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Finance and Short-term Debt

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We are team Baldwin, and we used two main strategies while playing Capsim. We focused on being broad cost leaders, and we were aggressive. During the practice rounds, we did not do well because of our lack of knowledge of the simulation and also did not really take the time to make appropriate decisions. When the real decisions started, we wanted to be broad cost leaders; dominant in all segments of the market, which included: Baker, Bead, Bid, Bold and Buddy.

We were profitable, because we were competing against the other teams in all segments of the market. For this reason, we were able to compete against everyone and had captured 25.75% of the market share at the end of decision six.

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Additionally, we used an aggressive strategy; one of the ways in which we were aggressive was by taking on short-term debt. This strategy was more risky because we depended on sales to repay debt. If our sales forecasts had been wrong and we had not sold as much as we wanted, our team would have not been profitable because we would have not been capable of paying our short-term debt.

Due to the lack of team communication, we forgot to confirm our decision so the computer made the decision for us. As a team, we met and discussed exactly how we wanted to come back from the first decision. We decided to read the manual and make sure that each of us knew exactly how the simulation worked. Furthermore, we discovered that the simulation provided different strategies on how to play the game. We utilized our new knowledge in order to make profitable decisions. After decision one, we decided that we were not necessarily trying to win but were trying to come back from the first decisions. Since we were not focused on the competition, we focused on making decisions that would allow our company to be profitable. We invested heavily in research and development (R&D) and sales and promotions in order to have the best products and to recover from the first decision. Additionally, we focused on the customers’ criteria in all the segments in order to capture the market. At the end of decision two, we had acquired $19,098 of the short-term debt.

Our strategy seemed to have worked; however because of our investments on R&D, sales and promotions out stock price dropped to $17.11. During decision three, we continued to capture as much market share by investing on R&D, sales and promotion, and focusing on customers’ criteria. We launched a new product (Bull) in the high-end segment because it had a high growth rate, was not sensitive to price and would have a higher profitability. Because our strategy was profitable, we continued to make similar decisions for round four. Our new product, Bull, began selling in the high-end segment. Additionally after reading the manual, we discovered we could invest in Total Quality Management (TQM), which reduced labor costs, material costs, Selling, General and Administrative (SG&A) cost, and also increased product demand. In the manual, it said not to invest under $500 or over $2000, because those investments would not show profitability. We decided to invest $1,500 in all the different TQM options in the simulation and saw positive results. By the end of round four, our short-term debt was $25,345 and out stock price had increased significantly to $38.65. During decision five, we knew that the end was coming. We did not want to use any different strategies to try and catch up to the winning team, so we continued with our original strategy. We continued to meet customers’ criteria in all segments.

Additionally, we continued to meet our customers’ criteria in all segments, invested in R&D, sales and promotions, and continued to invest in TQM. At the end of decision five, we paid off some of the short-term debt and had a balance of $20,000. Furthermore during decision six, we continued to meet our customers’ criteria in all segments in order to capture the market. We continued to invest in R&D, sales and promotions and TQM and paid off short-term debt. At the end of round six, our company was very profitable with sales of $311,484,788 and profits of $42,887,086. Since our company was mature and well established, we issued dividends to stockholders. At the end of decision six, the company’s stock price was $108.73. One of the few things that we learned from Capsim was how to work well as a team. We were able to unify ourselves and work through different problems and at the end become a profitable company.

Additionally, one of the things that allowed us to be profitable and do well in the game was the fact that we focused on our company and not so much on the competition. After round one when we were not doing well, we invested all our time on trying to make our company succeed; we did not focus on our competitors. Because of this, we were able to focus on making the right decisions for the company. Furthermore, one thing that benefited our team the most was reading the manual the simulation had provided and becoming somewhat like experts on Capsim.

The manual provides different strategies and allowed us to make better decisions. The manual helps students become familiar with everything Capsim-related, from a basic introduction to the simulation, industry conditions, the Capstone Courier, forecasting, to six basic strategies in order to be successful.

Cite this Finance and Short-term Debt

Finance and Short-term Debt. (2016, Dec 06). Retrieved from https://graduateway.com/finance-and-short-term-debt/

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