BUSINESS SIMULATION REPORT

on

STRATEGIC DECISION-MAKING AND BUSINESS PERFORMANCE:

INSIGHTS FROM CAPSTONE 2.0 SIMULATION

Submitted in partial fulfilment of the requirements for the award of MBA degree

by

TEAM 19
MBA
Batch 2023-25

Under the Guidance of

Dr. Bhagawan Chandra Sinha Dr. Sapna Mathur

Associate Professor Assistant Professor

SHARDA SCHOOL OF BUSINESS STUDIES

SHARDA UNIVERSITY, GREATER NOIDA - 201306
1. EXECUTIVE SUMMARY
Our simulation experience with Capstone has been relevant and engaging, providing us a
platform for knowledge application and actionable feedback, inching us closer to being
“workforce-ready graduates”. Instead of passively receiving information through lectures or
textbooks, we could actively engage in immersive, real-world learning applications. This
allowed us to apply what we know in a controlled environment, bridging the gap between
theoretical knowledge and practical skills.
Over the preceding rounds, our team has made numerous strategic and tactical decisions across
various functional areas, including research and development, production, marketing, and
finance, that led to our company growing in leaps and bounds. The level of competition was
high after the trial rounds, with no single company completely dominating all market segments.
However, a highly successful simulation experience for our team during the competition rounds
resulted into a transition from a loss-making company initially to one with substantial
profitability and market leadership at the end.

KEY STRATEGIC DECISIONS AND THEIR IMPACT ON PERFORMANCE

Aggressive Investment in Research and Development (R&D): Andrews offered a diverse

range of products across all segments, with consistent revision of specifications in each round.
Our team also introduced new products like Ace in the Low-End segment (Round 4), Ant in
the Size segment (Round 4), and Ark in the Performance segment (Round 6). This continuous
product development allowed Andrews to better meet the evolving customer buying criteria
and demand in each segment, and its impact is evident in Andrews' strong market share across
all segments at the end of Round 8.
Strategic Capacity Management: Andrews consistently increased its production capacity
throughout the simulation. This expansion allowed our team to meet the growing demand for
its products and avoid major stockouts, while also contributing to increased sales revenue.
Effective Pricing Strategies: Andrews followed a well-thought out pricing strategy in line
with its long term objectives of market leadership and profitability. While our products were
competitively priced in the volume segments where we offered reasonably good specifications,
our products were priced at the upper limit in the niche segments where we offered
differentiated specifications. This allowed us to increase our unit sales and market share as well
as our profitability.
Significant Investments in Total Quality Management (TQM) and Human Resources
(HR): Andrews invested $70,000 in TQM and $40,000 in HR throughout the simulation
rounds. These investments had cumulative positive impacts, including significant reductions
in material cost (-11.8%), R&D cycle time (-73%), labour cost (-14%), and significant
increments in demand (24.4%), accessibility (30%), and productivity index (30%). These
improvements directly contributed to a higher contribution margin (59.59% in Round 8 vs.

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28.25% in Round 0), along with lower costs, faster innovation, and greater customer demand
as pointed out before, leading to increased profitability.
Efficient Sales and Marketing Management: Andrews significantly reduced its SG&A to
Sales ratio from 8.88% in Round 0 to 3.51% in Round 8, while simultaneously achieving
significantly higher sales ($673,529 vs. $101,073). This exemplifies a more efficient
allocation of sales and promotional budgets focused on maintaining high customer awareness
and accessibility for its well-positioned products.

PRIMARY LESSONS LEARNED

Importance of Customer Focus and Market Adaptation: Continuously monitoring

customer buying criteria and adapting product offerings through R&D is crucial for long-term
success. Andrews' ability to reposition and introduce new products that aligned with evolving
market needs was a major driver of its growth.
Strategic Investment in Capabilities: Investments in TQM and HR can yield significant
competitive advantages by reducing costs, improving efficiency, accelerating innovation, and
increasing demand. These are not short-term expenses but strategic moves that build a strong
foundation for sustained performance, as outlined in the previous section.
Balancing Growth and Efficiency: Expanding production capacity to meet demand is
important, but it must be managed efficiently to avoid excess capacity and to control costs.
Similarly, managing SG&A effectively ensures that marketing efforts translate into sales
without excessive overheads.
Financial Discipline and Long-Term Vision: While initial losses might occur (as seen in
Andrews' Round 1 performance), a long-term vision focused on strategic investments and
market leadership can lead to substantial profitability and shareholder value, as demonstrated
by the company at the end of Round 8.
Competitive Analysis: The varying performance of competitors (Baldwin, Chester, Digby,
Erie, and Ferris) underscores the importance of understanding competitors' strategies and
market positions to inform one's own decisions. For example, the continuous changes in market
share indicate a dynamic competitive landscape where continuous adaptation is necessary.

2. INDUSTRY & COMPETITIVE LANDSCAPE

The simulated industry environment involves six competing companies: Andrews, Baldwin,
Chester, Digby, Erie, and Ferris. These companies operate in a market divided into five
distinct product segments: Traditional, Low End, High End, Performance, and Size. The
competition within this environment is driven by the need to gain and maintain market share
in each of these segments providing learning experiences that are more aligned with the

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"realities of the business world. Success in this environment requires us to make strategic,
cross-functional business decisions in a dynamic and competitive market.
Key features of the simulated industry include:
Differentiated Customer Preferences: Customers in each of the five segments have specific
buying criteria. This also include varying levels of importance for product age, price,
positioning (based on performance and size attributes), and Mean Time Before Failure
(MTBF).
Product Positioning and the Perceptual Map: Products are strategically positioned within
the market based on their performance and size attributes. Companies must decide how to
position or reposition their products to appeal to their target customers.
Evolving Market Dynamics: The demand for products in each segment is subject to growth,
with different "Demand Growth Rates" projected for upcoming years. This indicates that the
relative attractiveness and size of these segments will change over time, requiring companies
to adapt their strategies.
Financial Performance and Capital Markets: The success of each company is measured
through a range of financial statistics, such as Return on Sales (ROS), Return on Assets
(ROA), Return on Equity (ROE), Sales, and Profit. The varying stock prices, bond yields,
and S&P ratings reflect the market's assessment of each company's financial health and future
prospects.
Workforce Management: The "Workforce Summary" provides data on employee numbers,
turnover rates, and productivity indices for each company.
The overall simulated industry environment is designed to be an immersive, hands-on learning
experience that allows us to operate and grow a multi-million-dollar company in a risk-free
environment. Ultimately, Capstone's simulated environments are designed to bridge the gap
between theoretical knowledge and practical application, aiming to produce workforce-ready
graduates for academia and to help assess, hire, and develop A+ talent for corporations.

COMPETITIVE FORCES OPERATING IN THE INDUSTRY

Threat of New Entrants: As the simulation hasn't yet put any new entrants, we weren't
concerned about new competitors aside from the existing companies. However, the threat posed
by new products from established companies may be taken into account in this analysis. Since
the beginning, new products have been introduced by a number of companies; including
Andrews.

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Bargaining Power of Suppliers: Supplier variables in the simulation environment include
labour and material costs, indicating the presence of material and manpower suppliers.
However, we are not provided with multiple supplier options to choose from and details like
concentration of suppliers, the uniqueness of their inputs, the switching costs for the industry,
or the importance of these inputs to the production process. Therefore, it is difficult to
definitively assess the bargaining power of suppliers.

Bargaining Power of Buyers: The simulation environment mentions specific needs and
preferences of customers in each segment. These criteria include factors like price, age,
positioning (performance and size), and Mean Time Between Failure (MTBF). The
importance percentages assigned to each criterion highlight what customers value most in each
segment, giving them leverage to demand products that meet these specific requirements at a
competitive price. The existence of multiple companies offering products in each segment
provides buyers with a choice, increasing their price sensitivity and bargaining power.

Threat of Substitute Products or Services: The simulation focuses on the competition within
the existing sensor industry and doesn’t have any potential substitute products or services from
outside this industry that could meet the same customer needs. Consequently, it is impossible
to evaluate the threat of alternatives, though there may be products from other segments that
may serve as a better or more affordable alternative to products in a particular segment.

Intensity of Rivalry Among Existing Competitors: The rivalry among the existing
competitors (Andrews, Baldwin, Chester, Digby, Erie, Ferris) is high. These companies are
actively competing for market share in each of the five market segments. The companies are
offering differentiated products based on performance, size, MTBF, and price to target specific
customer needs within each segment. This differentiation itself fuels competition as companies
strive to offer the best value proposition. Moreover, the financial results, including sales, profit,
ROS, ROA, and ROE, vary significantly among these companies, indicating that the
competitive actions and outcomes differ, leading to an intense struggle for profitability and
market leadership.

MARKET TRENDS AND KEY EXTERNAL FACTORS

Shifting Market Size and Growth: There is a major growth potential in all segments, which
indicates an expanding market opportunity. However, the growth rate is not uniform across

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these segments. For instance, Andrews’s maximum unit sales lies under the Low-End
segment because it consistently represented the largest portion of the market, 38.3% in the last
round of the simulation environment to be precise. Its demand growth rate is 11.7%, indicating
a sustained, albeit not accelerating, large market. On the other hand, the Performance and Size
segments’ demand growth rate are 19.8% and 18.3% respectively, which prompts companies
to consider allocating more resources towards these faster-growing segments over time.

Evolving Customer Buying Criteria: Customer preferences within each segment evolves
every year, influencing product design, pricing, and marketing decisions. Evolving customer
preferences necessitate continuous monitoring of market demands and adjustments to product
characteristics and pricing strategies to remain competitive in each segment. For example, in
the Traditional segment, price remained an important buying criterion. However, the
acceptable price range shifted upwards, indicating increased price sensitivity over time.

Competitive Actions: The decisions and performance of competitors are a critical external
factor. Market share, financial statistics, and product analyses provide insights into competitors'
strategies, product offerings, pricing, and overall success. For example, “Workforce Summary”
provides data on employee numbers, turnover rates, and new/separated employees in the
simulation environment. High turnover rates in companies such as Baldwin and Ferris indicate
challenges in retaining skilled labour, potentially affecting productivity and training costs,
influencing decisions related to Human Resources investments amongst competitors.

Prime Interest Rate: The next year's “prime rate" is explicitly increased every year. This
external economic factor directly impacts the cost of borrowing (both short-term and long-term
debt), as seen in the increasing interest expenses for some companies over the simulation
rounds.

3. STRATEGY FORMULATION & EXECUTION

At the outset of the Capstone simulation, Team Andrews strategically positioned itself as a
broad-based player, aiming to penetrate all five customer segments: Traditional, Low-End,
High-End, Performance, and Size. Our guiding principle was a hybrid strategy, combining
elements of Cost Leadership and Broad Differentiation. This dual approach allowed us to
capitalize on both efficiency-driven and innovation-driven opportunities in the market.

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The guiding principles of our early strategy included:

Cost Leadership Backbone: We laid the foundation for operational efficiency by investing
early in automation and Total Quality Management (TQM). These initiatives were aimed
at reducing labour costs, minimize material waste, and improving product quality. This effi-
ciency allowed us to set competitive pricing, especially in price-sensitive segments like Low-
End and Traditional.

Broad Product Coverage: We launched or maintained a presence in all five market segments
to diversify revenue streams and reduce dependency on any single customer group. The idea
was to be a versatile competitor, capable of adjusting our strategic emphasis depending on
how market trends evolved.

R&D Management: R&D resources were distributed to refresh products as needed, keeping
them within the ideal age and performance-positioning. Rather than heavily investing in in-
novation from the start, we opted for moderate R&D spending to ensure relevance while
preserving financial flexibility.

Balanced Marketing Approach: Promotional and sales budgets were allocated to maintain
adequate awareness and accessibility across segments. Our aim was to be visible but not
overspend in areas where word-of-mouth and product performance could carry more weight.

Conservative Capacity Planning: Production capacities were set up to meet forecasted de-
mand with a safety margin, while carefully avoiding emergency loans. We used forecasting
tools and historical data to guide initial plant investments and manage working capital pru-
dently.

This approach allowed Andrews to establish a stable operating base, build brand presence, and
generate early profits, while remaining agile enough to adapt as customer preferences and
competitor strategies unfolded in later rounds.

STRATEGY EVOLUTION BASED ON MARKET DYNAMICS

As the simulation progressed, the dynamics of customer preferences, competitor behaviour,

and market growth patterns necessitated an adaptive, data-driven evolution of our strategy.

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While we began with a broad hybrid approach, we quickly realized the need to differentiate
more sharply in high-growth areas and streamline focus in saturated segments.

Rounds 1-3 – Building Market Presence & Operational Foundation: We focused on solid-
ifying our position in the volume segments while building a base in the niche segments. By
optimizing cost and maintaining consistent product positioning, we achieved stable revenue
growth market positioning.

Rounds 4-5 – Realigning to Capture Growth Opportunities: Some competitors had

launched additional products in a few segments, and recognizing a possible threat, we launched
an additional product each in the Low-End and Size segments. The rationale behind choosing
the Low-End segment was our excellent product-market fit that showed huge untapped poten-
tial in the biggest market segment, while in the Size segment were our R&D capabilities and
market leadership in a decreasingly competitive market.

Rounds 6-7 – Segment Specialization and Margin Expansion: With multiple Andrews’
products experiencing stockouts (especially in Performance and Size segments), we reaffirmed
our strategy of selective segment expansion. We reinforced capacity and marketing in segments
with unmet demand and higher contribution margins and launched an additional product in the
Performance segment, solidifying our market leadership.

Round 8 – Leadership Consolidation and Strategic Maturity: Strategy emphasized product

positioning, quality, and satisfaction while maintaining financial discipline. Also targeted fi-
nancial and operational consolidation to improve performance metrics for the ultimate show-
down.

FRAMEWORK-BASED STRATEGIC ANALYSIS

SWOTT Analysis

Factor Insight
Strengths High profit margins, market share leadership, efficient operations
Weaknesses Inventory build-up in Traditional, marketing spend spikes in Low-End
Opportunities Product expansion in Performance and Size segments
Threats Baldwin’s growing presence (market share at 19%), segment saturation

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 Trends Shifting consumer preferences toward younger, better-positioned products

5C Analysis

Company Leading across 5 segments with strong cash position and highest cumulative profit
($506K)
Customers Prioritize age, positioning, and satisfaction (e.g., Agape satisfaction = 100)
Competitors Baldwin improved slightly but remains ~56% behind in revenue
Collaborators Lean on internal R&D, TQM, and automation; limited external dependencies

Context Rising demand in Performance (+19.8%) and Size (+18.3%) segments supports
growth strategy

BCG Matrix

Segment Growth Relative Category Strategic Action

Rate Market Share
Traditional 9.2% 82.6% Cash Cow Maintain
Low-End 11.7% 100.0% Cash Cow Maintain / watch for saturation
High-End 16.2% 100.0% Star Launch new product
Performance 19.8% 100.0% Star Add capacity
Size 18.3% 100.0% Star Add capacity

EXECUTION METRICS AND BUSINESS OUTCOMES

Key Achievements:

• Sales grew from $101K in Round 0 to $674K in Round 8 (+567%)

• Profit increased from $4.1K to $185K, with cumulative profit crossing $506K.
• Market share grew from 16.7% to 43.5% - 2.28x the nearest competitor.
• Stock price surged from $34.25 to $312.80 — more than triple most competitors.
• Cash reserves at $268K – highest in the industry.
• No emergency loans across all rounds — solid cash flow and internal funding.

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 • Contribution margin increased steadily from 28.3% to 59.6%.

Execution Challenges:

• Occasional stockouts in key products implying missed revenue.

• Underperformance in some rounds due to forecast overshoots or product launches by
competitors.
• ROE and ROA dipped slightly in Rounds 6–7 due to mismatched investments and
subsequent financial decisions.

STRATEGIC TAKEAWAYS AND LEARNINGS

• Balanced Strategy Beats Extremes: Our hybrid model enabled us to stay agile, adjusting
to both cost pressures and customer preferences.
• Focus Drives Advantage: Concentrated investment in high-performing segments
created enduring strengths.
• Execution Precision Matters: Minor errors in forecasting and positioning can lead to
substantial opportunity costs.
• Operational consistency wins: Early investments in automation, TQM, and training
paid off through rising productivity (130%) and margin expansion.
• Innovation Yields Margin: Products with well-invested R&D (e.g., Adam, Aft, Agape)
consistently earned the highest customer satisfaction and margins.
• Resilience Is a Strategic Asset: No dependency on emergency loans gave us financial
flexibility and confidence in long-term planning.
• Sustainability of strategy ensured leadership without debt reliance — rare among
competitors.

Throughout the eight competition rounds, Team Andrews emerged as the most dominant,
efficient, and strategically agile firm in the simulation. Starting with a balanced cost-leadership
strategy, Andrews evolved into a high-margin, segment-focused market leader. Leveraging
data, agile product management, and disciplined financial controls, Andrews outperformed all
competitors on key metrics: sales, profits, market share, and customer satisfaction.

The strategic frameworks applied—SWOTT, 5C, and BCG Matrix—validate the team's
choices and highlight a path forward rooted in expansion through innovation, efficiency, and
responsiveness to evolving market needs.
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4. FINANCIAL & OPERATIONAL PERFORMANCE ANALYSIS
This section provides a comprehensive analysis of the financial and operational performance
of Andrews and its competitors (Baldwin, Chester, Digby, Erie, Ferris) between round 0 (2024)
and round 8 (2032) of the simulation. The analysis covers financial data trends, financial health
assessment, operational efficiency evaluation, and identification of potential mistakes, risks,
and corrective actions.

FINANCIAL DATA ANALYSIS

Metric Trend Andrews Baldwin Chester Digby Erie Ferris

Round 0 $101,073
Sales Round 8 $673,529 $294,669 $137,120 $202,791 $87,785 $153,996
Change +566% +192% +36 +101% -13% +52%
Round 0 $4,185
Net Profit Round 8 $184,900 $18,124 $11,952 $7,413 $6,125 $8,073
Change +4,318% +333% +186% +77% +46% +93%
Round 0 $96,222
Total
Round 8 $836,010 $161,031 $101,292 $96,261 $82,531 $66,691
Assets
Change +769% +67% +5% ~ -14% -31%
Round 0 $48,284
Total
Round 8 $167,609 $79,738 $49,750 $51,182 $44,139 $33,968
Liabilities
Change +247% +65% +3% +6% -9% -30%
Round 0 $47,939
Total
Round 8 $668,401 $81,293 $51,542 $45,079 $38,392 $32,723
Equity
Change +1,294% +70% +8% -6% -20% -32%

Summary: In Round 0, all companies started with identical financial positions. By Round 8,
significant divergence in performance is evident. Andrews has achieved substantial growth in
Sales, Net Profit, Total Assets, and Total Equity, indicating a successful growth strategy. In
contrast, the other companies show considerably lower figures in these areas.

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FINANCIAL HEALTH ASSESSMENT

Metric Trend Andrews Baldwin Chester Digby Erie Ferris

Round 0 8.7%
ROE Round 8 27.7% 22.3% 23.2% 16.4% 16.0% 24.7%
Change +19 +13.6 +14.5 +7.7 +7.3 +16
Round 0 4.3%
ROA Round 8 22.1% 11.3% 11.8% 7.7% 7.4% 12.1%
Change +17.8 +7 +7.5 +3.4 +3.1 +7.8
Round 0 4.1%
ROS Round 8 27.5% 6.2% 8.7% 3.7% 7.0% 5.2%
Change +23.4 +2.1 +4.6 -0.4 +2.9 +1.1
Round 0 $2.09
EPS Round 8 $38.57 $6.86 $5.62 $3.71 $2.82 $4.07
Change +1,745% +228% +169% +78% +35% +95%
Round 0 $68m
Market
Round 8 $1,499m $178m $122m $108m $98m $83m
Cap
Change +2,104% +162% +79% +59% +44% +22%

Analysis:

Strong Financial Health for Andrews: Andrews exhibits significantly higher ROE, ROA, and
ROS in Round 8, indicating a much stronger financial health compared to its competitors.

Earnings Power: The Earnings Per Share (EPS) of Andrews has seen a dramatic increase,
reflecting its substantial profitability and potentially changes in its share structure (though no
stock issuance or repurchase is explicitly mentioned in the cash flow statement for Round 0).
By Round 8, Andrews' EPS is far greater than its competitors.

Market Valuation: The Market Capitalization of Andrews has grown exponentially, dwarfing
its competitors. This indicates strong investor confidence in Andrews' future prospects and
performance.

Competitor Performance: While all competitors show positive ROE and ROA in Round 8,
their metrics are considerably lower than Andrews', suggesting they haven't achieved the same
level of financial success. Digby and Erie show the lowest profitability metrics.

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OPERATIONAL EFFICIENCY EVALUATION

Metric Trend Value

Round 0 4,208
Total Production Round 8 27,250
Change +548%
Round 0 5,300
Total Capacity Round 8 15,850
Change +199%
Round 0 79%
Average Plant Utilisation Round 8 172%
Change +93
Round 0 100%
Productivity Index Round 8 130%
Change +30

Analysis:

Production and Capacity Growth: Andrews has significantly increased both its production
and capacity by Round 8, indicating a focus on capital investment to meet growing demand.

Plant Utilisation: Andrews' average plant utilization has increased from Round 0 to Round 8.
This shows efficient use of plant and equipment in line with its strategic goal of increasing
operational efficiency.

Workforce Efficiency: Despite a decrease in the number of employees, Andrews' Productivity

Index has increased to 130.0% in Round 8. This shows improved efficiency in the workforce,
through training as indicated by investments in ‘Manufacturing - Training & Assembly Teams’.

R&D and Product Strategy: By Round 8, Andrews has significantly revised its product
portfolio and it seems to be actively managing the age and positioning of its products to meet
evolving customer preferences in different segments. The introduction of new product names
like "Ace" and "Ark" in the Low End and Performance segments respectively exemplifies an
active R&D strategy.

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MISTAKES, RISKS, AND CORRECTIVE ACTIONS

While highly successful, Andrews' lower asset turnover and increased inventory in Round 8
could indicates potential inefficiencies in asset utilization. The significant capacity expansion
might also represent a risk if future demand does not meet expectations. However, investment
in Total Quality Management (TQM) initiatives, particularly Vendor/JIT Inventory, are an
attempt to improve inventory management and reduce material costs. Investments in Human
Resources, specifically Manufacturing - Training & Assembly Teams and Scientists -
Recruitment & Retention, have contributed to the increased Productivity Index and better
product development. The strategic product revisions and introductions indicate a proactive
approach to meeting market needs.

Between Round 0 and Round 8, Andrews has demonstrated exceptional financial and
operational performance, achieving significant growth in sales, profitability, and market
valuation. Its strategic focus on product development, capacity expansion, and workforce
efficiency, supported by investments in TQM and HR, has been highly effective. While there
are potential areas for improvement in asset utilization and inventory management, Andrews
stands out as the clear leader among its competitors. The other companies have shown varying
degrees of growth but lag significantly behind Andrews in key financial health metrics,
suggesting differences in strategic effectiveness and execution.

5. MARKETING & CUSTOMER INSIGHTS

Customer Insights provide us a vital understanding of what matters most to consumers within
distinct market segments. Each segment values product attributes differently, and tailoring
offerings to these preferences is critical for success. For instance, in the Low-End segment,
price is the primary concern—products that fall within a narrow, acceptable price range gain
favor. Following price, customers in this segment consider product age, positioning (a function
of performance and size), and MTBF (Mean Time Between Failures) in decreasing order of
importance. Conversely, the Traditional segment places the highest emphasis on Age,
preferring products that feel familiar and established. Understanding these segment-specific
priorities is essential for companies to design products that meet market demands and to
strategically position themselves against competitors.

MARKETING INVESTMENTS AND CUSTOMER ENGAGEMENT

A key insight from our analysis is that marketing underinvestment, particularly in promotion,
often correlates with lower customer satisfaction. Companies that failed to allocate adequate
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Promo Budgets struggled to communicate the value of their products effectively. As a result,
these products lacked visibility, making them less appealing to consumers who were unaware
of their existence or perceived them as inferior compared to better-promoted alternatives. This
lack of awareness not only hurt brand perception but also led to missed sales opportunities.
In competitive segments, consumers gravitate toward products they recognize and trust.
Therefore, the failure to maintain high awareness and differentiate through consistent
messaging diminished market share and weakened brand positioning.

PERCEPTUAL MAPS: VISUALIZING MARKET FIT

Perceptual Maps offer a visual analysis of how each product is positioned in the market based
on performance and size. These maps are invaluable in determining whether a product aligns
with the ideal customer expectations outlined in the buying criteria for each segment. By
observing the distance between a product's actual position and the optimal target zone,
companies can identify whether they need to adjust product attributes or reposition their
offerings to improve appeal.

KEY MARKETING METRICS

Promo Budget: Drives Customer Awareness—the percentage of the market that knows about
the product. For example, Acre, our product in the Low-End segment, maintained 100%
awareness over an extended period with a Promo Budget of approximately $1,500, highlight-
ing the strong correlation between sustained promotional investment and visibility.

Sales Budget: Influences Customer Accessibility, which measures how easy it is for consum-
ers to purchase a product. Accessibility is shaped by factors such as distribution channels and
customer service. Products like Able (Traditional segment), with a Sales Budget nearing
$1,100, enjoyed higher accessibility, making them easier for customers to acquire.

Together, awareness and accessibility are critical levers in converting customer interest into
actual sales. Products that scored high on both dimensions, such as Able (Traditional), Adam
(High-End), Aft (Performance), and Agape (Size), consistently outperformed others, demon-
strating the effectiveness of a balanced investment strategy.

CUSTOMER SATISFACTION AND MARKET SHARE DYNAMICS

The Customer Satisfaction metric offers a comprehensive view of how well a product fulfills
the segment’s buying criteria, including price sensitivity, attribute alignment, and perceived
value. High satisfaction typically results from a strong fit between product features and
customer preferences, amplified by effective marketing and distribution.
Analyzing Actual vs. Potential Market Share further reveals untapped growth opportunities.
A product with high potential market share but low actual performance may suffer from

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poor visibility or limited accessibility—areas that can be improved through targeted marketing
or adjustments to product attributes. For example, increased promotional spending or an
enhanced distribution strategy might unlock the product’s full potential.

TURNING INSIGHTS INTO STRATEGY

By synthesizing data from customer buying criteria, product performance, marketing

investments, perceptual mapping, satisfaction levels, and market share analytics, companies
can form a holistic understanding of their market position. These insights enable strategic
decision-making aimed at:
• Refining product designs to match segment-specific needs,

• Reallocating budgets to maximize visibility and accessibility,

• Enhancing customer satisfaction,

• And ultimately, capturing a greater share of the market.

This data-driven approach is essential for staying competitive in dynamic markets and for
ensuring that product offerings evolve in line with customer expectations.

6. LEADERSHIP & TEAM DYNAMICS

Strong leadership and team cohesion were essential in managing the intricacies of Capstone
2.0 Business Simulation. This section examines the organisation, teamwork, communication,
and interpersonal growth within our team during the simulation rounds.

ASSIGNMENT OF LEADERSHIP ROLES

Right from the beginning, we appreciated the value of allocating well-defined roles in terms of
personal strengths, interests, and academic orientations. Responsibilities were collaboratively
determined in an open debate that valued participation and respect, where team members
volunteered to handle various functions such as Marketing, R&D, Finance, Strategy, etc. and
the overall team leader provided direction. This worked in such a way that every member
owned a domain area, thus enabling a decentralised leadership model where decisions were
made together but led by the domain expert of the team. This promoted accountability and
initiative-taking and didn't burden any one person with all of leadership.

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TEAM COLLABORATION AND COMMUNICATION

Collaboration among teams was one of the most powerful things about our performance. We
organised frequent meetings prior to each round of simulation to review the company's
performance, analyse data, and strategize moves. These meetings were formalised, with
agendas sent in advance, enabling each member to prepare and give insights pertinent to their
role. We employed computer-aided collaboration tools like Google Meet and WhatsApp for
real-time communication and shared documents through Google Drive to make it transparent.
Tasks and deadlines were monitored through shared sheets, reducing confusion and keeping
the team on track. Even though most of our interactions were virtual, team cohesion was high
because we were engaging constantly and with an attitude of support. The culture we fostered
allowed everyone to speak their mind freely, which enriched our decisions and enhanced
overall team confidence.

DECISION-MAKING DYNAMICS

Decision-making in the team was collective. Although every member contributed data-driven
analysis and functional recommendations, ultimate strategic choices were made following
comprehensive discussion and coordination with overarching goals. The team leader made sure
that every member was heard and that no hasty decisions were made. This collective process
resulted in more holistic strategies and greater team buy-in. Sometimes, we experienced
decision fatigue or strategic disagreements — particularly when financial results did not meet
expectations. In those moments, we used a data-led approach: returning to simulation
dashboards, rerunning forecasts, and considering competitive counter-play before changing
direction. These habits made our decisions fact-based and minimised friction during differing
opinions.

CONFLICT MANAGEMENT AND RESOLUTION

As with any team operating in pressure, we had some skirmishes during the simulation—
basically over incompatible opinions on allocating resources and measurement of performance,
but our team managed these with maturity. We provided feedback and fostered positive
criticism within team after every round, and conflicts were usually dispelled through good old-
fashioned frank one-on-ones or helped-through team talks, promoting respect for each other.
One situation worth mentioning was when there was a conflict between the Marketing and

16
Finance leaders regarding how to allocate funds. By discussing openly and being willing to
compromise, we managed to rank must-have product releases without going beyond our cost
guidelines. This demonstrated the need for negotiation and emotional intelligence in
coordinating group dynamics.

LEADERSHIP STYLES WITHIN THE TEAM

The leadership styles observed within our team included a combination of transformational and
servant leadership. The team leader usually demonstrated a transformational style — inspiring
others with a clear vision – encouraging innovation and motivating us during setbacks. At other
times, they also exhibited elements of servant leadership, frequently supporting others with
data analysis, report preparation, or last-minute research. This diversity in leadership styles
added depth to our collaboration. It ensured that we were not just focused on meeting
simulation targets but also on growing individually and collectively. It also contributed to a
culture of mutual learning and respect, which is often lacking in competitive team settings.

TEAM PERFORMANCE AND EFFICIENCY

On a general note, our team's performance improved progressively throughout the simulation.
During the early rounds, coordination problems and learning curves retarded us, but as we
stabilised in our respective roles and were better aware of the simulation dynamics, our
effectiveness improved substantially. We sustained a rhythm of debriefing after every round to
recognise what was effective, what wasn't, and what adjustments were necessary. This self-
reflection habit enhanced our quality of decisions as well as speed of execution. It also instilled
an attitude of ongoing learning. One of our greatest accomplishments was getting to an
agreement fast in tight situations without losing quality. This effectiveness had a direct
contribution to our firm team foundation and collective dedication to the objectives of the
simulation.

PERSONAL REFLECTIONS ON LEADERSHIP GROWTH

Taking part in this simulation enabled us to learn the real-world applications of leadership
theories and the subtleties of team management. We understood that leadership is not so much
about control as it is about empowering others. All the team members contributed by helping

17
fellow teammates, coordinating timelines, or providing solutions — reiterating the point that
leadership is a collective responsibility. We also gained more confidence in expressing our
thoughts, particularly during opposing views. We learned to put forward our ideas in a logical
manner, actively listen to others, and adjust accordingly. Our interpersonal relationships were
enhanced through continuous interaction and by resolving disagreements in a constructive way.

This experience further taught us that effective leadership depends on self-knowledge,

emotional intelligence, and the capacity for task-focus alongside people-focus. The lessons that
we learned here will certainly steer us in subsequent corporate careers, particularly in cross-
functional teams and fast-paced settings.

7. DATA-DRIVEN DECISION MAKING

In today’s fast-moving business world, decisions based on gut feelings are just not enough, but
also extremely risky. Through eight rounds of this business simulation, we learned the true
power of using data to guide our choices. Every round gave us new information—about our
customers, our competitors, our finances—and we used that data to adjust, improve, and grow
our business. This chapter walks through how we used data, dashboards, forecasting tools, and
financial models to make decisions that helped us perform better with each round.

OUR FIRST STEPS

In Round 1, we entered the market with a few missteps. Our products didn’t quite meet what
customers were looking for, and our costs were too high. But instead of guessing what went
wrong, we turned to the data. The customer survey scores showed a disconnect between our
product specifications and what the market wanted. That gave us our first data-driven decision:
shift our R&D focus to better match customer preferences. By Rounds 2 and 3, we noticed our
marketing reach was weak. Awareness and accessibility numbers were low, which hurt our
sales. So, we used those metrics to adjust our strategy—focusing more budget on promotion
and building up our sales force. This led to more visibility and better reach across our segments,
and we saw an improvement in customer engagement by Round 4.

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GETTING BETTER EVERY ROUND

As we moved through Rounds 4 and 5, we started using more detailed metrics to fine-tune
operations. We saw that some of our production capacity was sitting unused. This was costing
us money, so we recalculated how much we really needed to produce and made adjustments.
We also learned how to time our R&D investments better. We started planning ahead—
investing early in promising segments like Size and Performance. That forward-thinking
strategy paid off by in the subsequent rounds, with stronger sales and better alignment with
customer needs. We struggled with inventory issues in Round 6—too much stock one round,
and not enough the next. That’s when we realized our sales forecasts needed work. We used
historical demand data and customer trends to build better forecasts, and in Round 7 we
managed to keep inventory at the right level. This reduced waste and made our supply chain
more efficient.

FORECASTING AND FINANCIAL MODELLING

Good decisions depend on solid planning, and that’s where forecasting came in. We frequently
underestimated customer demand in the earlier rounds, which led to missed opportunities and
stock-outs. That taught us to rely more on data from previous rounds, customer behaviour, and
market growth when making our predictions. In the later rounds, we were forecasting more
accurately by factoring-in things like market trends, competitor moves, and our own past sales.
That helped us plan production better and avoid both shortages and excess inventory.

We also used financial modelling to test ideas before we committed to them. In Round 7, we
explored whether to invest heavily in automation. We modelled different scenarios—how much
we’d save on labour and how it would impact our cash flow. Once we’re sure, we went ahead
and went all-in on automation, drastically reducing labour costs in the final round. Scenario
planning helped us prepare for unexpected events. For example, we tested what would happen
if demand dropped or if we overproduced. These simulations helped us set safety stock levels,
price points, and production volumes with more confidence.

THE DECISIONS THAT PAID OFF

By Round 5, our data-driven approach really started showing results. Our products were more
aligned with what customers wanted. Our marketing reached more people. And we were more

19
efficient in production. This all led to higher profit margins. Even before that, we took a bold
decision to launch two new products – one each in the Low-End and Size segments. We realised
these segments had unmet demands and our capabilities were perfectly aligned with the market
potential – leading to a confident move that paid off in the later rounds. By the final round, we
had our best performance yet. Key indicators like ROS, ROA, sales, net profits, etc. were the
highest in the industry. Our product portfolio was streamlined, our finances were healthy, and
our operational efficiency had never been better. Every improvement we made was backed by
data and reinforced over time.

INSIGHT FROM DATA-DRIVEN STRATEGY

After going through eight rounds of decision-making, we learned a lot about how to use data
effectively. Some of our biggest takeaways:

Data helps you avoid costly mistakes. We could spot issues early—like low product appeal,
excess inventory, or rising debt—and fix them before they hurt us.

Forecasting is a skill. The more we practiced it, the more accurate we became. Good forecasts
led to better production planning and higher profits.

Scenario planning builds confidence. It let us prepare for different possibilities and choose
the safest path forward.

Being proactive works. Investing in R&D, automation, and quality early helped us get ahead
of competitors and serve customers better.

8. STRATEGIC LESSONS & REAL-WORLD APPLICATIONS

The Capstone 2.0 Business Simulation offered an immersive, data-rich environment in which
strategic thinking, cross-functional alignment, and iterative learning were critical to success.
This simulation didn’t simply teach concepts—it demanded execution. Through strategic
decision-making in a dynamic competitive landscape, several key lessons emerged that not
only defined performance in the game but also hold deep applicability for real-world business
environments.

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KEY STRATEGIC TAKEAWAYS

Strategic Alignment Drives Performance: One of the most consistent takeaways from the
simulation was the importance of aligning every functional area to a clear strategic intent.
Whether a team pursued a cost leadership approach, a differentiator strategy, or a niche focus,
the companies that maintained alignment between R&D, Marketing, Production, and Finance
consistently outperformed those with scattered or reactive decision-making. For instance, a
differentiator strategy in the High End or Performance segments required early and regular
R&D investments to maintain positioning near the evolving ideal spot on the perceptual map.
This needed to be supported by strong marketing spend, adequate production capacity, and
long-term financial planning. Misalignment—like cutting marketing while pursuing a premium
pricing strategy—led to suboptimal results.

Financial Structure Shapes Business Flexibility: A deep insight emerged around capital
structure—particularly how debt vs. equity choices influence return metrics and financial risk.
Teams that used moderate debt to fund growth without overleveraging were able to maintain
higher Return on Equity (ROE) and deploy cash for strategic investments. On the other hand,
equity-heavy structures often diluted shareholder value unless offset by high net income
growth. In the simulation, over-reliance on stock issuance reduced ROE even when net profits
rose. Meanwhile, debt misuse risked high interest costs and potential emergency loans. The
key was to strike a balance—using debt strategically while maintaining strong cash flows and
interest coverage.

Marketing Investment Enhances Market Share: A frequent misconception is that product

quality or price alone drives demand. The simulation made it clear that promotional and sales
budgets are critical levers for building awareness and accessibility—two factors that directly
influenced the customer survey score and segment capture. In Capstone 2.0, underinvestment
in marketing led to lower awareness even for well-positioned or fairly priced products,
especially in competitive segments like Traditional and Low End. Conversely, teams that
maintained consistent marketing efforts and gradually increased their accessibility index saw
compound improvements in market share over time.

Forecast Accuracy is a Profit Lever: Forecasting wasn’t just a math exercise—it was a
strategic necessity. Overestimating demand resulted in high inventory costs and reduced
contribution margins due to excess labour and storage. Underestimating demand led to missed
sales and suboptimal capacity utilization. Teams that forecasted based on potential market share

21
and segment demand (instead of just past sales) fared significantly better. This required
integrating market reports, product competitiveness, and competitor behaviour to inform
projections.

Innovation and Product Lifecycle Timing Matters: Capstone highlighted the impact of
product revision timing and lifecycle management. Teams that revised products too early lost
out on full depreciation of development costs and created aging inventory. Teams that revised
too late fell behind segment expectations for performance, size, and age—leading to declining
customer satisfaction. Success in fast-moving segments like High End and Performance
required anticipating where the ideal spot would move and initiating R&D ahead of time. In
slower-moving segments like Low End, less frequent updates were optimal.

CASE 1: APPLE INC.

Apple’s enduring success is rooted in its masterful strategic alignment across all business
functions. It operates with a clear differentiation strategy centred on innovation, premium
quality, and customer experience. From R&D to marketing to supply chain, every department
reinforces this overarching value proposition.

R&D: Apple invests heavily in product innovation to maintain a technological edge,

developing proprietary chips (e.g., M-series processors) and tight software-hardware
integration.

Marketing: Their advertising is consistent, focused on lifestyle and simplicity—perfectly

reflecting their user-focused design philosophy.

Operations: Apple’s supply chain is streamlined to support product launches with precision,
avoiding delays and stock issues during critical demand cycles.

Finance: Pricing is aligned with its brand promise, and the company maintains strong margins
while investing in future growth.

This cross-functional alignment enables Apple to command customer loyalty, maintain high
profitability, and continually redefine premium tech – exemplifying a very important business
lesson – strategic alignment isn’t optional, it’s essential. Without this, even market leaders can
fall swiftly in a dynamic environment – case in point – Nokia. Once the global leader in mobile
phones, it failed primarily due to strategic misalignment. While the company had a strong brand

22
and large market share in the early 2000s, its internal departments operated in silos, and
leadership failed to align around a clear future strategy – leading to rapid decline and eventual
acquisition by Microsoft.

CASE 2: AMAZON

Amazon exemplifies the power of strategic financial structure to fuel aggressive growth while
maintaining investor confidence. It began with minimal profitability but reinvested heavily in
infrastructure, logistics, and technology.

Equity-Funded Growth: Amazon used equity to fund long-term initiatives like AWS, Prime,
and global fulfilment centres—accepting low ROE early to build future cash flow engines.

Leverage Management: Though not highly debt-leveraged initially, Amazon strategically

increased its debt capacity only after revenue streams stabilized.

Cash Flow Optimization: Through negative working capital (getting cash before paying
suppliers), it financed operations without excessive external debt.

Amazon’s financial discipline allowed it to scale rapidly, innovate continuously, and become
one of the world’s most valuable companies – reinforcing the fact that capital structure should
empower sustainable scaling – not disguise underlying weaknesses. A cautionary tale of
mismanaged capital structure and financial overextension is the case of WeWork. Fuelled by
massive equity investments, the company pursued hypergrowth without solid financial
fundamentals. Ultimately, WeWork’s lack of financial control and strategic discipline led to
massive devaluation and restructuring under new leadership.

ROLE OF EXPERIENTIAL LEARNING IN MBA EDUCATION

Experiential simulations like Capstone 2.0 are crucial for bridging the gap between theory and
practice in MBA education. Textbooks can explain ROE, contribution margin, and customer
segmentation, but simulations allow learners to apply these in a risk-controlled environment,
learn from mistakes, and iterate strategically.

Decision Ownership: Students feel the weight of real consequences—missed forecasts, budget
trade-offs, or strategic missteps.

23
Cross-Functional Thinking: Simulation forces integration of finance, marketing, production,
and strategy—mimicking real corporate environments.

Leadership Growth: Students develop soft skills like negotiation, conflict resolution, and
collaboration under pressure.

Capstone 2.0 is more than a simulation. It’s a compressed, high-stakes learning lab that reflects
the realities of business management—requiring strategy, agility, and cross-functional
execution. These lessons transcend the classroom and build enduring decision-making
capabilities for future leaders – providing a solid foundation of experiential learning.

9. CONCLUSION & RECOMMENDATIONS

The Capstone 2.0 simulation provided an invaluable learning environment that tested our
strategic thinking, data-driven decision-making, and team collaboration under dynamic market
conditions. Over several rounds, we encountered competitive pressures, internal trade-offs, and
the consequences of strategic missteps—challenges reflective of real-world business
environments. This section consolidates the key insights gained, strategic recommendations for
future teams, and a reflection on personal growth and its career implications.

SUMMARY OF MAJOR INSIGHTS

Strategic Consistency Is Critical: Teams that remained consistent in their overarching

strategy (e.g., low-cost leader, premium differentiator, or broad market player) achieved better
alignment between departments and stronger market performance.

Integration Across Departments Drives Success: Capstone 2.0 reinforced the importance of
cross-functional alignment. R&D decisions impacted marketing effectiveness, which in turn
affected sales forecasts and production planning. Financial choices influenced everything from
plant investment to stock price. Success depended on viewing the business holistically rather
than as a series of isolated departments.

Data-Led Forecasting Reduces Risk: Accurate forecasting became a cornerstone of

competitive performance. Teams that used potential market share, customer satisfaction scores,
and market growth rates to build forecast models outperformed those relying on intuition or
last year’s sales.

24
Financial Health Enhances Strategic Freedom: Teams with sound cash flow and well-
managed capital structures had the freedom to invest in capacity, automation, and R&D without
relying on emergency loans or diluting equity. The ability to plan and fund long-term initiatives
without financial stress distinguished high-performing firms from reactive ones.

STRATEGIC RECOMMENDATIONS FOR FUTURE TEAMS

Begin With a Clear Strategic Identity: Decide early whether your company will be a cost
leader, a differentiator, or a hybrid, and let that choice inform every decision—from product
positioning to R&D timing and budget allocations.

Invest in Forecasting and Scenario Planning: Build detailed forecasting models using
customer buying criteria, market growth projections, and competitive positioning. Test
different scenarios (e.g., what if you stock out, or launch a product early?) to reduce surprises.
Forecast not just units but also revenue, contribution margin, and working capital needs.

Prioritize Profitability Over Volume: Selling more does not always mean earning more.
Focus on contribution margin and Return on Sales (ROS) rather than pure revenue. Avoid
overproducing in pursuit of market share if it leads to excess inventory or shrinking profit
margins.

Use Financial Levers Wisely: Only issue equity if absolutely necessary, and be strategic with
debt. Use long-term financing for capacity or automation investments, not to patch poor cash
management. Track your leverage, ROE, and EPS to maintain investor confidence and financial
flexibility.

PERSONAL LEARNINGS AND CAREER IMPACT

Real-World Application of MBA Concepts: The simulation offered a hands-on experience in

applying finance, marketing, operations, and strategic management principles in an integrated
manner.

Improved Decision-Making Under Pressure: With tight timeframes and constant feedback
loops, we developed the ability to make informed decisions quickly while managing trade-offs.
This skill is critical for any managerial or consulting role where ambiguity is the norm and
decisions impact cross-functional teams.

25
Leadership and Collaboration Development: Working within a team taught me how to
balance leadership and followership, navigate disagreements constructively, and align diverse
perspectives toward shared goals.

Confidence in Strategic Thinking: The iterative nature of the simulation taught me to think
in systems—anticipating how changes in one area ripple through the rest. It strengthened my
confidence in recommending strategies backed by financial and operational data, preparing me
to contribute meaningfully to executive-level decision-making.

Capstone 2.0 was more than an academic exercise. It was a microcosm of real business life—
dynamic, data-driven, unpredictable, and rewarding. The lessons learned through the
simulation are applicable across industries, roles, and stages of a career. For future participants,
the key to success lies in strategic clarity, disciplined execution, and collaborative leadership.
For us personally, the experience solidified not only technical proficiency but also the mindset
needed to thrive in complex business environments.

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