Agenda & Announcements for Class #3

• Agenda:
– In the News……..
– Team Assignments
– Capstone Simulation Review
– Team Time
• Announcements:
– Capstone Registration Problems?
• Must register before Tuesday – get familiar
– Teams Meet before Class #5 – Next Thursday
• Strategies, Tactics and Decisions (see Decision Matrix)
• Team Norms and Objectives
• Input decisions by Monday 10/18 at 11:59am (error on Syllabus)
– Strategic Thinking and Leadership Self-assessment Survey
will be e-mailed to you – complete by Sunday October10th
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 Establishing Teams

• 8-10 Teams in the Class (3-4 people per team)

– 2 Industries; 4-5 teams in each

• Avoid Existing Friend Groups

– 1 “Marketing Whiz”
– 1 “Finance / Accounting Whiz”

• Meeting Time Best Team Selection

– M/W Mornings
– M/W Afternoons
– T/Th Mornings
– T/TH Afternoons
– Weekday Evenings
– Weekends

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

Capstone Simulation
• Functions:
– Research and Development
– Marketing
– Production
– Finance
– Human Resources (Round 2)
• Key Points:
– Most numbers in 1,000’s (000), i.e. 1,000 = 1 million
– Functions interrelated
– Understand Differences in Segments!
– Must be connected to Internet for “Official Decisions”
– We are doing “Tournament” (not “footrace”)

3
Your History & Product
• Recently Broken Up into 6 Companies
• Electronic Sensors
• 5 Products to Start
– Decide to Add or Terminate a Product(s)
• Key Product Attributes:
– Customer Perception (Map)
• Size (smaller is more valuable)
• Performance (speed – faster is more valuable)
• MTBF – “Quality” (Mean Time Before Failure – average)
• Age – last updated
– Price
• See Segmentation Decision Factors in Guide

4
Perceptual Map

Big Product
• Size 4 P’s
• Speed • Product*
• MTBF • Price
S • Place
i • Age
• Promotion
z
e

Small

Slower Faster
Performance (Speed)

5
Decision Making Process
1. Analyze Environment
• Read Market Reports and Understand Customers
• Competitors are all Equal Now
• Understand Industry Forecasted Future by Segment

2. Determine Mission and Vision and Strategies

• Determine Target Segments
• Determine Competitive Strategy (s) – 6 defined in Guide

3. Determine & Integrate Operational Decisions:

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

4. Review Pro-Formas, Best/Worst Cases (sales) 6

• Reconsider decisions
Capstone “Pro-Formas”
• Forecast of Outcome Given Assumptions
• “Garbage in – Garbage out”
Actuals = Input Actuals Subject to
Others
Sales/revenues XXX
Cost of Goods Sold Cash Flow Net Income for CGS
R&D Expense X
Marketing Expenses X
Production Cost per Unit X
Inventory X
Dividends X
Bond Actions (Buy/Sell) X
Emergency Loans (cash flow) X
• Pro-Formas can be used for Best/Worst Case Analysis
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Decisions – for each product
• By product
– R&D - Product – (Size, Speed, MTBF, Age)
– Develop New or Terminate Products
– Price
– Promotion (Promotion Budget)
– Place (Sales Budget)
– Sales Forecast (goes to Production & Finance)
• Production – for each product:
– Units to be Produced (sales & inventory)
– Buy/Sell Capacity
– # of Shifts
– Automation Level
– # of Employees (Compliment) and Overtime
• Watch This – surplus employees = high cost/unit
8
Decisions for Company:
• Finance
– Review Pro-Formas (based on forecasts!) to determine
needs for cash
– Credit Policy A/R (with Marketing)
– Perform Best/Worst Case Scenarios
– Issue/Retire Stock
– Dividends
– Issue/Retire Long Term Debt
– Barrow Short Term (variable rates)
– Emergency Loan Risk
• Human Resources (starting Round 2)
– Compliment (#) for Production
– Caliber
– Training
– Labor Negotiations (After Round 3)
9
Analyst Reports –
Balanced Scorecard
• Annual (Round) Report
• Scores of 100 points in each of the following:
1. Margins
2. Profits
3. Emergency Loans
4. Working Capital Usage
5. Market Share
6. Forecasting Accuacy
7. Customer Satisfaction
8. Productivity
9. Financial Structure
10. Wealth Creation

10
Roles Options/Combinations

1. Product Manager: Responsible for one of the five

products in your starting product line.
2. Segment Manager: Responsible for one of the five
market segments.
3. Functional Manager: Responsible for R&D,
Marketing, Production, HR or Finance.
4. Competitive Intelligence Officer: Responsible for
predicting the behavior of one of your competitors
5. Matrix or multiple responsibilities
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Resources:

• Student Guide
• On Line Help
– Manager Guide
– Tutorials & Demonstrations
– Student FAQs
• Teammates
• Instructor
• Capstone Customer Service – MSI Support

12
Getting Started

• Log into computers

• Access: www.capsim.com
• Log Into Capstone Simulation
• Download capstone.xls
• Select Downloaded Excel File
– Open and log on

13
Key Dates
• Before Tuesday 10/12
– Solo Capstone Simulations – 4 Practice Rounds & Quiz

• By Monday 10/18 (change syllabus schedule)

– Teams Meet and Develop Strategic and Tactical Plans for Practice
Rounds
– Decision Input-Team Practice Round (Save Decisions)
• 11:59 am Day Before Class (Class on Tuesday 10/19)

• Wednesday 10/20 – Round 2 Decisions Due 11:59am

– Strategies should drive, tactics based on ourcome

• By Wednesday 10/28
– Review Practice Round Results
– Identify Key Lessons Learned (hand in)
– Competition Round 1 Decisions due day before class
– Team Strategic Plan Due
14
Administrative Processes
• Solo Rounds –
– Excel or On Line “Rehearsal Simulation”
• Practice and Competition Rounds
– Excel “Work on My Company’s Official Decisions”
– Last Person Saves Decisions
– Have Review and Assurance Process
• Capstone System “Homework” to aid you – no need to
complete or submit except for Solo Round Quiz

15
Next Class

• Chapter 3 – Internal Analysis

• Apple Store Article
• Trouble in Paradise Case
- be prepared to discuss in class
•4 Solo Practice Rounds & Quiz
•Teams Prepare for practice rounds
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