Introduction to CapStone Business Simulation

advertisement

WELCOME TO

CAPSTONE

BUSINESS

SIMULATION

Professor

Ted Clark

HK University of

Science &

Technology

Objectives

• Demonstrate effectiveness of multidiscipline 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

• Risk Free

• View Alternative Strategies

• Enjoyable

• Compresses Time

(1 Round=1Year)

• “Siloing” <> 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”

And I’m not getting what I want!

“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.”

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%.”

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

COMPANY

OVERVIEW

The Competition

ANDREWS

BALDWIN

CHESTER

DIGBY

6 Companies

$100 Million in Sales

5 Product Lines

Closed Marketplace

ERIE

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

(Chainsaw Ted ) Clark, “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 1 st . 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

“Our products are not well positioned in the marketplace.”

• Create new products to meet the changing marketplace

Marketing

“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

Production

“We are paying too much for labor costs.

Very soon we will run out of capacity to meet demand.”

• Purchase machinery to automate our facilities

• Buy or sell capacity of product lines

• Schedule production for each line

• Manage the majority of the company’s 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

• Select a minimum of two criteria to be measured by:

– ROE

– ROS

– ROA

– CUM PROFIT

– STOCK PRICE

– MARKET

CAPITALIZATION

– ASSET TURNOVER

– MARKET SHARE

• Weight each selection.

RUNNING YOUR

COMPANY

Some

Suggestions

Some Suggestions

• Do set up an organization (team) structure & agenda

• Don’t be rigid in that structure

• Do pick a strategy that is fun

• Don’t try to pre-determine the other 5 strategies –

You won’t!

• Do rotate the keyboard

• Don’t forget to save often!

• Do use all the data in the reports

• Don’t become a victim of “Analysis – Paralysis”

• Do initiate your strategy in the first round

• Don’t over-commit and shut off all possibility of mid course correction

Good Luck and Enjoy!

Download