1. An Interactive Business Simulation
W E L C O M E
To Capstone
An Interactive Business Simulation

2. Why Simulate?
Risk Free. Innovate and explore alternative strategies and tactics.
Big Picture. Decisions and their impacts will be examined within the context of overall business operations - across functional boundaries.
Develop Critical Thinking Skills. You will analyze, assess, plan, make decisions, evaluate, and adjust.
Compresses Time. Several years worth of decision-making will play out during the term.

3. The Business
$100M electronic sensor manufacturing firms. All teams begin with an identical profile.
Oligopoly - market dominated by handful of firms.
No outside competitors or product substitutes.
Benign environment – no recessions, no disruptive new technologies. Focus on competition.

4. Markets Defined By Segments
Performance - 11%
Low End - 31%
Traditional – 32%
Size - 10%
High End - 16%
Percentage in dollars ($)

5. Introduction To Perceptual Maps
Marketing tool used to depict product positioning. Illustrates how customers distinguish between products that are similar in nature.
Electronic Sensors
Large
Small
Slow
Fast
Size
(how big is the sensor?)
Performance
(how sensitive is the sensor, and how fast does it process data?)

6. Defines five market segments
There are five distinct segments of the market:
Traditional
Low End
High End
Performance
Size
The customers in each segment have different priorities and evaluate the product according to their own needs.
Large
Low End
Performance
Traditional
Size
Size
High End
Small
Slow
Fast
Performance
Perceptual Map

7. Segments Differentiated By Name
Large
Low
Pfmn
For example, Low End Segment customers look for large, slow sensors, representing nearly obsolete technology. Their primary concern is price.
While High End Segment customers want the latest & greatest technology. They’re willing to pay more to get very small, high performance sensors.
Trad
Size
Size
High
Small
Slow
Fast
Performance
Perceptual Map

8. Segments drift over time
Large
Low
Customer expectations are constantly changing. They expect the sensors to become smaller in size and better in performance.
Pfmn
Trad
Size
High
Size
Small
Slow
Fast
Performance
Perceptual Map

9. Segments drift over time
Large
Low
Pfmn
Trad
Size
Size
High
Small
Slow
Fast
Performance
Perceptual Map

10. Segments drift over time
Large
Low
Trad
Pfmn
Size
Size
High
Small
Slow
Fast
Performance
Perceptual Map

11. Customers Go Through a Two-Stage Purchase Decision Process
Stage 1 - Match Product to Market
1. Product must be positioned within the segment.
Able
Size
Performance
2. Product must fall within
price guidelines.
Price
Segments
3. Product must fall
within reliability guidelines
Reli-ability

12. Two-Stage Purchase Decision
Stage 2 - Rank Best Product
Reliability
1. Positioning
2. Age
3. Reliability
4. Price
Position
Ideal Spot AB
Yrs 1
Age
Price
20000
25000
HIGH END
$30
$40

13. Product Ranking Criteria by Market Segment
Traditional
Segment
Low End
Segment
High End Segment
Performance Segment
Size Segment
1 - Age
2 - Price
3 - Position
4 -Reliability
1 - Price
2 - Age
3 - Position
4 - Reliability
1 - Position
2 - Age
3 - Reliability
4 - Price
1 - Reliability
2 - Position
3 - Price
4 - Age
1 - Position
2 - Age
3 - Reliability
4 - Price
Listed in order of importance for each market segment.

14. Basic Functional Areas
R&D
Re-position products
Launch New Products
Set product reliability rating (MTBF)
Production
Schedule production
Increase/decrease plant production capacity
Change automation levels
Finance
Issue/buy-back stock
Set dividend policy
Borrow short or long-term
Pay-down debt
Basic Marketing
Set prices
Set Promotion budgets
Set Sales budgets
Input sales forecast

15. Optional Modules
TQM
Labor Negotiations HR
Advanced Marketing

16. Decision Making Each firm begins with identical profile
Decisions are made January 1st each year
Tactical plan should align with chosen success measurements (Profit, Stock Price, ROE, ROS, ROA, Asset Turnover, Market Share, Market Capitalization)
Responsibilities may be divided up by Product Manager, Functional Manager, or Market Segment Manager roles
Every member of the firm is able to create and upload decisions - communication and teamwork is vital!

17. Proformas Created Automatically in Decision Software Balance Sheet
Income Statement
Cash Flow
Financial Ratios
Sample Proforma Income Statement
Print Proformas from software after making decisions each round,
then compare to actual results

18. Student Activity Overview
Each student registers at
Personal Web page is created
Introductory lessons under “Getting Started” section heading on website
Team completes “Situation Analysis” exercise as a group
Teams compete for up to eight simulated years
Team develops Strategic Plan (success measurements)
Team completes Practice Round(s) decisions
Wrap-up reports
Celebrate Winners

19. Sample Student Website Page
Student Resources
Team Member Guide
Website (
- Demo’s
- Tutorials
- Help Files
- Round Analysis
- Tech Support Staff or
Sample Student Website Page