Capsim Presentation Speech PDF

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This is the speech that I wrote which went over the Capstone Capsim Simulation....

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The Capsim simulation is a very engaging way to learn about what makes a company work. We had to find the right combination of changes in research and development, marketing, production, finances, human resources, and TQM initiatives which would make us profitable. ***** The ultimate goal of us doing the Capstone simulation is to help us relate to what happens in the real world. We have to look at our competition to see what they are doing, then adapt and strategize to do things better than them and make better decisions, which is what happens in the actual competitive marketplace. The strategy I chose was Niche Cost Leader for Low Technology. I tried to transition all of my products towards the Traditional and Low End segments and keep my prices below average, which means that I had to find a way to decrease my materials cost, R&D, and production costs. ***** I did not perform very well in round 1. My sales decreased to $83,664,931. I took a loss of more than ($1.6M), and my contribution margin was the lowest of all the companies at 25.8%, which I believe is because of my position as cost leader. My stock prices took a big hit as well, dropping more than $10 to $24.21 per share. My market capacity, book value per share, and EPS also decreased this round. My cash position also fell, mainly because of the huge inventory expense, which caused me to require an emergency loan of almost $2M. My production was also less than my capacity, which didn’t help either. I issued some longterm debt in order to help my closing cash position, which did not help, because I ended up requiring an emergency loan. ***** I performed much better in round 2. My sales increased to $85,261,339. I had a profit of $4.3 million, and my contribution margin increased to 30.5%. My stock prices improved as well, increasing almost $6 to $30.16 per share. My market capacity, book value per share, and EPS also increased this round, and I was able to issue a small dividend. My cash position also improved this round, and I did not require an emergency loan. My production was more than my capacity, which also helped me out this round. I did not issue stock or debt in this round either. ***** I performed fairly well in round 3 as well. In this round, my sales slightly decreased to about $73 million. I had profits of almost $1.5 million, and I increased my contribution margin to 34.1%. My stock price also went up by $2.27 to $32.42. My market capacity increased again this round, but my book value per share stayed about where it was last round, and while my EPS was still positive, it actually decreased this round. I issued another small dividend this round as well. I did not issue stock or debt, and my cash position was not as good for this round, but I did not require an emergency loan. As in the last round, my production was greater than my capacity. ***** I did not perform nearly as well in this round as I did in the previous round. My sales decreased to almost $67 million, and I actually took a loss of about $850,000. Although my sales were not great and I took a loss, my contribution margin was still very good at 34.2%. My stock price dropped $8 to $24.42, and my market capacity, book value per share, and EPS also dropped in this round. I did issue another small dividend, but it did not help because I ended up taking a loss in this round. I took on long term debt because I was hoping to be able to fund plant and product improvements. Although my cash position wasn’t as bad as it was in the previous round, it was negative again, and I did not require an emergency loan. As in the previous round, my production was greater than my capacity again. ***** Even after improvements, I still performed horribly in this round. My sales decreased again to just over $63 million, and I took another larger loss of $1.5 million. My contribution

margin slightly decreased to 32.9% in this round. My stock price also dropped by almost $5 to $19.63. My market capacity, book value per share, and EPS all decreased in this round as well, which is mainly because of the loss I took in profits. Although my cash position was not as bad as last round, it was still negative, but I did not require an emergency loan. I did not issue stock, but I did take on long term debt again in this round to fund improvements in the final round. As in the previous round, my production was greater than my capacity. ***** After some improvements and careful decision-making, I finally saw some improvements in my performance. My sales drastically increased to over $91 million, causing me to have profits of almost $2.5 million, which is much better than previous rounds. Although I did much better in sales and profits, my contribution margin dropped to 26.5%, which I believe is mainly because of my position as a cost leader. My profits drove my stock prices up by $6.48 to $26.12, along with increasing my market capacity, book value per share, and EPS, enabling me to issue another small dividend. My cash position also drastically improved and I did not require an emergency loan again in this round. I did take on more long term debt because if we were going to continue the game, I felt as though I would need it for future improvements. As in the previous rounds, my production was greater than my capacity again. ***** I started out the simulation with a loss, but in the second round, I had almost $4.5 million in profits, which was my best round. I went downhill for the next couple of rounds, which was due to poor decision making, but I ended up bringing it back together in the end to make a profit of almost $2.5 million. ***** My sales stayed in the same range throughout most of the game, but in the last round I had my highest sales of almost $91.5 million. Looking back now, I think that if I would have been more strategic about my promotion and sales budgets, these numbers would have been higher. ***** As for my contribution margin, I started off not very good at 25.8%, and it increased over the next couple of rounds, peaking at 34.2% in round 4, then decreased back to 26.5% in the final round. I think the reason it was so low in the first and last rounds was because of my position as a cost leader for low technology. ***** My closing stock price was all over the place, but for the most part it kept up with my profits and losses. For the rounds I made a profit, it would increase, and for the rounds I took a loss, it would decrease. It peaked at $32.42, and at its lowest it was $19.63. ***** The main thing I learned from this simulation is that it is not easy or beneficial to do everything by yourself. It gets overwhelming when you have to make every single decision for every aspect of a company by yourself and not have any input from another person. Being able to relate the simulation to what actually happens in the real world was also a very important lesson that I learned. It was critical to be able to look at the competition and what they were doing and respond to their decisions based on what would be best for your company, which is what happens for successful companies in the actual competitive marketplace. Overall, this simulation was a valuable learning experience that gave me a chance to apply the skills and knowledge I have acquired through the course of my education and connect the dots to see the bigger picture of business management....