Agenda & Announcements for Class #3

• Agenda:– In the News……..– Team Assignments– Capstone Simulation Review– Team Time

• Announcements:– Capstone Registration Problems?

• Must register before Tuesday – get familiar

– Teams Meet before Class #5 – Next Thursday • Strategies, Tactics and Decisions (see Decision Matrix)• Team Norms and Objectives• Input decisions by Monday 10/18 at 11:59am (error on Syllabus)

– Strategic Thinking and Leadership Self-assessment Survey will be e-mailed to you – complete by Sunday October10th

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© 2007 Thomson/South-Western. All rights reserved. 1–2

Establishing Teams Establishing Teams

• 8-10 Teams in the Class (3-4 people per team)– 2 Industries; 4-5 teams in each

• Avoid Existing Friend Groups– 1 “Marketing Whiz”– 1 “Finance / Accounting Whiz”

• Meeting Time Best Team Selection– M/W Mornings – M/W Afternoons– T/Th Mornings – T/TH Afternoons– Weekday Evenings– Weekends

Capstone Simulation• Functions:

– Research and Development– Marketing– Production– Finance– Human Resources (Round 2)

• Key Points:– Most numbers in 1,000’s (000), i.e. 1,000 = 1 million– Functions interrelated – Understand Differences in Segments!– Must be connected to Internet for “Official Decisions”– We are doing “Tournament” (not “footrace”)

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Your History & Product

• Recently Broken Up into 6 Companies

• Electronic Sensors

• 5 Products to Start– Decide to Add or Terminate a Product(s)

• Key Product Attributes:– Customer Perception (Map)

• Size (smaller is more valuable)• Performance (speed – faster is more valuable)• MTBF – “Quality” (Mean Time Before Failure – average)• Age – last updated

– Price

• See Segmentation Decision Factors in Guide

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Perceptual Map

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Performance (Speed)Slower Faster

Size

Big

Small

4 P’s• Product*• Price• Place• Promotion

Product• Size• Speed• MTBF• Age

Decision Making Process1. Analyze Environment

• Read Market Reports and Understand Customers• Competitors are all Equal Now• Understand Industry Forecasted Future by Segment

2. Determine Mission and Vision and Strategies• Determine Target Segments• Determine Competitive Strategy (s) – 6 defined in Guide

3. Determine & Integrate Operational Decisions:• R&D – product features, new products, eliminate products• Marketing – Product, Price, Promotion (not \Place)• Production – capacity, automation, integrated with forecast & HR• Finance – finance capital improvements, maybe R&D• Human Resources – hiring, development, productivity, turnover

4. Review Pro-Formas, Best/Worst Cases (sales)• Reconsider decisions

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Capstone “Pro-Formas”

• Forecast of Outcome Given Assumptions

• “Garbage in – Garbage out”

• Pro-Formas can be used for Best/Worst Case Analysis 7

Actuals = Input Actuals Subject to Others

Sales/revenues XXX

Cost of Goods Sold Cash Flow Net Income for CGS

R&D Expense X

Marketing Expenses X

Production Cost per Unit X

Inventory X

Dividends X

Bond Actions (Buy/Sell) X

Emergency Loans (cash flow) X

Decisions – for each product

• By product– R&D - Product – (Size, Speed, MTBF, Age)– Develop New or Terminate Products– Price– Promotion (Promotion Budget)– Place (Sales Budget)– Sales Forecast (goes to Production & Finance)

• Production – for each product:– Units to be Produced (sales & inventory)– Buy/Sell Capacity– # of Shifts– Automation Level– # of Employees (Compliment) and Overtime

• Watch This – surplus employees = high cost/unit

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Decisions for Company:• Finance

– Review Pro-Formas (based on forecasts!) to determine needs for cash

– Credit Policy A/R (with Marketing) – Perform Best/Worst Case Scenarios– Issue/Retire Stock– Dividends– Issue/Retire Long Term Debt– Barrow Short Term (variable rates)– Emergency Loan Risk

• Human Resources (starting Round 2)– Compliment (#) for Production– Caliber– Training– Labor Negotiations (After Round 3)

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Analyst Reports – Balanced Scorecard• Annual (Round) Report

• Scores of 100 points in each of the following:1. Margins2. Profits3. Emergency Loans4. Working Capital Usage5. Market Share6. Forecasting Accuacy7. Customer Satisfaction8. Productivity9. Financial Structure10.Wealth Creation

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Roles Options/Combinations

1. Product Manager: Responsible for one of the five products in your starting product line.

2. Segment Manager: Responsible for one of the five market segments.

3. Functional Manager: Responsible for R&D, Marketing, Production, HR or Finance.

4. Competitive Intelligence Officer: Responsible for predicting the behavior of one of your competitors

5. Matrix or multiple responsibilities11

Resources:

• Student Guide

• On Line Help– Manager Guide– Tutorials & Demonstrations– Student FAQs

• Teammates

• Instructor

• Capstone Customer Service – MSI Support

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Getting Started

• Log into computers

• Access: www.capsim.com

• Log Into Capstone Simulation

• Download capstone.xls

• Select Downloaded Excel File – Open and log on

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Key Dates• Before Tuesday 10/12

– Solo Capstone Simulations – 4 Practice Rounds & Quiz

• By Monday 10/18 (change syllabus schedule)– Teams Meet and Develop Strategic and Tactical Plans for Practice

Rounds– Decision Input-Team Practice Round (Save Decisions)

• 11:59 am Day Before Class (Class on Tuesday 10/19)

• Wednesday 10/20 – Round 2 Decisions Due 11:59am– Strategies should drive, tactics based on ourcome

• By Wednesday 10/28– Review Practice Round Results– Identify Key Lessons Learned (hand in)– Competition Round 1 Decisions due day before class– Team Strategic Plan Due

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Administrative Processes• Solo Rounds –

– Excel or On Line “Rehearsal Simulation”

• Practice and Competition Rounds– Excel “Work on My Company’s Official Decisions”– Last Person Saves Decisions– Have Review and Assurance Process

• Capstone System “Homework” to aid you – no need to complete or submit except for Solo Round Quiz

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Next Class

• Chapter 3 – Internal Analysis

• Apple Store Article

• Trouble in Paradise Case - be prepared to discuss in class

•4 Solo Practice Rounds & Quiz

•Teams Prepare for practice rounds

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