Transcript Possible Role Assignments in the Capstone Simulation

Possible roles in the firm’s
management team in the
Capstone Simulation
Product Manager
Product Managers live and breathe their
assigned product— it is their “baby.” They
must ensure their product meets the
demands of the intended segment.
Product Managers ask…
In R&D
• is the product positioned correctly on the perceptual map?
• Is the age correct?
In Marketing
• is the price within the segment's expected range?
• Considering the expected demand for the segment and the
number of competing products, is the sales forecast
appropriate?
In Production
• is the schedule matching the sales forecast?
• Has the schedule been adjusted to reflect unsold
inventory?
• Do we have sufficient capacity to meet current and future
demand?
Product Managers concentrate on
the specifics of their product, and
how it relates to the segment.
• While they want their product to be
supported to the greatest extent possible,
they are not directly involved in Promotion
and Sales decisions.
Segment Managers are strategists.
Their job is to answer these questions:
• Will new products enter or leave the segment this year?
• Is there too much production capacity in the segment
(could lead to price competition)?
• Is there too little production capacity in the segment
(could lead to a margin opportunity)?
• How does the company's distribution system
("Accessibility" on the R&D spreadsheet) compare with
competitors?
• What is the margin potential of this segment?
• What should be done to gain competitive advantage for
the segment?
• What will competitors do next year in this segment? In
two years?
Segment Managers…
… have more freedom than Product
Managers to make strategy and policy
recommendations.
For example, if they observe a capacity
shortage developing, a Product Manager
will request more capacity, but a Segment
Manager might recommend bringing in a
second product to serve the segment.
A Product Manager would never
suggest "killing" their product…
but a Segment Manager might conclude
that the segment should be abandoned.
The Segment Manager might then
recommend:
• a rapid retreat from the segment;
• a phased withdrawal the segment; or
• a hedging strategy where most of the
assets are recovered, but the product is
kept in the segment as a contingency.
Segment Managers present
recommendations to a panel
(teammates) that sets overall
company strategy.
Functional Manager
A Functional Manager's job is to optimize the
efficiency of the assigned function and to
coordinate strategy across functional
boundaries.
Functional Managers assume
responsibility for an entire
department
•
•
•
•
•
Research & Development (R&D)
Human Resources
Marketing
Production
Finance
Functional Managers are the
authority for all rules that apply to
their area.
Efficiency Concerns
• R&D Managers should monitor project
completion dates. Since the rules require
that projects can only begin on January 1,
projects that did not finish last year "lock
out" a new project for that product this
year. Similarly, a project that ends in June
gives up six months of R&D "opportunity".
Efficiency Concerns
• Marketing Managers should monitor
promotion and sales budgets. As these
budgets increase, they experience
diminishing returns. Price drives product
margins, but it is also a segmentation
variable with "rough-cut" aspects to
consider.
Efficiency Concerns
• Production Managers should monitor
inventory levels, plant utilization and
overtime. These factors vary with
automation levels. For example, an
appropriate plant utilization for a product
automated to 10.0 (the upper limit) is
different than for an automation level of
1.0.
Efficiency Concerns
• Finance Managers should monitor cash
positions, and, more broadly, the capital
structure of the firm. Does the capital
structure support the performance
measures selected by the team? Is
sufficient working capital on hand to
weather a sudden surge in inventory?
Competitive Intelligence
Officer
The Competitive Intelligence Officer's
task is to see the market, and
especially their company, through the
eyes of the competitor.
The “Intel” Officer answers these
questions for the firm…
• How does this or that competitor measure
success?
• What segments matter most to them?
• What are they doing to achieve competitive
advantage?
• What will they do with their product line next year?
In two years?
• Is "our" company a threat to the competition?
• What could the competition do that is not in "our"
company's interest?
• How can "our" company influence the competition
to do what "we" want?
Each round, Competitive
Intelligence Officers present a
competitive strategy in the form
of, "If I were them, I would....“
They should then recommend
tactics designed to counter or
neutralize their moves.
Coordination Concerns
R&D Managers can explain the relationship
between:
• age and positioning;
• positioning and material cost;
• MTBF and material cost;
• automation and project length;
• number of projects and completion times; and
• project length and proximity to other products.
R&D Managers coordinate with…
• Marketing when products are repositioned
or introduced;
• Production when products are launched or
material costs change; and
• Finance over their budget.
Coordination Concerns
Marketing Managers can explain the
relationships between:
• price and contribution margin:
• price and demand;
• promotion budget and awareness; and
• sales budget and accessibility; and A/R
policy and demand.
Marketing Managers coordinate
with…
• R&D when products are launched or
repositioned;
• Production in their unit sales forecast and
contribution margin; and
• Finance with sales projections and their
budget.
Coordination Concerns
Production Managers can explain the relationships
between:
• inventory levels and carrying costs;
• carrying costs and opportunity costs (not having
inventory to sell);
• capacity and overtime;
• automation and labor costs;
• overtime and labor costs;
• idle plant costs; and
• consequences of selling capacity or buying
automation.
Production Managers coordinate
with…
• R&D about new product introduction and
material costs;
• Marketing about demand, scheduling, and
inventory; and
• Finance about plant and equipment
changes, inventory levels, and contribution
margins.
Coordination Concerns
Finance Managers can explain the relationships
between
• stock issue or retirement and capital structure;
• working capital and inventory;
• dividend policy and stock price;
• emergency loans and cash;
• current debt and short-term interest rates;
• bond issue and prepayment; and
• all financial performance measures.
Finance Managers coordinate
with…
• R&D over budgets and product
introductions;
• Marketing about sales projections,
margins, and budgets; and
• Production about margins, plant and
equipment changes and inventory levels.
Tactical Mistakes
In all cases, when the team
makes a tactical blunder, at least
two functional managers are
responsible. Following are some
common mistakes.
The company invents a product
but forgets to buy plant and
equipment for it. (R&D and
Production breakdown.)
The company takes an
emergency loan because
inventory levels increase.
(Marketing, Production and
Finance.)
The company selects
performance measures
inconsistent with their strategy.
For example, a "niche" company
chooses to be measured by
overall market share. (Marketing
and Finance.)
The company repositions a
product from the High End
segment to the Traditional
segment, but does not address
their material and labor costs.
(Marketing, R&D, and
Production.)
The Finance Manager makes
decisions before knowing the
budget demands of all R&D,
Marketing and Production
decisions.