1. Strategy and Tactics differ mainly around time scale.
In Foundation®, a 5-8 year Strategy is supported with annual tactical decisions.
Strategic Plan might consist of:
Vision or Mission Statement
S.W.O.T. Analysis (or Environmental and Internal scans)
Tactical and Functional Area Plans

2. A strategy is one of four organizational time drivers.
Introduction
A strategy is one of four organizational time drivers.
Mission Statement (timeless)
Strategy (3-5 years)
Operational Intents (1 year)
Tactics (Day to day)
TIME IN YEARS

3. Strategies are declared in corporate mission statements
CAPSTONE STRATEGIES
Strategies are declared in corporate mission statements
Foundation firms may develop and execute any strategy (or none at all - though that isn’t advisable). Basic strategies include:
Overall Cost Leader
Cost Leader with Focus (Low Tech or Product Life-Cycle)
Differentiator
Differentiator with Focus (High-Tech or Product Life-Cycle)
STRATEGY
Mission Statement
INDUSTRY AND MARKET
ANALYSIS
S.W.O.T Analysis
Competitor Analysis
Competitive Analysis
PERFORMANCE
ASSESSMENT
Success Measurements
Analyst Report
Round Analysis - Star
Summary
FUNCTIONAL PLANNING
R&D
Marketing
Production HR
Finance
TQM

4. BUSINESS STRATEGY CONCEPTS
Strategy is the comprehensive plan that states how a corporation will achieve its mission and objectives
Many different theories on strategies
This game uses theories of Michael Porter

5. BASIC CONCEPTS
Product life cycle
Concept of how a product moves through four stages of “life”
Introduction
Growth
Maturity
Decline
For game, it reflects a product moving through perceptual map

6. Niche market
focused part of a market - limited and clearly defined range of products is sold to specific group of customers
An example for the cleaning industry would be a window cleaning service or a cleaning service for people with pets
Game allows sales to only low tech or high tech market

7. Competitive advantage
Something your firm is perceived to do better than another firm
Porter identified two types:
Cost advantage – you can deliver similar benefits to consumers at a lower cost than other firms
Differentiation – you can deliver benefits that exceed other firms

8. Capstone Strategies
The Situation Analysis generated an overview of the forces at work within the Foundation® market place.
Now you must decide how to use that information to gain a competitive advantage.
There are many different combinations of the basic ideas covered. All can be successful depending on how well they are implemented tactically.

9. BROAD COST LEADER
An overall cost leader will attempt to be the low-cost producer in both segments of the market. They will have good profit margins on all sales while keeping prices low.
Firm Profile:
R&D
More likely to revise products than introduce new ones to the market
Marketing
Prices will be below average
Tend to spend less on promotion and sales

10. Production
Capacity improvements are unlikely to be undertaken (may run overtime instead)
Automation may be pursued to increase margins
Finance
Investments will be financed primarily with debt

11. NICHE COST LEADER (LOW TECH FOCUS)
A low-tech focused cost leader seeks to dominate the low-tech market segment. Their aim is to set prices below all competitors - and still be profitable.
Firm Profile:
R&D
Multiple product lines in the low-tech segment
Why not cost leader in high tech? Because they don’t care about price

12. Marketing Production Finance
Spend heavily on promotion (less on Sales as staff has more than one product to pitch to prospects)
Prices lower than average
Production
Invest heavily in automation
Finance
Investments financed primarily with debt

13. COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS
Seek to minimize costs through efficiency and expertise. Products will be allowed to age and change in appeal from high-tech to low end buyers.
This saves cost of constant R&D

19. Firm Profile: Marketing Production R&D
Low R&D spending
very little re-positioning
introduce new product every 2-3 years in High Tech
Marketing
High spending on promotion and sales
Production
Invest in automation early in the product’s life-cycle

20. Finance
Primarily finance with long-term debt

21. BROAD DIFFERENTIATOR
A Differentiator will seek to create maximum awareness and brand equity. They want to be well known as makers of high quality/highly desirable products.
Firm Profile:
R&D
High R&D spending to keep products fresh
Introduce a new product line to meet need in both markets
Competitive advantage is gained by distinguishing products with an excellent design, high awareness, and easy accessibility

22. Marketing Production Finance
Spend heavily on advertising and sales to create maximum awareness and accessibility
Prices will be higher (premium product)
Production
Increase capacity
Slight increases in automation if it doesn’t take away from R&D
Finance
Prefer to finance with stock/operations and avoid debt

23. NICHE DIFFERENTIATOR (HIGH-TECH FOCUS)
A high-tech differentiator seeks to be known far and wide as the top producer of the best performing state-of-the-art products.
Firm Profile:
R&D
Multiple product lines in high-tech segment
Minimum focus in low-tech segment
High R&D expenditures to continually introduce new product lines and keep existing products fresh

24. Marketing Production Finance
High promotion and sales investments to create maximum awareness and accessibility
Premium price
Production
Increase capacity to meet demand
Unlikely to invest in increased automation
Finance
Finance through stock issues and cash

25. DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS
A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments.
Firm Profile:
R&D
Multiple product lines in both segments
High R&D expenditures to continually re-position product lines as they transition from high-tech to low-tech

26. Marketing Production Finance
High promotion and sales investments to create maximum awareness and accessibility
Premium price
Production
Increase capacity
Unlikely to invest in increased automation
Finance
Finance through stock and cash

27. Today’s shift is tomorrow’s nightmare
Strategies Evolve
Today’s shift is tomorrow’s nightmare
Poor tactics undermine a good strategy
Good tactics can overcome a poor strategy

28. SUMMARY
There is no "magic bullet," guaranteed winning strategy. Each simulation has a unique competitive dynamic.
Successful firms will focus on planning, strategic alignment, teamwork, competitor analysis, and tactical adjustments.

29. Strategy help available at capsim
Strategy help available at capsim.com in the Help, Student Resources, Online Managers’ Guide or Tutorials & Demos