Capsim Final Report

The report focuses on comparing and contrasting the performance of my company in the

Capsim Simulation during practice and competition rounds. It aims to evaluate the results of

both stages individually and comparatively while highlighting the valuable learning

experiences gained throughout the process. I would acknowledge that the initial confusion

and excitement during the practice rounds, which led to disappointing results in the first three

rounds, later on become a strength as my mind cleared and the results improved with every

passing round. This helped in improving the company’s fate significantly as the company

reported great profits in the end with very little loan. Despite improvements in the final three

practice rounds, the company's fate remained unchanged, and positive cash flows could not

be achieved. However, the lessons learned during this phase proved beneficial in successfully

completing the competition rounds.

Speaking of the end results, the company reported highest ROS, ROE and highest ROA. So,

the company did well greatly, better than any competitor. This gave me immense pleasure and

satisfaction that I have learnt something that would help me in real life situations as well once

I step into managerial role in a real life company.

I made several mistakes during the practice rounds, particularly in failing to update products

appropriately. The decision to aggressively upgrade the product was not as fruiteful as I

thought because from 3rd round onward, I was not able to update appropriately impacting the

company's competitiveness. However, the introduction of Total Quality Management (TQM)

allowed for progress, leading to better results from the sixth round onwards. The report

acknowledges the company's excellent performance in the competition rounds, excelling in

profits and return on sales, but laments a slight lack in market share. I would also like to say
that the learning curve kicked in gradually during the final stages of the simulation which

helped improving my results.

I believe that in real life situation, the TQM initiatives would be available from the start, and

the simulation could have been more accurate by providing access to TQM from the first

round itself as compared to delaying it. In spite of this, the overall design and

comprehensiveness of the simulation was great and provided great deal of learning. The

experience gained through the Capsim Simulation is highly valuable for me that would

provide essential insights into managing a business and imparting lessons that will contribute

to my professional growth in the future.

The lesson learned from R&D in the practice round was effectively applied during the

competition round. Right from the start, I promptly upgraded all products, and the

implementation of TQM allowed for faster and more efficient upgrades, making the products

more desirable for customers. In practice round, I failed to introduce any new produce while

in competition rounds, I introduced one new product at the end, which was obviously very

late as I introduced it in the final round, which couldn’t contribute in market share. Despite

this effort, the overall market share remained very high due to maintaining higher margins on

sales, as the costs were also decreased significantly because of TQM initiatives. Nevertheless,

the performance regarding R&D in the competition stage was exceptionally satisfying.

During the practice stage, the company faced inappropriate marketing decisions, leading to

the less than potential market share right from the onset. The prices were set too high while

sufficient investment was made in sales and marketing, while the sales projections were

significantly off the mark. Although the sales remained steady throughout the simulation, in

fact increased steadily, however, it was never to its true potential. In would say that although
adjustments were made in the fourth round, the damage from the initial three rounds was too

extensive to fully recover in the final rounds.

The lessons learned from the practice rounds were effectively applied during the competition

rounds. Prices were aligned with the competition from the first round, and heavy investments

were made in sales and marketing to achieve 100% awareness and accessibility without any

negative returns. This successful strategy, combined with accurate sales projections, helped

control inventory holding costs and resulted in the highest sales in the market. Automation

decisions were initially panicked during the practice stage, delaying automation until the

fourth round and not selling excess capacity, leading to excessive stock at high labor costs. In

contrast, during the competition stage, appropriate decisions were taken from the start, selling

excess capacity in the first round and quickly increasing automation to optimize production

efficiency and cost.

Regarding Human Resource Management, I maximised the investment in both hiring budget

and training hours as soon as it was available. Again, in ideal situation, in real life, it would

have been available right from the start. However, still I achieved optimum results in both

practice and competition round and it was the main reason of top performance of the

company in the end. Investing in hiring and offering 80 hours of training per employee,

leading to increased efficiency. Total quality management decisions were made effectively in

both practice and competition rounds, with investments yielding reduced research and

development time, increased sales, and improved employee efficiency.

I would say that the decisions made in Finance Department were great right from the start.

This means, the company never needed any emergency loans while not having too much cash

surplus on the other hand. The company used an optimum combination of equity and debt

while short term loan was not used much, particularly in the final rounds. Moreover, adequate
dividends were also issued in the final rounds to ensure the company does not hold too much

cash.

Thanks to how course is planned, I quickly learned from my mistakes and implemented the

lessons in the competition rounds. From the very beginning, I ensured that I had sufficient

projected cash on hand to avoid the need for emergency loans. To achieve this, I utilized a

combination of equity capital and both long- and short-term debt. The practice stage also

taught me the importance of considering interest rates, and I took more long-term debt in the

earlier rounds, gradually redeeming long-term bonds in the final two rounds. This strategy

kept the finance cost at its lowest and contributed to maximizing the share price, a crucial

measure of performance for any commercial organization.

The entire experience proved to be highly educational, and I believe that the failures during

the practice stage were equally valuable, providing invaluable lessons in management that I

successfully applied in the competition stage. The opportunity to take on the role of a CEO

and manage all aspects of a company in a simulated real-life situation was enjoyable and

highly instructive. Throughout the simulation, I had to apply various business learnings and

continuously analyze different situations. This certainly improved my skills at least

theoretically and prepared me for real life business roles.

The simulation offered me a comprehensive understanding of how various operations in an

organization are interconnected. This knowledge was essential in comprehending the impact

of decisions made at different levels within the organization, enabling me to make more

informed choices. Being in the shoes of different managers, from research and development

to human resources and from finance to production, provided valuable experience and

practice in decision-making for each department. These tasks demanded critical thinking,
careful planning, and comprehensive analysis to ensure success, further enhancing my

learning process regarding the different functions of a business.

While the practice rounds prepared me for better decision-making, the competition rounds

allowed me to reflect on and reevaluate the decisions I made earlier. This process of

reflection is a powerful way to learn, as identified by researchers. This assignment, along

with the Capsim Simulation, offered excellent opportunities for learning through reflection.

Overall, both the Capsim Simulation and this final Capstone report were integral parts of the

course, enabling us to learn effectively within a condensed timeframe. Successfully

completing both components and outperforming the competition, including machines,

demonstrates the knowledge and experience gained from this course. I am grateful to the

professor for providing us with so much learning in such a short time, contributing to my

growth and development through this course.

Results Snapshot

Baldwin Chester Digby Erie Ferris

Andrews

ROS 15.34% 4.96% - 0.88% 6.65% 12.23% 2.67%

Asset
1.00 0.99 0.76 1.12 0.88 0.98
Turnover

ROA 15.31% 4.92% - 0.67% 7.48% 10.80% 2.62%

Leverage 1.49 2.23 2.38 2.11 2.10 2.18

ROE 22.88% 10.97% - 1.60% 15.78% 22.73% 5.72%

Emergency
$ 9,525,274 $ 0 $0 $0 $0 $0
Loans

$ $ $ $ $ $
Sales
123,305,463 234,077,093 153,119,931 286,928,537 207,430,664 223,015,826

Variable $ $ $ $ $ $

Costs 55,069,836 159,151,455 97,620,601 193,124,498 118,456,441 157,609,705

$ $ $ $ $ $
SGA
20,924,494 20,529,835 23,534,014 27,161,607 13,250,844 22,555,176

$ $ $ $ $ $
EBIT
34,250,380 33,320,291 11,886,471 45,430,702 54,352,061 23,765,906

Profit $ $ $- $ $ $ 5,957,266
 18,915,296 11,607,437 1,347,645 19,090,734 25,370,420

Cumulative $ $ $ $ $ $

Profit 66,667,222 56,392,128 41,662,738 59,915,595 62,438,004 44,582,518

Stock Price $ 80.22 $ 70.97 $ 49.09 $ 81.86 $ 92.55 $ 51.98

Market $ $ $ $ $ $

Capitalization 182,949,079 168,429,437 103,696,865 192,876,971 225,000,933 130,636,634

S&P Rating A CCC CC CCC CCC CCC

Working $ $ $ $ $
$ 8,165,071
Capital 29,641,199 16,151,955 45,167,393 37,139,637 34,875,449

Days of

Working 24.2 46.2 38.5 57.5 65.4 57.1

Capital

Free Cash $- $- $- $-
$ 2,365,363 $ 1,345,953
Flow 14,803,922 29,057,607 1,201,968 11,180,953

Plant and $ $ $ $ $ $

Equipment 185,840,000 234,800,000 218,000,000 233,500,000 241,500,000 198,700,000

$ $ $ $ $ $
Total Assets
123,553,191 235,935,777 200,428,136 255,107,855 234,965,827 226,979,303

Plant
183.10% 153.86% 104.99% 133.91% 174.68% 109.33%
Utilization
Traditional

Segment 15.83% 38.83% 5.45% 10.93% 28.95% 0.00%

Share

Low End

Segment 14.27% 20.25% 9.47% 15.51% 35.94% 4.55%

Share

High End

Segment 4.48% 16.46% 16.88% 19.45% 0.00% 42.74%

Share

Performance

Segment 8.94% 0.00% 18.62% 40.83% 0.00% 31.61%

Share

Size Segment
7.91% 0.00% 20.72% 42.57% 0.00% 28.80%
Share

Overall
12.01% 19.92% 11.78% 20.96% 20.89% 14.44%
Market Share

Complement 118 1035 691 1177 780 936

Overtime 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Turnover
6.40% 9.15% 9.39% 9.10% 9.39% 9.02%
Rate

Productivity 121.91% 106.55% 104.44% 106.09% 104.45% 107.78%

Index