The following assignments are due at the start of class on the dates that are listed.  They are also accessible from your CAPSIM welcome page (go to "Homework > Assignments > Review")They also may be turned in (posted) thorough that same site.  Although some are team exercises, each member should post. 

Assignment #1 - "Getting Started" ..  May 18  (Individual Assignment)

In order to get you through the learning curve, please go through these assignments.  

Instructions: Log into your account via, click on “Resource Materials” (left menu) and then “Tutorials.”

1.       View - the "Introductory Lesson" at the top of the page. (Note that it has sound ... in fact, several of these tutorials do ...they basically talk you through the process!)

 2.       View - the 1st four items under "Spreadsheet Demonstrations”  (R&D, Marketing, Production & Finance)                                                           

3.       Read - Chapters 1, 2, and 3 (pages 1-26) of the Foundation Team Member Guide (Some of this repeats material from the tutorials, but we are trying to learn) 

4.     After you do this, simply post "I have done the assignment"

Assignment #2  -  More Introduction … and .... Individual Practice Sessions – May 19    (Individual Assignment)

Log into your account via, click on “Resource Materials” (left menu) and then “Tutorials.”

1.       View - “Download Demonstration” at the bottom of the page

2.       Download the simulation to your computer.  (Instructions: On the left menu click on “Making Decisions,” click on the “Get Foundation.xls” button, right click on the word, “Here,” and save it to your computer. 

3.       Solo Rehearsal Simulation 

This is an individual practice session for the simulation (we will do our group activities later)

This assignment will give you a hands-on introduction to the functional areas of the simulation. At the end, you should have a greater understanding of the decisions required in each area (Research & Development, Marketing, Production, and Finance), and the interactions among them.

You will need to have downloaded the decision software to your computer before completing the exercise.

To begin, open
Foundation.xls .... in the pop-up menu, choose the option, “The Rehearsal Simulation”. Then enter your username and password. A "coach" will pop up to guide you through the rehearsal rounds. 

After you do this, simply post "I have done the assignment"

Assignment #3 - Team Practice Rounds – May 24


In this assignment, your team will start the process of making decisions, just like in the competition rounds, but since it is just practice, it won’t count. So, take this time to organize your team and run through some tactical movements before the competition rounds start.  

1.       Determine the organizational structure of your company. (With the small teams that we have in this class you may just want to work together...)  

2.       Download Foundation.xls from your Internet account by clicking on “Making Decisions.” If you have already downloaded the software on that computer, you do not need to do it again. The Foundation.xls file only needs to be downloaded to your computer once.

3.       Open the Foundation.xls file. When you get the box with 4 options on it, choose the first one "Latest decisions taken directly from the website." Once the file loads, on the top menu, click "Strategy" and begin making decisions for the different departments of your corporation ... (It is advantageous to go in the order that they are listed (Research & Development, Marketing, Production, and Finance) and then check back over the earlier ones after you finish.

4.       Save decisions and exit spreadsheet. Click on the top menu, "File" and "Save Decisions." It is best to save "Directly to the website" otherwise, they are not official. When you are ready to exit, click "File" and "Exit Foundation"  

5.       This assignment entails just starting the Practice Round ... then summarize your 1st decisions in a paragraph, and post the paragraph  

Assignment #4 - Situation Analysis – May 24 

You can do this as a team!! This assignment requires the completed information from the Situation Analysis (Chapter 4 of the Team Member Guide).  So … 

A.             Do the Situation Analysis (a  team project)

The Situation Analysis has five areas: Perceptual Map, Demand Analysis, Capacity Analysis, Margin Analysis and Consumer Report. You can divide the areas any way you wish ... choose an analysis that interests you, or if you prefer, assign the tasks based on each team member’s functional areas … or …. You can do them all as a team.

The R&D Department can complete the Perceptual Map (new and revised products will not sell if they are not inside a segment circle)
• The Marketing Department can calculate the Demand Analysis (understanding current and future demand levels is crucial for accurate sales forecasting)
• The Production Department can do the Capacity Analysis (understanding the costs associated with purchasing new Capacity and Automation is extremely important)
• The Finance Department can look at the Margin Analysis (cash from operations is factored into the balance sheet)
• The R&D and Marketing Departments can complete the Consumer Report (poorly perceived products can be revised, priced more aggressively or promoted more heavily)

If you divide the work, gather as a team and share the results once the analyses are completed. Overall, the Situation Analysis will give you an idea of where the market currently stands and where it will go.


B.          Answer all of the following (this is an individual project, to be turned in separately):

1. On the Perceptual Map, all segments drift to the lower right. Which segment drifts at the fastest rate? Which drifts at the slowest?

2. Each Segment’s Ideal Spot shows the buyer’s preferred coordinates within the circle. Why is the High End Ideal Spot to the lower right of the segment center? Why is the Low End Ideal Spot to the upper left of the Low End segment center?

3. Explain how increasing First Shift Capacity can reduce per unit labor costs.

4. Automation reduces per unit labor costs but it has two disadvantages. What are these?

5. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the Customer Buying Criteria, how would you increase margins for a Low End product? How would you increase margins for a High End product? Hint: The criteria can be found in the
Foundation Fast Track Market Segment Analyses (and on page 13 of the Team Member Guide).

6. The
Consumer Report indicates how customers perceive your product offerings. For example, Reliability (MTBF) is very important to Performance customers. What is the current MTBF for your Performance product? Given the desired range for Performance customers (found in the Buying Criteria) how many hours would it need to be raised to receive a Good on the Consumer Report? 

Assignment #5 - Outline Your Strategy ... & ... Choose “Success Measures”  – May 25

You can do this as a team!!

A.         Strategy

At the beginning of the simulation, your team faces an unusual business situation – all companies and products are identical to each other. In the real world this situation rarely if ever occurs. The closest analog might be a highly regulated industry.

Looking into the future, the simulated industry will rapidly differentiate. Nothing you can do will stop it. Given time, the industry will evolve into a state where competitors occupy defendable strategic positions. There are two important questions. “How long will the process take?” “Will two or more competitors attempt to occupy the same position?”

Let’s use an analogy. Picture a flat landscape. Now imagine several hills placed on the landscape. Each of the hills represents a strategy. Your success depends upon how quickly you can identify a hill, and how high you can climb it. Your hope is that you will choose a hill that nobody else picks, and that you can defend it against competitors. Complicating this is the fact that some hills are more attractive than others. Further, the more companies trying to climb a particular hill, the more difficult it is for each of them to successfully climb it.

Are there methods and techniques that will help you identify and select these strategic hills? Yes, the general topic is widely discussed. In class we will look at one of the most commonly referenced, Michael Porter’s "Generic Strategies"

Next, review the short tutorial on the Capsim website titled,
“Strategies and Mission Statements”. Tutorials are in the section titled "Resource Material" on your "Welcome" page. (This material is also on Pages 36 & 37 of your book)


With this as background, select or develop a strategy you would like your team to pursue. Prepare and post an argument for your strategy. The argument should address these issues:

1.             Segments. Which segments matter to you? How much share of those segments must you achieve to be an “average competitor” in the overall industry? For example, if you choose to play only in Traditional and Low End, you would have to command a higher share of those segments to achieve “average industry sales”.

2.             Profit potential.

3.             The speed at which you can create a defendable position. For example, new products typically take two years to bring to market. Significant productivity improvements could take several years.

4.             Priorities. Which products are most important to you? Which are least important?


Now that you have chosen your “strategy”, now let us choose our success measures …


 B.         Success Measures

What success measures should be used by your stakeholders to assess your company’s performance? What are their relative importance to each other?  The simulation offers 8 success measures:

1.       Cumulative Profit

2.       Ending Market Share

3.       Average ROS

4.       Average Asset Turnover

5.       Average ROA

6.       Average ROE

7.       Ending Stock Price

8.       Ending Market Capitalization

You will find a brief explanation for each measure on the website under “III. Simulation” “Success Measures”.

Prioritize these measures by applying a weight between 0% and 40%. The percentages across all measures must add up to 100%. For example, you might set Profit to 30%, Market share to 20%, ROS to 10%, ROE to 10%, Stock price to 10%, and Market Capitalization to 20%.

Given your measures, the simulation will score all teams to develop a winner by your criteria.

The scores for each team are generated using a three-step process:

1.       A raw score for each success measure is determined. Each team gets 1 point for itself. Teams get an additional point for each team they beat (participant or computer managed). There will be times when the first and second place team for a measure are very close. Nevertheless, the first place team will always receive a score of 6 and the second place team a score of 5. For example, if your team had top ROE, you would get 6 raw points for ROE.

2.       An adjusted score for each measure is created by multiplying the team's raw score by its success measurement weight. For example, if you weighted ROE at 20%, and it was first in that category (scoring 6 raw points), it would receive 1.2 points.

3.       The adjusted scores for each category are added together. Your resulting score will always be between 1 and 6.

Write an explanation for your choices for each success measure:

1.       Is this measure appropriate for evaluating your strategy? For example, if you are in every segment, market share is appropriate. If you are in only two segments, it is not appropriate, even if you have highest overall market share at the moment.

      2.      Why did you prioritize it with the value you gave it? In particular, if you think it is an appropriate measure, why? Likewise, if you think it is marginally appropriate, why? 

 Input your Success Measures

Assignment #6 - Competencies and Competitive Advantage –    May 23

You can do this as a team!!  In this assignment we examine the capabilities your company needs to develop to deliver its strategy. We assume that your team is about to have a meeting to set long range priorities around performance capabilities. This assignment is pre-work for that meeting.

At this point you have a strategic direction. For example, you might be saying, “We plan to be a high technology company. We will concentrate our resources upon the High End, Performance, and Size segments. We will compete based upon differentiation.” Or you might have decided to be in every segment and compete on price, or any of a dozen other combinations of vision and strategy.

But what capabilities do you need to develop to execute your strategy? For example, it is one thing to say, “We will compete on price”, and another to build a company that can effectively compete on price and still produce a solid return for stakeholders.

Let’s relate two popular ideas, “Core Competence” and “Competitive Advantage”, to your situation.
We will talk about these in class!

You could develop competencies in awareness, accessibility, product redesign, product invention, automation, plant utilization, human resources, cash flow management, and forecasting. All of these competencies take several years to develop.

You would use these competencies to develop competitive advantages. For example, competencies in automation and human resources could lead to a competitive advantage in cost leadership. Competencies in awareness, accessibility, and design could lead to a competitive advantage built upon differentiation.

With this as background, present an argument for your firm.

    1. What are the top three competencies you believe necessary to execute your vision and strategy?

    2. What decisions do you need to make to develop these competencies?

    3. How will they produce a competitive advantage?

Assignment 7 -  Cancelled ../

 Assignment 8 - Mission & Vision Statements  - June 2

You can do this as a team!!  In this assignment we will develop a mission and a vision for your company. First prepare a mission statement for your firm. 

Next prepare a vision statement for your company. The statement should present as accurate a picture as possible for your company at the end of the simulation a few “years” from now. It is not important that the statement read well – that is, we are not looking for something like a polished public relations statement. A list of bullets might be best, so long as it provides clarity to all team members. It is also appropriate to say what you will not be.

Here are some questions you can reflect upon to bring your vision into focus.   (Although since it provides a VISION you need not include all of these items nor be technical or specific in any area..)

1. By segment, how many products will appear in the segment?

2. What will our capacity and automation levels be in each segment?

3. How much money will we have invested by the last round?

4. What will our financial structure look like? The financial structure is everything on the right hand side of the balance sheet. Fundamentally, it summarizes how much of the assets were funded by debt holders and equity holders. You can get the financial structure you have today by looking at your “Annual Report”. On the right hand side of the Balance Sheet, you will see your financial structure in percentages. To determine what sort of structure you want, you can ask several simple questions.

    a. What mix of long term debt, stock issues, and retained profits do we need to grow the company?

    b. Do we want to keep profits or pay them out as dividends?

    c. Do we want to pay off our debt to avoid interest payments?

5. Are we biased towards cost leadership or differentiation?

    We will (have) talk(ed) about Mission and Vision statements in class ...

Assignment 9 - Financial Structure Policy Statement - June 7

You can do this as a team!!  Given the success measures you selected earlier in the course, and your current strategy and vision (which may have evolved considerably since your original strategy was set in Round 1), state your financial structure policy for the remaining rounds.

By this point in the simulation you have probably achieved your most important strategic goals. Chances are good that you are beginning to spin off significant cash. How will you apply this towards your capital structure?

As an observation of the real world, when presented with large cash flows, managers prefer to spend the money rather than give it back to shareholders. They might enter a new market, buy a promising start-up, acquire a competitor, splurge on a corporate jet, or push for higher salaries and bonuses. Investors generally resist such moves, using success measures and the authority of the board of directors to keep management in check.

The struggle between management and owners varies from company to company (Remember we talked about agency theory). A major factor in the outcome is the degree to which ownership is concentrated. Your situation in the simulation would be comparable to a wholly owned subsidiary or to a company with a very large voting block of conservative stockholders. You cannot do any of the things managers love to do. Instead, you must maximize the wealth of the owners.

“Financial Structure” is simply the Liabilities and Owner’s Equity side of the
Balance Sheet expressed in percentages. Given your success measures, what should your financial structure be? Why?

    1) List your success ratios and the priority weights that you gave to them.

    2) What should your
Accounts Payable policy be? Accounts Payable is debt. You are leveraging your vendor’s money. However, at 30 days they withhold deliveries and production falls by 1%. Your production costs go up as workers stand idle during parts shortages. At a 60 day policy production falls by 8%. At a zero day policy there are no shortages. Given your measures, what should your AP policy be?

  3) Current Debt is typically used to fund Inventory and Accounts Receivable. However, those accounts could also be backed by Retained Earnings. Given your measures, what should be your policy towards Current Debt?

4) Long Term Debt is used to fund Plant and Equipment. However, you could use equity (Common Stock plus Retained Earnings). If you eliminate Long Term Debt, its interest payment will disappear, and earnings will go up. However, the profits used to pay off the debt essentially went into the bondholder’s pocket. You could pay dividends to shareholders instead.

5) During these last few rounds the market continues to grow. Chances are you will make significant investments in new plant and equipment. Will you fund these with Long Term Debt, Stock Issues, or Retained Earnings?

Assignment #10 - SWOT Analysis - June 8

Please do this individually.  In order to assess your firm, do a SWOT analysis (we will talk about this in class)Specifically, I suggest that you look at the latest “Foundation FastTrack” and your "Annual Report".  You may want to list the four SWOT headings, and fill in your information under these headings.

Look at the big picture first, using the Perceptual Map, the Market Share Report, and the Summary Page, on the “Foundation FastTrack” As you spot something, make an entry in one of the categories.  For example “Ferris has just invented a new product in High-tech” .... (sounds like a threat” to me…)

 Next (still on the “Foundation FastTrack”) go through the High & Low Tech Analysis pages, perhaps looking at the overall rivalry, survey scores, awareness, and accessibility. For example here, “Our standard Low-Tech product has higher accessibility than our competitors” ... (sounds like a strength here...).

 Next (still on the “Foundation FastTrack”) look at the at the Production AnalysisMaybe examine capacity, automation, plant utilization, inventories, and margins.  For example, “The Able product’s margins are very large” (possibly an opportunity for you …assuming that the Able product is yours, of course)

 Next (still on the “Foundation FastTrack”) look at the Financial Analysis, and the financial structure of your company and of your competitors.  For example, “Interest payments are consuming my company”(A certainweakness)

As I mentioned before, your "Annual Report" can also be helpful in this endeavor ... along with the other "reports" that you get when you click "reports" or anything other material that is helpful ...



Assignment #11 - Competitor SWOT Analysis


Choose one of your "Foundation" competitors. (Make sure that each member of your team is analyzing different competitors).

Do a
SWOT analysis on one of your competitors:

    1. Give a short description of their current strategic position -- products, segments, plants, capital structure, source of competitive advantage, etc. Consider their product line from a “consumer reports” standpoint
(strengths and weaknesses).

    2. Assess their current
opportunities and threats. Given the segments they have settled upon, how big could their sales volume get? What is the profit potential? Can they maintain a competitive advantage?

    3. Predict their sales and profits for the ending year of the simulation.

    4. Indicate the success measures this team should use to assess themselves