Embed Size (px)
Citation preview
Organizational StrategyMANA 4322
Assurance of Learning
The University of Texas The University of Texas at Arlington ishellipat Arlington ishellip
A 100+ year old comprehensive research teaching and public service university offering
89 baccalaureate degree programs
71 master degree programs
30 doctoral degree programs
One of the largest members of the UT System
The UT Arlington The UT Arlington College of College of BusinessBusiness ishellip ishellip
Accredited by AACSB International ndash The highest most respected accreditation in the World
1 of only 5 Business Schools based in the DFW metroplex to have earned this distinction 1 of only 168 Business Schools accredited at all levels and in both its business and accounting programs Only 15 of Business Schools in the world have achieved this level of accreditation
Consistently recognized as one of the Best Graduate Business Schools by US News amp US News amp World Report World Report and other media outlets
Assurance of LearningLearning Objectives1 Display understanding of multiple business functions (finance marketing
etc) and inter or cross-functional problems and issues2 Show evidence of problem solving and decisional ability in dealing with
strategic and other business problems and situations3 Exhibit awareness of global business and economic systems4 Demonstrate knowledge of basic business research methods and data
analysis techniques5 Understand importance of leadership teamwork and interpersonal skills in
buildingmanaging a successful organization6 Demonstrate knowledge of information technology and its impact on
effective management of the enterprise7 Understand the values and practices associated with the ethical and legal
responsibilities of managing organizations8 Demonstrate competency in oral and written communication through
presentation of clear and concise information
FOUNDATION BUSINESS SIMULATION
FOUNDATION BUSINESS SIMULATION
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
The University of Texas The University of Texas at Arlington ishellipat Arlington ishellip
A 100+ year old comprehensive research teaching and public service university offering
89 baccalaureate degree programs
71 master degree programs
30 doctoral degree programs
One of the largest members of the UT System
The UT Arlington The UT Arlington College of College of BusinessBusiness ishellip ishellip
Accredited by AACSB International ndash The highest most respected accreditation in the World
1 of only 5 Business Schools based in the DFW metroplex to have earned this distinction 1 of only 168 Business Schools accredited at all levels and in both its business and accounting programs Only 15 of Business Schools in the world have achieved this level of accreditation
Consistently recognized as one of the Best Graduate Business Schools by US News amp US News amp World Report World Report and other media outlets
Assurance of LearningLearning Objectives1 Display understanding of multiple business functions (finance marketing
etc) and inter or cross-functional problems and issues2 Show evidence of problem solving and decisional ability in dealing with
strategic and other business problems and situations3 Exhibit awareness of global business and economic systems4 Demonstrate knowledge of basic business research methods and data
analysis techniques5 Understand importance of leadership teamwork and interpersonal skills in
buildingmanaging a successful organization6 Demonstrate knowledge of information technology and its impact on
effective management of the enterprise7 Understand the values and practices associated with the ethical and legal
responsibilities of managing organizations8 Demonstrate competency in oral and written communication through
presentation of clear and concise information
FOUNDATION BUSINESS SIMULATION
FOUNDATION BUSINESS SIMULATION
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
The UT Arlington The UT Arlington College of College of BusinessBusiness ishellip ishellip
Accredited by AACSB International ndash The highest most respected accreditation in the World
1 of only 5 Business Schools based in the DFW metroplex to have earned this distinction 1 of only 168 Business Schools accredited at all levels and in both its business and accounting programs Only 15 of Business Schools in the world have achieved this level of accreditation
Consistently recognized as one of the Best Graduate Business Schools by US News amp US News amp World Report World Report and other media outlets
Assurance of LearningLearning Objectives1 Display understanding of multiple business functions (finance marketing
etc) and inter or cross-functional problems and issues2 Show evidence of problem solving and decisional ability in dealing with
strategic and other business problems and situations3 Exhibit awareness of global business and economic systems4 Demonstrate knowledge of basic business research methods and data
analysis techniques5 Understand importance of leadership teamwork and interpersonal skills in
buildingmanaging a successful organization6 Demonstrate knowledge of information technology and its impact on
effective management of the enterprise7 Understand the values and practices associated with the ethical and legal
responsibilities of managing organizations8 Demonstrate competency in oral and written communication through
presentation of clear and concise information
FOUNDATION BUSINESS SIMULATION
FOUNDATION BUSINESS SIMULATION
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Assurance of LearningLearning Objectives1 Display understanding of multiple business functions (finance marketing
etc) and inter or cross-functional problems and issues2 Show evidence of problem solving and decisional ability in dealing with
strategic and other business problems and situations3 Exhibit awareness of global business and economic systems4 Demonstrate knowledge of basic business research methods and data
analysis techniques5 Understand importance of leadership teamwork and interpersonal skills in
buildingmanaging a successful organization6 Demonstrate knowledge of information technology and its impact on
effective management of the enterprise7 Understand the values and practices associated with the ethical and legal
responsibilities of managing organizations8 Demonstrate competency in oral and written communication through
presentation of clear and concise information
FOUNDATION BUSINESS SIMULATION
FOUNDATION BUSINESS SIMULATION
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
FOUNDATION BUSINESS SIMULATION
FOUNDATION BUSINESS SIMULATION
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
bull Demonstrate effectiveness of multi-discipline teams working together
bull Use strategic thinking to an advantagebull Test your business acumenbull Understand overall interaction and impact of
various parts of a business on one anotherbull Grow an awareness of competitionbull Take away practical know-how to improve the
effectiveness of your business
ObjectivesObjectives
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Why SimulateWhy Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integrationbull Learn consequences of good
and bad decisions
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
SENSORINDUSTRYOVERVIEW
SENSORINDUSTRYOVERVIEW
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
The Marketplace The Marketplace
Customers (OEMs) need sensors for their productsCustomers (OEMs) need sensors for their products
Initially one segment now breaking into twoInitially one segment now breaking into two
Very different customer demands between the two segments
Very different customer demands between the two segments
Diversification in the use and utility of the sensorsDiversification in the use and utility of the sensors
High TechHigh Tech
Low TechLow Tech
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
The Marketplace The Marketplace
In our industry we track the changing customer demand on a perceptual map
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
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to divergeMarket Segments will continue to diverge
LowTech
HighTech
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Low Tech CustomersLow Tech Customers
ldquoI want these sensors to be cheaprdquoldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta TestingrdquoldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquoldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquoldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
High Tech CustomersHigh Tech Customers
ldquoThese sensors have to be small like micro and fastrdquoldquoThese sensors have to be small like micro and fastrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI need them to be right out of RampD Irsquom talking ZERO years on the marketrdquo
ldquoI like a pretty high reliability but itrsquos not that importantrdquoldquoI like a pretty high reliability but itrsquos not that importantrdquo
ldquoIrsquoll pay more to get what I wantrdquoldquoIrsquoll pay more to get what I wantrdquo
And Irsquom not getting what I
want
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth All market segments increase at a nice ldquocliprdquo according to market analyst
ldquoI see the entire market growing at around 14 or 15 per year The High Tech market alone will be growing at a whopping 20rdquo
I hope those companies out there are ready for that kind of expansionrdquo
0
1000
2000
3000
4000
5000
6000
7000
8000
Year 1 Year 2 Year 3 Year 4 Year 5
Low Tech High Tech
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
COMPANYOVERVIEWCOMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Christopher Cox Chairman of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Donaldson outlined the reason and the outcome of this move
ldquoWe cannot allow monopolies of this sort to impact an entire industryrdquo stated Donaldson ldquoThe customers that utilize these sensors are being held hostage
ldquoEffective immediately Sensors Inc will be dissolved into the Andrews Baldwin Chester Digby Erie and Ferris companiesrdquo
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
The CompetitionThe Competition
6 Companies6 Companies
$40 Million in Sales$40 Million in Sales
1 Product Lines1 Product Lines
Closed MarketplaceClosed Marketplace
ANDREWSANDREWS
BALDWINBALDWIN
CHESTERCHESTER
DIGBYDIGBY
ERIEERIE
FERRISFERRIS
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
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
ldquoThis is a black day for our companyrdquo said Chairman Jeffrey E McGee ldquoWe need to hire a dynamic leadership group who will be able to take this company into the futurerdquo
ldquoDue to this immediate need I have hired the Dream Team to start on January 1st I expect to see great things from this Executive Team
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
WELCOME TO YOUR NEW COMPANY
WELCOME TO YOUR NEW COMPANY
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Functional AreasFunctional Areas
RampDRampDRampDRampD
MarketingMarketingMarketingMarketing
ProductionProductionProductionProduction
FinanceFinanceFinanceFinance
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Research amp DevelopmentResearch amp Developmentbull Establish the specification of the products to
meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
bull Establish the specification of the products to meet customer demand
bull Build the quality and reliability (MTBF) into the products
bull Ensure the perceived age of the product meets customer demands
bull Create new products to meet the changing marketplace
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
MarketingMarketing
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
bull Set the price of our products in the marketplace
bull Build customer awareness through promotion
bull Establish a sales force and distribution channels
bull Set the sales forecast for our products
bull Set Credit Policies ARAP
ldquoldquoOur productsOur productsare not pricedare not priced
optimallyoptimally
And many of ourAnd many of ourcustomers donrsquotcustomers donrsquoteven know oureven know our
product existsrdquoproduct existsrdquo
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
bull Purchase machinery to automate our facilities
bull Buy or sell capacity of product lines
bull Schedule production for each line
bull Manage the majority of the companyrsquos fixed assets
bull Establish your workforce complement
ProductionProduction
ldquoldquoWe are payingWe are payingtoo much fortoo much forlabor costslabor costs
Very soon weVery soon wewill run outwill run out
of capacity toof capacity tomeet demandrdquomeet demandrdquo
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
bull Acquire capital to fund capital expansionsndash Issue Stockndash Short Term Debtndash Issue Long Term Bonds
bull Issue dividend to our shareholders
bull Balance our debt portfolio
bull Manage our proformas
FinanceFinance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
bull Balance Sheet
bull Profit amp Loss
bull Cash Flow
bull Financial Ratios
ProformasProformas
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
A great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Scoring the GameScoring the Gamebull Performance criteria is measured by
ndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
bull Performance criteria is measured byndash ROE ndash ROSndash ROAndash CUM PROFITndash STOCK PRICEndash MARKET CAPITALIZATIONndash ASSET TURNOVERndash MARKET SHAREndash Each reflects 12 except Market
Capitalization which reflects 16 of overall performance
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
RUNNING YOUR COMPANYRUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASISTHINGS TO DO ON AN ANNUAL BASIS
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
bull Establish business strategy for your companybull Analyze Capstone Courier to see industry resultsbull Make tactical decisions across each functional
area (aligned to strategy)bull Upload official results and confirm on the websitebull Await results when Professor processesbull Rejoice in your superior capitalistic acumenbull Begin the process again by confirming alignment
of your results with your companyrsquos strategic goal
To Do ListTo Do List
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Types of Business-Level Strategies
bull Business-level strategies are intended to create differences between the firmrsquos position relative to those of its rivals
bull To position itself the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Five Generic StrategiesCompetitive Advantage
Co
mp
etit
ive
Sco
pe
CostCost Uniqueness
Bro
ad
targ
etN
arro
w
targ
et
Cost Cost LeadershipLeadership
DifferentiationDifferentiation
Focused Cost Focused Cost LeadershipLeadership
Focused Focused DifferentiationDifferentiation
Integrated CostIntegrated CostLeadershipLeadership
DifferentiationDifferentiation
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
STUCKIN THEMIDDLE
MY FIRM HASA COMPETITIVE
ADVANTAGE
MY FIRM HASA COMPETITIVE
ADVANTAGE
No Clearly Defined Strategyhellip
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
CAPSTONE STRATEGIESbull Strategies are declared in
corporate mission statements
bull Capstone firms may develop and execute any strategy (or none at all - though that isnrsquot advisable) Basic strategies includendash Overall Cost Leaderndash Cost Leader with Focus
(Low Tech or Product Life-Cycle)
ndash Differentiatorndash Differentiator with Focus
(High-Tech or Product Life-Cycle)
STRATEGYSTRATEGYMission StatementMission Statement
PERFORMANCEPERFORMANCEASSESSMENTASSESSMENT
Success MeasurementsSuccess MeasurementsAnalyst ReportAnalyst Report
Round Analysis - StarRound Analysis - StarSummarySummary
INDUSTRY AND MARKETINDUSTRY AND MARKETANALYSISANALYSIS
SWOT AnalysisSWOT AnalysisCompetitor AnalysisCompetitor AnalysisCompetitive AnalysisCompetitive Analysis
FUNCTIONAL PLANNINGFUNCTIONAL PLANNINGRampDRampD
MarketingMarketingProductionProduction
HR HR FinanceFinance
TQMTQM
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
OVERALL COST LEADER An overall cost leader will attempt to be the low-cost producer in
every segment of the market They will have good profit margins on all sales while keeping prices low for price-sensitive customers
bull Firm Profile
ndash More likely to re-position products than introduce new ones to the market
ndash Capacity improvements are unlikely to be undertaken (may run overtime instead)
ndash Automation may be pursued to increase margins
ndash Investments will be financed with debt andor stock issues
ndash Tend to spend less on promotion and sales
ndash Focus on Market Share Profits and Stock Price
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
COST LEADER WITH LOW-TECH FOCUS
A low-tech focused cost leader seeks to dominate the price sensitive market segments Their aim is to set prices below all competitors - and still be profitable
bull Firm Profile
ndash Multiple product lines in the low-tech segments (Low amp Traditional)
ndash Invest heavily in automation
ndash Spend heavily on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
ndash Investments financed with debt andor stock issues
ndash Focus on ROS ROE and Profits
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle focused cost leader will seek to minimize costs through efficiency and expertise Products will be allowed to age and change in appeal from high-tech to traditional and eventually low end buyers
bull Firm Profile Minimum presence in ldquospecialtyrdquo segments (Size amp Performance) Low RampD spending (very little re-positioning amp new product every 2-3
years) Invest in automation early in the productrsquos life-cycle High spending on promotion and sales Focus on ROE ROS and Profits
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
DIFFERENTIATOR A Differentiator will seek to create maximum awareness and
brand equity They want to be well known as makers of high qualityhighly desirable products
bull Firm Profile ndash High RampD spending to keep products freshndash Maintain a presence in all market segmentsndash Spend heavily on advertising and sales to create maximum
awareness and accessibilityndash Prices tend to be higherndash Focus on Market Share Profits and Stock Price
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
DIFFERENTIATOR WITH HIGH-TECH FOCUS
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products
bull Firm Profile ndash Multiple product lines in high-tech segments (High Performance
and Size)ndash Minimum focus in other segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually introduce new product lines
and keep existing products freshndash Unlikely to invest in increased automation or production capacityndash Focus on ROA Asset Turnover and ROE
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments
bull Firm Profile
ndash Multiple product lines in targeted segments (High Traditional and Low)
ndash Minimum focus in other segments
ndash High promotion and sales investments to create maximum awareness and accessibility
ndash High RampD expenditures to continually re-position product lines and keep products fresh
ndash Unlikely to invest in increased automation or production capacity
ndash Focus on ROA Stock Price and Asset Turnover
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
SUMMARY
There is no magic bullet guaranteed winning strategy Each simulation has a unique competitive dynamic
Successful firms will focus on planning strategic alignment teamwork competitor analysis and tactical adjustments
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Comp-XMAfter competing in the Foundationreg Business Simulation game each student will be required to complete Comp-XMreg individually
This exercise entails participating in an additional four similar yet different rounds (years) of another simulation After each simulated year you will complete a short quiz called a ldquoBoard Queryrdquo that contains questions tailored to your specific situation
Although every student in the course will use the same software the environment rules and competitive environment change Consequently each examination is unique because each student is tested on the decisions and results in hisher own company mdash decisions and results that will be different from those of any other company
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Comp-XMThe Comp-XMreg industry has four market segments Each individual participant is the sole decision maker for the Andrews company Andrews competes against three computer companies Baldwin Chester and Digby
The Comp-XMreg simulation runs four rounds
Simulation performance is judged using a Balanced Scorecard Each round a score is generated based on performance measures in these categories1048707 Financial1048707 Internal Business Process1048707 Customer1048707 Learning and Growth
At the end of Round 4 a fifth score is generated using a different set of measures that evaluate the cumulative performance for Rounds 1-4
Good Luck and EnjoyGood Luck and Enjoy
Good Luck and EnjoyGood Luck and Enjoy
