Acct 2220 - Capsim Simulation

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Acct 2220 - Capsim Simulation Teams will run
their own companies and compete against one
another. The focus is on Business Integration
and using accounting information to develop good
analysis decision-making skills.
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Why use Simulation?

• An opportunity to take control of your learning.
• An application of what we are discussing in
  class.
• Planning making your own business decisions
  understanding the implications of those
  decisions.
• Learning about the integration of multiple
  business disciplines (i.e. RD, Mkt, Prod, Acct,
  Finance).
• Recognition that there are no perfect answers.
• Team-building opportunity to work with others.
• A challenging, but engaging experience!

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ELECTRONIC SENSORS AN INDUSTRY OVERVIEW
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The Marketplace

• Customers (OEMs) need sensors for their products
• Initially one segment, now breaking into two
• Different customer demands developing between
  the segments
• Diversification in the use and utility of the
  sensors

Low Tech
High Tech
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The Marketplace

• In our industry we track the changing customer
  demand on a perceptual map.
• Over 8 years, customers will demand much faster
  and smaller sensors.
• Market Segments will continue to diverge.

Low Tech
High Tech
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Low-Tech Customer Demands

• 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.
• Ex Heat/Cooling sensors, Pressure switches,
  Security apps, generic needs.

You are not giving me what I want
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High-Tech Customer Demands

• 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
• Im willing to pay more to get what I want.
• I like a pretty high reliability.
• Ex Apple, Google, Dell, etc.

Im not getting what I want!
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INDUSTRY ANALYSTS PROJECT HIGH GROWTH IN THE
SENSOR INDUSTRY!
Consistent growth is projected over the next 8
years. All market segments will increase at a
nice clip, according to market analysts.
I see the entire market growing at around 14 or
15 per year. The High Tech market alone will be
growing at a whopping 16-20. I hope those
companies out there are ready for that kind of
expansion!
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SEC ANNOUNCES BREAKUP OF MONOPOLY
FOR IMMEDIATE RELEASE
The SEC, took dramatic action today by breaking
up the monolithic corporation, Sensors, Inc.
In a statement to the press, the SEC outlined
the reason and the outcome of this move. We
cannot allow monopolies of this sort to impact an
entire industry! The customers that utilize these
sensors are being held hostage. Effective
immediately Sensors, Inc will be dissolved into
the Andrews, Baldwin, Chester, Digby, Erie and
Ferris companies.
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The Competition
ANDREWS DIGBY BALDWIN
ERIE CHESTER
FERRIS
6 Companies 40 Million in Sales 1 Product Line 2
Segments Closed Marketplace
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SHAKE UP IN SENSOR INDUSTRY
Company Board 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. This is a terrible day
for our company, said Chairman Zeigler. We need
to hire a dynamic leadership group who will be
able to take this company into the future! Due
to this immediate need I have hired the Dream
Team to start on January 1st. I expect to see
great things from this new Executive Team!
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WELCOME TO YOUR NEW COMPANY!
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Functional Areas
Companies will need to coordinate strategy and
tactics across the following areas
RD

• Additional Modules
• HR (added Rnd 2 thru 8)
• TQM (added Rnd 4 thru 8)

Marketing
Production
Acct/Finance
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Research Development

• We need to establish the specification of the
  products to meet customer demand.
• What quality and reliability level should we
  choose for our products?
• Lets ensure the perceived age of the product
  meets customer demands.
• Lets create new products to meet the changing
  marketplace!

Our products are not well positioned in the
marketplace.
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Marketing

• We need to set the price of our products in the
  marketplace.
• We need to build customer awareness through
  promotion.
• We need to establish a sales force and
  distribution channels.
• We must prepare a sales forecast for our products
  each year!
• We need to set Credit Policies (A/R A/P)

Our products are not optimally priced. And many
of our customers dont even know our product
exists!
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Production

• Should we purchase machinery to automate our
  facilities?
• Should we buy or sell capacity?
• We will need to schedule production for each
  product line!
• We must manage the companies fixed (long-term)
  assets
• We must determine manage our workforce (i.e.
  of workers)

How do our labor costs compare to the
competition? Very soon, we may also run outof
capacity to meet demand!
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Finance Accounting

• How will we pay for all of this?
• How will we acquire capital?
• Should we issue Stock?
• Issue short-term Debt?
• Issue long-term Bonds (Debt)?
• Should we pay dividends to our shareholders? If
  so, how much?
• We must analyze financial stmts.
• We must evaluate our Proformas.

We have poorcash flow and substandardfinancial
ratios! We have nofinancial plan in place!
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Proforma Financials
A great management tool driven by forecasts and
projections. Allows What if Scenarios by the
company.

• Balance Sheet
• Profit Loss
• Cash Flow
• Financial Ratios

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Performance Metrics Used

• 1) Success Measures (must commit by Round 2)
• How will your team be evaluated? Select the
  criteria weighting factors.
• (Note minimum 1 weighting for each of the 8
  components below)
• ROS (Profitability)
• ROA (Profitability)
• ROE (Profitability)
• Cumulative Profit
• Stock Price (per share)
• Total Market Capitalization
• Asset Turnover (Mgmt Efficiency)
• Percentage of Market Share
• Note From your dashboard, see upper left for
  Homework/Success Measures.

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2) The Balanced Scorecard (Results of
Decisions)
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RUNNING YOUR COMPANY
THINGS TO DO ON AN ANNUAL BASIS
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To Do List

• First, establish a long-term Strategic Plan.
• Review Foundation FastTrack for industry
  conditions.
• Make tactical decisions across each functional
  area that is consistent with your overall
  company strategy.
• Upload your decisions to Capsim site by due
  dates.
• Review each rounds results and analyze not only
  your results, but the competitors as well.
• Build your business and create shareholder
  wealth!

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Groupwork Considerations
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• Good Luck in Running Your Company!
• Next Steps
• 1) Registration in lab.
• 2) Individually complete the Getting Started
• assigns by the due date (see class website).
• 3) Three Practice rounds (1 week).
• 4) Eight Competition rounds (6 weeks).