CAPSIM: Team Member Guide Notes, Capstone: Capsim Team Member Guide

The Industry Conditions Report and Courier's Market Segment Analysis Pages

Both of these help to break down each segment's criteria in order of importance.

Industry Conditions Report

Lists market segment sales percentages and projected growth rates. It is published once at the beginning of the simulation- and it is available in the Dashboard.

Inter-Department Coordination between Marketing and Production Departments

Make sure manufacturing quantities are in line with forecasts [market growth productions help Production determine capacity]. If Marketing discontinues a product, it tells Production to sell the product's production line.

Inter-Department Coordination between R&D and Marketing Departments

Make sure products meet customer expectations

Prices, set by ________________at the beginning of the year, will not change during the year.

Marketing

Annual Reports

Results from the previous year are called this. You can access these from two locations: 1) from the Capstone Spreadsheet, click Reports in the menu bar, 2) on the website, log into your simulation then click the Reports link.

Product: Sensors

Sensors are devices that observe physical conditions. For example, the average cell phone contains dozens of sensors that allow it to interpret touch, spatial orientation and signal strength. New sensor businesses are created every day in areas as diverse as security, aeronautics and biomedical engineering. You are in a business-to-business market, not a direct-toconsumer market; the sensors your company manufactures are incorporated into the products your customers sell.

High End Segment

This segment describes products that are fast in performance and smaller in size. (i.e. products of this type fall inside the lower-right set of dashed and solid circles)

Just In Time Information

This symbol is an upper square shaded in red. Clicking it will give you detailed information about the area you are viewing.

Age and MTBF

Two buying criteria that remain the same.

Positioning and Price

Two certain buying criteria that change every year.

Age

The length of time since the product was invented or revised.

Perceptual Map

The map measures size on the vertical axis and performance on the horizontal axis. Each axis extends from 0 to 20 units. Market segments have different positioning preferences. The LOW TECH segment is satisfied with inexpensive products that are large in size and slow performing. The HIGH TECH segment wants products that are faster performing and smaller insize. ** The overlap between the segments decreases because the Low Tech segment moves more slowly than the High Tech segment. Perceptual maps can be used to plot any two product characteristics.

Foundation Spreadsheet

The nerve center of your company where you formulate and finalize management decisions for every department.

The Ideal Spot

The point in the heart of the segment where all other things being held equal, demand is the highest.

MTBF (Mean Time Before Failure)

The rate of reliability measured in hours.

Fine Cut Circle

The solid inner circle that defines the heart of the segment. Often customers prefer products within this circle. These circles have a radius of 2.5 units.

Business-to-Business Market Type

The type of market your company is in. Your company is in a market that manufactures a product, so that this product, i.e. sensors, can be incorporated into the products your customers sell. [Instead of a direct-to-consumers market]

Practice Rounds

These are different from the Rehearsal Tutorial Round. During this round you can experiment with your decisions in a competitive environment. It consists of four trial and error periods. After these the simulation is reset and companies will compete for 8 rounds (i.e. each round is one full year)

Proformas and Annual Reports

These two documents are very specific to your company and help in a lot of decisions

Buying Criteria

They consider FOUR buying criteria: PRICE: Each segment has different price expectations. Low Tech wants inexpensive products while High Tech, seeking advanced technology, is willing to pay higher prices. AGE: Each segment has different age expectations, that is, the length of time since the product was invented or revised. High Tech wants new technology while Low Tech prefers proven technology that has been in the market for a few years. MTBF (Mean Time Before Failure): MTBF (Mean Time Before Failure) is a rating of reliability measured in hours. Segments have different MTBF criteria. High Tech prefers higher MTBF ratings while Low Tech is satisfied with lower ratings. POSITIONING: Sensors vary in their dimensions (size) and the speed/sensitivity with which they respond to changes in physical conditions (performance). Combining size and performance creates a product attribute called positioning.

Finance Department

This department can raise money via one-year bank notes, 10 year bonds, or through stock issues. This department can also issue stock dividends, buy back stock, or retire bonds before their due dates.

Research & Development Department

This department designs your company's product line. It is important that this department focuses on inventing and revising products that appeal to your customer's changing needs.

Production Department

This department determines how many units will be manufactured during the year. It is also responsible for the buying and selling of production lines.

Marketing Department

This department prices and promotes your products. They interact with your customers via the sales force and distribution system (i.e. responsible for sales forecast)

The Capstone Spreadsheet

This is where you formulate and finalize management decisions for every department. After you log in this is available from the Decisions link.

The Rehearsal Tutorial

This portion will show the students how to invent and revise products, make marketing decisions, schedule production and buy/sell equipment. It will also show you how to ensure that your company has the financial resources it needs for the upcoming year. [Happens at the very beginning and can be found on the simulation Dashboard]

The Courier Report's "Last Year's Results" Style System (i.e. How does it display results from round to round)

This report available at the start of Round 1 displays results from Round 0, when all companies were equal just after the monopoly's breakup. At the start of Round 2 it will display the results from Round 1, etc.

The Capstone Courier

This report is available from two different locations: 1) from the Capstone Spreadsheet, Click Reports in the menu bar, 2) on the website, log into the simulation and click the Reports link

Low End Segment

This segment describes inexpensive products that are large in size and slow performing. (i.e. products that fall inside the upper-left set of dashed and solid circles)

The Four Buying Criteria

1) Price 2) Age 3) MTBF 4) Positioning

The Five Market Segments (*Customers within a certain market segment have similar needs)

1) Traditional 2) Low End 3) High End 4) Performance 5) Size

Four Main Departments

1.) Research & Development, 2) Marketing, 3) Production, 4) Finance (Companies use the Capstone Spreadsheet to enter departmental decisions)

Decision Audit

A complete trail of all team decisions. This is available from two locations: 1) from the Capstone Spreadsheet, click Help in the menu bar 2) on the website, log into your simulation then Click on Decision Audit link

Customer Survey Score

A customer survey score reflects how well a product meets its segment's buying criteria. Company promotion, sales and accounts receivable policies also affect the survey score. Scores are calculated once each month because a product's age and positioning change a little each month. **If during the year a product is revised by Research and Development, the product's age, positioning and MTBF characteristics can change quite a bit.

Customer Survey Score

A product's demand is driven by this monthly number. Assuming that the product does not run out of inventory, a product with a higher score in this will likely outsell a product with a lower score. These numbers are calculated 12 times a year (i.e. scores are calculated once a month because a product's age and positioning change a little each month). It shows how well a product meets its segment's buying criteria.

The Perceptual Map

A tool used to track the position of their products and those of their competitors. It plots the the product size and performance characteristics. (i.e. size is measured on the vertical axis and performance is measured on the horizontal axis)

Positioning

Combining size and performance creates a product attribute called this.

The Situation Analysis

Completing this section will enable you to understand current market conditions and how the industry will evolve in the next few years (i.e. helps for operational planning). Available from the simulation Dashboard.

Foundation FastTrack

Every round, you and your competitors will have access to an industry newsletter called the Foundation FastTrack. It is an extensive year-end report of the sensor industry. It includes customer buying patterns, product positioning, public financial records and other information that will help you get ahead. Every product's Customer Survey Score can be found in the FastTrack's Segment Analysis pages. These scores determine sales distribution. In general, the higher the score, the better the sales.

Buyers in each segment place a ______________ emphasis upon the four buying criteria.

Different **For example, some customers are more interested in price, while others are more interested in positioning.

Price

Each segment has different expectations for this buying criteria. One segment might want inexpensive products, while another seeking advanced technology might be willing to pay higher prices.

Drift Rates: Low Tech vs. High Tech

Each year, the High Tech segment demands greater improvement than the Low Tech segment. Therefore they drift at different rates. High Tech moves faster and farther than Low Tech. As time goes by, the overlap between the segments diminishes.

Inter-Department Coordination between R&D and Production Departments

Ensure assembly lines are purchased for new products. If Production discontinues a product, it should notify R&D.

Industry Conditions Report

Outlines the beginning business environment, including customer buying criteria. This report is available from your simulation Dashboard.

Drift Rates

Overtime, customers expect products to be smaller and faster--this will cause segments to move a little each month down and toward the right. The numbers that describe this are called? (i.e. by the end of the 8th year the segments will not be overlapped) These are usually located in the Industry Conditions Report.

Inter-Department Coordination between Finance and Production Departments

Production tells Finance if it needs money for additional equipment [If Finance cannot raise enough money, Production must scale back or perhaps sell idle inventory]

Positioning in the Rough Cut

Products placed in these dashed circles are poorly positioned and they have reduced customer survey scores. [Just beyond the fine cut, customer survey scores drop 1%, halfway across the rough cut, scores drop 50 %. Scores drop 99% for products that are almost on the edge of this position]

Proformas & Annual Reports

Proformas are projections for the upcoming year. The proformas will help you envision the impacts of your pending decisions and sales forecasts. Annual reports are the results from the previous year. The annual reports will help you analyze last year's results.

Inter-Department Coordination between Marketing and Finance Departments

Project Revenues for each product and to set the Accounts Receivable policy [this policy is the amount of time, customers can take to pay for their purchases]

Proformas

Projections for the upcoming year are called this. They will help you envision the impacts of your pending decisions and sales forecasts. This is only available from the Capstone Spreadsheet's menu.

Decision Audit

The Decision Audit is a complete trail of all team decisions. It will help you identify your decision-making strengths and weaknesses.

Company Success

The board of directors, shareholders and other stakeholders expect you to make the company a market leader. Successful managers will: • Analyze the market and its competing products; • Create and execute a strategy; and • Coordinate company activities.

Rough Cut Circle or Rough Cut Boundary

The dashed outer circle that defines the outer limit of the segment (i.e. customers are saying, "I will NOT purchase a product outside this boundary." These circles have a radius of 4.0 units.

The Capstone Courier

The industry newsletter, which is an extensive year-end report of the sensor industry. This report includes: Customers Buying Patterns, Product Positioning, and 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).

Buying Criteria

The information a company uses to know how customers within each market segment value different standards as they evaluate products.

Situation Analysis

Will enable you to understand current market conditions and how the industry will evolve in the next few years. It will assist you with your operational planning.

Finance

Your Finance Department makes sure your company has the financial resources it needs to run through the year. The department can raise money via one-year bank notes, 10-year bonds or stock issues. The department can also issue stock dividends, buy back stock or retire bonds before their due dates. The Finance Department acts as a watchdog over company expenditures. Finance should review Marketing and Production decisions. Finance should cross-check Marketing's forecasts and pricing. Are forecasts too high or too low? Will customers be willing to pay the prices Marketing has set? Is Production manufacturing too many or too few units? Does Production need additional capacity? Has Production considered lowering labor costs by purchasing automation?

Marketing

Your Marketing Department prices and promotes your products. It interacts with your customers via its sales force and distribution system. Marketing is also responsible for sales forecasts. Marketing works with Production to make sure manufacturing quantities are in line with forecasts. Marketing's market growth projections also help Production determine appropriate levels of capacity. If Marketing wants to discontinue a product, it tells Production to sell the product's production line. Marketing works with Finance to project revenues for each product and to set the Accounts Receivable policy, which is the amount of time customers can take to pay for their purchases.

Production

Your Production Department determines how many units will be manufactured during the year. It is also responsible for buying and selling production lines. Production tells Finance if it needs money for additional equipment. If Finance cannot raise enough money, it can tell Production to scale back its requests or perhaps sell idle capacity.

Research & Development (R&D)

Your R&D Department designs your product line. The department needs to invent and revise products that appeal to your customers' changing needs. R&D works with Marketing to make sure products meet customer expectations. R&D works with Production to ensure assembly lines are purchased for new products. If Production discontinues a product, it should notify R&D.

Customers

Your customers fall into different groups, which are represented by market segments. Customers within a market segment have similar needs. The segments are named for the customer's primary requirements such as: • Low Tech • High Tech