CAPSIM-

In Capstone, there are _____ basic strategies for starting your own strategy.

6

The _____ is a marketing tool used to track the position of the company’s products against those of the competitors.

Perceptual Map

Hours

The Mean Time Before Failure is measured in _____.

Project Length

– The product’s automation level on the production line. – The # of R&D projects underway at the same time. – The proximity of the product’s new location to an existing product in your company’s line. These factors drive _______________.

Math and Logic

Forecasting sales requires _____ and _____.

Six Basic Strategies

Broad Differentiator Niche Cost Leader Niche Differentiator Cost Leader w/Product Lifecycle Focus Differentiator with Product Lifecycle Focus

Mean Time Before Failure

MTBF is _____.

Buying Criteria

The _____ are Price, Positioning, Age, and MTBF

Customer survey scores are calculated _____ times per year.

12

Price ranges in all segments drop by _____ much per year?

$0.50

The _____ report of the Capstone Courier can help you diagnose stock outs and their impacts.

Market Share

Financial, Internal Business Process, Customer, Learning and Growth

Balance Scorecard allows companies to gauge their performance by assessing measures in these categories.

Age of a Product

_____ is the length of time since a product was revised or invented.

Positioning and Price

_____ and _____ change every year. Age and MTBF criteria always remain the same.

Positioning and price change every year. _____ criteria always remain the same.

Age and MTBF

Ideal Spot

The _____ is the position on the Perceptual Map where demand is highest.

Market Segment

A _____ is a group of customers who have similar needs.

5 Market Segments

The _____ are Traditional, Low End, High End, Performance and Size.

Increased

Each year, customers demand ___________ performance and decreased size.

Decreased

Each year, customers demand increased performance and ___________ size.

The ___________ segment has the fastest drift rate.

performance

Low End

The _________ segment has the slowest drift rate.

Each month during the year, the segment drifts _____ of the distance from the starting position to the ending position.

1/12th

Segments are moving

Some ideal spots are ahead of the segment centers because _____.

Traditional and Low End

The __________ and ____________ sell more units than the high technology segments, High End, Performance and Size.

Growth rates for each of the segments can be found in the _________.

Capstone Courier

Traditional

___________ market segment seeks proven products at a modest price.

Age

The most important buying criteria for the Traditional segment is _____.

MTBF

The least important buying criteria for the Traditional segment is _____.

Center

The traditional customers give higher position scores to sensors located in the ______ of the segment circle.

Low End

The ______ market segment seek low prices and well proven products.

Price

The most important buying criteria for the Low End segment is _____.

MTBF

The least important buying criteria for the Low End segment is _____.

Low end customers prefer inexpensive sensors with _____ performance and _____ size.

slower, larger

Behind the center

The low end customers give higher position scores to sensors located _____ of the segment circle.

High End

_____ market segment seeks cutting-edge technology in size/performance and new designs.

The most important buying criteria for the high end segment is _____.

Ideal Position

Price

The least important buying criteria for the high end segment is _____.

High, Small

High end customers demand cutting edge sensors with _____ performance and _____ size.

Ahead of the center

The high end customers give higher position scores to sensors located _____ of the segment circle.

Performance

_____ market segment seeks high reliability and cutting edge performance technology.

MTBF

The most important buying criteria for the performance segment is _____.

Age

The least important buying criteria for the performance segment is _____.

Size

Performance customers emphasize performance over _____.

1 year

Performance customers want sensors in the _____ range.

2 year

Traditional customers give higher scores to sensors in the _____ range.

7 year

Low end customers give higher scores to sensors in the _____ range.

Newer

High end customers give higher scores to _____ sensors.

Size

The _____ market segment seeks cutting edge size technology and younger designs.

Ideal Position

The most important buying criteria for the size segment is _____.

Price

The least important buying criteria for the size segment is _____.

Performance

Size customers emphasize size over _____.

1.5 year

Size customers prefer sensors in the _____ range.

The prime interest rate in round 1 is _____%.

7.0%

The companies that manufacture sensors were created when _____.

government split a monopoly

The companies are in a _____ market, not a direct-to-consumer market.

business 2 business

Industry Conditions Report

The _____ outlines the beginning business environment, including customer buying criteria.

The _____ is an industry newsletter that has an extensive year-end report of the sensor industry.

Capstone Courrier

Capstone Courier

The _____ includes customer buying patterns, product positioning, public financial records and other information that will help you get ahead.

The Capstone Courier reports _____ year’s results.

last

Product Managers

_____ must ensure their product meets the demand of the intended segment. They concentrate on the specifics of their product and how it relates to the segment. They are not directly involved in Sales and Promotion decisions.

Segment Managers

_____ are strategists. They have more freedom than product managers to make strategy and policy recommendations. They present recommendations that set overall strategy.

Functional Managers

A _____ job is to optimize the efficiency of the assigned function and to coordinate strategy across functional boundaries. They assume responsibility for an entire department (R&D, Marketing, Production, Finance).

Projects can only begin on _____. Projects that did not finish last year will "lock out" a new project for that product this year.

January 1

Diminishing returns

As promotional and sales budgets increase, they experience _____.

Competitive Intelligence Officer

The _____ task is to see the market, and especially their company, through the eyes of the competitor.

_____ are projections for the upcoming year. _____ are the results from the previous year.

Proformas, Annual Reports

Research & Development

_____ designs your product lines. The department needs to invent and revise products that appeal to your customers’ changing needs.

Marketing

_____ prices and promotes your products. It interacts with your customers via its sales force and distribution system. It is also responsible for sales forecasts.

_____ determines how many units will be manufactured during the year. It is also responsible for buying and selling production lines.

Production

Finance

_____ makes sure your company has the financial resources it needs to run through the year. The department can raise money via one-year bank notes, 10-year bonds or stock issues. They can also issue stock dividends, buy back stock, or retire bonds before their due dates.

_____ works with _____ to make sure products meet customer expectations.

R&D, Marketing

_____ works with _____ to ensure assembly lines are purchased for new products.

R&D, Production

If _____ discontinues a product, it should notify _____.

Production, R&D

Marketing, Production, Production

_____ works with _____ to make sure manufacturing quantities are in line with forecasts. It’s market growth projections also help _____ determine appropriate levels of capacity. If it decides to discontinue a product, it tells the other to sell its production line.

_____ works with _____ to project revenues for each product and to set the Accounts Receivable policy.

Marketing, Finance

Accounts Receivable Policy

The _____ is the amount of time customers can take to pay for their purchases.

_____ tells _____ if it needs money for additional equipment. If they cannot raise enough money, it can tell them to scale back its requests or perhaps sell idle capacity.

Production, Finance

Finance

_____ acts as a watch dog over company expenditures.

The _____ is a complete trail of all team decisions. It will help you identify your decision making strengths and weaknesses.

Decision Audit

The Industry Conditions report is published _____.

Once

The Perceptual Map measures size on the _____ axis and performance on the _____ axis.

Vertical, Horizontal

Drift rates can be found in the _____.

Industry Conditions Report

Refuse

Customers will _____ to buy a product positioned outside the circles.

Outsell

Assuming it does not run out of inventory, a product with a higher customer survey score will _____ a product with a lower score.

_____ reflects how well a product meets its segment’s buying criteria.

Customer Survey Score

Perfect Customer Survey Score (100)

_____ requires the product be at the ideal position, be priced at the bottom of the expected range, have the ideal age and have an MTBF at the top of the specified range.

Rough Cut Circle

The _____ is the dashed outer circle that defines the outer limits of the segment. Customers will not purchase products positioned outside this boundary.

Fine Cut Circle

_____ is the solid inner circle that defines the heart of the segment. Customers prefer products within this circle.

The radius of the rough cut circle is _____.

4.0 units

The radius of the fine cut circle is _____.

2.5 units

Customer Survey scores drop by _____% just outside of the fine cut circle.

1%

Customer Survey scores drop by _____% half way across the rough cut circle.

50%

Customer Survey scores drop by _____% for products that are almost to the edge of the rough cut.

99%

Every segment has a $_____ price range.

$10

At $5 outside the price range, demand for the product is _____.

Zero

Sensors lose approximately _____% of their customer survey score for each dollar above or below the guideline.

20%

Each segment sets a _____ range for MTBF.

5,000 hour

Customer survey scores drop by _____% for every 1,000 hours below the MTBF guideline.

20%

At _____ hours below the range, demand falls to zero.

5,000

Material costs increase by _____ for every 1,000 hours of MTBF.

$0.30

Age

The _____ buying criteria does not have a rough cut. A product will never be too young or too old to be considered for purchase.

Customer Survey Scores drive _____ for your product.

Demand

_____ is calculated by dividing your Customer Survey score by the sum of all scores.

Demand

_____ is the percentage of people who know about your product.

Product Awareness

_____ is the number of customers who can easily interact with your company.

Product Accessibility

Promotion Budget

Awareness is built over time by the product’s _____.

Accessibility is built over time by the product’s _____.

Sales budget

Stock Out

A _____ happens when a product generates high demand but runs out of inventory.

Research & Development

_____ oversees invention and redesign.

January 1

All R&D projects begin on _____.

The trailing edge of the Low End fine cut has the lowest positioning cost of approximately _____.

$1

The leading edge of the high end fine cut has the highest positioning cost of approximately _____.

$10

Positioning, MTBF

Material costs displayed in the spreadsheet and reports are the combined _____ and _____ costs.

Segment circles on the Perceptual Map move at speeds ranging from _____ to _____.

0.7, 1.3

Project lengths can be anywhere from _____ to _____.

3 months, 3 years

Six month projects cost $_____.

$500,000

$1,000,000

One year projects cost $_____.

You want repositioning projects to finish in less than _____.

1 year

Will Not

Changing MTBF alone _____ affect a product’s age.

The _____ department is in charge of sales forecasting.

Marketing

From one year to the next, _____ % of customers who knew about a product forget about it.

33%

Starting Awareness

=Last Year’s Awareness-(33%*Last Year’s Awareness)

Once your product achieves 100% awareness, you can scale back the product’s promotion budget to around $_____ to maintain 100% awareness year after year.

$1,400,000

New products are newsworthy events and create _____% awareness at no cost.

25%

$3,000,000

If you have one product in a segment, there is no additional benefit to spending more than $_____ on the sales budget.

To achieve 100% accessibility, you must have two or more products in the segment’s _____.

Fine Cut

$3,500,000

Once you have achieved 100% accessibility, you can scale back the combined sales budgets to around $_____ to maintain 100%.

First Shift Capacity

_____ is defined as the number of units that can be produced on an assembly line in a single year with a daily eight-hour shift.

Twice

An assembly line can produce up to _____ its first shift capacity with a second shift.

Second shift labor costs are _____ higher than the first shift.

50%

$0.65

Capacity can be sold at the beginning of the year for _____ on the dollar value of the original investment.

Sell all but one unit of capacity

When discontinuing a sensor, if you want to sell all your inventory at full price, you must _____.

The lowest automation rating is _____.

1.0

The highest automation rating is _____.

10.0

Falls

As automation levels increase, the number of labor hours required to produce each unit _____.

Each additional point of automation decreases labor costs approximately _____%.

10%

Labor costs increase each year because of an ______ in the worker’s contract.

Annual Raise

Automation costs $_____ per point.

$4.00

Difficult

Raising automation makes it increasingly _____ for R&D to reposition products short distances.

While reduced automation will speed R&D redesigns, by and large, it _____ to reduce an automation level.

is not wise

Automation ROI

=(Savings*Remaining Rounds)/Automation Cost

As a general rule, companies fund short term assets like accounts receivable and inventory with _____ offered by banks.

current debt

January 1

Last year’s current debt is always paid off on _____.

Bankers will loan current debt up to about _____% of your accounts receivable.

75%

Bankers will loan current debt up to about _____% of this year’s inventory.

50%

Current debt is issued in _____.

1 year notes

All bonds are issued in _____.

10 year notes

Your company pays a _____% brokerage fee for issuing bonds.

5%

Interest Rate

The first three digits of the bond represent _____.

In a bond serial number, the last four digits indicate the _____.

Year the Bond is due

Capacity, Automation

As a general rule, bond issues are used to fund long term investments in _____ and _____.

Bondholders will lend total amounts of up to _____% of the value of your plant and equipment.

80%

When issuing new bonds, the interest rate will be _____% over the current debt interest rates.

1.4%

You can buy back outstanding bonds before their due date and a _____% brokerage fee applies.

1.5%

Credit Ratings

_____ range from AAA (best) to D (worst) and are evaluated by comparing current debt interest rates with the prime rate.

Current Market Price

Stock issue transactions take place at the _____.

Your company pays a _____% brokerage fee for issuing stock.

5%

New stock issues are limited to _____% of your company’s outstanding shares in that year.

20%

Capacity, Automation

As a general rule, stock issues are used to fund long term investments in _____ and _____.

Stock Price

_____ is driven by book value, the last two years’ earnings per share, and the last two year’s annual dividend.

Book Value

=Equity/shares outstanding

Equity

=Common stock + retained earnings

EPS (Earnings Per Share)

=net profit/shares outstanding

_____ is the amount of money paid per share to stockholders each year.

Dividend

Stockholders _____ to dividends beyond EPS.

do not respond

Little Effect

Dividends have _____ upon stock price.

When retiring stock it cannot exceed lesser of either _____% of your outstanding shares or your total equity.

5%

1.5%

You are charged a _____% brokerage fee to retire stock.

Emergency Loans

_____ cost one year’s worth of current debt interest on the loan and a 7.5% penalty fee.

Depress

Emergency loans _____ stock prices.

0.7%

A 60 day accounts receivable policy reduces the customer survey score by _____%.

7%

A 30 day accounts receivable policy reduces the score by _____%.

No Reduction

A 90 accounts receivable policy produces _____ to the customer survey score.

40%

Offering no credit terms for accounts receivable reduces the customer survey score by _____%.

1%

Suppliers withhold _____% at a 30 day accounts payable lag.

8%

Suppliers withhold _____% at a 60 day accounts payable lag.

26%

Suppliers withhold _____% at a 90 day accounts payable lag.

63%

Suppliers withhold _____% at a 120 day accounts payable lag.

100%

Suppliers withhold _____ at a 150 day accounts payable lag.

CPI (Continuous Process Improvement) Systems

The _____ TQM program reduces material costs and to a lesser degree labor costs.

Vendor/JIT

The _____ TQM program reduces material costs and administrative overhead.

QIT (Quality Initiative Training)

The _____ TQM program reduces labor costs.

Channel Support Systems

The _____ TQM strategy increases the effectiveness of the sales budget and in turn, demand.

Concurrent Engineering

_____ reduces R&D cycle time and in turn R&D costs.

UNEP Green Program

The _____ TQM strategy increases the effectiveness of the sales budget and therefore increases demand. Also reduces waste and therefore material costs.

Benchmarking

The _____ TQM strategy reduces administrative overhead.

Quality Function Deployment Effort

This TQM strategy _____ reduces R&D cycle time and enhances the effectiveness of the promotion and sales budgets.

CCC (Concurrent Engineering)/Six Sigma

The _____ TQM program reduces material costs and labor costs.

GEMI TQEM Sustainability

_____ reduces labor costs as it minimizes environmental risks. Includes methods that protect employee health and redesign of products to have fewer toxic by-products. Also reduces material costs through recycling and material use efficiencies.

$500,000

If you spend less than _____ on a TQM/Sustainability initiative in a single round you will see little return.

$1,500,000

An investment of _____ on a TQM/Sustainability initiative in a single round will produce a cost-effective impact.

$2,000,000

An investment over $_____ on a a TQM/Sustainability initiative in a single round will produce absolutely no additional benefit.

$4,000,000

Expenditures beyond $_____ a TQM (total quality management)/Sustainability initiative over two to three years pushes well into diminishing returns.

Complement

_____ is the number of workers in the workforce.

Needed Complement

_____ is the number of workers required to fill the production schedule without overtime.

$1000

Recruiting Spend budgets start at _____ per worker.

$5000

You can spend up to an additional $_____ per worker on the recruiting spend budget.

Higher Productivity, Lower Turnover

Training leads to _____ and _____ but takes people off the job while they are in the classroom.

$20

Training costs _____ per hour per worker.

Productivity Index

Investments in recruiting and training raise your _____ which in turn lowers your per unit labor costs.

100%

The productivity index can never fall below _____%.

50%

Second shift and overtime workers cost _____% more per hour than workers on first shift.

Overtime Percent

_____ is the percentage of work performed on overtime.

Turnover rate

_____ is the percentage of workers who left the company last year, excluding downsizing.

5%

About _____% of turnover is rooted in unavoidable factors like retirement, relocation, and weeding out poor workers. Remaining turnover is a function of employee dissatisfaction.

New Employees

_____ are the employees recruited this year.

Separated Employees

_____ are the employees that are lost because of downsizing or increases in automation.

Recruiting Spend

_____ is the extra amount budgeted per worker to recruit high caliber workers.

$1000

Recruiting spend base amount is $_____.

Training hours

_____ is the number of hours each year that each individual worker is taken off-line for training and development.

Productivity Index

_____ indicates how the general workforce compares with the workers employed in Round 0.

Recruiting Cost

_____ is the amount spent to recruit new workers. It is calculated by the number of workers recruited*($1000+Recruiting Spend).

Separation Cost

_____ is the cost to fire workers.

$5000

Separation packages are worth _____.

Training Cost

The _____ is driven by training hours.

$20

Training costs _____ per hour.

Total HR Admin Costs

_____ are incorporated into the income statement’s admin bottom line and are allocated based on the product’s complement.

Labor and Management

_____ negotiate over four separate categories: hourly wage, benefits, profit sharing percent, annual raise.

Starting Position for wages

_____ cannot be less than 80% or more than 150% of your current contract.

0%, 150%

Starting Position for benefits, profit sharing and annual raise can be between _____% and _____% of your current contract.

10%

Labor will ask for a _____% across the board wage and benefit increase.

Adjust Demand Upward

If any of the Starting Position offers is higher than the 10% increase, labor will _____ to match it.

Agreement

If labor’s demand is within the company’s Starting Position and Negotiation ceiling, negotiations lead to _____.

84 days

The maximum length of a strike is _____ at which point both sides accept arbitration.

7 days

Workers will strike for _____ for every $1 difference in wages, $300 difference in benefit package, and percentage point difference in Profit Sharing and Annual Raise.

Low Automation

Companies with _____ will want to control labor costs.

Reach

_____ is the potential number of customers who would see the message.

Frequency

_____ is the number of times a message is repeated.

Traditional and Low End Segments

_____ and _____ respond good to print media.

High End, Performance

_____ and _____ segments respond poorly to print media.

Size Segment

_____ responds fairly to print media.

$700,000

In print media, the cost to gain additional awareness becomes prohibitive beyond $____.

Traditional, Low End

The _____ and _____ segments respond good to direct mail.

Performance,Size

_____ and _____ segments respond poorly to direct mail.

High End

The _____ segment responds fairly to direct mail.

$800,000

In direct mail, the cost to gain additional awareness becomes prohibitive beyond $____.

Traditional and Low End

_____ and _____ segments respond poorly to web media.

Performance, Size

_____ and _____ segments respond good to web media.

High End Segment

_____ responds fairly to web media.

$500,000

For web media, the cost to gain additional awareness becomes prohibitive beyond $____.

Traditional, Low End

_____ and _____ segments respond poorly to email.

Performance, Size

_____ and _____ segments respond good to email.

High End

The _____ segment responds fairly to email.

$600,000

For email, the cost to gain additional awareness becomes prohibitive beyond $____.

The _____ segment responds good to trade shows.

High Tech

Traditional, Low, Performance

_____, _____, and _____ segments respond fairly to trade shows.

Size

The _____ segment responds poorly to trade shows.

$300,000

For trade shows, the cost to gain additional awareness becomes prohibitive beyond $____.

$125,000

Outside sales people cost _____ per person.

Diminishing returns for outside sales are reached at _____ per segment.

12 people

$50,000

Inside sales people cost $_____ per person.

30

Diminishing returns for inside sales people are reached at _____ people per segment.

Distributors cost _____ per year.

$100,000

15

Diminishing returns for distributors are reached at _____ distributors per segment.

Low, Medium, High

Sales channel effectiveness for traditional segment customers is _____ for outside sales, _____ for inside sales, and _____ for distributors.

Medium, Low, High

Sales channel effectiveness for low end segment customers is _____ for outside sales, _____ for inside sales, and _____ for distributors.

High, Medium, Low

Sales channel effectiveness for high end segment customers is _____ for outside sales, _____ for inside sales, and _____ for distributors.

Medium, High, Low

Sales channel effectiveness for performance segment customers is _____ for outside sales, _____ for inside sales, and _____ for distributors.

High, Medium, Low

Sales channel effectiveness for size segment customers is _____ for outside sales, _____ for inside sales, and _____ for distributors.

100%

Time allocations must equal _____.

The simulation charges a _____% carrying cost for inventory.

12%

Broad Cost Leader

A _____ strategy maintains a presence in all segments of the market. Competitive advantage is gained by keeping R&D, production and material costs to a minimum, enabling the company to compete on price. Automation levels will be increased.

Broad Differentiator

A _____ strategy maintains a presence in every segment of the market. Competitive advantage is gained by distinguishing products with an excellent design, high awareness, and easy accessibility. Products keep pace with the market, prices will be above average. Capacity is expanded as demand is generated.

Niche Cost Leader (Low Technology)

A _____ strategy concentrates primarily on the Traditional and Low End segments of the market. Competitive advantage is gained by keeping R&D, production, and material costs to a minimum, price will be below average. Automation levels will be increased.

Niche Differentiator (High Technology)

A _____ strategy focus on the High End, Size, and Performance segments. Competitive advantage is gained by distinguishing products with an excellent design, high awareness, easy accessibility and new products. R&D competency keeps designs fresh. Price is above average. Capacity is expanded as demand is generated.

Cost Leader with Product Lifecycle Focus

A _____ strategy centers on the High End, Traditional, and Low End segments. Competitive advantage is gained by keeping R&D, production and material costs to a minimum. Sales are kept for many years as products are moved to different segments.

Differentiator with Product Lifecycle Focus

A _____ strategy centers on High End, Traditional, and Low End segments. Competitive advantage is gained with excellent design, high awareness, easy accessibility and new products. R&D competency keeps designs fresh, price is above average. Capacity is expanded as demand is generated.

Low Tech Prime Spot

Center of circle; Performance + 0, Size +0

High Tech Prime Spot

Lower right; Performance +1.4, Size -1.4

High Tech Drift Rate

+.7 Performance, -.7 Size

Low Tech Drift Rate

+.5 Performance, -.5 Size

Low Tech Market Growth Rate

10%

High Tech Market Growth Rate

20%

Low Tech Price Criteria

Between $15-$35; Importance 41%

Low Tech Age Criteria

3 years old; Importance 29%

Low Tech MTBF Criteria

Between 14,000 and 20,000; Importance 21%

Low Tech Starting Ideal Position Criteria

Performance 4.8, Size 15.2; Importance 9%

High Tech Starting Ideal Positioning Criteria

Performance 7.4, Size 12.6; Importance 33%

High Tech Age Criteria

0 years old; Importance 29%

High Tech Price Criteria

Between $25 and $45; Importance 25%

High Tech MTBF Criteria

Between 17,000 and 23,000; Importance 13%

Projected Interest Rate

7%

Rough Cut Circle

4 unit radius, customers will not purchase outside

Fine Cut Circle

2.5 unit radius, customers prefer to purchase within

1,000 Hours of MTBF Costs…

$.30 per unit

Each time a product is repositioned, its age is cut in…

Half

__% of customers forget about the product each year

33%

New products create __% awareness

25%

Unit of Capacity Cost =__

$6 + $4*Automation Rating

Sensors lose approximately __% of customer survey score for each $1 above guidelines

10%

Products 1,000 MTBF hours below criteria lose __% of customer survey score

20%

Demand in a month is calculated by…

Taking your product’s customer survey score and dividing it by the sum of all scores

Accounts receivable score

90 days = No reduction 60 days = .7% reduction 30 days = 7% reduction 0 days = 40% reduction

Highest and Lowest Positioning Costs

Lowest = $1.50 Middle = $5.75 Highest = $10.00

Broad Cost Leader

Both segments, keeps costs and prices low, high automation

Broad Differentiator

Both segments, good positioning, high awareness, accessibility, and prices

Niche Cost Leader

Cost leader focused on low tech market

Niche Differentiator

Differentiator focused on high tech market

Cost Leader with Product Lifecycle Focus

Cost leader with products that start high tech and mature into low tech

Differentiator with Product Lifecycle Focus

Differentiates products, products start high tech and keep pace with market

After 100% awareness, promo budget of __ will keep awareness constant.

$1,400,000

After 100% accessibility, sales budget of __ will keep awareness constant.

$3,500,000

Capacity can be sold for…

65% of original investment

Automation costs…

$4 per point

Banks will loan current debt up to __% of accounts receivable and __% of years inventory, then __% is added on top

75% AR 50% Inv 20% borrowing added

Bonds are __ years, __ reflect the interest rate that is __% over current interest rate, __ indicates when bond is due, and you pay a __% brokerage fee to issue and a __% brokerage fee to buy back

10 years first three digits of serial number 1.4% over current rate last four digits indicates maturity date 5% brokerage fee issue 1.5% brokerage fee buy back

Bondholders will lend up to…

80% of plant and equipment value

Each __% over prime debt rate lowers bond rate one category

0.5%

Stock issues are limited to __% of outstanding shares, with a __% brokerage fee. Stock can be retired up to either __% of outstanding shares, with a __% brokerage fee, or the amount of __

20% issue limit 5% brokerage fee issue 5% outstanding shares 1.5% brokerage fee retire Total equity

Emergency loans: you must pay __, with a __% penalty

One year’s current debt rate cost, 7.5% penalty

When opening the Excel version of Capsim, you should do what to Macros?

Enable

If there are two identical products, one that has 100% accessibility and one that has 0% accessibility?

the product with 100% accessibility will outsell the other 2 to 1 providing all other attributes are identical

How many products does every team start with?

five

What are three of the five Segments?

Traditional, low end, performance

A segment manager’s task is to?

verify the products entering and leaving a segment, the margin potential for those products, capacity level and the distribution system as compared to competitors

What is the difference between the market segments at the beginning of the round to the final round?

The fine cuts overlap in the beginning and in year 8; only the rough cuts overlap

In order for a team to win at CapSim, they need to..

have a proactive strategy, contingency plan, open communications, strong knowledge of the industry and have a strong understanding of the analyst report

After you have uploaded your decisions to the website, you can change your official decisions as many times as you want prior to the processing date and time of the round.

true

Once you upload your official decisions during a round, how many times can you change them before the end of theround?

as many times as you want

The economic environment for this simulation game will include

a favorable environment featuring modest growth, low inflation, and reasonable interest rates

MTBF is measured in

hours

Customers that want low prices and are willing to sacrifice miniaturization and performance are in the

low end segment

Customers that want small products and are willing to sacrifice performance are in the

size segment

In Capsim, pricing standards are set by

the consumer, market segment

In the Rough Cut buying stage, "reliability" is expressed in terms of:

MTBF

MTBF measures what?

reliability, size, market segment

The two characteristics that the perceptual map evaluates are

performance, size

The Perceptual Map is

A marketing tool used to compare products against customer perceptions

The segments all drift to the lower-right section of the perceptual map. Why does this drift take place?

Customers want smaller faster products

Over time, the segments will drift in which direction on the Perceptual Map?

down, right

When tracking market segments on the performance and size perceptual map, which segment moves or "drifts" the slowest?

Low

What happens to a product priced at $1 above or below the segment guideline when a segment’s product supply outstrips demand?

it loses 20% of its appeal

What’s the measure for product reliability?

expected time a product lasts

At what dollar amount above the segment guidelines is all consumer appeal lost?

five dollars

The prices in each segment

drop by .50 each year

MTBF in the segments should be

MTBF (Performance) > MTBF (High End) MTBF (Low End) < MTBF (Size).

Which of the following are not considered in the Fine Cut?

automation

Inside each fine cut circle,

segments have an ideal spot where demand is at its highest.

The Traditional ideal spot is

near the center of the circle

Increasing a product’s reliability will result in which of the following changes to production costs?

higher material costs

Age refers to:

product age

What happens to a product’s Perceived Age when it is repositioned in R&amp;D?

its reduced by 50%

The preferred product perceived age for each sector peaks at:

0 years for high end, and 7 years for low end

At which point does the perceived age of a traditional product peak?

2

pricing plays a role when:

in the rough cut stage of the purchase decision, in the fine cut stage of the purchase decision

What are the top buying criteria that low end customers most value?

price

The top two buying criteria for each segment is:

price for low end, positioning for high end

Low Tech customers emphasize buying criteria in which order?

price, age, positioning, reliability

Each segment places?

a different emphasis on the 4 buying criteria

Which market segment places the most importance on price?

low end

If you are marketing to High End customers, which criteria are most important to them in order of importance?

1. Positioning 2. Age 3. MTBF 4. Price

When an R&amp;D effort started in 2001 completes on September 15, 2002, the product revision kicks in

immediately upon completion

The relative cost of a product’s material cost increases as

MTBF goes up

Which Automation rating requires the longest time to reposition a product?

10

When a product is moved to a new location on the Perceptual Map, the Perceived Age (or Age) is:

divided in half

Changing MTBF will:

have no impact on perceived age

If your team decides to introduce a new product, when should capacity and automation be purchased?

one round pior to product release

If you purchase production capacity and automation:

it is available in the next year

Marketing is concerned with 4 things. What are they?

price, place, promotion, product

An increase in promotional budgets have:

decreasing returns over time

promotion efforts are resulted from?

diminishing returns

Assuming no additional product promotion, what percent of customers, reached through last year’s marketing campaign will carry over into the current year?

67%

How is the strength of the sales channel measured?

accessibility on a scale from 0 to 100%

If you drop your sales budget to zero, accessibility drops to 0% in how many years?

3

how can assembly lines double their capacity?

add a second shift

If you increase automation from 2.0 to 5.0, the cost is

12 dollars per unit of capacity

What is one drawback of increasing automation?

The product requires increased time/expense for subsequent short-move repositioning.

If you reduce automation in the production component of Marketing, you will:

incuur a retooling cost

If you want to add 500,000 units of capacity to an assembly line with an automation rating of 5, how much will itcost?

13,000,000

If a line has a capacity of 100,000 units, the cost of changing the automation level 1 unit either up or down is

400000

Depreciation is calculated:

over a straight line 15 year period

Which three factors drive labor cost?

Wage and benefit rates, Automation levels, Second shift/Overtime costs

If current wages are set at $10/hour, what would be the minimum starting pay that your company would offer?

8/hour

Which three customer groups "ride the wave of technology" and are considered to be in the high technology segments?

performance, high end, size

When plotting the segment locations for each round

the goal is to determine the ideal spot location for each segment during the 8 years.

if you are currently producing 100,000 units and your automation level is 10, how much will it cost you to double your capacity?

4600000

What is the right formula for capacity investment?

Investment = Capacity x [$6 + ($4 x Automation)]

If you are currently producing 100,000 units at an automation level of 5, how much would it cost to maximize automation?

2,000,000

As a manager you need to change the automation level of your segment from 2 to 5. The line has a capacity of $2million. How much would it cost?

24 million

Rapid movement of an existing product on the Perceptual Map requires

low automation levels

If a product’s Price was $20, its Material $8, and its Labor $7, the Margin Per Unit would be:

5 dollars

The reliability component cost of a product with a 17,000 hour MTBF rating is:

5.10

minimum time it takes to create a new product?

1 year

The marketing spreadsheet is used to set which of the following:

price, promotional budget, sales budget

The A/R lag is

a marketing spreadsheet definition. the accounts receivable lag (in days). the time between customers receiving products and when they are expected to pay for them.

Cash position is

the cash position at the beginning of the round and a projection of the cash position at the end of the round

Which customer group or market segment seeks proven products using current technology?

Low Tech

Which customer group or market segment seeks proven products, are indifferent to technological sophistication, and are price motivated?

Low Tech

Which customer group or market segment seeks cutting edge technology in both size and performance?

High Tech

Which customer group or market segment seeks high reliability, advanced technology products that emphasize high performance?

High Tech

Which customer group or market segment seeks advanced technology products that focus on small size?

High Tech

Repositioning moves a product on the Perceptual Map from its old location to a new one. When does the new location become active?

the day the R&D project completes

If a product’s Automation rating is substantially increased, it will:

no longer move along the perceptual map

This strategy attempts to gain a competitive advantage by keeping R&amp;D costs, production costs and raw materialcosts to a minimum in order to compete on the basis of price. The product life cycle focus will enable sales for many years on each new product introduced into the High End segment. Products will begin their lives in the HighEnd, mature into Traditional and finish as Low End products before they are retired and their assets harvested.

Cost Leader with Product Life Cycle Focus

This strategy will allow us to maintain a presence in every market segment. Competitive advantage will be gained by keeping R&amp;D costs, Production costs and raw material costs to a minimum, enabling us to compete on the basisof price. We will price below average. We will increase automation levels to improve our margins and to make itacceptable to run second shift/overtime.

Broad Cost Leader

This strategy will allow us to maintain a presence in every market segment. Competitive advantage will be gained by distinguishing our product with an excellent design, high awareness, and easy accessibility. We will develop anR&amp;D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offeringimproved size and performance. The price of the products will be above average and capacity will expand as wegenerate higher demand.

Broad Differentiation

This strategy will concentrate on the Traditional and Low End segment. Competitive advantage will be gained bykeeping R&amp;D costs, Production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price (low prices). The product will be priced below average and automation levels will be increased to improvecontribution margins and make it acceptable to run second shift/overtime

niche cost leader

This strategy will focus on the high technology segments (High End, Performance and Size). Competitiveadvantage will be gained by distinguishing our products with excellent design, high awareness, easy accessibility,and product extenders. Our R&amp;D competency will keep our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. The prices of our products will be above averageand we will expand capacity as we generate higher demand.

niche differentiation

The Promotion part of marketing in CapSim allows teams to allocate their time based on

each product

In forecasting, it is not likely that you will take half of the sales unless

the price is at the low end of the range and the positioning, age and MTBF are superior.

customer demand is driven by

customer survey

the customer survey score is driven by the?

4 p’s

Combining size and performance creates a product attribute known as

positioning

This strategy will gain competitive advantage by distinguishing our products with an excellent design, highawareness, easy accessibility, and product extenders. We will develop R&amp;D competency that keeps our designsfresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand in our markets: High, Traditional and low end

Differentiation Strategy with a Product Life Cycle Focus

What section of the perceptual map is considered ideal for the low end segment?

upper left

In order to achieve 100% accessibility, a team must:

have at least two products in a segment

What is the most important criteria to a "Traditional Segment" consumer?

age

It takes ______ years to invent a product.

More than 1 year but no more than 3 years

how many market segments are there?

5

How much does it cost for MTBF per 1,000 hours of reliability?

.30