Business Strategy

Simulation

Team DIGBY(R&D, HRM, TQM)

-Written by
Alok Pathak
Index

Abstract-----------------------------------------------------------------------------------------------------3
Introduction------------------------------------------------------------------------------------------------3
Strategy------------------------------------------------------------------------------------------------------3
Vision statement------------------------------------------------------------------------------------------3
Final result--------------------------------------------------------------------------------------------------4
Round 1------------------------------------------------------------------------------------------------------5
Round 2------------------------------------------------------------------------------------------------------5
Round 3------------------------------------------------------------------------------------------------------6
Round 4------------------------------------------------------------------------------------------------------7
Round 5------------------------------------------------------------------------------------------------------7
Round 6------------------------------------------------------------------------------------------------------8
Round 7------------------------------------------------------------------------------------------------------9
Round 8------------------------------------------------------------------------------------------------------10
Abstract-
The following report explains a business simulation using Capstone competing against 5 teams,
Andrews, Baldwin, Chester, Erie and Ferris (automated by computer) for 8 rounds. Each team was
given a different strategy to implement and the performance was measured according to different
indicators such as profit, sales, cost leadership, contribution margins, return on sales, return on
equity, leverage and stock prices. This report will cover the strategy implemented by Andrews team,
the performance in each round, decisions made in each department and our overall results against
other teams. In addition, the interconnection between the departments in the game and in real life.

Introduction-
Capsim capstone is about 6 different companies which makes sensors which belong to
different kind of segments which are Traditional, performance, high End, performance and
size. Each segment has its individual performance, size configuration and reliability and
indicated on the perpetual map.
For each segment customers had demands about the configuration of the product. This
whole process of 8 round is about making product better, doing proper marketing
production and maintaining finance with better quality management.
Products we had in each segment are: Daze, Dell, Dixie, Dot, Dune and Drake(Invented
product)

Strategy Digby - Broad Differentiation-

Vision Statement-
Premium products for the industry: Digby brands withstand the tests of time. Our primary
stakeholders are customers, stockholders, management, and employees.

Research and Development (R & D)

We will keep our existing product line, maintaining a presence in every segment. Our goal is to offer
customers products that match their ideal criteria for positioning, age, and reliability.

Marketing

The Digby team will spend aggressively in promotion and sales in all segments. We want every
customer to know about our superb designs, and we want to make our products easy for customers
to find. We will price at a premium.
Production

We will grow capacity to meet the demand that we generate, avoiding overtime when possible.
After our products are well positioned, we will investigate modest increases in automation levels to
improve margins, but never at the expense of our ability to reposition products and keep up with
segments as they move across the perceptual map.

Finance

We will finance our investments primarily through stock issues and retained earnings,
supplementing with bond offerings on an as needed basis. When our cash position allows, we will
establish a dividend policy and begin to retire stock. We are somewhat averse to debt and prefer to
avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0. We
measure performance in terms of market share, stock price, ROA, and profits.

Final Result:-
We performed 8 rounds of simulation and I will explain round by round- My main work was to focus
on R&D, HRM and TQM in my team. Results after all rounds:

Balance scorecard after all rounds:-

ROUND 1-
In first round we invested much more in R&D than other department because we had to be
the differentiator. In process of achieving the strategy we had to make products according
to customer demand and best than everyone else.
We left low end product to mature and get aged to 7. And made changes to others
according to the industry courier report. I tried to always put our products in June and July
according to the drifts, because putting them in middle will always give some extra time to
sell and our product will never be in the last preference for the customers. (Segment drift
happens monthly).
Examined the demands and changed reliability according to the customers and parallelly
kept the material cost in mind as well. Which gets affected by MTBF.

Digby in orange square stock market summary

ROUND 2-
In round 2 we again followed the same strategy of differentiation and invested half of our
total investment in R&D and made products better and perfect according to the customer
demand. As a result of this we priced our products higher because we always had higher
manufacturing cost. But we still were making good sells.
We always knew R&D is the most important factor for simulation. We always had better
performance than all other teams for our sensors in each segment.
Digby in orange square stock market summary

ROUND 3-
From round three we started focusing on products which are doing better for us and which
are not. The ones which were lacking behind we invested in R&D for them to make them for
perfect. We never gave second thought about R&D. it was always clear in mind what we
wanted and following the strategy.
From this round we started making decision for HRM also, we kept track of people we are
hiring and according to that we decided our budget for skill training and training hours.
We always agreed on all labour demands to avoid strike and make them work happily.

Digby in orange square stock market summary

From round four we started focusing on increasing our market segment as well, so R&D
became more important. Digby became more stable and we had a lot of cash left. Our
product which were doing better for us and which are not. The ones which were lacking
behind we invested in R&D for them to make them for perfect. We never gave second
thought about R&D. It was always clear in mind what we wanted and following the strategy.

For HRM, we increased our production, so we hired more workers. We increased our
recruitment budget and increased training hours to meet our production and make products
better.

Digby in orange square stock market summary

ROUND 5-
In round five we were counting few more points before making R&D like prices were getting
dropped by 0.50 $ each round, on the same hand TQM helped us in reducing our costs. we
started focusing on increasing our market segment as well, so R&D became more important.
We targeted to increase production by 25% and to meet that demand we had to be perfect
in R&D. The products which were lacking behind we invested more in R&D for them to make
them for perfect. We never gave second thought about R&D. it was always clear in mind
what we wanted and following the strategy.
We became stable so we invented new product named DRAKE and we could easily bear the
cost of inventing new product due to stability.
Digby in orange square stock market summary

For HRM, Due to increase in production workers were highest for us, so we increased the
budget to maximum and training hours to full. Because we were producing at maximum
capacity. we agreed all their demands.
From this round TQM started so we selected few options out of all in TQM according to our
strategy and started making decision according to that. We initially invested 750-1000 in
priority options. And 250-500 in less priority options.

ROUND 6-
Our new product Drake came into the market and we put it into the segment where we
were making best. Our new product was perfect according to customer demand and had
highest manufacturing cost.
Differentiation strategy continued and highest investment till now again in R&D. In round six
we were counting few more points before making R&D like prices were getting dropped by
0.50 $ each round, on the same hand TQM helped us in reducing our costs. we started
focusing on increasing our market segment as well, so R&D became more important.
products which are doing better for us and which are not. The ones which were lacking
behind we invested in R&D for them to make them for perfect. We were increasing our
market share.

Digby in orange square stock market summary

HRM budget and hours were same like the last time on the higher side.

TQM we increased our budget for the options which we picked to increase our portfolio and
make our image best in the customers. That’s why we invested more than 1000 this time.

ROUND 7-
We ended being on top with market share and profit because of best R&D all the time so we
had the same thing this round as well. We followed our same strategy of differentiation and
continued with maximum investment in R&D. We focused on High End, performance and
size segment where we were making 40% or more in market share.
Digby in orange square

stock market summary

In HRM we were again working on full capacity, so we had to invest maximum and do full
hours of training to the workers. We invested full $5000 and 80 hours.

ROUND 8-
After the end of all rounds our products had highest performance and best according to the
customers demand.
We were almost on the last round rest other teams stopped investing on R&D but we
continued this round too and still gave the customers best product.
We ended up getting the highest market price and share for Digby.

We always had the highest HR admin cost amongst all the teams. We always believed in
training people and giving full investment to this department.

In TQM again we invested higher than other and this time we explored other areas as well.
To make better portfolio.