Capsin Case Analysis

Introduction

The team simulation competition for the Administrative Strategy Capstone course was based around the footwear industry with every team starting on similar grounds. All teams owned two footwear factories with similar market shares in various markets. The goal for the competition was to choose a new strategy to increase the company’s income and market share compared to the competition and to make operational decisions based on the target strategy. The teams were to balance the expectations of all stakeholders through their efforts and were measured on factors such as financial metrics, credit rating, image rating, sales, and market share.

Our team, titled Happy Feet, struggled at the beginning with drastic effects resulting from early decision making. As the years passed we were able to stabilize and eventually begin to recover our position. This report summarizes our strategic plan, decision making, results, and overall analysis of the five year simulation with suggestions for improvements.

Strategy Selection and Execution

Our team’s approach to the competition was to take a position as a low-cost provider in the footwear industry. The goal was to provide our product at a lower overall cost than rivals and to target a larger market base than the competition. The team chose from the beginning to strive to maintain this strategy and to adapt as the years went on to maintain this approach unless extraordinary circumstances warranted change. Our relative position compared to rivals was reviewed each year to determine if we were aligned to our target strategic position for the market and whether we had direct competition in our area. Decisions were then made on how to adapt for the next year.

Throughout the competition the team maintained the same low-cost provider strategy. Operational decisions were made to decrease product costs, reduce expenditures, increase performance by purchasing plant upgrades, and to reduce overall wholesale costs in an effort to lead as a low-cost firm. In the first few years we quickly determined that our cost structure was too high based on the competition thus hurting our sales figures and overall performance. While we set our wholesale prices low, our competitors were able to match or even beat our prices, while offering a similar S/Q quality and product line breadth or better. Decisions were made to reduce our operating and overhead costs by purchasing factory upgrades to improve quality, reducing advertising expenses, reducing rebates, and eliminating free shipping. The team then chose to increase our S/Q rating by increasing superior material usage, product line breadth, and additional styling features to make our product more appealing.

By year 15 the firm’s performance was turning upward with positive projections into year 16. The team had successfully initiated a turn