WELCOME TO CAPSTONE BUSINESS SIMULATION

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WELCOME TO CAPSTONE BUSINESS SIMULATION
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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
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The Marketplace
In our industry we track the changing customer
demand on a perceptual map
Low Tech
Performance
Traditional
High Tech
Size
Over the 7 years, the customers will demand much
faster and smaller sensors
Market Segments will continue to diverge
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Low Tech Traditional Segment Customers
Youre not giving me what I want
I want these sensors to be cheap
I want them to have been around for a while no
Beta Testing!
They have to be moderately reliable.
The technology doesnt have to be cutting edge.
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High Tech, Size Performance Segment Customers
And Im not getting what I want!
These sensors have to be small, like micro, and
fast
I need them to be right out of RD, Im talking
ZERO years on the market
Ill pay more to get what I want.
I like a pretty high reliability.
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Strategic Map
Large
Size
Small
Fast
Slow
Performance
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Each Segment has a Sweet Spot
Low
Large
Perf
Trad
Sweet Spot
Size
High
Small
Fast
Slow
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Two Stage Purchase Decision
Stage 1 - Match Product to Market
Size
1. Product must plot within the segment.
2. Product must fall within price
guidelines.
Quality
3. Product must fall within quality guidelines
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Two Stage Purchase Decision
Stage 2 Competitive Rankings of Best Products
Quality
1. Positioning 2. Age 3. Quality 4. Price
Position
Sweet Spot
0
1
Yrs
Age
Price
20000
25000
HIGH END
30
40
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Segment Criteria Ranking
Traditional
Size
Perf
High End
Low End

• Age
• Price
• Position
• Quality

• Price
• Age
• Position
• Quality

• Position
• Age
• Quality
• Price

• Quality
• Position
• Price
• Age

• Position
• Age
• Quality
• Price

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Functional Areas and Value Creation
Production
RD
HRM
Finance
Marketing
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Value Chain Analysis
Support Activities
Inbound Logistics
Primary Activities
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Value Chain Analysis
Support Activities
Inbound Logistics
Manufacturing
Primary Activities
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Value Chain Analysis
Support Activities
Inbound Logistics
Outbound Logistics
Manufacturing
Primary Activities
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Value Chain Analysis
Support Activities
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Value Chain Analysis
Support Activities
Service
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Value Chain Analysis
Support Activities
Procurement
Service
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Value Chain Analysis
Support Activities
Technology Development
Procurement
Service
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Value Chain Analysis
Human Resource Management
Support Activities
Technology Development
Procurement
Service
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Value Chain Analysis
Headquarters Activities
Human Resource Management
Support Activities
Technology Development
Procurement
Service
Inbound Logistics
Outbound Logistics
Marketing
Manufacturing
Primary Activities
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Capstone Value Chain Activities
Firm Infrastructure
Human Resource Management
MARGIN
Technological Development
Procurement
Service
Inbound Logistics
Marketing Sales
Outbound Logistics
Operations
MARGIN
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Inbound Logistics
Raw materials and components receiving Warehousin
g Materials handling
Inbound Logistics
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Production
Capacity and production levels Production
schedule Automation levels Labor force
utilization levels Improve efficiency
Relatively Few Management Layers to Reduce
Overhead
Firm Infrastructure
Effective Training Programs to Improve Worker
Efficiency and Effectiveness
Human Resource Management
Investments in Technology in order to Reduce
Costs Associated with Manufacturing Processes
Technological Development
Procurement
Frequent Evaluation Processes to Monitor
Suppliers Performances
Efficient Plant Scale to Minimize Manufacturing
Costs
Delivery Schedule that Reduces Costs
Small, Highly Trained Sales Force
Service
Inbound Logistics
Selection of Low Cost Transport Carriers
Products Priced to Generate Sales Volume
Outbound Logistics
Operations
Timing of Asset Purchases
Operations
Policy Choice of Plant Technology
Efficient Order Sizes
Organizational Learning
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Outbound Logistics
Packaging Warehousing Inventory
management Shipping and distribution
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Frequent Evaluation Processes to Monitor
Suppliers Performances
Delivery Schedule that Reduces Costs
Small, Highly Trained Sales Force
Effective Product Installations to Reduce
Frequency and Severity of Recalls
Service
Outbound Logistics
Selection of Low Cost Transport Carriers
Products Priced to Generate Sales Volume
Outbound Logistics
Marketing Sales
National Scale Advertising
Efficient Order Sizes
Interrelationships with Sister Units
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Marketing
Sales forecasting Pricing strategy Marketing
strategy and budget Sales force management
Firm Infrastructure
Human Resource Management
MARGIN
Technological Development
Procurement
Service
Outbound Logistics
Marketing Sales
Marketing Sales
Inbound Logistics
Operations
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Service
Customer relations Warrantees, guarantees Spare
parts Tech help Repair
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Service
Service
Inbound Logistics
Outbound Logistics
Marketing Sales
Operations
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Procurement
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Procurement
Service
Inbound Logistics
Outbound Logistics
Marketing Sales
Operations
Purchasing Vendor relations
Business services outsourcing
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RD
Firm Infrastructure
Human Resource Management
Technological Development
Technological Development
Procurement
Establish the specification of the products to
meet customer demand Build the quality and
reliability (MTBF) into the products
Create new products to meet the changing
marketplace Manage new product cycle times
Service
Outbound Logistics
Inbound Logistics
Marketing Sales
Operations
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Research Development

• Set Product coordinates (Position)
• Set MTBF rating (Quality)
• Drives Perceived age (Age)
• Drives breadth of product line

High High Eight
lt
lt
lt
Low Low One
Quality Age Breadth
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R D Factors on Existing Products

• Cycle time affected by
• Automation level of production line
• Number of projects underway
• Distance moved on perceptual map

High
High
High
Long
lt
lt
lt
lt
Low
Low
Low
Short
Automation Level
Number of Projects
Distance moved
Cycle Time
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HRM
Firm Infrastructure
Human Resource Management
Human Resource Management
Technological Development
Production line staffing Recruiting and training
of new employees
Wages and benefits for employees Negotiate with
labor union
Procurement
Service
Outbound Logistics
Inbound Logistics
Marketing Sales
Operations
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HQ Activities
Firm Infrastructure
Firm Infrastructure
Human Resource Management
Support Activities
Government relations Public relations General
Counsel
Technological Development
Strategy and decision making Finance and
Accounting
Service
Marketing Sales
Outbound Logistics
Inbound Logistics
Operations
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Success Measurements

• Practice Rounds All criteria equally weighted
• Competitive Rounds YOU choose at least TWO
• Ending Stock Price must be at least 20
• Others Your choice
• Cumulative Profit
• Avg. Market Share
• Asset Turnover
• Avg. ROA
• Avg. ROE
• Avg. ROS
• Criteria and weights will remain proprietary
• throughout the simulation

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Capstone Scoring Report
Winner !
Erie
Ferris
Andrews
Chester
Digby
Baldwin
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Assignments Grading
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Computers and Facilities
A typical day of Capstone
Industry 1 SimId C12084 Industry 2 SimId C12085
31 AUG Weds SIM Round 2 Decisions DUE 1100 Meet Rounds 1-2 Debrief 100 SIM Round 3 Decisions DUE 600 SIM Round 2 Decisions DUE 1100 Meet Rounds 1-2 Debrief 200 SIM Round 3 Decisions DUE 600
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Assignments for This Week

• MONDAY-TUESDAY
• Subscribe to Capstone
• See pg. 2 of syllabus
• Tutorials (esp. Spreadsheet Demonstrations)
• Solo Rehearsal
• WEDNESDAY
• Upload Practice Round 1 decisions by 1100 a.m.
• Results available 1200 p.m.
• Meet for Debriefing at 100 p.m. or 200 p.m.
• Round 1 (for real!) decisions due by 600 p.m.
• Submit Strategy eMemo by 700 p.m.

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Good Luck and Enjoy!