Вы находитесь на странице: 1из 26

Capsim Business Simulation

Key Learnings
Industry: C77390, Team Erie (E2)
MPE 15; April 2016

Performance till date Trends, Metrics
Overall Strategy
Module-wise Inferences
- R&D
- Marketing
- Production
- Human Resources
- Finance
Forecasting Method

Performance till date

Contribution margin is 45%

Zero emergency loan
The ideal year-end inventory position
Increase in stock price over last year ($19.27
Profit of $ 23,733 thousands
Cumulative Profit of $27,470 thousands

Performance Trends Why should you

invest in our company

Trend of our Share prices & Earnings Per


Performance Trends

Trend of our Sales, ROE, ROS, ROA, Asset

Turnover and Contribution Margin

Analysis of Financial Parameters

Performance Metrics
Metric Allocations
Stock Price
5% 15% 15% ROE
5% 20%

Ferris 91.8 Baldwin 37.7 Andrews 36.4 Digby

31.7 Chester 19.1

Final Score Ranking

Market Share
Market Cap

Performance Metrics

Market Share

Balanced Scorecard

Round 7 points: 77 of 100


Guiding Strategy: To be present in only 3 segments Traditional,

Low-end and High-end segments
Differentiation Strategy with Product Lifecycle Focus

Helped us channel our spends, so that we acquire highest market share in at

least 2 out of 3 segments

Introduction of new product Eager, helped us regain some share

in High-end segment should have been introduced much earlier

Spending aggressively on promotion & sales in the initial rounds,

gave us competitive advantage

Our strategy included the following:
Reduction of R&D cycle time through TQM initiatives

Helped us not only with cycle times but also with the possibility
of higher automation, and thereby increasing contribution

Revise product Ebb, in the Low-end segment just

once somewhere to come out in the middle rounds
Set Performance & Size parameters at the June
ideal spot and come out with the new product as
early as possible
No changes to MTBF made didnt affect us much

Our strategy in Marketing included the following:
Be aggressive during earlier rounds - in terms of promo &

May reduce contribution, but will help increase market share greatly
Cost accrued in initial rounds but benefit will last till the last rounds

Best to reach 100% awareness fastest by spending high

initially and maintain - as 33% awareness is lost y-o-y
Pricing the Low-end product Ebb, and Traditional product
Eat at the lowest among the competitors in initial
rounds when customer awareness & accessibility were
not fully gained

Helped gain market share quickly, though it reduced contribution


Marketing (cntd)

Accessibility for Traditional & Low end segments feed

off on each other better to increase sales budget for
those two segments.

Customer Awareness is easy to gain & maintain, but

accessibility is difficult to gain if there is only one
product in a segment

Esp. Traditional segment as it helps to increase accessibility for

all other segments (its fine cut circle intersects all other

Full accessibility is gained only in later rounds

In later rounds when promo & sales options becomes

available, spend on awareness becomes higher

Our strategy in Production included the following:
Estimate a products market share one or two years in

Produce enough so as to keep two months inventory for

smaller segment sizes like High-end, Performance & Size
Produce around 1.5 to 2 months of inventory for Low -end &
Traditional segments as the number of units are high in
those segments

Helps buy capacity and avoid lost opportunity

Important since inventory carrying costs are higher

Slowly increase automation till R&D cycle times reduces

through TQM initiatives & rapidly increase after TQM kicks
in, esp. for Traditional & High-end segment

Human Resources
Our strategy in Human Resources included the
Spend just enough on recruiting to keep the same
previous years turnover rate or slightly lower
Provide just enough training hours, so that there is
no overtime, i.e overtime percent doesnt cross 0%
Engage in labour negotiations - offer higher
incentives, so that we can retain labour (luckily we
could afford this, sorry to our fellow teams)
Important to reduce material costs through TQM
initiatives to be able to bear higher labour costs in
last round

Total Quality Management

Our strategy in TQM initiatives included the following:
Spending consistently high on TQM yielded high
benefits which were carried over throughout all the
Most important ones were the ones which helped
with R&D cycle time & labour, material & admin cost

Esp. the following initiatives:

CCE/6 Sigma Training
Quality Function Deployment Effort
Concurrent Engineering
GEMI TQEM Sustainability Initiatives

Our strategy in Finance included the following:
Relied upon using long-term debt even though it
came at a higher interest rate - as current year shortterm debt ended up locking our finances for the next
Kept 10% of forecasted sales revenue as cash
reserve to avoid emergency loans

In most of the rounds our actual sales were more than our
potential sales, so we avoided emergency loans

Closing stock price at $49

Credit Rating at round 7 is AAA which is the highest possible rating
assigned to the bonds.

Forecasting Method

Forecasting accurately could have been the single most

important differentiator, which helped us do better than
the other teams
Forecasting is done by calculating:
= Total industry unit demand x Next Year's Segment Growth Rate x
Market share

The Courier report shows us the market share for last

year can be considered only if everything remains the

Practically such a scenario is unlikely to happen

Therefore, forecasting based on the units sold in the

previous years & factoring in the growth rate will be
primitive & inaccurate

Forecasting Method (cntd)

Our Forecasting is done by estimating = Januarys

Customer Survey Score / Segments Total Survey Score
To estimate a Customer Survey Score, we need to set up a
table for each market segment that has:
- Buying criteria - Age, Price, Ideal position and Reliability
- Importance of those characteristics in %
- An evaluation of how close the current product offering
is to the ideal
- Calculate the attractiveness score
- Impact of Awareness & Accessibility on score
- Impact of Accounts Receivable on score

Forecasting Method (cntd)

For example, consider the Traditional segment:

We need to calculate attractiveness score for each


Forecasting Method (cntd)

For ex, if the age is 1.5 then the attractiveness score

is calculated: 80% of 47% i.e 37.6 points


Forecasting Method (cntd)




cut circle - radius of 2.5 units. Farther they are from the ideal spot the score is
reduced. Just beyond the fine cut, scores drop 1%. Halfway across rough cut,
scores drop 50% and edge of the rough cut, scores drop 99%


we get our total score by summing up all the scores

Forecasting Method (cntd)

Impact of Awareness & Accessibility: Better customer

awareness and accessibility increases the survey score
For Traditional segment in the Courier report the scores are
as follows:

Last yr awareness (33% x last yr awareness) = Starting


Forecasting Method (cntd)

Starting awareness + Additional awareness from below fig.

= New awareness

January customer survey score = Total attractiveness score

x New awareness % x New accessibility%.
Hence, next year market share = Januarys Customer
Survey Score / Segments Total Customer Survey Score

Forecasting Method (cntd)

Impact of Accounts Receivable

At 90 days no reduction
At 60 days the score reduced by 0.7%
At 30 days the score reduced by 7%
At 0 days score reduced by 40%.

Hence next year market share = Januarys Customer

Survey Score / Segments total customer survey.

E2: Team Members

Srinivasa Adithya
Karthik Hegde
Gopalakrishnan Krishnan
Gayathri Vittal
Vikrant Sharma

Thank You