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Introduction
“I hear and I forget. I see and I
remember. I do and I understand.”
Confucius
Kelley Summer 2009 GM 105
Strategic Management
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Decisions
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Your team makes decisions given
competitor past, current and future
decisions
Your team is responsible for its
decisions and performance measures
Decisions should be an adventure, not a
chore
Kelley Summer 2009 GM 105
Strategic Management
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Team Operation
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Each team will make decisions
regarding sales forecasts, marketing,
finance, human resources, production,
and total quality management.
Kelley Summer 2009 GM 105
Strategic Management
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Team Operation
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Work out an arrangement to upload
each round’s decisions. You may
choose to meet in person initially, and
then use email as the game progresses
and meet as needed.
Specify how each member of the team
will be evaluated.
Kelley Summer 2009 GM 105
Strategic Management
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Team Operation
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Keep a record of all discussions,
decisions made and results (Companies
keep minutes of meetings). A hardcover
lab notebook works great for this
purpose.
Kelley Summer 2009 GM 105
Strategic Management
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Team Operation
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Advice – Don’t let problems fester. Problems
with team members need to be confronted
quickly, honestly and forcefully. Ask the
instructor if you have questions about decisions
or output. You may want to see me in class
since trying to answer detailed questions via
email isn’t the best method for this purpose.
Kelley Summer 2009 GM 105
Strategic Management
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Capstone Game
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The product is a sensor.
6 teams in each industry (2 students
per team). Teams only compete with
other firms in their industry.
Start by marketing 5 brands each
targeted toward a different market.
May market 3 new brands.
Kelley Summer 2009 GM 105
Strategic Management
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Capstone Game
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Firms control positioning of products.
Over time consumers want smaller, less
expensive sensors.
Market size and growth rates are
different.
Round decisions must be uploaded to
the Capsim website by 2 p.m. for the
1:00 p.m. class and 8 p.m. for the 6:30
p.m. class.
Kelley Summer 2009 GM 105
Strategic Management
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Capstone Game
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When two decisions are due they must
be uploaded by 2 p.m. and 3 p.m. for
the 1 p.m. class, and 7:00 p.m. and
8:00 p.m. for the 6:30 p.m. class.
Kelley Summer 2009 GM 105
Strategic Management
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Marketing Decisions
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Consumer awareness is important.
Promotion expenses increase
awareness. Sales expenses maintain
awareness.
Advanced marketing decisions begin in
round 2.
Kelley Summer 2009 GM 105
Strategic Management
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Production Decisions
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You want to produce at 100% capacity
when possible.
You may sell excess capacity or add
capacity.
Generally it is better to utilize over
100% capacity (overtime) rather than
sell capacity.
Watch inventory stock in each market.
Kelley Summer 2009 GM 105
Strategic Management
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HR Decisions
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Hourly wage rate starts in Round 4.
Labor negotiations occur in Round 6.
Kelley Summer 2009 GM 105
Strategic Management
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R&D Decisions
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Total Quality Management begins in Round 3.
R&D revision times take longer if you put
more than one product is being revised.
You want repositioning projects to finish in
less than one year.
It takes 1 to 3 years to launch a new product.
Kelley Summer 2009 GM 105
Strategic Management
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Finance Decisions
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You may issue more stock or bonds to
raise capital.
You may choose to pay dividends.
You may pay off existing debt.
Watch your cash flow.
Use the pro forma spreadsheet to analyze
alternative decisions before uploading
decisions.
Kelley Summer 2009 GM 105
Strategic Management
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Capstone Introduction
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Manuals
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Positioning and product attributes pp. 6-7; 12-13
Marketing decisions pp. 18-19
Ideal spots pp. 13, 28
Demand analysis pp. 28-29
Basic forecasting method pp. 32-33
Six Strategies p. 35
Sequence of Decisions
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Sales forecast
Marketing decisions (product pricing, R&D)
Production decisions (amount to produce, level of
automation, buy or sell capacity, labor complement)
TQM decisions
HR decisions
Labor negotiation (only round 6 in first game)
Check pro forma cash flow statement and then enter
Finance decisions
Kelley Summer 2009 GM 105
Strategic Management
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Capstone Introduction
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Choosing a strategy
Match performance measures with the strategy
Interpreting results after each round
 I look at each firm’s average contribution margin using the
benchmark of 30%.
 Next, I look at the ROS
 After that look at the contribution margins of individual
products
What to learn from the practice rounds?
Kelley Summer 2009 GM 105
Strategic Management
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