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WELCOME TO CAPSTONE ® BUSINESS SIMULATION. Professor Jeffrey E. McGee. The University of Texas at Arlington. Objectives. Demonstrate effectiveness of multi-discipline teams working together. Use strategic thinking to an advantage. Test your business acumen. - PowerPoint PPT Presentation
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WELCOME TO CAPSTONE reg BUSINESS SIMULATION
ProfessorJeffrey E McGee
The University of Texas at Arlington
bull Demonstrate effectiveness of multi-discipline Demonstrate effectiveness of multi-discipline teams working togetherteams working together
bull Use strategic thinking to an advantageUse strategic thinking to an advantagebull Test your business acumenTest your business acumenbull Understand overall interaction and impact of Understand overall interaction and impact of
various parts of a business on one anothervarious parts of a business on one anotherbull Grow an awareness of competitionGrow an awareness of competitionbull Take away practical know-how to improve the Take away practical know-how to improve the
effectiveness of your businesseffectiveness of your business
Objectives
Why Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integration
SENSORINDUSTRYOVERVIEW
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
ProfessorJeffrey E McGee
The University of Texas at Arlington
bull Demonstrate effectiveness of multi-discipline Demonstrate effectiveness of multi-discipline teams working togetherteams working together
bull Use strategic thinking to an advantageUse strategic thinking to an advantagebull Test your business acumenTest your business acumenbull Understand overall interaction and impact of Understand overall interaction and impact of
various parts of a business on one anothervarious parts of a business on one anotherbull Grow an awareness of competitionGrow an awareness of competitionbull Take away practical know-how to improve the Take away practical know-how to improve the
effectiveness of your businesseffectiveness of your business
Objectives
Why Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integration
SENSORINDUSTRYOVERVIEW
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
bull Demonstrate effectiveness of multi-discipline Demonstrate effectiveness of multi-discipline teams working togetherteams working together
bull Use strategic thinking to an advantageUse strategic thinking to an advantagebull Test your business acumenTest your business acumenbull Understand overall interaction and impact of Understand overall interaction and impact of
various parts of a business on one anothervarious parts of a business on one anotherbull Grow an awareness of competitionGrow an awareness of competitionbull Take away practical know-how to improve the Take away practical know-how to improve the
effectiveness of your businesseffectiveness of your business
Objectives
Why Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integration
SENSORINDUSTRYOVERVIEW
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Why Simulate
bull Risk Freebull View Alternative Strategiesbull Enjoyable bull Compresses Time (1 Round=1Year)
bull Selectivity ltgt Integration
SENSORINDUSTRYOVERVIEW
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
SENSORINDUSTRYOVERVIEW
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
The Marketplace Customers (OEMs) need sensors for their products
Initially one segment now breaking into five
Very different customer demands developing between the segments
Diversification in the use and utility of the sensors
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
The Marketplace In our industry we track the changing customer demand on a perceptual map
Over 8 years the customers will demand much faster and smaller sensors
Market Segments will continue to diverge
LowTech
Traditional
HighTech
Performance
Size
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Low Tech amp Traditional Customers
ldquoI want these sensors to be cheaprdquo
ldquoI want them to have been around for a while ndash no Beta Testingrdquo
ldquoThe technology doesnrsquot have to be cutting edgerdquo
ldquoThey have to be moderately reliablerdquo
Yoursquorenot giving me what I
want
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
High Tech Size amp Performance Customers
ldquoThese 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 like a pretty high reliabilityrdquo
ldquoIrsquoll 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 16rdquo
I hope those companies out there are ready for that kind of expansionrdquo
010000200003000040000500006000070000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
COMPANYOVERVIEW
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
SEC ANNOUNCES BREAKUP OF MONOPLOYFOR IMMEDIATE RELEASE
Mary L Schapiro Chair of the SEC took dramatic action today by breaking up the monolithic corporation Sensors Inc
In a statement to the press Chairman Schapiro 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 Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
The Competition
6 Companies
$100 Million in Sales
5 Product Lines
Closed Marketplace
ANDREWS
BALDWIN
CHESTER
DIGBY
ERIE
FERRIS
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
SHAKE UP IN SENSOR INDUSTRYCompany 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
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
WELCOME TO YOUR NEW COMPANY
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Functional Areas
RampDRampD
MarketingMarketing
ProductionProduction
FinanceFinance
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Research 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
ldquoldquoOur productsOur productsare not wellare not well
positioned inpositioned inthe marketplacerdquothe marketplacerdquo
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Marketingbull 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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
Production
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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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
Finance
ldquoldquoWe have poorWe have poorcash flow andcash flow andsubstandardsubstandard
financial ratiosfinancial ratios
We have noWe have nofinancial policyfinancial policy
statementrdquostatementrdquo
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
bull Balance Sheetbull Profit amp Lossbull Cash Flowbull Financial Ratios
ProformasA great management tool driven by forecasts and projections Allows ldquoWhat ifrdquo Scenarios by the company
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Scoring 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
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
RUNNING YOUR COMPANY
THINGS 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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
To 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Five Generic StrategiesCompetitive Advantage
Com
petit
ive
Scop
eCostCost 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 marketndash Capacity improvements are unlikely to be undertaken (may run
overtime instead)ndash Automation may be pursued to increase marginsndash Investments will be financed with debt andor stock issuesndash Tend to spend less on promotion and salesndash 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 automationndash 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 issuesndash 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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 segmentsndash High promotion and sales investments to create maximum
awareness and accessibilityndash High RampD expenditures to continually re-position product lines and
keep products freshndash Unlikely to invest in increased automation or production capacityndash 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 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-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Comp-XM reg
After competing in the Capstonereg 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-XM reg
The 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 Enjoy
Comp-XM reg
The 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 Enjoy
Good Luck and Enjoy
