload official results and confirm on the website
• Await results when Professor processes
• Rejoice in your superior capitalistic acumen
• Begin the process again by confirming alignment
of your results with your company’s strategic
goal.
Good Luck
and Enjoy!