Capsim Strategic Management Simulation: First Place. We simulated developing silicon wafers for 6 rounds representing 6 years. We chose broad differentiation as a a strategy. Even though I was CEO for round 5 & 6, I drove the strategy starting round 1
MC Construction Business Structure & Improvement, November 2010
Strategy Digby Mgt667 001
1. Digby
Shareholder’s Meeting: 2009 - 2015
MGT 667 – Strategic Management
Dr. Vinay Garg
Bandar Al Mogesib
Srinivas Damera
Srinath Jayarama Raju
Ihab Judeh
Finy Mathew
2. DIGBY
Mission Statement:
Offer premium products for the industry.
Our brands withstand the tests of time.
Our primary stakeholders are customers, stockholders, management,
and employees.
Strategy- Broad Differentiation:
Maintains a presence in all segments of the market.
Competitive advantage is gained by distinguishing products with an
excellent design, high awareness, and easy accessibility.
R&D competency is developed that keeps designs fresh and exciting.
Products keep pace with the market, offering improved size and
performance.
Prices are above average.
3. Strategy Implementation
R&D:
Our goal is to offer customers products that match their ideal criteria
for positioning, age, and reliability.
Maintaining a presence in all segments.
Marketing:
Our company will spend aggressively in promotion and sales.
Every customer should know about our superb designs, and find our
products easily.
Price at a premium.
HR:
Invest consistently in training workforce to increase productivity.
Maintain a mean and lean workforce.
Offer superior benefits, wages, and annual raise.
4. Strategy Implementation
Production:
Avoiding second shift/overtime when possible.
After products are well positioned, we will invest in high automation
levels to improve margins.
Keep up with segments as they move across the perceptual map.
Finance:
Finance our investments primarily through stock issues and cash from
operations.
When cash position allows, we will retire stock.
Measure performance in terms of market share, market cap, ROA, and
profits.
6. Key Decisions
R&D to improve our product.
Reposition High, Size and Performance to leading edge.
Repositioned Traditional to center of the segment.
TQM investment in Process Management
Concurrent Engineering – reduced R&D cycle time by
27%.
Lowered material and labor cost.
$6.5M in plant improvement.
Increased automation on traditional and low-end which was
financed by short-term debt.
7. Performance Measures
EPS = $(0.06) vs. Baldwin $(0.07)
CM = 31.2% vs. Baldwin 31.9%
Turnover Rate = 10.4% vs. Baldwin 9.3%
ROA = -0.1% vs. Baldwin -0.1%
9. Key Decisions
Investment in TQM ($10.5M):
3.61% increase in demand vs. 1.30% for Ferris
13% decrease in material and labor cost
Lowered the price in every segment.
Decrease in contribution margins
Improved customer survey scores
Labor negotiation
Increased wages, benefits, profit sharing, and annual raise
Increased labor cost and lowered margins for next round.
13. Key Decisions
Increased sales and promo budget ($25M) to increase
accessibility and awareness while investing in TQM ($9M).
Developed a new high-end product Dazey.
Did not buy sufficient capacity for 200% utilization.
Repositioned Dell (low-end) before other teams.
Competitive advantage of having a mature well positioned
product in later rounds.
Optimistic forecasting in traditional segment to gain market
left by Erie.
Inventory increased due to Andrews moving into the
traditional segment and poor positioning.
16. Key Decisions
Conservative Forecasting
Anticipated lower demand due to repositioning of Dell
(low-end).
Stock out due to Chester closing low-end production line.
Increased prices on all products to improve margins.
Priced new high-end product Dazey at $44.
Increased prices by $1 for all other products.
$17M in plant improvements.
Increased automation to 8 in low-end.
Financed using $15M in stocks, $2M short-term debt and
cash.
17. Performance Measures
EPS = $4.12 vs. Baldwin $7.11
EPS
$25.00
$20.00
$15.00
Digby
EPS in $
$10.00 Baldwin
Ferris
$5.00
$-
2009 2010 2011 2012 2013 2014 2015
$(5.00)
CM = 34 % vs. Baldwin 40.6 %
Turnover Rate = 8.5 % vs. Baldwin 10.3 %
ROA = 7.7 % vs. Baldwin 12.4 %
19. Key Decisions
$47M Investment in plant improvement.
Automation to 10 in traditional(+5.5) and low-end(+2).
Automation to 4 in all other segment(+1).
Lowered labor cost
Raised $35M cash through short-term and long-term debt
Increased annual raise for employees.
Increased labor cost for other teams
Lower margins
Positioning of traditional product (Daze).
To utilize the automation to the highest
21. Key Decisions
Reduce prices in all segment, except Size segment to increase
customer survey scores.
Continued R&D to improve high-end, size and performance.
Moved the products to leading edge for differentiation.
Forecasting for full capacity and production at 198% plant
utilization.
Avoided interest payment by retirement of debt.
Long term – $37M
Short term – $20M
Retired stocks – $10M
24. Performance Measures
EPS = $20.10 vs. Baldwin $13.99
CM = 46.1% vs. Baldwin 39.3%
Turnover Rate = 7.7% vs. Baldwin 10.5%
ROA = 29.3% vs. Baldwin 19.1%
Productivity = 107 % vs. Baldwin103 %
25. Digby 2016 and beyond…
Buy more capacity to meet future
demands.
Reduce labor and material cost by TQM
and increasing productivity.
Allow traditional product to mature before
repositioning.
Reduce prices without sacrificing margins.
Establish a dividend policy
$113M in retained earnings.
