Capsim Guide - Capsim 2021 - Tip 10 Tips To Win All Rounds - Part 4
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Can you elaborate please regarding the order of the segments you chose to add products to? I mean why first low end segment, then traditional and lastly high end?
LOW END - HIGHEST MARKET SHARE, SALES AND ALSO HIGH GROWTH, CHECK COURIER REPORT TO SEE SALES VOLUME
TRADITIONAL - SECOND HIGHEST
ALSO THEY BRING GOOD SALES AND GOOD PROFIT (CONTRIBUTION MARGIN)
HIGH END, SIZE, AND PERFORMANCE ARE SIMILAR - 10% MARKET SHARE, NEED HIGH PRICE TO GET PROFIT
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Why we need to take a short debt ? What is the reason ?
IN EARLY ROUNDS, 1-2-3, NEED INVESTMENT FOR R&D, PRODUCTION CAPACITY INCREASE
NEED INVESTMENT
THEN USE STOCK ISSUE, LONG TERM LOANS
AND ALSO USE SHORT TERM LOANS IN ROUND 1-2-3 TO AVOID SHORTAGE OF CASH (IN CASE OF LOW SALES, EG. COMPETITORS DUMP PRICES)
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Why the new products are meant to be ideal for year 4 (why this year?!)? How this connects to our strategy?
NEW PRODUCTS WILL BE AT IDEAL SPOTS AND 1-2 YEARS OLD TO SELL WELL IN ROUND 4
ADD NEW PRODUCTS TO LEAD IN 3 SEGMENTS IS GOOD FOR BROAD DIFFERENTIATION STRATEGY
For HR decision- what is the reason for entering 40 h training and 3000 recruitment.
OPTIMAL IS 5000 AND 80 HOURS OF TRAINING
GOOD FOR LONG TERM, GOOD WORKERS, SAVE COST, INCREASE QUALITY
ALSO SAVE COST IN ROUND 1-2-3 THEREFORE USE 3000 AND 40
FROM ROUND 4 USE 5000 AND 80
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QUICK GUIDE & WINNING TIPS FOR ROUND 1
1. R&D add a new product in Low end, will start selling from Round 2, and double sales and profit from round 4-8, leading the game with sales and profit.
2. Marketing: reduce prices by $0.50
3. Promo and sales about 1.200 - keep close to competitors
For Low End use 2.000 to sell best, it has high sales volume
4. Production: If add a new product, NEED To add new CAPACITY for new Low End, about 500 and set automation 5.0
Increase automation of Traditional to 5.0, Low End to 6.50
Can sell surplus capacity of Traditional (-600) and High End (-300)
Can add capacity for old Low End (200)
5. HR use 3000 and 40 to save cost and gain profit, for round 1-2-3, from round 4 use max 5000 and 80 hours
6. Finance: Use 2 sources of investment, Issue stock max and max long term loans, can also use short term borrowing
7. TQM spend for all 10 initiatives, each 1000
Will have top sales and profit from ROUND 4, leading the games all rounds 5-8.
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QUICK GUIDE & WINNING TIPS FOR ROUND 2
1. R&D add a new product in Traditional, will start selling from Round 3, and double sales and profit from round 4-8, leading the game with sales and profit.
Update 4 old products
Do not need to update Low End and new Low End (if added in Round 1)
2. Marketing: reduce prices by $0.50 0 Eg. Traditional 29.00, Low End: 20.00; High End: 39.00, Performance: 34.00 and Size 34.00
3. Promo and sales about 1.400 - keep close to competitors
For Low End use 2.000 to sell best, it has high sales volume
4. Production: If add a new product, NEED To add new CAPACITY for new Traditional, about 400 and set automation 5.0
Increase automation of Traditional to 6.0, Low End to 8.0 and also for New Low End to 8.0 (if added from Round 1)
Can add capacity for New Low End (300)
5. HR use 3000 and 40 to save cost and gain profit, for round 1-2-3, from round 4 use max 5000 and 80 hours
HR is long term investment
6. Finance: Use 2 sources of investment, Issue stock max and max long term loans
Can also use short term borrowing to avoid Emergency Loan
From Round 6-7-8 can retire stocks and pay dividends, when having high sales, alot of cash and profit.
7. TQM spend for all 10 initiatives, each 1000
Will have top sales and profit from ROUND 4, leading the games all rounds 5-8.
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Note that this game requires all decisions cooperations.
Only R&D can not sell. R&D can improve products each round to meet customer or market demands.
Price is important for sales and profit. Good price can sell and bring profit.
Production is important for volume, BEP and cost reduction. Need enough capacity to meet demands and automation to reduce cost.
HR just spend 3000 and 40 in rounds 1-2-3 then increase to 5000 and 80 in rounds 4-8.
HR is long term investment.
Finance to get enough investment, and avoid emergency loans. Get good funds from stock issue, long term loans and even short term borrowings if needed in round 1-2-3
TQM for high quality and cost reduction.
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Note in advance:
- This is long term strategy game with 8 rounds (Practice may have 4 rounds)
- Round 1-2-3 focus on investment, R&D, new products development, promo and sales, increase production capacity, automation.
Therefore will have good sales and some profit.
- From Rounds 4-8, will lead the game with top sales and profit.
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Quick question, why do we not want to issue stock??
Your team has high sales and profit now. Enough cash for investment
So do not need issuing stocks.Round 7-8 can buy back stocks and pay dividends to get higher stock price and EPS
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Can you explain the reason for the numbers in buy/ sell capacity
Most effective production is 150% capacitySell surplus capacity to invest in other productsBecause products are sold independently
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What strategy for CompXM
We use Broad differentiation strategyFocus on 4 segmentsHigh quality good priceWill have high sales and top profit.
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Should I quit Buddy (Size) product
My suggestion:- This is long term strategy game.- Zero sum game. It means if you do not sell, competitors will- If you leave or retire a product, competitors will sell more, and push your market share down, and also push your stock price down
* So, keep it, all products will bring good sales and profit all rounds 4-8.
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Note in advance:
- This is long term strategy game with 8 rounds.
Rounds 1-2-3 focus on R&D, Promo and sales, Production expansion...
therefore will have good sales but some profit
Lead the game all rounds 4-8 with top sales and profit.
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Note in advance:
If you did not do well in round 1. You will Need rounds 2-3 to fix R&D, update products, new products development, promo and
sales, add new production capacity
Therefore, round 2-3 will have good sales but low net profit (or small loss)
Rounds 4-8, will have both high sales and profit, leading the game.
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OVERVIEW OF STRATEGY
We apply broad differentiation strategy.Focus on all five segments, more on Low end, traditional and Performance segment, because they have higher sales and growth and profit.High products quality and good prices.
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COMPXM OVERVIEW
We apply Broad differentiation strategyFocus on all the four segments
Also add new 4 products in 4 segments to double sales and profit (because products are sold independently)
We use strong promo and sales in round 1-2-3 and back to 1.400 in round 4 when products reached 100% customer awareness and accessibilityFor production, we increase production capacity, update automation to 6-8-10 for Thrift , 8 for Core and maintain 6 for Nano and elite
Gaining high sales and profit in rounds 1-4, top sales and profit in rounds 3 and 4.
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Change MTBF for all our products to the maximum amount we can.
Does that have a low R & D cost, and just boost sales/market share?
The thought is just that it's an extremely cheap demand upgrade. The extra R&D cost is trivial if you're already revising that product (which you must for everything except Low End). And the extra unit cost is cheap: there's only a $1.50 per unit manufacturing cost difference between minimum and maximum MTBF. And for that cost you get 7-53 raw demand points which is a huge bargain in pretty much every segment (less so in traditional and low-end, but even then it's cheaper than cutting prices).
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I'm on round 4 now, what do you suggest doing for TQM and if our awareness is now at 100% should we decrease our promotional budget?
TQM is very straight forward. When TQM comes in you want to invest $1500 the first year, then $1500 the 2nd year and $1000 on the 3rd year and stop investment after that.
Once you reach 100% awareness, tune down your promotion to $1400.
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Will automation affect right the year of update or next year
Automation has a 1-year lag. You don't benefit at all during Round 1, but you benefit a ton during Round 2. You should see contribution margins above 50% for Round 2, provided you don't slash prices.
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How to calculate Sales Forecast
Forecasting: (Last Year Segment demand)(Segments' Growth Rate)(Last years market share) = Forecast for next year
Production Schedule: (Forecast)*(1.15) - Inventory on hand
Buy/Sell Capacity Buy if 2nd Shift production > 50% Sell if 2nd Shift production < 20%
Borrowing Money Borrow in the following order until you reach 2.0 Leverage and 60 Days of working capital Stock issue > Current Debt > Long term debt
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