Capsim Business Simulation Overview

Course Road Map

• Students should register at capsim.com/register using a provided User ID and Password.
• Follow these steps to register and get started:
  • Review the Rehearsal Tutorial
  • Open the Foundation Spreadsheet
  • Form a company
  • Practice Rounds (as instructed by instructor)
  • Competition Rounds (decisions count and include additional tasks)
• Competition Rounds include:
  • Optional Homework Assignments
  • Peer Evaluations

Introduction

• The student controls a multi-million-dollar sensor manufacturing company.
• This company was created by splitting a former monopoly.
• The company faces challenges with outdated products, poor marketing, outdated facilities, and poor financial management.
• The post-monopoly era requires companies to innovate as competitors offer better products or lower prices.
• The company manufactures sensors that other businesses incorporate into their products.

Industry Conditions Report

• Each sensor industry simulation has unique conditions.
• The Industry Conditions Report outlines the initial business environment, including customer buying criteria.

Management Tools

• Rehearsal Tutorial: Guides students on managing the company. Includes product development, marketing decisions, production scheduling, and financial management.
• Foundation FastTrack: An industry newsletter that provides insights into customer buying patterns, product positioning, and financial records to help students gain a competitive edge.
• Situation Analysis: Helps students analyze current market conditions and industry trends. Available online as well as a downloadable PDF.

Proformas and Annual Reports

• Proformas: Upcoming year financial projections. Students can use these to visualize the impact of their decisions and sales forecasts.
• Annual Reports: Past year's results. Provide insights into previous performance and help students analyze past outcomes.

Company Departments

• Research & Development (R&D): Designs and revises product lines based on customers' needs.
• Marketing: Sets prices, promotes products and makes sales forecasts.
• Production: Determines production quantities, buys and sells production lines.
• Finance: Manages company finances, raising capital via various methods.

Inter-Department Coordination

• Different departments frequently work together to ensure alignment of operations and decision-making.

Practice and Competition Rounds

• Practice rounds help experiment with decisions in a competitive environment.
• These rounds use a unique simulation model.
• The decisions made in practice rounds determine how the simulation model proceeds.
• The simulation is reset after practice rounds to begin real competition against other businesses.

Company Success

• Successful companies analyze the market, implement their strategy, and coordinate their actions.

Industry Conditions

• The Industry Conditions Report helps students understand their customers' needs and preferences.
• Customers are grouped into market segments with similar requirements.
• The report includes market segment sales percentages and projected growth rates for each simulation.

Customer Survey Score

• Product demand is driven by its customer survey score in each segment.
• Higher scores result in more sales.
• The score considers product positioning, price, mean time before failure (MTBF), and product age.
• Different segments prioritize these criteria differently.

Forecasting

• Students use last year's sales as a starting point for forecasting next year's sales (plus any relevant segment growth rate).
• A qualitative assessment of the product against other competitors helps fine-tune the forecast.
• A December Customer Survey Score can help compare a company's product performance against the competition.
• Realistic price estimations are essential for generating accurate proforma financial reports. Forecasts should be compared and adjusted to account for competitor actions and industry trends.

Worst Case/Best Case Forecasting

• Worst case scenario forecasts help identify the lowest possible expected financial outcome.
• Best case scenario forecasts help identify the best possible outcome.
• These estimations can facilitate adjustments to sales forecasts and company goals.

Balanced Scorecard

• The balanced scorecard assesses company performance in different categories, including financial performance, operational efficiency, customer satisfaction, and employee growth.
• By considering all these aspects, companies improve their performance and ensure long-term success.

Six Basic Strategies

• Broad Cost Leader: Minimizes R&D, production, and material costs to compete based on low prices.
• Broad Differentiator: Distinguishes products with excellent design, high awareness, and easy accessibility.
• Niche Cost Leader (Low Tech): Targets the Low-Tech segment, keeping costs low and focusing on this niche market.
• Niche Differentiator (High Tech): Targets the High-Tech segment, focusing on advanced products and unique features.
• Cost Leader with Product Lifecycle: Prioritizes cost leadership with product lifecycles focusing on early High-Tech products into products meant for both segments.
• Differentiator with Product Lifecycle: Differentiates itself with excellent design, high awareness, and accessibility, managing product life cycles from High-Tech to Low-Tech.

Finance

• Current Debt: One-year loans from a bank.
• Bonds: Long-term (10-year) debt, carrying interest.
• Stock: Shares issued at a market price.
• Emergency Loans: Short-term loans for bridging cash flow gaps.
• Credit Policy: Sets payment terms (accounts receivable) and delays payments (accounts payable). This affects customer and supplier relations.

Additional Modules

• Some simulations include modules like HR (Human Resources) or TQM/Sustainability, requiring further management decisions.

Plug-ins

• Plug-ins impact the company by posing dilemmas like those related to ethics, requiring group discussion and decision-making.

Situation Analysis

• The Situation Analysis evaluates strengths, weaknesses, opportunities, and threats of a business.
• This analysis considers perceptual mapping, demand, capacity, margin, and consumer reports.

Forecasting (Detailed)

• Methods include simple growth rate calculations and qualitative comparison with competitors.

This quiz covers the foundational steps and industry context for the Capsim business simulation, where students manage a sensor manufacturing company. Participants will learn to navigate company formation, competition rounds, and the challenges of innovation in a post-monopoly market.