For the 700 or more Iowa State students each semester taking Business Administration 250, a game can be serious business. Their grade, in part, depends on it.
The introductory business course has for several years devoted a portion of the class to an online corporate simulation called Capsim. It's an engaging, practical way to help students grasp basic concepts and the value of teamwork, said Bruce Kraft, a professor of practice in finance and the course coordinator.
"Once you get out into the business world and start doing it on a repeated basis, you understand how to make business decisions and evaluate business performance. But the challenge as a learner is unless you put it into practice, it doesn't really stick," he said.
The simulation puts students at the helm of the remnants of a sensor manufacturing monopoly broken up by the government, creating up to six separate companies in the sensor industry that start on equal footing. Students choose how to proceed to distinguish their corporations from the competition.
The students work in five-person teams, making joint decisions about research and development, marketing and sales, production, total quality management and financing, Kraft said. They study an array of reports to inform their production plans, sales and budget forecasts, and capital management. Each of the eight weeks of the simulation equals a year in the industry.
"It's a good approximation of an annual process that you'd go through to develop your targets and monitor and evaluate your performance," Kraft said. "It helps them see the importance of the connectivity of the departments and impact of their decisions."
Each week, Capsim gives a score for each team's corporate maneuvering, based on metrics such as product margins, profitability, working capital, market share, forecasting accuracy, customer satisfaction, productivity, their financial structure and wealth creation, Kraft said.
All of about a dozen course sections per semester use the simulation, and each team's score is ranked against other teams in their section and against hundreds of other student teams using the program across the country. Kraft said Iowa State teams often are in the top 10 nationally.
"We tend to do pretty well, in comparison. It gives them a sense of pride, knowing there are all these other teams out there," he said.
The simulation accounts for about 30% of a student's grade. With an average class size of 75, a course section typically will have three self-contained "industries" in which the companies' behaviors impact each other. It's not designed to be a cutthroat contest, Kraft said.
"It's really a matter of what did you learn from what happened. How did you improve your business performance?" he said. "It's an iterative learning process."
At the end of the semester, teams give class presentations on their companies. After his team's presentation last spring, Kashver Sidhu, a junior in management information systems, said Capsim taught him a lot about analysis and collaboration.
"The numbers tell a story, but you have to figure out the story as a group," Sidhu said.
