Capstone exam

Within the process management initiatives, channel support systems

increase the effectiveness of the sales budget and therefore demand.

When a segment's product demand outstrips supply

products lose 20% for each dollar above or below the segment guideline.

Customers go through a two-stage buying process: The Rough Cut and the Fine Cut. In the Rough Cut, buyers focus on four product characteristics. Which one of the following is NOT one of these four product characteristics?

quality

Within the process management initiatives, concurrent engineering

reduces R&D cycle time, the time needed to move products on the perceptual map and change the MTBF specifications.

Teams can produce up to ______ products.

8

What is one draw-back of increasing automation?

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

R&D projects can drive a product's:

all of the above.

What effects do Process Management Initiatives have? a. Administrative savings b. Higher production efficiency c. Increase in demand d. Reduction of R&D times e. All of the above

e. All of the above

What effects do Process Management Initiatives have? a. Administrative savings b. Higher production efficiency c. Increase in demand d. Reduction of R&D times e. All of the above

e. All of the above

If a product's Automation rating is substantially increased, it will:

take longer to move the product across the Perceptual Map.

The higher a company's automation level,

the lower a company's labor costs.

Maximum issue is

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

How much do segment prices fall each year?

$0.50

If a line has a capacity of 100,000 units, the cost of changing the automation level 1 unit either up or down is

$400,000.

If a product's Price was $20, its Material $8, and its Labor $7, the Margin Per Unit would be:

$5.

How is performance scaled?

0 (low performance) to 20 (high performance)

What percentage of additional awareness does the first $1,000,000 increase in promotion budget buy?

20%

What percentage of the entire market segment does Low End make up for?

31%

What is the size of the plant at the start of the simulation?

5 assembly lines with space to add 3 more.

You are charged a ______ brokerage fee to issue bonds and ______ brokerage fee if you retire bonds prior to their maturation date.

5%; 1.5%

How much awareness is created by the $250,000 promotion fee when a new product is invented?

50%

Assuming no additional product promotion, what percent of customers, reached through last year's marketing campaign will carry over into the current year?

67%

Emergency loans are made at what rate over the normal Current Debt interest rate?

7.5%

How is the strength of the sales channel measured?

Accessibility on a scale of 0 to 100%

What section of the perceptual map is considered ideal for the low end segment?

Upper Left

The economic environment for this simulation game will include

a favorable environment featuring modest growth, low inflation, and reasonable interest rates.

The promotion budget affects:

awareness.

What are the three effects of an increase in Automation? a. A decrease in labor hours b. Lower variable costs c. Longer repositioning period in R&D d. Higher efficiency e. a, c, d

e. a, c, d

When an R&D effort started in 2001 completes on September 15, 2002, the product revision kicks in

immediately upon completion.

Where is proximity to the Ideal Spot particularly important?

in high technology segments.

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

divided in half.

The average company should double in size every:

6 years.

EPS (Earning Per Share) is calculated by

dividing net profit by the number of shares outstanding.

The Ideal Spot

drifts at same pace as the segment.

If your team decides to introduce a new product, when should capacity and automation be purchased?

One round prior to product release

The two characteristics that the perceptual map evaluates are

Performance and Size.

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

Performance customers

Which customer group or market segment seeks proven products using current technology?

Performance customers

If you are marketing to High End customers, which criteria is most important to them in order of importance?

Positioning, Age, MTBF, Price

Which product attribute do Low End customers value the most?

Price

What two factors are considered in both the rough cut and fine cut of the customer buying process?

Price and Reliability

How much does it cost for MTBF per 1,000 hours of reliability?

$0.30

Labor costs are driven by three factors:

wage and benefit rates, automation levels, and second shift.

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

10

What is your bond rate? The prime rate is 10%; your current bond rating slipped one category (to AA).

11.9%

Inventory Carrying Cost is ___% of the average cost of production.

12

If your short-term interest rate is 12.1%, then your bond rate is:

13.5%

How can assembly lines double their output?

Add a second shift.

What is the most important criteria to a "Traditional Segment" consumer?

Age

Once you upload your official decisions during a round, how many times can you change them before the end of the round?

As many times as you want

Which of the following is true about the Accounts Receivable Lag and its implications on demand?

At 60 days, demand is 98.5%.

Which of the following are not considered in the Fine Cut?

Automation

Stock price is a function of:

Book value, Earnings per Share, and Dividend.

The Finance Department can use which of the following methods to acquire capital for company activities?

Current Debt, Stock Issues, Bond Issues and Profits

In Capstone©, pricing standards are set by:

Customers (Market Segments).

What is a market segment?

Group of customers with similar purchasing concerns

Increasing performance and shrinking size does what to the material cost?

Increases

What happens to a product priced at $1 above or below the segment guideline when a segment's product supply outstrips demand?

It loses 20% of its appeal.

When tracking market segments on the performance and size perceptual map, which segment moves or "drifts" the slowest?

Low

Which customer group or market segment seeks cutting edge technology in both size and performance?

Low End customers

Which customer group or market segment seeks proven products, are indifferent to technological sophistication, and are price motivated?

Low End customers

Marketing is concerned with 4 things. What are they?

Price, Place, Promotion, and Product

In the Capstone® simulation, what are the components of a product's material cost?

Reliability component cost and positioning component cost

Two questions that dominate customers' thinking are:

Size and Performance.

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

If your company has a sales budget of $3 million and drops it to zero,

accessibility drops to 0% in three years.

How can R&D time be reduced? By:

budgeting money to quality initiatives.

What are the drivers of Material Costs? a. Higher performance b. Smaller size c. Higher Mean Time Between Failure (MTBF) d. All of the above e. None of the above

d. All of the above

The relative cost of a product's Material increases as: Size is ______; Performance is ______; and MTBF is ______.

decreased; increased; raised

An increase in promotional budgets have:

decreasing returns over time.

Your finance department is primarily concerned with a. acquiring the capital needed for company activities. b. establishing a dividend policy that maximizes the return to shareholders. c. setting credit policies for customers and suppliers. d. profits. e. all of the above.

e. all of the above.

When a segment's product demand outstrips supply, a. a product's MTBF can go 4,900 hours below the range without affecting sales. b. a product with an MTBF 1,000 hours below the segment guideline loses about 20% of its appeal. c. at 5,000 below the range, products will lose all appeal. d. both a and b are true. e. both a and c are true.

e. both a and c are true.

When a segment's product demand outstrips Supply a. product sales become inelastic. b. product sales become elastic. c. product sales can be priced up to $4.90 above the price range without losing sales. d. products lose all appeal at $5 above the price range. e. both c and d.

e. both c and d.

What happens to a company when its debt-to-assets ratio increases? a. Its credibility among creditors suffers. b. It envisages higher risk. c. Its short term interest rates increase. d. Its bond rating is reduced. e. c, d

e. c, d

Pricing plays a role a. in the final cut of the purchase decision. b. in the rough cut stage of the purchase decision. c. in neither stage of the purchase decision. d. in the fine cut stage of the purchase decision. e. in both b and d.

e. in both b and d.

Rapid movement of an existing product on the Perceptual Map requires

low automation levels.

The Traditional ideal spot is

near the center of its circle.

Which market segment is less sensitive to price, but more to design?

performance

Products must plot within ______ units from the center of the circle on the Perceptual Map to survive the rough cut.

4.0

MTBF in the segments should be a. MTBF (Performance) > MTBF (High End). b. MTBF (Low End) > MTBF (High End). c. MTBF (Low End) < MTBF (Size). d. a, b, and c. e. only a and c.

e. only a and c.

Capacity is sold by

entering a negative number in the Buy/Sell row on the Production Spreadsheet.

In order to achieve 100% accessibility, a team must:

have two products in the same segment.

Budgeting money to Quality initiative will lead to these outcomes except:

increase Labor Costs.