Capsim final report

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MGMT 4650 - 03 Strategic Management

Through the Capsim’s business simulation, we had an opportunity to understand business principles under the competitive environment. Each group managed a company that they must keep on a clear strategic path, build a product portfolio, manage costs, analyze the market, develop forecasts and make decisions in R&D, Marketing, Production, HR, Finance, and TQM.

Digby’s intended strategy was to dominate two to three product segments by using low cost and differentiation. With the given preferred customer price points and knowledge of the annual price decrease, our company remained firm in keeping products on the lower end of the price range. To differentiate ourselves and dominate the intended product segments, we planned to release a new product once the opportunity was given. In order to do this, loans were taken out early on to invest into R&D for current products and future development of new products. By doing so, we avoided the risk of running into emergency loans. We made sure to keep our products in stock and based our forecasting on market share and the growth of the market, utilizing automation and TQM.

Internal Analysis

Our team member strengths immensely contributed to Digby’s success. Mark and Dang would take the lead on R&D. Thai and Audrie would handle the marketing area. Zong and Jaspreet would take care of our company’s financials. We would come to decisions as a group, and would push each other in order to make the company better.

Strategy Implementation

The growth has been resounding and the future looks to be even more promising and profitable. Exhibit 5 shows how profitable our firm has been relative to our total assets. Our management team has efficiently used the assets at our disposal to generate earnings for all our investors. With much of the industry failing in this aspect, we thrived reaching a high of 35.34% return on assets while the industry dove into the negatives. Exhibit 6 portrays each company's stock price. With a trend of higher stock prices, our prior investors have been very pleased especially this last year where our share prices increased by $107.67.

The investment that we are needing is $100 million. With this extra capital, we will buy out Andrew and consolidate our products. The financial outlook of this firm is clearly visible. We have never looked for quick profits, but instead looked to continue our investments for the future, while generating industry leading profits. Our company is a clear front runner with respect to R&D, production, marketing, and market share. So investing in Digby is not a question of why, but more of how long will you wait before realizing that this company is going to continue to thrive and can be a very lucrative investment?

During our time running Digby we were successful. Although we were able to attain the highest market share overall while control 50% of the markets in High, Performance, and Size, however, we still have areas that we can make changes, allowing us to improve the health of Digby.

Successes:

Failure:

The biggest failure/challenge we faced was the forecasting sales. During the earlier rounds our management team noticed stock outs of certain product segments. Our team would always produce more product(s) we would stock out of, and conversely when we didn’t stock out of a product, we would cut back production. Forecasting correctly is important since there are two problems overproduction, labor and carrying costs. If, we could go back and redo anything, we would have forecasted a bit more conservatively, and would have trusted our calculations. IF we would have forecasted correctly, we would have been able to reduce unnecessary cost, which leading to increased profits.

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