Professional Documents
Culture Documents
The Marketplace
The Marketplace
Sensor Market (simple products with 2 dimensionsSize and Performance) 5 competitors per simulation (3A, 3B, 4A, 4B) All start off equal, all products per segment are same, one factory with 5 assembly lines $100 million sales company No outside competitors or product substitutes
The Marketplace
Simple Marketplace
modest growth, low inflation, reasonable interest rates, no external surprises
Market Segments
Low End (31.1%) Traditional (32.4%) High End (15.3%) Performance (10.4%) Size (10.8%)
But segments grow at different rates and customer expectations shift at different rates
Customer Expectations
Customers go through a 2-stage buying process:
Customer Expectations
(2) FINE CUT (if product passes rough cut)
Positioning Age Reliability Price
Product Management
How should we place our product (size and performance placement)? What is our perceived quality (MTBF)? What is our price? What is the promotion budget (awareness)? What is the sales budget (accessibility)? What is the production schedule (units)? What is the capacity (including overtime)? What is our automation level (labor content & flexibility)?
Your Job
Make functional decisions following a cohesive strategy:
Marketing Research and Development (R&D) Production Finance Total Quality Management (TQM) Human Resources (Labor)
Common Problems
New products, but no capacity.
Breakdown between R&D and Production.
Common Problems
Performance measures inconsistent with strategy. Niche strategy vs Market share. Profits vs target market.
Breakdown between Marketing and Finance.
Key Roles
Competitor Intelligence Officer Segment Managers Functional Managers
Marketing, Finance, Operations, HR, R&D
These role assignments are valuable for enhancing the critical thinking skills, but are not required to play the simulation
You decide how you want to organize!!
Competitor Intelligence
How do the competitors measure success? What segments are they targeting? What is their competitive advantage? What will their future products be like? Do they threaten your company? How can they hurt you? How can you influence their decisions? How can they influence your decisions?
Segment Management
What products are entering or leaving your segments? What is each segments production capacity?
Excess leads to price competition. Shortages lead to margin opportunities.
Do you have segment accessibility? What is each segments margin potential? What will competitors do in each segment?
Functional Managers
R&D managers monitor repositioning dates (keep projects within one year). Marketing managers monitor promotion and sales budgets. Keep product within segments. Production managers monitor inventory levels, plant utilization and overtime. Automation affects costs and flexibility. Finance managers monitor cash position and capital structure.
R&D Manager
Understand relationships between
age and position changes, positioning and material cost requirements, MTBF and material costs, automation and product implementation time, number of R&D project and completion times, project length and proximity to other products.
Marketing Managers
Understand relationships between
Price and contribution margins, Price and demand, Promotion budget and awareness, Sales budget and accessibility, and A/R policy and demand.
Affected by R&D launches and Production capacity and costs. Impacts Finances.
Production Manager
Understand relationships between Inventory levels and carrying costs (interest), Carrying costs and lost sales (market share), Capacity and overtime, Automation and labor costs, Overtime and labor costs, and Consequences of buying/selling capacity and automation. Impacted by R&Ds new products and material costs. Impacts marketing demand, scheduling, and inventory. Finance affected by plant and equipment, inventory, and margins.
Finance Manager
Understand relationships between Stock issue or retirement and capital structure, Working capital and inventory, Emergency loans and cash, Current debt and short term interest rates, Dividend policy and stock price, Bond issue and prepayment, and Financial performance measures. Affected by R&D introductions, Marketing forecasts, margins, and budgets, and Production budgets, margins, and inventories.
Creating a Mission
What are your goals? What market segments will you address? What product values will you deliver? How will you treat employees? What EPS will you deliver to stockholders?
Strategy Alternatives
Creating a Strategy
How will you achieve your goals? What product-market segments will you target? How many segments and how many products? What functional capabilities are needed for each? R&D, Production, and Marketing? What techniques and assets are needed? What will be your competitive advantages? Financial structure and market performance
Capstone Strategies
Your Strategic Analysis provides an understanding of the forces at work within each Capstone market segment. Decide how to use that information to gain a competitive advantage. There are many alternative goals & strategies - any of which can be successful depending on how well they are implemented.
CAPSTONE STRATEGIES
STRATEGY Mission Statement Strategic Intent STRATEGIC BUSINESS ANALYSIS Product-Market Analysis Customer Analysis Competitive Analysis S.W.O.T Analysis
Strategic alternatives include: Cost Leader Cost Leader with Focus (Low Tech or Product Life-Cycle) Differentiator Differentiator with Focus (High-Tech or Product Life-Cycle)
High spending on promotion and sales. Goals may be ROE, ROS, and Profits.
Differentiator
A Differentiator will maximum awareness and brand equity. Focus on high quality/highly desirable products. High R&D spending to keep products fresh. Maintain a presence in all market segments. Spend heavily on advertising and sales to create maximum awareness and accessibility. Prices tend to be higher. Goals may be Market Share, Profits, and Stock Price
Summary
There is no magic bullet strategy in Capstone. Successful teams will:
Develop a cogent long-range goals Set appropriate strategies Develop appropriate functional capabilities, and Adjust as dictated by the opportunities and realities of the competitive market place.
Financial Statements
Balance Sheet
What the company owns and who owns it A snapshot of your financial health Assets = Liabilities and net worth combined Accurate for a specific date See Capstone Courier for latest round Balance Sheet
Financial Ratios
A financial ratio shows the relationship between two financial measures
Developed by dividing one measure into another
Financial Ratios
Four categories:
Liquidity Solvency Market value Profitability
Its a ratio! There are ethics involved, but ratios are easily manipulated. Understand this fact
Asset Turnover
Reveals how effective assets are at generating sales revenue.
sales
Asset Turnover =
assets
Return on Sales
ROS indicates the percentage of each sales dollar that results in net income.
net profit
Return on Sales =
net sales
Return on Assets
ROA measures a companys ability to use all its assets to generate earnings.
net profit
Return on Assets =
assets
Return on Equity
Return on Equity highlights for the stockholders the return on their investment.
net profit
Return on Equity =
equity
Leverage
Leverage shows the debt level of the organization.
assets
Leverage =
equity
Performance Measures
Know your measures when making decisions! I think of measures as falling into one of two camps:
Sales (A/TO, Share, ROA) Profits (Cume Profits, ROS, ROE, ROA)
As a general rule:
Never put ROS and A/TO together ROS and Market Share dont work well together These success measures typically compete