CapSim Quiz Sample Questions

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the
question.

1. Stock price is a direct function of dividends, EPS, and ______ along with emergency
loans?
a. debt rating c. book value
b. cash on hand d. yield ratio

2. Which criterion is most important in the High-End segment?

a. age c. price
b. position d. quality

3. On the perceptional map, where is the sweet/ideal spot in the High End segment?
a. in the center of the circle c. there is no sweet spot in High End
b. on the trailing edge of the circle d. on the leading edge of the circle

4. What is one way to lower material costs?

a. decrease MTBF c. increase automation
b. increase capacity d. none of the above

5. Higher automation leads to lower production costs and has what effect on
repositioning a product on the perceptual map?
a. makes it more difficult and expensive c. no effect
b. makes it easier and cheaper d. eliminates repositioning

6. What is the approximate overall average growth rate for all five segments industry?
a. 14% c. 4%
b. 19% d. 9%

7. When you sell capacity what percentage of your original investment do you receive?
a. 65% c. 50%
b. 25% d. 10%

8. One way to finance expansion is through the issuing of bonds. When this happens,
your company is charged a _____% brokerage fee for issuing the bonds.
a. 2% c. No fee is charged
b. 5% d. 7.5%

9. For each point of change in automation, your company is charged ______ per unit of capacity.
a. $6.00 c. $4.00
b. $5.00 d. $7.00

10. Which of the following reports can be used to diagnose problems on a product-by-product
basis?
a. stock market summary c. cash flow statement
b. income statement d. balance sheet
 CapSim Quiz Sample Questions

11. Gross margin is calculated by subtracting what direct labor and direct materials from unit price.
True / False

If you reduce MTBF from 21000 to 14000 (the low end of the range) you save $2.80 in direct
materials per unit. True / False

If you increase MTBF from 17000 to 23000 (high end of the range) how much will it cost, you per
unit? $1.80 / $2.10

How much do you save in direct labor per unit if you increase automation from 0 to 1? 20% / $1.01
Per Unit

For each point of change in automation, what is the cost or savings per unit? $6 / $4

If a production line has a capacity to produce 1,000,000 units and you change the automation from
1 to 3, what is the total cost? $2,000,000 / $8,000,000

Changes in capacity and automation happen immediately. True / False

If you sell all your capacity, Foundation will sell your remaining inventory for half the average cost
of production. If you keep one unit of capacity, you can sell all inventory at full price. True / False

If you add 800,000 units of capacity at an automation rating of 3, what will it cost you? $14,400,000
/ $7,600,000

If you reduce automation, you will incur etooling costs. True / False

Selling capacity happens immediately. Buying capacity takes a year. True / False

Each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation. True /
False; $6 per unit of floor space

The market is growing at 10% per year your unit sales are growing at 20% per year. What is
happening to your market share? Your market share will increase versus your competition because
market share is determined (in the simulation) by unit sales / Your market share will be determined
by dollar sales we cant predict what will happen to market share

Price guidelines for products remain the same round after round. True / False

All companies in the sensor market start out with a market share of 16%. True / False

1. A firms mission statement is usually prepared in significant enough detail to guide all of a firms
stakeholders in their day to day decision making related to the firm.
a. Is usually prepared following the preparation of the strategic plan
2. If you or your team decides to introduce a new sensor product, when should capacity and automation be
purchased?
a. One round prior to product release
3. The promotion budget affects:
a. Awareness
 CapSim Quiz Sample Questions

4. What is the minimum amount of time that it takes to invent a new sensor?
a. 1 year at least
5. Which one of the following is NOT one of the four product characteristics that R&D can set?
a. Quality
6. The relationship between promotion and sales budgets and sensor sales is generally
a. A direct one
7. At the beginning of the stimulation, how many assembly lines are there?
a. 5 line per company
8. The Finance Department can use which of the following methods to acquire capital for company activities?
a. Current Debt, Stock Issues, Bond Issues and Profits
9. How can assemble lines double their capacity?
a. Add a second shift
10. When the practice rounds are over (both individual and team) the simulation will be reset so that real
competition can begin among the teams. Each management team will take the reins of
a. A $100 million company with 5 products
11. A firms value proposition should be developed to reflect the perspective of
a. Board of Directors
12. The 5 market segments learned in the Capstone book are the following:
a. High end, Low end, Traditional, Performance, and Size
13. What is a market segment?
a. A group of customers with similar purchasing concerns
14. Whats the measure for product reliability?
a. How long a product is expected to function
15. Which of the following are not considered in the Buyers Criteria?
a. Automation
16. A(n) ____________ examines the social, political, economic, regulatory, technological, and competitive
environments as conditions.
a. External Analysis
17. The size segment places more importance on
a. Positioning and age
18. Which market segment places the most important on price?
a. Low End
19. Which market segment places the most importance on reliability?
a. Performance
20. If you are marketing to High End customers, which criteria are most important to them in order of
importance?
a. Positioning, Age, MTBF, Price
21. If you purchase production capacity and automation:
a. It is available in the next year
22. An increase in promotional budgets has:
a. Diminishing returns over time
23. In the Gelle case the competitive strategy that all the members of management appeared to agree was not
appropriate for the firm was:
a. A low Price Product Pricing Strategy
24. A _________ is one that does not affect the execution of the firms competitive strategy.
a. Nonstrategic Decision
 CapSim Quiz Sample Questions

25. Capital needed for company activities cannot be acquired through:

a. Arbitrarily firing employees
26. Which financial obligation is best satisfied with Bond Issues?
a. Paying for increased production capacity
27. In the Gelle case the primary conflict or problem was created by
a. A failure to implement an agreed upon competitive strategy
28. One of the tradeoffs of extending your firms AR collection terms from net 30 to net 45 will likely be:
a. Less pressure on the firms cash flow
29. A _______ is defined by the particular mix of price, product qualities and features, and service that
differentiate from others in the marketplace
a. Competitive Strategy
30. A ________ occurs when different members of the organization apply their own decision criteria rather
than use a common lens.
a. Unhealthy Debate