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Capstone simulation

Discussion in 'Open Discussion (Work-safe)' started by DEBuckeye, Oct 19, 2004.

  1. DEBuckeye

    DEBuckeye It ain't easy, bein' cheesy.

    Has anybody ever done this in a business class or an MBA program? A lot of MBA schools use it.

    If you haven't heard of it, it's a web-based business simulation where you make decisions (R&D, marketing, finance, etc.) to run a business over the course of 10-14 weeks. The goal, obviously, is to increase sales and market share, leading to a profit. It's kind of like corporate fantasy football.

    I'd be interested to hear any experiences. I'm in it now, in round 4 out of 12.
  2. BrutuStrength

    BrutuStrength It's time to bring it!

    We had a shorter simulation (4-6 weeks) in an undergrad class. We went with the Walmart approach. We ramped up production, spent decent money on advertising, and lowered our prices. To stay ahead of our competition, we lowered our prices a little bit each week, so even though they lowered their prices, we remained lower or even. By selling more units, even at lower profit margins, we basically crusied to victory and we set a record with our earnings. We were also fortunate that we didn't get hit by a fire or other type of disaster.
  3. BIATCHabutuka

    BIATCHabutuka out of chaos comes playoffs

    did this at OSU MBA.

    pretty much everyone ramped up production and glutted the market. the team that won was the one buying the excess production capability on the cheap a few weeks in when everyone realized that they did the same thing.

    i think any contrarian strategy would be ideal.

    in hindsight i thought the best path to success would be to sell all of the imaginary assets at the outset insteadof participating in a bullshit scenario. at least then you wouldn't lose much cash.
  4. NJ-Buckeye

    NJ-Buckeye They Hate Us cuz They Ain't Us.. Banners are good Staff Member

    if its the same modeling I used, I had it twice... in undergrad and grad... in undergrad, I spent money on building manufacturing capacity in the first iteration.... NOT... I got killed... almost unrecoverable...

    the software model I used... was based on a traditional company startup strategy... grow by closely matching revenue & expenses...

    sounds like it could be the same... because I can definitely see why VGs scenario would work extremely well... the key to my model was to manage total costs in line with sales.. which really meant focusing on variable costs... the model penalized me for incurring fixed costs (because of sales volativity impact)... BrutuStrengths strategy would have worked in my model because it too is doing a good job of matching revenue with variable expenses.... its closer to what I did... but VGs winning team story is even reducing their variable costs by buying someone else's excess at discount.. that would have made my model scream...
  5. BIATCHabutuka

    BIATCHabutuka out of chaos comes playoffs

    i hated this exercise personally. very unrealistic i thought. it assumes everyone has equal products and service and that specific numerical benefits would flow from spending money in various areas.

    we lost lots of cash but at least we started the trend of selling our capacity off early and finished relatively well (well for a loser).

    i really think the best answer to this is to sell everything and invest the cash for short term interest rate gains and lock in a second or third place instead of placing your company in the hands of the simulator.
  6. NJ-Buckeye

    NJ-Buckeye They Hate Us cuz They Ain't Us.. Banners are good Staff Member

    that would be very interesting... it really could work... if I'm correct about how the model acts... you're getting rid of all fixed costs... and obviously variable... while still bringing in revenue... definitely fits the model...

    and permitting lots of time to go drink and not have to worry about the damn game
    DEBuckeye... see if the teacher is game for some extra credit activity... and would let you do two separate plays... VGs play should work... may not win... but it probably will be up there...
    Last edited: Oct 19, 2004
  7. BIATCHabutuka

    BIATCHabutuka out of chaos comes playoffs

    if you consider victory eaking out a profit (or the smallest loss because invariably there is one winner and a bunch of losers in a zero sum game) instead of finishing first i definitely think it is the way to go.

    to bring it back to football terms and jim tressel, it is the surest path to victory and probably the wisest decision.

    i would hate to go to my bosses and say that we risked our business on the whim of some computer simulation, instead i would be happy to say that i realized early on this was a bad business to be in and sold it out while i still could and returned approzimately all the value of the assets (plus interest minus the discount you sell at and minus the loss you incurred until you sold out).

    it is kind of smacking the game in its face though but i believe it is the right decision to not play.

    edit: actually i would sell all my assets for cash plus some token options from the buyer. that way i minimize risk and can profit from their success i hand to them on a silver platter.
  8. NJ-Buckeye

    NJ-Buckeye They Hate Us cuz They Ain't Us.. Banners are good Staff Member

    OK.. the truth comes out.. you got the answer from watching the movie War Games (Matthew Broderick and Dabney Coleman) a dozen times when you were a kid

    that strategy sure worked for a number of gazillionaires in the last decade or so.. like Cuban
  9. kn1f3party

    kn1f3party Junior

  10. BIATCHabutuka

    BIATCHabutuka out of chaos comes playoffs

    nice reference. never made the connection myself but it is right on point.
  11. NorthShoreBuck

    NorthShoreBuck True Madness Requires Significant Intelligence

    I did the same thing.

    I was big on marketing, we hired a sports star to promote our product.

    I hate to say it but we rotated the CEO position, it was team effort, and my Pepsico teammate outsourced manufacturing to a third world country and we made more money. I think we ended up third in a competition, if we would have outsourced earlier we would have done better.

    The trick with our program was to increase sales via marketing while cutting costs. We were eventually outbid for our sports star.

    Funny that capstone is used in different ways. I also had a end of MBA capstone project that was supposed to incorporate all that we had learned in the program. In that case we analyzed the local welfare to work organization to see how effective it was and make recommendations.

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