Acct 2220 - Capsim Simulation
Teams will run their own companies and
compete against one another. The focus is
on “Business Integration” and using
accounting information to develop good
analysis & decision-making skills.
Why use Simulation?
•An opportunity to take control of your learning.
•An application of what we are discussing in class.
•Planning & making your own business decisions &
understanding the implications of those decisions.
•Learning about the integration of multiple business
disciplines (i.e. R&D, Mkt, Prod, Acct, Finance).
•Recognition that there are no “perfect” answers.
•Team-building opportunity to work with others.
•A challenging, but engaging experience!
ELECTRONIC SENSORS:
AN
INDUSTRY
OVERVIEW
The Marketplace
• Customers (OEMs)
need sensors for their
products
• Initially one segment,
now breaking into two
Low Tech
High Tech
• Different customer
demands developing
between the segments
• Diversification in the
use and utility of the
sensors
The Marketplace
Low
Tech
High
Tech
• In our industry we
track the changing
customer demand on a
perceptual map.
• Over 8 years, customers
will demand much faster
and smaller sensors.
• Market Segments will
continue to diverge.
Low-Tech Customer Demands:
• “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.”
•Ex: Heat/Cooling sensors, Pressure
switches, Security apps, generic needs.
You are
not giving
me what I
want…
High-Tech Customer Demands:
• “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’m willing to pay more to get what I
want.”
• “I like a pretty high reliability.”
•Ex: Apple, Google, Dell, etc.
I’m not getting
what I want!
INDUSTRY ANALYSTS PROJECT HIGH
GROWTH IN THE SENSOR INDUSTRY!
Consistent growth is projected over the next 8 years. All market
segments will increase at a “nice clip,” according to market analysts.
“I see the entire
market growing at
around 14% or 15%
per year. The High
Tech market alone
will be growing at a
whopping 16-20%.”
I hope those
companies out there
are ready for that
kind of expansion!”
8000
7000
6000
5000
4000
3000
2000
1000
0
Year 1
Year 2
Year 3
Low Tech
Year 4
High Tech
Year 5
SEC ANNOUNCES BREAKUP OF MONOPOLY
FOR IMMEDIATE RELEASE
The SEC, took dramatic action today by breaking up the
monolithic corporation, Sensors, Inc.
In a statement to the press, the SEC outlined the reason
and the outcome of this move.
“We cannot allow monopolies of this sort to impact an
entire industry! 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
BALDWIN
CHESTER
DIGBY
6 Companies
$40 Million in Sales
1 Product Line
2 Segments
Closed Marketplace
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRY
Company Board 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 terrible day for our company,” said Chairman Zeigler.
“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 new
Executive Team!
WELCOME TO
YOUR NEW
COMPANY!
Functional Areas:
Companies will need to coordinate strategy and tactics across the
following areas:
R&D
Marketing
Production
Acct/Finance
Additional Modules
- HR (added Rnd 2 thru 8)
- TQM (added Rnd 4 thru 8)
Research & Development
•We need to establish the
specification of the products to meet
customer demand.
•What quality and reliability level
should we choose for our products?
•Let’s ensure the perceived age of the
product meets customer demands.
•Let’s create new products to meet
the changing marketplace!
“Our products
are not well
positioned in
the marketplace.”
Marketing
“Our products
are not optimally
priced.
And many of our
customers don’t
even know our
product exists!”
•We need to set the price of our
products in the marketplace.
•We need to build customer
awareness through promotion.
•We need to establish a sales force
and distribution channels.
•We must prepare a sales forecast
for our products each year!
•We need to set Credit Policies
(A/R & A/P)
Production
•Should we purchase machinery to
automate our facilities?
How do our labor
costs compare to
the competition?
Very soon, we
may also run out
of capacity to
meet demand!”
•Should we buy or sell “capacity”?
•We will need to schedule production
for each product line!
•We must manage the companies’
fixed (long-term) assets
•We must determine & manage our
workforce (i.e. # of workers)
Finance & Accounting
•How will we pay for all of this?
•How will we acquire “capital”?
•Should we issue Stock?
•Issue short-term Debt?
•Issue long-term Bonds (Debt)?
•Should we pay dividends to our
shareholders? If so, how much?
•We must analyze financial stmts.
•We must evaluate our Proformas.
We have poor
cash flow and
substandard
financial ratios!
We have no
financial plan
in place!
Proforma Financials
A great management tool driven by forecasts
and projections. Allows “What if” Scenarios
by the company.
•Balance Sheet
•Profit & Loss
•Cash Flow
•Financial Ratios
Performance Metrics Used
1) Success Measures (must commit by Round 2):
How will your team be evaluated? Select the criteria & weighting factors.
(Note: minimum 1% weighting for each of the 8 components below):
•ROS (Profitability)
•ROA (Profitability)
•ROE (Profitability)
•Cumulative Profit
•Stock Price (per share)
•Total Market Capitalization
•Asset Turnover (Mgmt Efficiency)
•Percentage of Market Share
Note: From your dashboard, see upper left for Homework/Success
Measures.
2) The “Balanced Scorecard” (Results of Decisions):
RUNNING YOUR
COMPANY…
THINGS TO DO ON AN
ANNUAL BASIS…
To Do List:
•First, establish a long-term Strategic Plan.
•Review Foundation FastTrack for industry conditions.
•Make tactical decisions across each functional area
that is consistent with your overall company strategy.
•Upload your decisions to Capsim site by due dates.
•Review each round’s results and analyze not only
your results, but the competitors as well.
•Build your business and create shareholder wealth!
Groupwork Considerations:
Good Luck in Running Your
Company!
Next Steps:
1) Registration in lab.
2) Individually complete the “Getting Started”
assigns by the due date (see class website).
3) Three Practice rounds (1 week).
4) Eight Competition rounds (6 weeks).