CAPSIMOverview

The Nature of CAPSIM

You are now MBA’s You are the experts. You have had the training. Top 5% of Educated People in the World You make the rules. If you don’t like the rules, change them. You write the books. If you don’t like what a book says, change

it. You teach the classes.

Simulation vs. Games

Simulation Used to Learn Real Life

Airline Pilots Astronauts Businesses

Games Fun Entertainment

My Role in CAPSIM

Not a Class To Teach Skills Class to Apply What You Already Know

BUSN 6120 Economics MRKT 5000 Marketing BUSN 6110 Production and Operations FINC 5000 & 5880 Finance HRMG 5000 Human Resources Others

Introduction

Sensors Identical Competitors Monopoly Breakup Everyone Begins the Same Oligopoly Market Structure

The Team Member Guide

The Team Member Guide is your definitive resource for what happens in the simulation.

Know it well. Everything in it is important It is overwhelming at first. It will get better as we go.

The Rehearsal Tutorial

Everyone must do the rehearsal tutorial before we start the simulation.

Where you get familiar with how the simultion works.

It is a tutorial on how to use the simulation.

It is not a practice round. It is not a competition round. It is not the COMP-XM exam.

Situation Analysis

Important step Don’t leave it out. Tells about

Current Market Conditions How the Industry Will Evolve Operational Planning

Reports

The Industry Conditions Report (One Time)

The Capstone Courier (The Newspaper) Rubric Debrief Report (Understanding

Mistakes) Many Others Like a Real World Business

Information is Everywhere. You must find what is useful. No one is going to tell you where to look.

The CAPSIM Spreadsheet

Use the Online Spreadsheet Let One Student do all the Updating

Departments

Research and Development Marketing Production Finance Other

Human Resources (later in simulation) Information Technology (Spreadsheets)

Research and Development

Designs Product Lines Invents New Products Revises Current Products Pay attention to Lead Times

Marketing

Sets Prices Promotes Your Product

Very Important Spend a Lot of Money on Promotion Creates Customer AWARENESS One of the things beginners get wrong.

Sales Forecast

Production

How Many Units You Will Produce Determines Production Capacity Discontinues Lines

Sells all inventory at half price Sets Automation Levels

Labor Costs go down as automation increases Takes Time Possible to Over-automate

Buys and Sells Production Lines

Finance

Raises Money to Run the Business Bank Notes Bond

Issues Retirements

Stock Issues Dividends Buy Back Stock

Human Resources and TQM

The HR Module Begins in Round 2 Allows you to manage the people you have.

The TQM Module Begins in Round 3 TQM is your Friend Use it to Lower Your Costs

Types of Play

Rehearsal Tutorial Individual

Practice Rounds 8 Rounds, Team Play

Competition Rounds 8 Rounds, Team Play

Comp-XM (Exam Rounds) 5 Rounds, Individual

Rounds

Each Round Represents One Year Takes 1-2 Hours to Complete

Each Team Uploads their Round Info Spin the Round

Happens for all teams at the same time Analyze The Results Upload the Next Round

Industry Conditions Report

Published Once at the Beginning

Buying Criteria

Price Age MTBF Positioning

Size Performance

Perceptual Map

Deals with Positioning See Page 4 of Team Member Guide Drift (Industry Conditions Report)

Continued

Fine Cut Rough Cut Outside

Customer Survey ScoreHow to Estimate Your Score

Extremely Important See Section 3.2 of the Team Member Guide

Understand Your Customer Survey Score Product Demand is Based on the CSS.

Build a Spreadsheet!!

Six Basic Strategies

Broad Cost Leader Broad Differentiator Niche Cost Leader (Low Tech) Niche Differentiator (High Tech) Cost Leader with Product Life Cycle Focus

High end, traditional, and low end focus Differentiator with Product Life Cycle

Focus High end, traditional, and low end focus

Typical ProblemsRunning Out of Money - Big Al

Borrowing money at high interest rates because you didn’t have enough cash to run the business.

Remember: Retained Earnings is not a cash account.

Typical ProblemsRunning Out of Product to Sell

Stock outs are bad Understand them and avoid them when

possible

Typical ProblemsForecasts

Marketing – Conservative In case sales don’t materialize

Production – Aggressive Because Finished Goods Inventory is a Liquid

Asset

Typical ProblemsAwareness And Accessibility

Awareness – Customers are Aware of Your Product Promotion Budget

Accessibility – Customers Can Find Your Product Sales Budget

Spend Lots of Money on Both of These

Typical ProblemsUnderestimating the Competition

Your competitors are Good The Computer Teams are Good

Typical ProblemsGetting Behind

Don’t Make Mistakes Early You can easily get behind and go

bankrupt. There is NO RESET BUTTON. You live with the consequences of your

decisions.

Typical ProblemsNot Having A Strategy

See the Six Basic Strategies Pick One Stick with it. If it doesn’t Work, Change it. There are Other Strategies

See the Strategic Planning Process Presentation

One Last Word of Advice

Companies pay employees lots of money to spend full time dealing with these issues

If you run out of things to do in this 1-2 hour exercise, you are doing something wrong.

There is always more you can do.

Questions