Capsim study guide to exam

(Price Question) - At what dollar amount above the segment guidelines is all consumer appeal lost?

$5

How much does each new unit of capacity cost?

$6 bucks for floor space and $4 bucks for automation. If you want to raise automation by 1 level, it will cost $4 for each unit of capacity.

When investing in print media, diminishing returns apply after

$700,000 per product

(questions about product age) - The preferred product perceived age for each sector peaks at...

- 0 years for high end. - 7 years for low end. I guess the younger it is, the better quality product it is.

What does the TQM spreadsheet help with?

- Administrative savings - Higher production efficiency - Increase in demand - Reduction of R&D times - TQM improves product quality while reducing the time and resources required to design, manufacture, warehouse and ship products. - also if you invest more than 5 million in the same TQM initiative over a 2-3 year period, it does little to no improvement...

Customers who care about size are part of which segment?

Size segment - Size's growth rate for their segment is 18.2%.

When working with Distributors, each distributor costs

100,000$ - Distributors are a separate sales channel. - Distributors place your product in their own showrooms. You pay each distributor $100,000 per year to stock your product line.

If the segments all drift to the LOWER RIGHT section of the map, what does that mean?

That the customers (or market segment) are setting the standards that they want smaller (size) and faster (performance) products.

If you see a red flag on one of your spreadsheets, what does this mean?

That there is more information. - Example - if there is a red flag in your relationship, there is more information you need to know about that red flag in order to continue the relationship.

When working with Outside Sales, each salesperson costs

125,000$ - this includes salary, commission, travel, and support. - In the Sales Budget Resource, the outside sales force meets with customers face-to-face.

According to the S-Shaped curve, diminishing returns for a single year budget become noticeable at...

2 million - The S-Shaped curve predicts return on investment.

(questions about product age) - At which point does the perceived age of a traditional product peak?

2 years

If you drop your sales budget to zero, accessibility drops to 0% in how many years?

3 years. - if you drop your sales budget to zero, it will take 3 years for you accessibility to drop to 0% too. - ALSO in order to achieve 100% accessibility, you need to have at least 2 products in the same segment.

Customer survey score is driven by the

4 P's - it is based on customer demand. - The December Customer Survey indicates how customers perceived the products in the segment. - The customer survey is a good comparison tool for looking at the competitive analysis with production. Reflects how well a product meets its segment's buying criteria, calculated 12 times a year.

When working with inside sales, each inside salesperson costs

50,000$ - In only one product segment, diminishing returns for inside sales is reached at 30.

By what percentage do labor costs fall at an automation rating of 10?

90%

What is the best bond rating to the worst bond rating?

AAA - best D- Worst

Which two buying criterias remain the same over time?

Age Reliability

true or false? High End Performance Size drift at a faster rate than the other segments.

True

True or false? Diminishing returns will occur when investing in the same TQM Initiative round after round.

True. - diminishing returns will occur when investing in the same TQM round after round. - each initiative will reach a point where no further improvement is possible, therefore the investments create no additional returns.

(questions about product age) - What happens to a product's Perceived Age when it is repositioned in R&D?

When a product is repositioned in R&D... - the percieved age is reduced by 50%.

True or False? Generally speaking, a team with high levels of automation would be inclined to Make a "low ball" offer to the unions in order to further lower costs.

False. - if anything, they pay them more cause they have to be able to work the machines right.

What are the 4 buying criteria?

Price Age MTBF Positioning (pfmn, size) - Each segment values these buying criterias in different order.

What trend can be explicitly observed in the industry in which your company is operating?

Products become smaller and smaller. - Example - Apple iphones get thinner and thinner.

Promotion budget goes towards...

Promotion budget goes towards awareness. - The more you promote a product, the more awareness

What process management initiative reduces labor costs?

QIT - Quality Initiative Training - If a company with low automation wanted to invest in a single area that exclusively lowers labor costs, they would select QIT (Quality Initiative Training).

Perceptual map

a marketing tool used to compare products against customer perceptions. - measures performance and size of the product.

The first page of the courier is

a snapshot of last year's results.

The TQM report can be accessed from the

capstone courier.

What is working capital?

current assets - current liabilities - The funds needed for the day to day running of the company. Working capital is... - The life blood of any organization because its the money (capital) for day to day activities. - All of the money tied up in things you one day wish to sell. - Can be seen on the balance sheet under the headings current assets and current liabilities (cause working capital = assets-liabilities). - The change of working capital can be seen on the cash flow statement.

Which finance thing has the highest interest rate?

emergency loans lol

What does a segment manager do?

verify the products entering and leaving a segment, the margin potential for those products, capacity level and the distribution system as compared to competitors.

R&D completion time can be diminished

when a company takes advantage of existing technology.

Low Tech customers emphasize buying criteria in which order?

1. Price 2. Age 3.Postioning (pfm and size) 4. Reliability

What are the 4 P's of marketing?

1. Product 2. Price 3. Place 4. Promotion

The Finance Department can use what methods to acquire money (capital) for company activities?

- Current Debt - Borrowing long and short term debt - issuing stock - Bond Issues - Profits

What happens to a company when its debt-to-assets ratio increases?

- Its short term interest rates increase. - Its bond rating is reduced.

MTBF (reliability) is

- Mean Time Between Failure. - This measures reliability, size and market segment. - measured in hour increments. - MTBF per 1,000 hours = 0.30 cents. - How much of a range does each segment have for MTBF? - 5,000 hour range. Products with an MTBF 1,000 hours below the segment's guideline lose about ___20__% of their customer survey score.

What are the 5 market segments? and what is a market segment?

1. Traditional 2. Low End 3. High End 4. Performance 5. Size - Group of customers with similar purchasing concerns

Which spreadsheet/department are new products created and revised on?

- Research and Development - You can change repositioning, invention, and reliability adjustments on the R&D spreadsheet.

Where do all 5 segments fall in the map?

- Upper left = low segment - Next to low segment on the upper right side = Performance - middle = traditional - bottom left = size - Bottom right = High end

your finance department is primarily concerned with

- acquiring the capital needed for company activities. - establishing a dividend policy that maximizes the return to shareholders. - setting credit policies for customers and suppliers. - profits. - Financial decisions should be made last, after all the other departments made their decisions.

What does the segment analysis say in the courier?

- each market segment in detail. - ideal position - price - age - reliability - customer survey is in the segment analysis

The Capstone Courier (also called the industry newsletter) is...

- is an extensive year-end report of the sensor industry. This report includes: - Customers Buying Patterns - Product Positioning - Public Financial Records. This is where your team will evaluate their company's performance or analyze their competitors (i.e. other companies within the sensor industry).

In Capstone®, the spreadsheets (as in the different sections of CAPSIM)- allow team members to

- make changes to variables. - observe the results of changes made to variables. - Each of the spreadsheets work independently and depend on values entered in other spreadsheets.

R&D - research and development involves the

- perceptual map - size of product - performance of product -MTBF or reliability - age of product.

what can you do in the marketing spreadsheet?

- prices. - promotion budgets. - sales budgets. - REMEMBER: Enter your worst-case forecast for sales, and your best case for production so you don't stock out. - The marketing spreadsheet has the credit policies for customers and supplier sets. - THE MARKETING DEPARTMENT ESTABLISHES THE PRICES OF THE PRODUCTS.

What does the "market share report" say in the courier?

- sales volume in all segments. - reporting potential and actual sales

what is on the stock and bond summaries in the capstone courier?

- the stock price - bond ratings -the interest rate for next year

R&D completion time depends on

-number of projects in R&D - automation rating - similarity to existing products

Of the groups of the marketing segments (performance, size, traditional, high end, and low end) which 3 are considered to be in high tech segments and usually "ride the wave" of technology?

1. Performance 2. High end 3. Size

44. If you are marketing to HIGH END customers, which criteria are most important to them in order of importance?

1. Positioning (pfm and size) 2. Age 3. MTBF (reliability) 4. Price (matters about 9%)

what is the distance between low and high preferred prices?

10 bucks

Stock price is based on

Book value, Earnings per Share, and Dividend. - stocks are used for funding long term investments in capacity and in automation. - STOCK ISSUES ARE USED TO FUND LONG TERM INVESTMENTS IN CAPACITY AND AUTOMATION.

What's the measure for product reliability?

Expected time a product lasts

Assets =

Liabilities + Equity

Which market segment moves or drifts the slowest?

Low end... - cause i mean all they care about is price so as long as the price is low, other stuff don't really matter.

The resources used in the sales budget are

Outside Sales, Distributors, and Inside Sales.

Which customer group or market segment seeks high reliability, advanced technology products that emphasize high performance?

Performance customers - Performance has the highest growth rate in the market.

The A/R lag is

The A/R lag is - a marketing spreadsheet definition. - the accounts receivable lag (in days). - the time between customers receiving products and when they are expected to pay for them. - When A/P lag increases... it improves its cash position and its suppliers withhold material for production. They withhold it for 150 days. - If you increase A/R lag days, your sales forecasts increases and collection time increases.

In Capstone©, pricing standards are set by:

The Customers (or specific Market Segment).

Repositioning moves a product on the Perceptual Map from its old location to a new one. When does the new location become active?

The day the R&D project completes

What is the difference between the market segments at the beginning of the round vs. the market segments in the final round?

The fine cuts overlap in the beginning and in year 8; - only the rough cuts overlap.

What is one drawback of increasing automation?

The product requires increased time/expense for subsequent short-move repositioning.

Which customer group or market segment seeks proven products using current technology? or customers that want proven products, current technology of moderate size and performance.

Traditional customers - This makes up 27.5% of the sensor market in 5 years for the simulation. - Most important criteria for traditional segment is AGE. it makes up 47%...

Each additional advertisement increases customer awareness by _____________the first.

a lesser amount than the first. - Increasing the number of advertisements does not linearly increase Awareness. When the advertisement runs a second time, a percentage of people who saw it the first time will see it again. Those who see the ad twice do not become aware of the product when they see it the second time. Therefore, the second placement does not add as much Awareness as the first-- the result, diminishing returns apply.

Labor negotiations include

a. hourly wage. b. benefits. c. profit sharing. d. annual raise. Remember that negotiations ceiling (the most) they will pay people is 10% above the starting positions.

How can assembly lines double their capacity?

add a second shift. - but the second shift wages are 50% more than the first shift wages. - Production runs can be scheduled in 1 or 2 shifts. - INCREASING CAPACITY TENDS TO REDUCE THE NUMBER OF WORKERS ON THE 2ND SHIFT.

Which team does labor see the opening offers from?

all teams

The ideal spot drifts...

at the same pace as the segment.

Which Automation rating requires the longest time to reposition a product?

automation level of 10 is a long time to reposition a product. - In the start of the simulation, we start with 3.0-5.0 automation level. - Automation ratings can be anywhere from 1.0 to 10.0. The higher the automation rating; the lower the labor cost. - If something has high automation, then that means the machines are doing most of the work. - If automation increases then it takes longer to move the product across the perceptual map.

Assuming the Productivity Index is greater than 100%, adding Overtime will ____________ the Productivity Index.

decrease. - if productivity is over 100% then overtime will just decrease the productivity because then the workers will get tired if you keep giving them overtime.

When a product is moved to a new location on the Perceptual Map, the Perceived Age (or Age) is

divided in half. - so when a product moves to a new location, its good for the age.

(Price Question) - The prices in each segment drops by..

drops by $0.50 each year.

what does the financial summary page cover in the capstone courier?

financial summary page = - each company's cash flow - balance sheet - income statements

Which of the following will give your company an AAA bond rating...

having no debt at all.

Increasing a product's reliability will result in which of the following changes to production costs?

higher material cost

Process management initiatives deals with the TQM spreadsheet.. it also helps with

improving business procedures, resulting in improved efficiencies and cost structures. Examples of Process management initiatives: -CPI - Vendor/Just-in-Time Inventory (JIT) - Quality Initiative Training (QIT) - Channel Support systems - Concurrent Engineering (CCE)

Which financial obligation is best satisfied with Bond Issues?

increased production capacity

What is a fine cut circle?

its the area around the idea spot. - inside each fine cut circle, segments have an ideal spot where demand is at its highest. - The inner fine cut circles represent the heart of the segment where demand is strong. - in the fine cut, a product's appeal is drive by its "customer survey score".

Customers that want low prices and are willing to sacrifice size and performance are in the _____ segment

low end segment. - low end customers want the lowest price so they don't care that much about size or performance. - AKA boba's cheap ass lmfaoo

what is the most important for low end customers? (Upper left area)

low price... low price matters 53% to them which is high.

In the perceptual map, if there is rapid movement of an existing product, it needs lower...

lower automation levels.

Customers go through a two-stage buying process: The Rough Cut and the Fine Cut.... What two factors are considered in both the rough cut and fine cut of the customer buying process?

mainly Price and Reliability - Age is not considered in the rough cut at all.

The Traditional ideal spot is

near the center of its circle. - Traditional always drifts from +0.7 performance and -0.7 for size on the map.

True or false? - an increase in promotional budgets have decreasing/diminishing returns overtime. Also - promotion budget affects the awareness. Starting awareness of a new product is 25%.

true

changing MTBF does not affect

on percieved age

what is the most important for high end customers?

positioning. aka, (pfmn, size) = positioning. - High end customers seek the cutting edge technology in both size and performance. - buying criteria is the same for size and high end because they're both next to each other on the map.

Sales budget goes towards...

product's accessibility. - so sales is about accessibility. When selling juicy as a salesman, you had to make sure the customers had ACESS-ibility to the perfumes.

what does the production analysis report say in the courier?

production analysis = - detailed info about each product in the market - sales - inventory - price - material cost - labor cost

the performance segment places importance on

reliability (cause in order to perform well, it needs good reliability). and positioning - which is performance and size.

How do you discontinue a sensor?

sell all the capacity for the sensor. Liquidate.

Generally, __________ will be incurred when production levels decrease and / or Automation levels increase.

separation costs. - cause when automation increases, you don't need much people cause the machines take over so its a separation cost to fire ppl.

cash position

the cash position at the beginning of the round and a projection of the cash position at the end of the round.

What does the perceptual map evaluate? like what is on the x and y axis's with the circles.

the perceptual map moves based on the performance (x axis horizontal) and the size (y axis up and down). always try to stay in the ideal spot for performance and size in that segment.

What does the perceptual map show?

the positioning of a product in the different segments.

Refering to stocks and bonds, the maximum issue is

the upper limit in thousands of dollars that teams can issue in stock this year.

When should you buy automation and capacity for a new product?

the year before the revision date.

When going to a new automation level, there is a ___ lag.

there is a 1 year lag. - and a 1 year lag in buying new capacity too.

JIT - Just in time inventory

this Just in time inventory helps reduce material costs (cause it deals with inventory) and administrative costs (cause its a management thing to calculate how much inventory you need).