Transcript MgtSim-1

University of Alaska-Anchorage * College of Business & Public Policy
M A RKETING
M G T.
* Marketing Management Simulation *
S I M U LA T I ON
Course Intro & Overview
M A RKETING
M G T.
Professor Ed Forrest
S I M U LA T I ON
• Telephone:
(cell) 854-8784
• Email:
ejforrest@ uaa.alaska.edu
THE CAPSTONE SIMULATION
Most widely used Business –
Simulation Program in the World
• Adopted by major Fortune
500 companies
..General Motors, General
Electric, Honeywell, Dell,
John Deere, Citibank,
Alcoa, BP, Allstate,
Samsung, Goldman
Sachs, Microsoft…
M A RKETING
M G T.
•Simulation proffers you opportunity
to experience every key dimension
of strategic thinking developed to
date:
S I M U LA T I ON
Strategic
Thinking
the ten big
ideas
M A RKETING
M G T.
Today- Form Your Company
S I M U LA T I ON
7. Corporate culture- corporate
behavior, and in particular the resistance of the
organization to change, is inevitably a function of
its culture
(Prof Thomas/ Penn St. able to predict final standings w/in 1 place
90% of time –after observing initial group interaction)
8. Leadership craft- Leaders
responsible for assuring strategy links values of
firm with its vision & that firm can successfully
implement strategy thru effective HR mgt.
Strategic Thinking- the ten big ideas
Today – Begin Analysis of Your Situation
1. Long-range planningconsiders the external factors that affect
success & integrates the various functional
strategies.
2. Strategic analysis
Market segmentation
The lifecycle.
SWOT analysis.
Industry structure
Strategic Thinking- the ten big ideas
Economic
Environment
Moderate growth, Low inflation,
Averaged interest rates
• No outside competitors or
•
product substitutes
• No economic downturns or other
surprises ...
Sim designed this way
for one reason:
Whatever happens
will be result of
your-tactical
execution of
strategies… not by
external factors!
M A RKETING
M G T.
S I M U LA T I ON
Concepts & Processes
Equally Applicable
If Simulation
Service Based:
• Instead of Sensors Sold-Units of Production=
– Meals served
– Seats sold
– Rooms rented
– Patients seen
– Members joined
– Lawns cut
Agriculture
Manufacturing
Services
80%
70%
% 60%
o
f 50%
40%
G 30%
N
P 20%
10%
0%
1850
1950
2050
M A RKETING
M G T.
S I M U LA T I ON
Lecture-Learning
M A RKETING
M G T.
If you want Lectures:
S I M U LA T I ON
• Foundations
of Business
Strategy
• Coursera
M A RKETING
M G T.
Learning & Retention
S I M U LA T I ON
5%
+
75 %
M A RKETING
M G T.
S I M U LA T I ON
M A RKETING
M G T.
S I M U LA T I ON
Your
“study” of
business …
piece-meal
& in
isolation!
M A RKETING
M G T.
Marketing
S I M U LA T I ON
R&D
HR
Production
Finance
You
Da’
Boss
… run a
$100M
business ….
Your Product Line:
SENSORS:
YOUR JOB:
• Make every
decision
• In every
Functional
Domain
• to create,
produce &
successfully
market your
products…
M A RKETING
M G T.
…success
contingent
on strategic
integration
of decisions
across all
domains
S I M U LA T I ON
You will Compete against other members
of this class –running 5 other Corp’s ….
M A RKETING
M G T.
S I M U LA T I ON
• Andrews
• Baldwin
• Chester
• Digby
• Erie
• Ferris
M A RKETING
M G T.
S I M U LA T I ON
Plus…
your decisions &
business performance
will be compared
against 1000+ other
teams competing at
other universities…
around the world
Product Place
Target
Market
Price Promotion
M A RKETING
M G T.
S I M U LA T I ON
& How –to date-have we fared in
this World-Wide
Competition??
M A RKETING
M G T.
S I M U LA T I ON
•
2001 Top Ten Teams,
World-Wide, for Round 8
Top Ten Teams, World-Wide, for Round 8
by success measurement
There are currently 940 active teams that have played Round 8.
For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then
5.0% Asset Turnover less then 8.0
Profit for Round 8
Round 8 - Mean - $ 25,324,003
•
Top Ten Active Teams Professor School/Course Simid Team Value
•
1 Dr. Minu Afza College of Business - Bloomsburg University
93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245
2 Mr. Bill Gardner Penn State University -Fayette Campus
Contemporary Business Seminar CAP1513 Andrews $ 193,853,427
3 Dawn DeTienne University of Colorado at Boulder
Senior Seminar CAP1656 Andrews $ 184,258,599
4 Prof. Howard Feldman University of Portland
Managerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390
Dr. Ed Forrest University of Alaska
5
Marketing Management CAP1611 Baldwin $ 163,281,864
6 Dr. Eric Wiseman University of Colorado at Boulder
Business Senior Seminar CAP1818 Chester $ 157,930,382
7 Dr. Murrow Drury College
Strategy and Policy Formulation CAP1838 Erie $ 149,235,238
8 Dr. Pettus Millikin University
Business Policy CAP1748 Baldwin $ 147,967,873
9 Doug Mayer Hartwick College
Management VII-secA CAP1811 Digby $ 137,339,216
10 Dr. Bruce A. Schooling Point Loma Nazarene University
Strategic Management CAP1794 Digby $ 121,289
th
5
M A RKETING
M G T.
S I M U LA T I ON
2003 Top Ten Teams,
World-Wide @Rnd 8
•
For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0
Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: All
•
URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K
Date/Time: 04/12/2003 10:07:35
eNote:
Text:
Cumulative Profit for Round 8 - Mean - $ 125,355,000
Top Ten Active Teams Professor School/Course Simid Team Value
1 natalie marsh Strayer University
Business Policy & Strategic Planning C4779 Baldwin $ 459,411,986
2 John Hall University of Florida
Global Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583
3 natalie marsh Strayer University
Senior Seminar - Business Administration C4778 Erie $ 382,697,422
4 Peter Stanwick Auburn University
Strategic Management C5095 Chester $ 353,185,127
5 John Pearce Villanova University
Policy Administration C5033 Ferris $ 348,535,130
6 Gavin Fox Georgia Southern University
BUSINESS SIMULATION C5041 Digby $ 343,761,703
7 Shirley Schooley Birmingham-Southern College
Strategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002
8 natalie marsh Strayer University
Senior Seminar - Business Administration C4778 Ferris $ 339,568,171
•
th
9
9 Edward Forrest University of Alaska
Marketing Management C4806 Chester $ 333,620,198
10 Donald Kreps Kutztown University
mba capstone C4797 Digby $ 327,188,363
M A RKETING
M G T.
2005 S I M U LA T I ON
#1
M A RKETING
M G T.
S I M U LA T I ON
2006-
5
th
M A RKETING
M G T.
S I M U LA T I ON
and
th
8
M A RKETING
M G T.
S I M U LA T I ON
2007
rd
3
M A RKETING
M G T.
S I M U LA T I ON
Fall 2009
#1 in the world!
M A RKETING
M G T.
And Stock Price
S I M U LA T I ON
M A RKETING
M G T.
S I M U LA T I ON
Spring 2010
M A RKETING
M G T.
Spring 2010
S I M U LA T I ON
M A RKETING
M G T.
Fall 2010
S I M U LA T I ON
M A RKETING
M G T.
Spring 2011
S I M U LA T I ON
v
M A RKETING
M G T.
S I M U LA T I ON
Fall 2011
M A RKETING
M G T.
S I M U LA T I ON
Fall13
UAA-CBPP students —out of 1,089 teams competing
#4 in & # 10 in profit
#5 in Stock Price
#6 in ROE
#3 & #7 in ROA
#8 in Asset Turnover
Profit for Round 8 - Mean - $ 20,919,310
Top Industry
Ten Active
Teams
Your
C58880
was ranked:
· with 1089 Capstone teams
Professor
· completing round 8
· by Nov 22, 2013.
School/Course
Simid
Team
Value
1 Robert Woodward
Capsim Management Simulations - Main
Ethics
C58086
Andrews
$ 508,976,902
2 LaKami Baker
Auburn University - Main
Strategic Management
C59204
Digby
$ 158,606,060
3 William Worthington
Baylor University - Main
Strategic Management
C58893
Ferris
$ 139,469,157
4 Edward Forrest
University of Alaska - Main
Marketing Management
C58879
Erie
$ 134,385,883
M A RKETING
M G T.
S I M U LA T I ON
Your Industry C65757 was ranked:
with 1057 Capstone teams
completing round 8 - by Nov 21, 2014
ROE for Round 8 - Mean - - 3.63%
Top Ten Active Teams
Professor
1 Peter Hosie
School/Course
Simid
Curtin Business School - Main
Bentley (Sem 2-2014)
C64703 Baldwin 268.30%
University of Alaska- Anchorage - Main
2 Edward Forrest
Marketing Management
Your Industry C65757 was ranked:
 with 1057 Capstone teams DePaul University - Main
James Belohlav
Management Strategy--Evening
3 completing
round 8
 by Nov 21, 2014.

Brigham Young University - Main
4 Anne Woolstenhulme
Strategic Management - 002
Team
C65757 Ferris
Value
252.05%
C65729 Andrews 160.99%
C67336 Baldwin 156.23%
5 Craig Citron
Southern Connecticut State University Main
MG450
C66602 Erie
6 Jason Harkins
University of Maine - Main
Strategic Management
C66183 Baldwin 133.31%
153.28%
M A RKETING
M G T.
#1 Fall 2014
S I M U LA T I ON
Cumulative Profit for Round 8 - Mean - $ 57,143,445
Top Ten Active Teams
Professor
School/Course
Simid
Team
Value
1
Edward Forrest
University of Alaska-Anchorage - Main
Management Simulation
C65883
Chester
$ 423,479,998
2
Montchai Pinitjitsamut
Kasetsart University - Main
AgStrategy1
C63414
Erie
$ 379,323,878
3
Erin Nelson
DePaul University - Main
GSB 599
C66845
Erie
$ 369,501,687
4
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- C
C65322
Chester
$ 332,453,310
5
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- A
C65316
Baldwin
$ 317,334,112
6
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- C
C65324
Chester
$ 309,297,102
7
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- A
C65318
Chester
$ 290,130,349
8
Veer Mehta
SCMHRD ExEd - Main
SCMHRD ExEd
C67080
Baldwin
$ 287,625,419
9
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- A
C65316
Ferris
$ 269,713,684
10
David Brokaw
UIndy - Carmel
MBA 690 - Strategic Analysis - Wednesday
C66529
Digby
$ 265,975,495
13
Edward Forrest
University of Alaska-Anchorage - Main
Management Simulation
C65883
Digby
$ 253,412,984
M A RKETING
M G T.
#1 Fall 2014
S I M U LA T I ON
Profit for Round 8 - Mean - $ 16,856,185
Top Ten Active Teams
Professor
School/Course
Simid
Team
1
Edward Forrest
University of Alaska-Anchorage - Main
Management Simulation
C65883
Chester
$ 179,894,270
2
Montchai Pinitjitsamut
Kasetsart University - Main
AgStrategy1
C63414
Erie
$ 150,718,034
3
Erin Nelson
DePaul University - Main
GSB 599
C66845
Erie
$ 117,376,727
4
Veer Mehta
Great Lakes PGPM - Main
Great Lakes PGPM
C66539
Chester
$ 102,062,415
5
Michael Stoica
Washburn University - Main
Strategic Analysis
C66272
Baldwin
$ 100,603,573
6
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- C
C65322
Chester
$ 99,817,375
7
Igor Gvozdanovic
Zagreb School of Economics and Management - Main
Maximizing and Measuring Corporate Value_CAPSTONE
C67613
Andrews
$ 97,578,131
8
Veer Mehta
IIM Shillong - Main
IIM Shillong
C61259
Chester
$ 97,216,158
9
Erin Nelson
DePaul University - Main
GSB 599
C66845
Chester
$ 96,520,602
BIMTECH India - Main
BIMTECH India
C65546
Chester
$ 95,719,172
10 Dharam Pal
Value
M A RKETING
M G T.
#1 Fall 2014
S I M U LA T I ON
Stock Price for Round8 - Mean - $ 105.49
Top Ten Active Teams
Professor
School/Course
Simid
Team
Value
1
Edward Forrest
University of Alaska-Anchorage - Main
Management Simulation
C65883
Chester
$ 407.95
2
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- C
C65322
Chester
$ 372.73
3
Al Lovvorn
The Citadel - main
BADM 740: Fall 2014
C65655
Andrews
$ 320.94
4
Montchai Pinitjitsamut
Kasetsart University - Main
AgStrategy1
C63413
Andrews
$ 317.55
5
Jeffrey McGee
University of Texas - Main
Strategic Management Fall 2014
C66078
Baldwin
$ 307.51
6
Veer Mehta
Great Lakes PGPM - Main
Great Lakes PGPM
C66540
Chester
$ 307.47
7
Montchai Pinitjitsamut
Kasetsart University - Main
AgStrategy1
C63413
Chester
$ 303.80
8
Robyn Rodier
Melbourne Business School - Main
Integrative Business Capstone - FT August 2014
C66127
Baldwin
$ 297.36
9
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- C
C65324
Chester
$ 295.82
10
Vasant Sivaraman
S.P. Jain Institute of Management and Research - Main
Decision Analysis (Business Simulation)- A
C65318
Chester
$ 291.90
13
Edward Forrest
University of Alaska-Anchorage - Main
Management Simulation
C65883
Digby
$ 280.96
M A RKETING
M G T.
S I M U LA T I ON
M A N A G E M E N T
S I M U LA T I O N
You are now the Captain…
st
1 Organize
Companies
Register @ www.capsim.com
Today- we will
begin analysis
of “your
situation…”
1st-Step back &
take a look at
the “Big Picture”
The Big Picture
Situation/SWOT
Analysis
Strategic
Planning
•Company
•Consumers
•Competitors
•Conditions
• PEST
Growth &
Competitive
Strategies
Functional
Integration
Functional
Integration
Marketing
Performance
Assessment
 Profits
 Mrkt Share
 ROA
R&D
 ROS
Production  ROE
 Asset T/O
 Stock
HR
 Mrkt Cap
Finance
BUSINESS PLAN GUIDELINE
Page 1: Mission & Vision Statements –
SECTION I : SITUATION ANALYSIS
1.1: External Environment - Opportunities & Threats:
MARKET STRUCTURE
MARKET SEGMENT SIZE & GROWTH
MARKET SEGMENT VALUE
MARKET SEGMENT DYNAMICS
1.2: Internal Environment- Analysis & Evaluation of
Company's Strengths & Weaknesses
Marketing Management
Production & HR Management
Financial Management
1.3: Situational Analysis Results: SWOT Analysis
SECTION II: STRATEGY, OBJECTIVES & TACTICS
2.1: Select one of the Six Basic Strategies delineated in
your Online Guide – Describe your Company's Growth &
Competitive Strategy; be specific regarding any plans for
new product development (What products? Which
segments? What years?)
2.2: Functional Domains- Objectives & Tactics
Marketing + R&DProduction & HR
Financial-
BUSINESS PLAN
Answers 3 Critical Q’s:
1.Where are we
now? = Situation
Analysis
2.Where do we
want to go
3.How do we get
there?
2. Where do we
want to go?
–
Market positions
to stake out?
–
Consumer needs
& segments
serve?
–
Outcomes to
achieve?
Final Question answered by
Strategic Planning:
1.Where are we now?
2.Where do we want to
go?
3.How do we
get there?
*Growth, Competitive &
Functional Strategies
M A RKETING
M G T.
Begin Situation-Analysis
S I M U LA T I ON
Company
INTERNAL ENVIRONMENT
Your Company's
Financial
Strengths & Weaknesses:
Consumer
Competitors
Conditions
EXTERNAL ENVIRONMENT
Opportunities & Threats
YOUR
1st ASSIGNMENT
Opportunities & Threats:
Ascertain:
 Market Structure
 Consumer Demand
Business Plan Guideline:
M A RKETING
M G T.
Begin Situation-Analysis
S I M U LA T I ON
Company
INTERNAL ENVIRONMENT
Your Company's
Financial
Strengths & Weaknesses:
Consumer
Competitors
Conditions
EXTERNAL ENVIRONMENT
Opportunities & Threats
M A N A G E M E N T
S IM U L A T I O N
The Capstone Courier
M A N A G E M E N T
S IM U L A T I O N
Various Measures of
Your PROFITABILITY




Profitability Ratios:
ROS--- Profit/ Sales
ROA— Profit/ Assets
ROE– Profit/ Equity
Net Profits
Cum Profits
M A N A G E M E N T
S IM U L A T I O N
NET PROFITS $$
•Year 1 $6 million
•Year 2 $8 million
•Year 3 $10 million
•Year 4 $12 million
•Year 5 $16 million
•Year 6 $21 million
CUM PROFIT
•Year 7 $27 million
General Range:
•Year 8 $35 million
$20 to $100 M
Main ratio of Profitability
Return on Sales
Return on Sales =
net profit
net sales
“ROS indicates percentage of each sales
dollar that results in net income.”
Return on Assets
Return on Assets =
net profit
assets
“ROA measures company’s ability to use its
assets to generate earnings.”
ROE
Return on Equity =
net profit
equity
Encompasses the 3 main levers used by mgt to
generate return on investors equity
Profitability * Asset Mgt * Leverage
Du Pont Formula
Value Chain
net profit
Return on Equity =
net profit
sales
x
sales
assets
equity
x
assets
equity
Du Pont Formula
Value Chain
net profit
Return on Equity =
net profit
sales
x
sales
assets
equity
x
assets
equity
Improve ROE by:
Value Chain
Profitability * Asset Mgt * Leverage
net profit
sales
Improving
Margins
sales
x
assets
assets
x
Increase sales
&/or
reduce &/or
eff. work
assets
equity
Increasing
Leverage
Ratio
ROE*
World
Class
Top
10 cut
Mean
600%+ 100%+ ~20%
Poor
<15%
“Generically, profits are
driven by the company’s
asset base
and by its efficiency working
those assets”
How effective/aggressive R-U in
building your Co’s asset base…
It takes $$ to Make $$
&-why not make it using
somebody else's…. To help
you make even more…
LEVERAGE:
Assets/Equity – simulation takes
owner's perspective.
Corp assets fin.w/ debt
Optimal
Leverage
A Leverage of 3.0
says, "For every
$3 of Assets there
is $1 of Equity &
$2 of Debt”…
Assets
Debt
Equity
$1
$0
$1
$2
$1
$1
3.0
$3
$2
$1
4.0
$4
$3
$1
1.0
2.0
1.8
to
2.8
Key Demand
Consideration:


Overall market
growing @ ~
14%/yr
“Average” company
should/could double sales in 6 years
Key Capacity
Consideration:
How effective will you be in building
your Co’s asset base?


At outset should be
spending ~$10-25M /
round on plant
improvement
By end should
expand asset base to
min $140M to $160M+
70000
60000
50000
40000
30000
20000
10000
0
Year Year Year Year Year Year Year Year
1 2 3 4 5 6 7 8
The More Assets you have the better your Bond Ratings
AAA/AA/A/BBB/… BB & beyond is Junk…
B/CCC /CC/C/D = default
•As your debt-to-assets
ratio increases… Your
short term interest rate
increases…
•For each additional .5%
increase in interest -You
drop one category
Page 3
“Generically, profits are
driven by the company’s
asset base
and by its efficiency working
those assets”
Asset Turnover
Reveals how effective assets are at generating sales revenue.
The higher the better = more efficient use of assets
Asset Turnover =
sales
assets
Currently you
are generating
$1.05 in sales
for every $1
assets
Financial
Guidelines:
ProfitabilitySGA/sales & Margins
IF: Contribution
Margin
(Sales- variable costs) / sales
……. below
30%,
Problem =
Marketing (customers hate
your products)
Production (your labor &
material costs too high),
&or Pricing (you cut price too
much).
IF:
Contribution Margin is
above 30%… but Net
Margin is below 20%
…Net Margin = Sales - (Variable
Costs + Period (Fixed) Costs) /
Sales
Problem= heavy expenditures on
Depreciation (perhaps you have idle
plant)
& or heavy expenditures on SGA
(perhaps you’re pushing into diminishing
returns on Promo & Sales Budgets).
IF:
Net Margin above 20%,
but ROS (net profit)
below 5%.. -you either experienced some
extraordinary "Other" expense
like a write-off on plant you sold
or you are paying too much Interest
(…you may also have spent heavily on
TQM initiatives).
Stock Price
Profit$
STOCK
PRICE
Function of:
1. Earnings per Share
Net Profit / # Shares
2. Book Value

Equity / # Shares

3. Dividend Policy
Good Dividend Policy
M A RKETING
M G T.
S I M U LA T I ON
Questions?