15 Capstone® Computer Strategies
Many Tournament and all Footrace simulations include Computer Driven companies (see Section 2.3.3 Number of Competing Companies Within an Industry).
The strategies the Capstone® computer companies use are summarized here. The Capstone® Sample Business plans in Section 12, which instructors can distribute to students, parallel the strategies in this section.
Participant Teams are not required to follow these strategies. Unless instructors tell them otherwise, they are free to construct strategies of their own.
The Andrews computer team will adopt a Cost Leader with a Product Life Cycle Focus strategy, concentrating on the High End, Traditional, and Low End segments. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our "product life cycle" focus will allow us to reap sales for many years on each new product we introduce into the High End segment. Products will begin their lives in the High End, mature into Traditional, and finish as Low End products before they are retired and their assets harvested.
Reliable products for mainstream customers: Andrews brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management.
We will introduce a new High End product every 2 years and retire our Low End product when it becomes obsolete (falls outside the Low End segment circle). We will gradually phase-out our Performance and Size segment products (Aft and Agape). We will ultimately have a steady stream of products lined up along the High End, Traditional, and Low End segments.
The Andrews team will spend modestly on promotion and sales budgets in our targeted segments (High, Traditional, and Low). Our prices will be lower than average for those segments. For Aft and Agape: we will price at the top of the expected range and discontinue advertising & sales budgets as we retire these products. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility.
We will significantly increase automation levels on products we intend to keep for more than three years (Adam and Able) and spend the money necessary to set-up highly automated plants for our new products as they are launched. We will sell off the plants for Aft and Agape over the next few years.
We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0 and 3.0. We measure performance in terms of stock price, ROE, and ROS.
The Baldwin computer team will adopt a Differentiation Strategy with a Product Life Cycle Focus, concentrating on the High End, Traditional, and Low End segments. We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and new products. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand.
Premium products for mainstream customers: Baldwin brands withstand the tests of time. Our primary stakeholders are customers, stockholders, management, and employees.
We will reposition our Size and Performance segment products (Buddy and Bold) to the Traditional segment. We will allow our present Traditional segment product to become a Low End segment product as the segments drift. We will eventually introduce a new product to the High segment and will ultimately have two products each in the High, Traditional, and Low End segments. Our goal is to offer customers products that match their ideal criteria for positioning, age, and reliability.
The Baldwin team will spend aggressively in promotion and sales in our targeted segments (High, Traditional, and Low). We want every customer to know about our superb designs, and we want to make our products easy for customers to find. We will price at a premium.
We will grow capacity to meet the demand that we generate, avoiding overtime when possible. After our products are well positioned, we will investigate modest increases in automation levels to improve margins, but never at the expense of our ability to reposition products and keep up with segments as they move across the perceptual map.
We will finance our investments primarily through stock issues and retained earnings, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0. We measure performance in terms of stock price, ROS, Asset Turnover, and ROA.
The Chester computer team will adopt a Broad Cost Leader strategy, maintaining a presence in every segment. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our Cost Leader orientation will allow us gain a competitive advantage based upon low prices. Our products will keep pace with the market, offering improved size and performance. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run overtime (which we can also view as a second shift).
Low priced products for the industry: Chester brands offer solid value. Our primary stakeholders are bondholders, customers, stockholders and management.
We will keep our existing product line, maintain a presence in every segment, and work to keep our products up to date in each segment despite high automation levels.
The Chester team will spend modestly on promoting and selling products in our industry. Our prices will be lower than average. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility.
We will significantly increase automation levels on all products. However, because automation sets limits upon our ability to reposition products with R&D, we automate more in the slower moving Traditional and Low End segments than in the fast moving High End, Performance, and Size segments. We will prefer overtime to capacity expansions.
We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0 and 3.0. We measure performance in terms of market share, stock price, ROE, and profits.
The Digby computer team will adopt a Broad Differentiation strategy, maintaining a presence in every segment. We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, and easy accessibility. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand.
Premium products for the industry: Digby brands withstand the tests of time. Our primary stakeholders are customers, stockholders, management, and employees.
We will keep our existing product line, maintaining a presence in every segment. Our goal is to offer customers products that match their ideal criteria for positioning, age, and reliability.
The Digby team will spend aggressively in promotion and sales in all segments. We want every customer to know about our superb designs, and we want to make our products easy for customers to find. We will price at a premium.
We will grow capacity to meet the demand that we generate, avoiding overtime when possible. After our products are well positioned, we will investigate modest increases in automation levels to improve margins, but never at the expense of our ability to reposition products and keep up with segments as they move across the perceptual map.
We will finance our investments primarily through stock issues and retained earnings, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0. We measure performance in terms of market share, stock price, ROA, and profits.
The Erie computer team will adopt a Niche Cost Leader Strategy, concentrating on the Traditional and Low End segments. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our Cost Leader orientation will allow us gain a competitive advantage based upon low prices. Our products will keep pace with the market, offering improved size and performance. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run overtime (which we can also view as a second shift).
Reliable products for low technology customers: Erie brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management.
We will concentrate our existing product line into the Low End and Traditional segments. Eat and Ebb will serve the Low End segment. Echo, Edge, and Egg will serve the Traditional segment. During the early years we will migrate (gradually) our Performance and Size segment products (Edge and Egg) to the Traditional segment. We will allow Eat (Traditional) to slip into the Low End while Edge slips into the Traditional segment.
The Erie team will spend modestly on promoting and selling products in our targeted segments (Traditional, and Low). Our prices will be lower than average for those segments. While Edge and Echo are being repositioned, we will price somewhat below and discontinue sales budgets as we exit the specialty Performance and Size segments. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility in the Traditional and Low End segments.
We will significantly increase automation levels on our products. However, because automation sets limits upon our ability to reposition products with R&D, we will postpone automation for Edge and Egg until they arrive in the Traditional Segment. We will prefer overtime to capacity expansions.
We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0 and 3.0. We measure performance in terms of ROS, stock price, and ROE.
The Ferris computer team will adopt a Niche Differentiation strategy that focuses upon the high technology segments (High End, Performance, and Size). We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and new products. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand.
Premium products for the technology oriented customers:Ferris brands define the cutting edge. Our primary stakeholders are customers, stockholders, management, and employees.
We will keep our existing technology products (Fist, Foam, and Fume), phase out Fast and Feat, and introduce new technology new products in the High End, Performance and Size segments. Our goal is to offer technology oriented customers products that match their ideal criteria for positioning, age, and reliability.
The Ferris team will spend aggressively in promotion and sales in the technology segments. We want every customer to know about our superb designs, and we want to make our products easy for customers to find. We will price at a premium. In the low technology segments we will exit gracefully, harvesting our Fast and Feat products as they exit the Low End segment.
We will grow capacity to meet the demand that we generate, avoiding overtime when possible. After our products are well positioned, we will investigate modest increases in automation levels to improve margins, but never at the expense of our ability to reposition products and keep up with the high technology segments as they move across the perceptual map.
We will finance our investments primarily through stock issues and retained earnings, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0. We measure performance in terms of ROS, Asset Turnover, and ROA.