Capstone Business Simulation - Learnings

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Capstone is a rich, complex business simulation designed to teach strategy, competitive analysis, finance, cross-functional alignment, and the selection of tactics to build a successful and focused company. As part of our tragic and disastrous campaign as Digby, we have put our learnings in the form of a presentation to save ourselves from getting a C grade !!

Text of Capstone Business Simulation - Learnings

  • 1. M/s Digbys Business Strategy AnalysisBusiness Avenue, 4214, Postal code 80.250-210 / Singapore +65 3836 55 55 +65 9685 55 55| | www.SOS.com M/s Digbys Business Strategy Analysis

2. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Agenda Digby Company Profile Sensor Market in 2012 Current Scenario - 2016 Production Learnings Sales & Marketing Learnings Research & Development Learnings Finance Learnings TQM & HR Learnings 3. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Digby Company Profile 4. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis DIGBY Research & Devp (R&D) Production Sales & Marketing Human Resources (HR) Total Quality Mgmt (TQM) Finance Sidd Ravishankar Head R&D Varun Mahajan Head Production Robin Agarwal Head Sales & Mktg Shashank Shinde Head TQM & HR Shirish Bansal CEO & Head Finance 5. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Sensor Market in 2012 6. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Sensor Manufacturers in Market Market Share Market Cap No. of Products Markets Served Andrew 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Baldwin 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Chester 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Digby 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Erie 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Ferris 16.67 % $ 69M 5 Low, Trad, High, Prmn, Size Market Scenario - 2012 7. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Current Scenario - 2016 8. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Andrews 14% Baldwin 15% Chester 20%Digby 13% Erie 15% Ferris 23% Market ShareFinancial Statistics Sales Breakup 34.25 26.15 14.48 30.88 12.12 0 5 10 15 20 25 30 35 40 2010 2012 2014 2016 2018 Share Price Shar 9. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis DazeTraditional Segment DellLow Segment DaveHigh Segment DotPerformance Segment DuneSize Segment Digby Products 10. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Production Learnings 11. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Mr. Varun Mahajan Production Head We are looking at maximum market share after 4 years and we shall go full steam to increase capacity in the initial years. Hopefully we shall be able to take advantage of a growing market ! 12. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis FY 2012 FY 2013 Production - Learning # 1 Capacity should be increased only considering short term market growth and not long term market growth as it also carries depreciation cost Add fixed capacity in small increments as the demand grows ! 13. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Production - Learning # 1 All other players sold off capacity and hence had more cash at hand for investments. FY 2013 14. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis FY 2013 Production - Learning # 2 Conservative approach followed in selling off excess capacity FY 2014 Correct your errors in the first shot ! 15. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Production - Learning # 3 Due to cash crunch owing to excess spending on increasing capacity, Digby fell short of cash to Automate their plants resulting in lower contribution margin and higher costs in years to come FY 2012 FY 2013 Cost control is extremely important ! 16. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Production - Learning # 4 Poor Plant Utilization Ideal plant utilization - 198% of the plant capacity Digbys Plant utilization level was 72% in 2013 and increased to 160% in 2016 This showed Digbys over spending on plant expansion in the first years resulted in poor Asset Turnover Ratio 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 2013 2014 2015 2016 Optimum Capacity Utilization Industry Average Utilization Digby Average Utilization 17. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Production - Learning # 5 Poor Forecasting led to unsold inventory. Tradeoff between Stock Out and Inventory carrying cost was not calculated FY 2013 18. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Poor Forecasting led to unmet market demand as all companies had stock out Production - Learning # 6 FY 2015 Market Demand > 1.8 Total Capacity 19. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Sales & Marketing Learnings 20. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Sales & Marketing - Learning # 1 Higher Customer visibility comes at a price ! 100% Customer Awareness & 100% Accessibility 75% Customer Awareness & 75% Accessibility Less than 50% Customer Awareness & Less than 50% Accessibility 21. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Sales & Marketing - Learning # 2 The product with a higher Customer Survey Score (CSS) tends to outsell the others which have a lower CSS CSS Promotion Budget AR Policy Customer Buying Criteria Sales Budget 22. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Pricing needs to be done carefully within a band that attracts the customer Market will not accept your product if it is priced beyond a certain limit Sales & Marketing - Learning # 3 FY 2015 23. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Research & Development Learnings 24. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Research & Development - Learning # 1 Timely release of product is CRITICAL in gaining market share and competitive advantage FY 2013 25. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Research & Development - Learning # 2 Product positioning must be as per the needs/wants of the target segment FY 2013 26. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Research & Development - Learning # 3 Failed product transitioning in Dixie No R&D was conducted on Dixie under the expectation that it would drift into the Traditional market segment It ended up as an abandoned product which was a misfit everywhere Product Transitioning needs to be PLANNED in advance 27. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Research & Development - Learning # 4 R&D time depends on R&D being conducted on various products simultaneously Continuous improvements should be done on products every year FY 2016 28. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance Learnings 29. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance - Learning # 1 Higher the Cash at hand, Lower is the Risk to the organization! Poor prediction of cash at hand resulted in an Emergency Loan to Digby and Andrews Finance should not drive business, business should drive finance! - Prof Manish Agarwal However, business should also hear out Finance.. 30. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance - Learning # 2 Inventory Carrying Cost needs to be looked at as poor sales results in a high inventory carrying cost Also, inventory at hand results in a conservative forecasting often resulting in a STOCK OUT and lost market potential in the following year 31. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Mr. Shirish Bansal CEO & Finance Head We should follow our tradition of issuing dividends to our shareholders Im optimistic of an increased market share and increased stock price in the coming year 32. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance - Learning # 3 Digby paid 4 million as dividend and the same year Digby faced an emergency loan of 4.9 million Digby should have reinvested to increase the value of the firm as it did not have excess cash. FY 2013 Customer is my CEO, who pays my salary; but I am not a Slave ! Mr. Boman Moradian 33. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance - Learning # 4 Debt/Equity ratio should always be between 1.8 and 2.8 If the ratio is high one should go for equity and if the ratio is low one should go for loan A company with a high D/E ratio is seen as a risky company Debt is not necessarily bad ! 34. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Finance - Learning # 5 Long term loan should be used for plant & equipment purchase, capacity increase etc. for long term use Current loan should be taken to pay to suppliers or for short term use Wrong selection will lead to unnecessary interest Debt should be taken according to requirement 35. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis TQM & HR Learnings 36. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Human Resource Learning # 1 Productivity can be increased by: Continuous Manpower training Spending on recruiting to hire high caliber workers FY 2016 37. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Total Quality Management Learning # 1 No money spent on TQM initiatives in round 3 whereas the competitors in the industry invested heavily FY 2015 38. M/s Digbys Business Strategy AnalysisM/s Digbys Business Strategy Analysis Total Quality Management Learning # 1 In spite of spending on TQM in 2016, the demand for other companies products increased FY 2016 39. M/s Digbys Business Strategy AnalysisM/s Digbys Business