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Welcome back to
the most recent edition of my Capsim guide. I am Dr. Larry Chasteen, sharing insights derived from
my involvement in the Capsim Foundation Challenge across both undergraduate and graduate
strategic management courses. Capsim's simulation functions as a valuable educational resource,
offering students a peek into the intricacies of corporate management. Many participants in this
business simulation challenge have earned top rankings in global tournaments.
If you are immersed in Capsim and have perused my prior blog (if not, I recommend starting with
Capsim: How to Win), you have likely delved into strategic decision-making within your game.
Recognizing the initial challenges that may accompany diving into the simulation, my advice is to
remain patient and foster open communication with your team members. It will become more
manageable over time. The last thing you should contemplate is abandoning your efforts; you have
invested time and effort into establishing your enterprise and making initial decisions. Persevere;
success is within your grasp!
**Understanding Forecasting:**
Forecasting involves predicting future sales based on past data. In Capsim, accurate forecasting
empowers players to make well-informed business decisions, resulting in substantial profits without
resorting to emergency loans.
- **Best-Case Forecast:** Prepare for the optimal scenario to mitigate the risk of stockouts.
- **Worst-Case Forecast:** Anticipate the worst-case scenario to mitigate the risk of emergency
loans.
Refer to the forecasting chapter in the team member guide for comprehensive insights into these
approaches and the best/worst-case forecasts. Furthermore, Professor Jeff Caneen from BYU-Hawaii
provides a detailed forecasting video explaining these techniques.
Maintain a spreadsheet to track customer ratings annually; it provides valuable insights into your
product's performance compared to competitors'. Analyze this data meticulously to gauge your market
share percentage and forecast market growth. Adjust production and inventory levels accordingly. In
instances where product shortages are predicted, prioritize maintaining inventory to capitalize on
selling opportunities and avoid conceding market share to competitors due to stockouts.
Striking a balance between inventory levels is crucial; excessive inventory poses cash flow
challenges, potentially leading to emergency loans. Plan to borrow slightly more than anticipated from
the outset to create a cash cushion of $8 million to $10 million.
I trust this guide equips you with the tools to leverage forecasting effectively in the Capsim
simulation, facilitating your journey to success. Embrace the learning opportunities presented by this
simulation; its challenges mirror those encountered in the real-world business landscape.