Capstone Review
How much do segment prices fall each year?
$0.50
What percentage of additional awareness does the second $1,000,000 increase in promotion budget buy?
20%
In the Capstone® simulation, what are the components of a product's material cost?
Reliability component cost and positioning component cost
Re-positioning 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 one draw-back 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?
Traditional customers
Which of the following is true?
Traditional segment emphasizes the age criteria, Low End segment emphasizes the price criteria.
When a segment's product demand outstrips Supply
product sales can be priced up to $4.90 above the price range without losing sales and products lose all appeal at $5 above the price range.
How is performance scaled?
0 (low performance) to 20 (high performance)
Emergency loans are made at what rate over the normal Current Debt interest rate?
7.5%
Which three factors drive labor cost?
Wage and benefit rates, Automation levels, Second shift/Overtime costs
When an R&D effort started in 2001 completes on September 15, 2002, the product revision kicks in
immediately upon completion.
When purchasing increased Capacity and Automation, the new capacity becomes available,
in 1 year.
EPS (Earning Per Share) is calculated by
dividing net profit by the number of shares outstanding.
Inventory Carrying Cost is ___% of the average cost of production.
12
At which point does the perceived age of a traditional product peak?
2
How much awareness is created by the $250,000 promotion fee when a new product is invented?
50%
What is the starting awareness percentage of a new product?
50%
The average company should double in size every:
6 years.
Assuming no additional product promotion, what percent of customers, reached through last year's marketing campaign will carry over into the current year?
67%
Teams can produce up to ______ products.
8
Which customer group or market segment seeks high reliability, advanced technology products that emphasize high performance?
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
What section of the perceptual map is considered ideal for the low end segment?
Upper Left
The relative cost of a product's Material increases as: Size is ______; Performance is ______; and MTBF is ______.
decreased; increased; raised
When a product is moved to a new location on the Perceptual Map, the Perceived Age (or Age) is:
divided in half.
Over time, the segments will drift in which direction on the Perceptual Map?
down; right
The Ideal Spot
drifts at same pace as the segment.
The Traditional ideal spot is
near the center of its circle.
When a segment's product demand outstrips supply
products lose 20% for each dollar above or below the segment guideline.
If your team decides to introduce a new product, when should capacity and automation be purchased?
One round prior to product release
Which market segment places the most importance on reliability?
Performance
The two characteristics that the perceptual map evaluates are
Performance and Size.
Which Automation rating requires the longest time to reposition a product?
10
How can assembly lines double their output?
Add a second shift.
Benchmarking reduces
Administrative Cost.
The Finance Department can use which of the following methods to acquire capital for company activities?
Current Debt, Stock Issues, Bond Issues and Profits
If the previous year you reached 100% customer awareness in your company, this year what will you need to do to maintain this level?
I would only need to create 33% new awareness to maintain 100% this year.
Within the process management initiatives, channel support systems
Increase the effectiveness of the sales budget
Marketing is concerned with 4 things. What are they?
Price, Place, Promotion, and Product
The Perceptual Map is
a marketing tool used to compare products against customer perceptions.
When a segment's product demand outstrips supply,
a product's MTBF can go 4,900 hours below the range without affecting sales and at 5,000 below the range, products will lose all appeal.
Capacity is sold by
entering a negative number in the Buy/Sell row on the Production Spreadsheet.
If you purchase production capacity and automation:
it is available in the next year.
Rapid movement of an existing product on the Perceptual Map requires
low automation levels.
A change in MTBF affects:
material cost.
R&D completion time depends on
number of projects in R&D, automation rating, similarity to existing products.
Which market segment is less sensitive to price, but more to design?
performance, high end, size
Inside each fine cut circle,
segments have an ideal spot where demand is at its highest.
R&D projects can drive a product's:
size, age, reliability, performance.
You are charged a ______ brokerage fee to issue bonds and ______ brokerage fee if you retire bonds prior to their maturation date.
5%; 1.5%
Which of the following are not considered in the Fine Cut?
Automation
The promotion budget affects:
Awareness.
What is a market segment?
Group of customers with similar purchasing concerns
Changing MTBF will:
Have no impact on Perceived Age
Which customer group or market segment seeks cutting edge technology in both size and performance?
High End customers
Increasing a product's reliability will result in which of the following changes to production costs?
Higher material cost
What are the drivers of Material Costs?
Higher performance, Smaller size, Higher Mean Time Between Failure (MTBF)
What happens to a company when its debt-to-assets ratio increases?
Its short term interest rates increase and Its bond rating is reduced.
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 proven products, are indifferent to technological sophistication, and are price motivated?
Low End Customers
MTBF in the segments should be
MTBF (Performance) > MTBF (High End) and MTBF (Low End) < MTBF (Size).
What is the most important criteria to a "Low End Segment" customer?
Price
The economic environment for this simulation game will include
a favorable environment featuring modest growth, low inflation, and reasonable interest rates.
If your company has a sales budget of $3 million and drops it to zero,
accessibility drops to 0% in three years.
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, and profits.
Fast-moving, high tech segments tend to favor:
capacity over increased automation.
An increase in promotional budgets have:
decreasing returns over time.
In order to achieve 100% accessibility, a team must:
have two products in the same segment.
Where is proximity to the Ideal Spot particularly important?
in high technology segments.
Pricing plays a role
in the rough cut stage of the purchase decision and in the fine cut stage of the purchase decision.
Budgeting money to Quality initiative will lead to these outcomes except:
increase Labor Costs.
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
Dividends are paid to the stockholders in
quarterly installments at a rate per share that you establish at the beginning of the year.
If a product's Automation rating is substantially increased, it will:
take longer to move the product across the Perceptual Map.
When plotting the segment locations for each round
the goal is to determine the ideal spot location for each segment during the 8 years.
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.
Labor costs are driven by three factors:
wage and benefit rates, automation levels, and second shift.
How much does it cost for MTBF per 1,000 hours of reliability?
$0.30
If you increase automation from 2.0 to 5.0, the cost is:
$12 per unit of capacity.
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. 20 - (8 + 7) = 5
Adding one additional unit of capacity costs
$6 + ($4 x Automation Level).
What is your bond rate? The prime rate is 10%; your current bond rating slipped one category (to AA).
11.9%
If you want to add 500,000 units of capacity to an assembly line with an automation rating of 5, how much will it cost? (Hint: $6 for floor space and $4 times automation level.)
13,000,000
If your short-term interest rate is 12.1%, then your bond rate is:
13.5%.
What percentage of additional awareness does the first $1,000,000 increase in promotion budget buy?
26%
What percentage of the entire market segment does Low End make up for?
31%
The traditional market segment makes up what percentage of sales, in dollars?
32%
Products must plot within ______ units from the center of the circle on the Perceptual Map to survive the rough cut.
4.0
What is the size of the plant at the start of the simulation?
5 assembly lines with space to add 3 more.
What are the three effects of an increase in Automation?
A decrease in labor hours, Longer repositioning period in R&D, Higher efficiency
How is the strength of the sales channel measured?
Accessibility on a scale of 0 to 100%
What effects do Process Management Initiatives have?
Administrative savings, Higher production efficiency, Increase in demand, Reduction of R&D times
What is the most important criteria to a "Traditional Segment" consumer?
Age
Which of the following is not a process management initiative available to your company?
All are available process management initiatives
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%.
Stock price is a function of:
Book value, Earnings per Share, and Dividend.
In Capstone©, pricing standards are set by:
Customers (Market Segments).
Increasing performance and shrinking size does what to the material cost?
Increases
What happens to a product's Perceived Age when it is re positioned in R&D?
It is reduced by 50%.
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.
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
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.
Two questions that dominate customers' thinking are:
Size and Performance.
How can R&D time be reduced? By:
budgeting money to quality initiatives.