By Now You Should Have Downloaded the Capstone

By now you should have downloaded the Capstone.xls decision spreadsheets to your computer and entered at least some decisions. Remember that you can find help by emailing me a question or by contacting student support at Capsim by emailing them a question or calling the 877 toll free number. Capsim contact information can be found on the Help link on Capsim.com after you have logged on. The online Student Guide also has a FAQ section that may answer many of your questions.

Be sure to read and understand the Capsim Game Student Guide and Advanced Module Guides (Marketing, TQM, HR and Labor Negotiation) located on the Capsim web site. It is a good idea to print out these guides and have them with you when making decisions. Decisions for Practice Round 2 will include the advanced Marketing module and must be uploaded by 10 a.m. Saturday, Feb. 28th. Decisions for Practice Round 3 will include the advanced marketing and TQM modules and must be uploaded by 11 a.m. Saturday, Feb. 28th. Although I didn’t require it, if you are interested in gaining experience with the advanced HR module, I have scheduled Practice Round 4 to run at 12 p.m. Saturday, Feb. 28th. You may find the results for each Practice Round in the Capstone Courier.

At 1 p.m. on Saturday, Feb. 28th, I will reset the game for the actual game where you will begin to earn points. The schedule of when the decisions for the actual game must be uploaded can be found in the class syllabus. For example, the decisions for Round 1 of the actual game must be uploaded by 11 a.m. on Saturday, March 7th.

Your team must write a Management Memo and submit it to me by 11 a.m. on Saturday, March 7th. The class syllabus outlines what needs to be included in the Management Memo. In addition, I have put two copies of Management Memos from the summer of 2007 on my web site. Keep in mind that these Management Memos may not have received full points for the assignment but are provided to you as a sample of how to write the Management Memo. Specifically, I am looking for a detailed description of your strategy and specific financial and strategic objectives that your firm will try to accomplish. The more detail that your team provides in the Management Memo should help your team in making its decisions for the simulation game. I ask that all of your team members sign the Management Memo acknowledging that they agree with the content of the memo.

Let me take a moment to answer some of the questions that students had last Friday.

1. If each of us has a laptop and are signed in to the game at the same time, and I make decisions on my laptop, will the other two team members see these decisions on their laptops?

The short answer is no. Your laptops are not connected to one another, and therefore, changes made on decision spreadsheets on one laptop will not show up on the other laptops. The only way that the other two students will see the decisions that you make is for you to upload your decisions, and then the other two students must download the newly saved decision spreadsheets to their laptops. 2. Is there a preferred sequence of decisions?

Yes, I believe logically it makes sense to forecast the sales for each product for the next round before you do anything else. Next, enter the Marketing and R&D decisions for that product that you believe will achieve the sales forecast that you set. Third, enter the Production decisions, followed by the TQM, HR and Labor Negotiation decisions when they are available. Lastly, check the pro forma cash flow statement and then enter the Finance decisions.

3. How do we choose a strategy for the game?

There is no best strategy for this game. I gave you 5 possible strategies in my PowerPoint slides. The Capsim Game gives you 6 strategies. Your team may be creative and make up your own variation of any of these strategies. I have seen teams come up with unique strategies that worked very well. The key is to have some strategy or game plan that your team is using. Otherwise you will find your team’s performance will be inconsistent. Keep in mind that it costs the same to promote a product regardless of the targeted market segment. Hence, it is very difficult to achieve any financial success with fewer than 3 products, especially if they are targeting the smaller market segments.

4. How do we know what three performance measures to select to be graded on?

This is a good question. Setting specific financial and strategic objectives should guide your team’s selection of performance measures. I always recommend that teams use ‘average contribution margin’ as one of the team’s performance measures as it forces the team to continually look at the pricing and variable costs associated with a product. It is very difficult to do well in the game regardless of the strategy if the average contribution margin falls below 30%. Per the class syllabus, your team may change any of its performance measures starting with Round 5 of the first game. Your team may not change your performance measures in the advanced game.

5. How do we interpret the results from each round?

I am willing to debrief any team right after the results are posted on the Capsim web site. I first look at each firm’s average contribution margin. I use the benchmark of 30% or higher to see how well the firm is controlling its variable costs and setting its prices. The second thing I look at is the ROS (Return on Sales or Net Profit Margin). This tells me how well the firm is controlling its fixed costs. After that, I begin to look for reasons why individual product contribution margins are low or why fixed costs are high relative to product sales.

6. What should we be learning from Practice Rounds 2, 3 and 4?

The Practice Rounds are meant to give your team some experience with making decisions using the advanced modules of Marketing, TQM and HR as well as learning how to interpret the results of the team’s decisions. In addition, the Practice Rounds give your team an opportunity to learn how to work together before you start earning points for the game. Your team can decide how it wants to allocate the work and make decisions. Some teams choose to meet during class time and enter its decisions on one computer. Other teams choose to allocate certain decisions to specific team members. I recommend someone should be the General Manager to make sure decisions are being made on time.

Before Saturday Feb. 28th, I would recommend each team member print, read and understand the Student Guide for the Capsim Game and the Marketing, TQM and HR advanced modules. These guides explain the limits on budgets, how to allocate budgets, and what various expenditures are designed to accomplish. For example, the advanced Marketing decisions require the team to break each product’s promotional budget into 5 different media. Some media work better than others in different market segments. If you haven’t read the advanced Marketing module you won’t know how much to spend and which media to use.

Also by Saturday Feb. 28th, I recommend that the team assign at least one product to each member to manage. Each team member should decide on a sales forecast for their product, upload the Marketing, R&D and production decisions for their product. This will give everyone some experience with forecasting and how to enter decisions in the spreadsheets. I recommend that your team meet this Friday during class time to input decisions for Practice Round 3 (and Practice Round 4 if you choose to do so), work on formulating your strategy for the actual game and decide how the team is going to allocate the work for writing the Management Memo.