CAPSIM. Overview. The Nature of CAPSIM. You are now MBA’s You are the experts. You have had the training. Top 5% of Educated People in the World You make the rules. If you don’t like the rules, change them. You write the books. If you don’t like what a book says, change it.
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The Nature of CAPSIM • You are now MBA’s • You are the experts. • You have had the training. • Top 5% of Educated People in the World • You make the rules. • If you don’t like the rules, change them. • You write the books. • If you don’t like what a book says, change it. • You teach the classes.
Simulation vs. Games • Simulation • Used to Learn Real Life • Airline Pilots • Astronauts • Businesses • Games • Fun • Entertainment
My Role in CAPSIM • Not a Class To Teach Skills • Class to Apply What You Already Know • BUSN 6120 Economics • MRKT 5000 Marketing • BUSN 6110 Production and Operations • FINC 5000 & 5880 Finance • HRMG 5000 Human Resources • Others
Introduction • Sensors • Identical Competitors • Monopoly Breakup • Everyone Begins the Same • Oligopoly Market Structure
The Team Member Guide • The Team Member Guide is your definitive resource for what happens in the simulation. • Know it well. • Everything in it is important • It is overwhelming at first. • It will get better as we go.
The Rehearsal Tutorial • Everyone must do the rehearsal tutorial before we start the simulation. • Where you get familiar with how the simultion works. • It is a tutorial on how to use the simulation. • It is not a practice round. • It is not a competition round. • It is not the COMP-XM exam.
Situation Analysis • Important step • Don’t leave it out. • Tells about • Current Market Conditions • How the Industry Will Evolve • Operational Planning
Reports • The Industry Conditions Report (One Time) • The Capstone Courier (The Newspaper) • Rubric Debrief Report (Understanding Mistakes) • Many Others • Like a Real World Business • Information is Everywhere. • You must find what is useful. • No one is going to tell you where to look.
The CAPSIM Spreadsheet • Use the Online Spreadsheet • Let One Student do all the Updating
Departments • Research and Development • Marketing • Production • Finance • Other • Human Resources (later in simulation) • Information Technology (Spreadsheets)
Research and Development • Designs Product Lines • Invents New Products • Revises Current Products • Pay attention to Lead Times
Marketing • Sets Prices • Promotes Your Product • Very Important • Spend a Lot of Money on Promotion • Creates Customer AWARENESS • One of the things beginners get wrong. • Sales Forecast
Production • How Many Units You Will Produce • Determines Production Capacity • Discontinues Lines • Sells all inventory at half price • Sets Automation Levels • Labor Costs go down as automation increases • Takes Time • Possible to Over-automate • Buys and Sells Production Lines
Finance • Raises Money to Run the Business • Bank Notes • Bond • Issues • Retirements • Stock Issues • Dividends • Buy Back Stock
Human Resources and TQM • The HR Module Begins in Round 2 • Allows you to manage the people you have. • The TQM Module Begins in Round 3 • TQM is your Friend • Use it to Lower Your Costs
Types of Play • Rehearsal Tutorial • Individual • Practice Rounds • 8 Rounds, Team Play • Competition Rounds • 8 Rounds, Team Play • Comp-XM (Exam Rounds) • 5 Rounds, Individual
Rounds • Each Round • Represents One Year • Takes 1-2 Hours to Complete • Each Team Uploads their Round Info • Spin the Round • Happens for all teams at the same time • Analyze The Results • Upload the Next Round
Industry Conditions Report • Published Once at the Beginning
Buying Criteria • Price • Age • MTBF • Positioning • Size • Performance
Perceptual Map • Deals with Positioning • See Page 4 of Team Member Guide • Drift (Industry Conditions Report)
Continued • Fine Cut • Rough Cut • Outside
Customer Survey ScoreHow to Estimate Your Score • Extremely Important • See Section 3.2 of the Team Member Guide • Understand Your Customer Survey Score • Product Demand is Based on the CSS. • Build a Spreadsheet!!
Six Basic Strategies • Broad Cost Leader • Broad Differentiator • Niche Cost Leader (Low Tech) • Niche Differentiator (High Tech) • Cost Leader with Product Life Cycle Focus • High end, traditional, and low end focus • Differentiator with Product Life Cycle Focus • High end, traditional, and low end focus
Typical ProblemsRunning Out of Money - Big Al • Borrowing money at high interest rates because you didn’t have enough cash to run the business. • Remember: Retained Earnings is not a cash account.
Typical ProblemsRunning Out of Product to Sell • Stock outs are bad • Understand them and avoid them when possible
Typical ProblemsForecasts • Marketing – Conservative • In case sales don’t materialize • Production – Aggressive • Because Finished Goods Inventory is a Liquid Asset
Typical ProblemsAwareness And Accessibility • Awareness – Customers are Aware of Your Product • Promotion Budget • Accessibility – Customers Can Find Your Product • Sales Budget • Spend Lots of Money on Both of These
Typical ProblemsUnderestimating the Competition • Your competitors are Good • The Computer Teams are Good
Typical ProblemsGetting Behind • Don’t Make Mistakes Early • You can easily get behind and go bankrupt. • There is NO RESET BUTTON. • You live with the consequences of your decisions.
Typical ProblemsNot Having A Strategy • See the Six Basic Strategies • Pick One • Stick with it. • If it doesn’t Work, Change it. • There are Other Strategies • See the Strategic Planning Process Presentation
One Last Word of Advice • Companies pay employees lots of money to spend full time dealing with these issues • If you run out of things to do in this 1-2 hour exercise, you are doing something wrong. • There is always more you can do.