In this part of the report the student reviews the Strategy, Tactics and Decisions taken by their team in the Capstone Business Simulation. The student evaluat

Carlos Henao Part 1 and Part 2

BCOMPS

Part One – In this part of the report the student reviews the Strategy, Tactics and Decisions taken by

their team in the GlobalDNA Business Simulation. The student evaluates the success of the Strategy

and Tactics used and of the Decisions taken using the results of both the performance and budget

products in the different markets they operated in.

In the Global DNA Business Simulation, my group’s strategy was mainly to be able

to position ourselves as market leaders from the start of the simulation by having great

products at reasonable prices. The way we decided to position ourselves in all markets

was by trying to conquer the European market at the beginning as well as keeping our

ground in the Americas to gain market control. As a group we decided to stay away from

the Asian market as we thought that the Asian market was very small and it would be best

if we keep it for our later rounds when the market was a little bigger and worth going into.

Our first decision was to only have 2 products, one for each of the segments. We

produced excellent quality products at competitive prices but we had issues with our

forecasts and costs. As many teams we learned from the practice rounds that going into

the international markets would have to be very strategic.

After moving into the first round we were able to see that our products had a good

customer satisfaction but our revenues and profits were lower than other companies in

the market. As we analysed why the lower revenues and profits we were able to see that

production costs were higher than others making our contribution margin lower. Also in

our analysis, we noticed that most of the companies had similar strategies with products

in all market segments/regions. With this being the case we decided to do two keys things

that helped us win, first thing was lowering the accounts payable from 60 to 30 days, and

the second one was to invest into automation to have a competitive advantage over the

other companies bringing our contribution margin into a much higher percentage in the

long rather than in the short run. Also, we noticed that there was available cash and that

many teams were incurring in emergency loans which gave us the possibility to invest a lot

in our assets.

We also saw that we needed to make changes in the company’s marketing and

pricing strategy. In the marketing department we felt like we wasted a lot of money which

resulted in lower sales compared to what other companies. When we saw this we thought

it was best to lower the amount spent in marketing but keep it at a decent amount in

order not lose product awareness and /or accessibility. When we hit round 4 and 5 we

were able to see the results of our investments and cost reduction in Marketing because

Carlos Henao Part 1 and Part 2

BCOMPS

we saw that we really reduced production costs which put us in a place where our

products were at reasonable and competitive price in all markets. At later rounds we were

able to see that if the sales and promo expenditures with the regional expenditures was

well distributed we would get great results to become market leaders. During the

simulation, we figured out we had to keep on producing more and better products to

keep selling more to gain more market share in each and every market were in.

At the end of the simulation we finished with four products, two of them focused

on the performance segment, one of them making it a hybrid product (both for

performance and budget segmenets) and one of them, our first product, in the budget

segment. The overall market share of our company was the biggest one of the simulation

among all companies, and we had an overwhelming control of the European market with

a very strong position in Asia. As far as the Americas, we had some issues with this market

but we were able to maintain a significant control and market share. Throughout the

rounds we actively made and offered the best quality products with the specs based on

what the consumer was demanding. This work very good for us because by having Able,

our budget product, as one of the segment leaders and introducing older performance

product in a grey area accessible for the budget customers, gave us the possibility to sell

more and gain more profits. Also, by having 2 products in the performance segment we

took away market share from our main competitors and increased our revenues. As far as

our hybrid product it helped us out as we were also able to compete with all the other

companies and taking away some of their market share.

The strategy of our company was great and it’s because we were able to climb up to the

first position after many errors. The success was due to the fact that we were able to adapt

and changed strategy in the beginning to the market needs and by taking advantage the

other companies mistakes, mostly in the in the financial department. The main reason of

our group result was due to the competitive advantage we had in automation, making us

obtain a bigger contribution margin in our products. This gave us the flexibility to adjust

prices especially with the currency exchange. Also, a key element was in our financial

department that gave us from the beginning the possibility to invest a lot in automation,

R&D and plant capacity without having emergency loans. The cashflows we had round by

round were usually very high compared to the others in the market which help us to focus

only in the operation and marketing of our products.

Carlos Henao Part 1 and Part 2

BCOMPS Part Two – In this part of the report the student identifies the differences in the competitive

environment between the GlobalDNA simulation and the Comp-XM one. The student analyses how

these differences could affect the success of the Strategies they had used in the GlobalDNA. On the

basis of this analysis and the experience gained from the GlobalDNA simulation, the student

identifies the strategies that could maximise their firm's performance in the Comp-XM simulation.

We are comparing both simulations by using concrete facts. As we compare both

environment we can see some differences that are obvious right of the bat. The first

differences that I was able to see is that the Global DNA you are competing with a total of

six companies where as in Comp XM there is only four companies you are competing with.

We can also see a difference in the markets, in Global DNA you start out in the Americas

already and you start to expand. When we see Comp XM we see that we are already in all

the other markets (America, Europe & Asia). We also see that the starting conditions are

the same for all six companies in Global DNA and for Comp XM we have different conditions

for all players. We can also see that there is already two existing products on Comp XM

where in Global DNA there is only one product you start with. One of the biggest differences

and may seem like a challenge is that Global DNA you have a total of 8 rounds to work with

and to recuperate in case something goes wrong. In Comp XM you have less of a window to

fix your mistakes. The biggest difference between the two is that Global DNA the companies

are managed by groups and at Comp XM is based on logarithmic execution.

Change in Strategy

The strategy will be different in Comp XM because there is a total different starting

point from what you started with. Now based on what we already have and what the

projections are my strategy will be investing in automation and slowly break into all 3

markets efficiently by not having too much inventory.

BCOMPS – Business Competency Simulation

Lucas Castro

Simulation Report Part 1 & 2 (draft)

Page 1 of 3

Introduction

GlobalDNA and Comp-XM are simulation tools used to reproduce real business situations. Both

platforms provide students with useful insights into business strategy creation based on foreseen

scenarios. During the simulation students can also discover the dynamics of various departments,

understand their relationships and how one affects another.

Part One During the GlobalDNA simulation, my team assumed the company Erie. We opted to pursue a

global broad cost leadership strategy. Therefore, our company entered all market regions and

maintained a presence in both budget and performance segments.

The company’s positioning strategy was based on price to gain and maintain a competitive

advantage in the Americas, Europe, and the Asia Pacific. Erie had to ensure that production costs

were kept to a minimum to sell at low prices without significantly impacting the contribution

margin.

Budget Segment Introduction of a single device to target price-sensitive customers in all regions. The product was

updated regularly to meet ongoing customer expectations. No introduction of new devices in the

subsequent rounds.

What Went Well

✓ The selling prices of the budget devices were low in comparison to those offered by the

competitors, which in exchange boosted the global demand.

✓ We successfully forecasted the product demand; consequently, the inventory level was

managed effectively.

What Went Wrong or Could be Improved

▪ Low investments in marketing activities hurt overall customer awareness and

accessibility.

BCOMPS – Business Competency Simulation

Lucas Castro

Simulation Report Part 1 & 2 (draft)

Page 2 of 3

▪ More investments to increase plant capacity and automation could have helped cut

production costs and increased the company’s contribution margin.

Performance Segment Like the strategy in the budget segment, it was launched only one device in the performance

segment. The frequent updates of the product’s technical specifications were the main tactics

used to decrease the perceived age by customers and keep the product at the ideal position.

What Went Well

✓ No significant investments in R&D to develop a new device permitted us to keep costs

down.

✓ The addition of region kits in the Americas, and Europe helped boost demand.

What Went Wrong or Could be Improved

▪ Selling prices could have been set higher since competitive prices seemed not to affect

the customer purchasing intention in this segment

▪ The introduction of a new device in the preceding rounds could have drastically reduced

the perceived age by customers.

Part Two Six different teams competed during the GlobalDNA simulation. The simulation lasted eight

rounds hence lasting longer than the Comp-XM simulation. Therefore, it would be safe to say

that the first simulation permitted some flexibility in terms of decision-making to the teams. In

the Comp-XM simulation, you assume the company Andrews that competes with three other

companies. The simulation lasts only four rounds, and this may infer that decisions should be

made wisely, the strategy should be created at the earliest possible and special focus should be

given to short-term wins.

BCOMPS – Business Competency Simulation

Lucas Castro

Simulation Report Part 1 & 2 (draft)

Page 3 of 3

Next Steps In the Comp-XM simulation, Andrews will gain a competitive advantage through a

differentiation strategy in both segments and enter all regions:

➢ Investments in R&D should support product design and innovation.

➢ Investments in promotion and sales should increase customer awareness and

accessibility.

➢ Plant capacity will be monitored, and units will be outsourced to meet additional demand.

➢ Automation level will be kept low to permit quick product updates.