Get the Best Guide To Capsim (from Experts)
From choosing a winning strategy, improving the balanced scorecard record, and tackling the Comp XM exam, capsim simulation can be a hard nut to crack. Fortunately, with this comprehensive capsim guide, you can maneuver successfully through the industry condition report, human resource decisions, and other elements to improve your score.
And suppose you get stuck in round 1 or round 8; our capstone simulation experts are here to take you through the game step by step. So, feel free to contact us for professional guidance.
The 6 Key Decisions; R&D, Production, Marketing, TQM, Human Resources, and Finance
Similar to the actual competitive marketplace, capsim entails business departments that enable it to run like a real business. These include; production, marketing, finance, TQM, human resource, and research and development.
You must make effective decisions in all these sections to succeed in the Capstone simulation. So, how do you go about this if you are new to the simulation?
The R&D department focuses on your company’s product line. The main activities in this section include inventing and revising products to resonate with the customer’s needs and preferences. This will give you a competitive advantage, helping you boost your sales.
Here are two key moves in this department that will increase your chances of winning capsim:
Adjust MTBF To Max of Every Segment
Lowering the MTBF is one of the most recommended ways to reduce material costs. Unfortunately, this move results in low-priced goods which is a higher cost for your company.
Instead, you should change the MTBF to the maximum of every segment. While you may not affect the material costs, you will have found the customer buying criteria at the lowest price.
Ideal Positioning of Products
Once you change the MTBF, you should focus on positioning your products. You can accomplish this by calculating the ideal position of every product first. The Capstone Courier shows you the ideal place for the products in round 0.
Once you find the spot, apply the proper drift rates and get the ideal positions for the next rounds. Now push them while lowering any that have their revision dates as next year. The low-end segment product is usually unique, so avoid moving it until round 4 or 5.
This department decides how many units will be produced every year. It also has the mandate to buy or sell production lines. Some key elements to consider in this department include:
Sometimes you may sell above the sales forecast value. Hence, you should consider the inventory at hand when making production decisions. Here is a formula to help you determine the production units you should aim for in your simulation;
Production Units = (Sales Forecast * 1.15) – (Inventory at Hand)
Identify the products or segments you want to hit 10 fast and the ones you want to add capacity gradually. Typically, you should adjust the Low End to reach 10 in the shortest time possible. The Performance, Size, and High End should rise progressively.
buy or sell capacity?
You should sell capacity if your second shift production is less than 20% on the balanced scorecard. But if it is above 50%, you should buy capacity.
Your money decisions will determine whether you win or lose the capsim game. As a result, your finance department should ensure you have enough funds to run your company throughout the year.
You can source money through the following ways in your first round;
- Issuing stock
- Long-term debt
- Borrowing current debt
When sourcing resources through the above methods, put a limit of 10k for each. This will help you balance the ratios as you will later face a debt payment with interest. Hence, it’s essential to avoid hurting your bottom line.
Once you achieve a good cash position, you can use the leftover money to repurchase stocks. If you have excess capital investment, you should utilize it to pay dividends.
When engaging in business simulation, it’s also essential to ensure you decrease your expenses. One way to accomplish this is to pay your long-term debt early. This will lower the interest expenses, allowing you to pay less than the initial figure.
Not sure what to do in round 2 or 3 of your capstone simulation? Feel free to consult our experienced capsim professionals. We will help you develop the right financial plan depending on the circumstances surrounding your company.
Your marketing department is responsible for the following:
One of the key tips that drive success in the capsim game is finding an equilibrium price. To find the equilibrium price, start by placing the highest prices for all the segments, then keep lowering them by 0.50 in every round.
Maintain this difference every year unless your segment or product experiences disruption.
To find accurate figures when doing sales forecasting, follow these steps;
Step 1. Check the market share page on the capstone courier report. You will see the previous year’s potential market share, take this figure and multiply it by the next year’s demand of every segment.
Step 2. Next Year’s Demand = Total Current Demand * Growth Rate
Step 3. Next Year’s Forecast = Next Year’s Demand * Market Share
Alternatively, you can multiply the number of units sold in the segment by the growth rate of the specific segment to get a forecast.
Sales and Promotion
While it’s tempting to invest heavily in sales and promotion to increase sales, you should note that your spending reaches a certain point where you experience diminishing returns. Consequently, you should not spend more than $2000 or less than $1000.
Our capsim experts recommend you allocate $2000 to your sales and promo budget. And similar to the pricing, begin lowering this figure by $100. If your sales/promo number increases as a consequence, maintain this adjustment; if it declines, then increase the budget.
5. Human Resources
Your human resources decisions determine your products’ prices and your business’s expenditure. Hence, you should invest to the maximum for recruiting and training.
You should allocate $ 5,000 and 80 training hours for the best outcome.
6. Total Quality Management
Total Quality Management usually matches advanced rounds demands. So you should not implement it in rounds 1 or 2. To get the best results, introduce Total Quality Management in rounds 3 and 4.
Stuck finding the right winning tips? Don’t hesitate to ask for expert help. Our team of capsim graduates can assist you through your business simulation journey to round 8.
Guide To Capsim Basic Strategies
The capsim strategy you choose determines your decisions for all the rounds. Below are the winning tips for the six basic strategies in capsim business simulation
1. Broad Cost Leader
The Broad Cost Leader maintains a presence in the Low end and Traditional segments to give you a competitive advantage in the following ways.
It adds more automation, cutting your labor costs.
The research and development maintain your product line regardless of the increased automation in all segments.
As a result, you keep all your costs at a minimum, offering your customers better pricing options.
2. Broad Differentiator
The broad differentiator strategy focuses on product modification. Your research and development distinguish products through excellent design, high awareness, and visibility. To keep up with your customer’s demands, you improve Performance and Size.
This means that your prices are above average. So, unlike the Broad Cost Leader, your business competes through premium goods. The source of your finances is usually stock offering and issuing bonds. Not sure how to allocate your funds through this strategy? Our friendly capstone professionals can offer you an exhaustive capsim guide.
3. Niche Cost Leader
The Niche Cost Leader is a Low Tech strategy concentrating on low-end and Traditional segments. The main plan is to lower the research and development, material, and labor costs to gain a competitive advantage.
The marketing department focuses on matching customer accessibility needs. Once you gain an excellent financial position, you increase or decrease the promo and sales budget. Note that when using this method, you should keep your costs at a minimum to maintain low product prices.
4. Niche Differentiator
When playing capsim business simulation, the Niche Differentiator strategy focuses on the high-tech segment. Once again, you gain a competitive advantage by differentiating products through high awareness, excellent design, easy accessibility, and new products.
This strategy also introduces research and development competency to maintain fresh and exceptional designs for your products. To keep pace with the market demands, you progressively improve the Performance and Size.
5. Cost Leader with Product Lifecycle Focus
What do students achieve in the capsim game when they use Cost Leader with Product Lifestyle Focus strategy?
This approach enables you to make better decisions in the Low-End, Traditional, and High-End segments. It helps you stay above the competition through low-price products. As a result, you make significant sales for the new product you invent. The main moves in this strategy include;
Introducing a new product in the High End after every two years
Repositioning Low-End products to exit the segment
Repositioning Size and Performance products
Adding more automation
Collecting more resources to invest in accessibility and awareness
All these activities are focused on providing products at a low price. The source of funds in this strategy is stock offerings and bond issues.
6. Differentiator Product Lifestyle Focus
This winning strategy implements changes in the Low End, Traditional, and High-End segments. You are required to add more capacity and increase automation to stay ahead of the competition. You also reposition the segments to achieve a good cash position.
This strategy invests heavily in the marketing production section to improve product value. This way, you will produce premium products at high prices. Unlike other strategies, the Differentiator Product Lifestyle Focus finances its operations through cash and stock issues. Once you gain a good cash position, you repurchase your stocks.
Searching for a Comp XM Capsim Guide?
Completing rounds 1 to 8 of the capsim game successfully can be a breath of fresh air. However, you encounter a final exam once you finish the simulation.
Most students relate to test stress, especially the Comp XM exam, which has a strict due date. Stuck finding a guide to capsim exam? We can walk you through all capsim requirements to help you win.
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