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Capstone Simulation Top

Management Presentation
Team Digby (Industry 2):

Statement of Purpose
Vision: We will be the company that is the most innovative and provides the best products in the market.

Mission: To achieve market dominance in our market segments by consistent R&D innovation and the use of Sales
and Promo Budgets to gain a competitive advantage.

Business Strategy: Digby has incorporated a well-rounded strategy by accounting for competitors trends to
assess current, and future, opportunities and threats within the industry. We have reviewed our current strengths
and weaknesses as well in order to strategically place Digby as an emerging competitor that will outperform the big
players throughout the rounds. We have decided to focus mainly on three products in order to keep from spreading
our assets too thin. By improving the quality of our products and increasing our capacity to produce them we will
capture and expand market share greatly. Increasing awareness on the marketing side of our efforts will ensure the
efficacy of our product sales.

Segmentation: As we see it, large investments are needed to be competitive in the high-end segment, so our focus
here will be on R&D. The low-end segment will emphasize production as this will be where we use the most
capacity to sell the greatest amount of products. Steady increases are the goal, and our marketing plan takes this
approach to raise brand awareness in all segments.

Implementation Plans: R&D
o Compete in three market segments
Attempt to maintain ~20% market share
o Reduce to two key segments if needed

Traditional Market Segment (Daze)
o First market segment focused
o Ideal age is consistently met through slow R&D

Low End Market Segment (Dell)
o Second market segment focused
o Increase market share with little R&D

High End Market Segment (Dixie)
o Third market segment focused
o Continuously improve performance, size, and MTBF

Size and Performance Market Segments (Dot and Dune)
o Two not focused
o Extra income until no market share
Top Management: R&D
o What Worked?
One of our best products was Dell
Increase MTBF incrementally until maxed
Change pfmn and size last round
Allowed us to gain 32% market share (Industry best)
Traditional was also successful
Follow industry conditions report for pfmn and size
Grew to 20% market share
o What Didnt?
Dixie struggled from the beginning
Suffered a setback the first round, never recovered
Too expensive and took too long
o Strategy Amendments
Focus on only two products
Trying to have three is too expensive
Traditional and low end segments cheapest to gain market share
o Next Time
Introduce a second product in traditional market
Focus on size or pfmn market segment instead of high end
Implementation Plans: Marketing
Keep all prices at the same levels until round 4.
Except: Lower price for Low-End segment
o One time on the 2nd round
o Make up difference with higher promotion
Avoid price wars
Promo and sales budget:
Focus: traditional , high-end, and low-end markets
Increase promo periodically until 100% awareness
Increase accessibility slowly but periodically
Gain lead on awareness on the high-end and traditional segments
Keep lead on the low-end awareness.
Reduce promo and sales for performance and size segments.

Top Management:Marketing
What did work
Effort to lead in awareness and accessibility in target segments
Resisting price changes until customer demands
What didnt work
High-end segment marketing
Slow increase of promo awareness and accessibility.
Strategy Amendments
Increase promo and sales budget drastically on first rounds
Keep periodic increase until until 100 % awareness
Maintain prices high if reasonable
Next Time:
Increase promo and sales to $2,million on round one
Ignore High-End segment
Initially, increase the price of product not in target segment
Implementation Plans: Production
Production Schedule:
Produce between 1.3 to 1.6 times the unit sales forecast for Daze, Dell, and Dixy.
Produce between 1.2 to 1.4 times the unit sales forecast for Dot and Dune.

Buy/Sell Capacity:
Cover the total amount of scheduled production with our first shift.
o As we increase our production schedule, we will also increase our first-shift capacity in order
to reflect this change.

Automation Rating:
Only increase the automation rating for Dell, while leaving the automation ratings for the other five
industries stagnant.
o We will ultimately raise Dells automation rating to 10 before the end of the five years.
Top Management: Production
What Worked?
Production for Daze and Dell was accurate.
What Didnt?
First-shift capacity was too expensive to keep up with.
o Dell fell behind
Automation rating was also much more expensive than anticipated
Strategy Amendments
We retired 3 products -- no production necessary.
As Dell started to dominate the market, we could not keep up with the first shift capacity and
automation rating.
Next Time
Overproduce inventory in the first few rounds.
Retire underperforming products earlier.
Implementation Plan: Finance
Long-term Debt
o primary borrowing method
opportunity to infuse capital into our company for investments in R&D, production, and marketing
Long time to repay the loans, minimizes risk of emergency loans

Current Debt
o Short-term loans will be used in the initial rounds; need substantial financing compared to later rounds

Common Stock
o Loans will cover our financing needs; no reason to dilute earnings per share
o Retire stock to bolster earnings per share in last rounds, and dividends will be issued as well

Cash Positions
o We will obtain enough financing to keep our cash positions around 10 million dollars throughout the rounds

Top Management: Finance
What Worked?
Issuing long-term bonds was the most reliable way to raise capital, while short term loans were useful to cover
additional needs
Buying back shares and issuing dividends in the final rounds proved to be a solid strategy

What Didnt?
Due to excessive spending it was not realistic to avoid issuing stock as a means to raise capital, but this didnt
end up being too damaging as we were able to buy back the stock in the last round

Strategy Amendments
Confusion in the initial round lead to financial constraints
More funding was needed as a result, which weighed down performance early
Able to bounce back to emerge as viable competitor

Next Time?
Be mindful that finance is dependent on completeness of other sections

Pro Forma vs Results