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
Low
Tech
Performance
Traditional
Size
High
Tech
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
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!”
“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
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’ll pay more to get what I want.”
“I like a pretty high reliability.”
And I’m not
getting what I
want!
Strategic Map
Large
Size
Small
Fast
Slow
Performance
Each Segment has a Sweet Spot
Low
Large
Perf
Trad
Sweet Spot
Size
High
Small
Slow
Fast
Two Stage Purchase Decision
Stage 1 - Match Product to Market
1. Product must plot within the segment.
Price
2. Product must fall within
price guidelines.
Quality
3. Product must fall
within quality guidelines
Size
Two Stage Purchase Decision
Stage 2 – Competitive Rankings of
Best Products
Position
Quality
1. Positioning
2. Age
Age
Sweet
Spot
0
Yrs
1
3. Quality
Price
HIGH END
20000
25000
4. Price
$30
$40
Segment Criteria Ranking
Traditional
Low End
High End
Perf
Size
• Age
• Price
• Price
• Age
• Position
• Age
• Quality • Position
• Position • Age
• Position
• Quality
• Position
• Quality
• Quality
• Price
• Price
• Age
• Quality
• Price
Functional Areas and Value Creation
R&D
Production
HRM
Finance
Marketing
Value Chain Analysis
Inbound
Logistics
Support
Activities
Primary Activities
Value Chain Analysis
Manufacturing
Inbound
Logistics
Support
Activities
Primary Activities
Value Chain Analysis
Outbound
Logistics
Manufacturing
Inbound
Logistics
Support
Activities
Primary Activities
Value Chain Analysis
Primary Activities
Marketing
Outbound
Logistics
Manufacturing
Inbound
Logistics
Support
Activities
Primary Activities
Service
Marketing
Outbound
Logistics
Manufacturing
Inbound
Logistics
Value Chain Analysis
Support
Activities
Value Chain Analysis
Support
Activities
Primary Activities
Service
Marketing
Outbound
Logistics
Manufacturing
Inbound
Logistics
Procurement
Value Chain Analysis
Technology Development
Primary Activities
Service
Marketing
Outbound
Logistics
Manufacturing
Procurement
Inbound
Logistics
Support
Activities
Value Chain Analysis
Human Resource Management
Technology Development
Primary Activities
Service
Marketing
Outbound
Logistics
Manufacturing
Procurement
Inbound
Logistics
Support
Activities
Value Chain Analysis
Headquarters Activities
Human Resource Management
Technology Development
Primary Activities
Service
Marketing
Outbound
Logistics
Manufacturing
Procurement
Inbound
Logistics
Support
Activities
Capstone Value Chain Activities
Firm Infrastructure
Human Resource Management
Technological Development
Service
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Procurement
Inbound
Logistics
Raw materials and
components
receiving
Warehousing
Inbound
Logistics
Materials handling
Production
Capacity and
production levels
Relatively Few
Management
Layers to
Production
Reduce Overhead
Firm Infrastructure
schedule
Effective Training Programs
Automation
levels
to Improve
Worker
Efficiency and Effectiveness
Human Resource Management
Investments in Technology in order
Labor
force utilization
to Reduce
Costs Associated
with
Manufacturing
Processes
levels
Technological Development
Frequent Evaluation Processes to
Procurement
Monitor Suppliers’ Performances
Policy Choice of Efficient Order
Plant Technology Sizes
Organizational
Learning
Small, Highly
Trained Sales
Force
Products Priced to
Generate Sales
Volume
Service
Outbound
Logistics
Efficient Plant
Delivery Schedule
Scale to Minimize that Reduces
Manufacturing
Costs
Costs
Selection of Low
Timing of Asset
Cost Transport
Purchases
Carriers
Operations
Inbound
Logistics
Improve efficiency
Outbound
Packaging
Logistics
Warehousing
Firm Infrastructure
Inventory management
Human Resource Management
Technological
Shipping and
Development distribution
Frequent Evaluation Processes to
Procurement
Monitor Suppliers’ Performances
Efficient Order
Sizes
National Scale
Advertising
Interrelationships
with Sister Units
Marketing
& Sales
Service
Selection of Low
Cost Transport
Carriers
Effective Product
Installations to
Reduce Frequency
and Severity
Products Priced to of Recalls
Generate Sales
Volume
Outbound
Outbound
Logistics
Logistics
Delivery Schedule Small, Highly
that Reduces
Trained Sales
Costs
Force
Marketing
Sales forecasting
Firm Infrastructure
Human Resource Management
Pricing strategy
Marketing strategy and
budget
Technological Development
Marketing
& Sales
Marketing
& Sales
Service
Outbound
Logistics
Operations
Inbound
Logistics
Procurement
Sales force
management
Service
Customer relations
Firm Infrastructure Warrantees,
guarantees
Human Resource Management
Spare parts
Tech help
Technological Development
Repair
Marketing
Service
& Sales
Service
Outbound
Logistics
Inbound
Logistics
Operations
Procurement
Procurement
Firm Infrastructure
Human Resource Management
Technological Development
Marketing
& Sales
Service
Vendor relations
Outbound
Logistics
Purchasing
Inbound
Logistics
Operations
Procurement
Procurement
Business services outsourcing
R&D
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Service
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Establish the specification of the
Create new products to meet the
products to meet customer
changing marketplace
demand
Build the quality and reliability (MTBF)
Manage new product cycle times
into the products
Research & Development
• Set Product coordinates (Position)
• Set MTBF rating (Quality)
• Drives Perceived age (Age)
• Drives breadth of product line
High
High
Eight
<
<
<
Low
Quality
Low
One
Age
Breadth
R & D Factors on Existing Products
Cycle time affected by:
• Automation level of production line
• Number of projects underway
• Distance moved on perceptual map
High
High
<
High
<
Low
Low
Automation Number of
Level
Projects
Long
<
<
Low
Distance
moved
Short
Cycle Time
HRM
Firm Infrastructure
Human Resource Management
Technological Development
Wages and benefits for employees
Procurement
Service
Negotiate with labor union
Marketing
& Sales
Operations
Inbound
Logistics
Recruiting and training of new
employees
Outbound
Logistics
Production line staffing
HQ
Activities
Support
Activities
Firm Infrastructure
Human Resource Management
Strategy and decision making
Government relations
Finance and Accounting
Public relations
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
General Counsel
Service
Technological Development
Success Measurements
Practice 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
6
4
3
2
1
0
Winner !
5
Assignments & Grading
ITEM
WEIGHT
Final Simulation Score
70%
Initial Strategy eMemo
10%
Board of Directors Briefing
20%
Computers and Facilities
A typical “day” of Capstone
Industry 1
SimId: C12084
31 AUG
Weds
Industry 2
SimId: C12085
SIM: Round 2 Decisions DUE 11:00
SIM: Round 2 Decisions DUE 11:00
Meet: Rounds 1-2 Debrief 1:00
Meet: Rounds 1-2 Debrief 2:00
SIM: Round 3 Decisions DUE 6:00
SIM: Round 3 Decisions DUE 6:00
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!