The Capstone Effect

The team strategy simulation, Capsim, is integrating all facets of a business education in an attempt to provide the student with a unique opportunity to experience the challenges of the business world. The student gains a sense of what it must be like to lead a business organization-a task that requires the student to see and understand the complexity involved in the execution of numerous business functions-R&D, marketing, production, H/R, finance. The results of the simulation are affected not only by the decisions of the student but by the interplay of other student teams. This provides for a very dynamic environment resembling the typical business environment.

Overlaying the management of typical business functions i.e. R&D, marketing, production, finance, etc., is the development of business strategy. Even before the simulation begins, team members must debate overall business strategy. The question becomes how can a team develop the best strategy in a competitive environment?

First, the team must envision the kind of overall offering it hopes to make to the market. What kind of effect will the organization have on the world? Then, the team must determine whether or not such a strategy is feasible. Does the organization have the right tools to make it happen? Are there others who are trying the same thing? Are they succeeding?

China's ICBC Bids for U.S. Entry

China's largest state-owned bank signed an agreement to acquire a majority stake in Bank of East Asia's U.S. subsidiary. It is the first time that China's state owned banks have acquired a U.S. deposit-taking institution. This is interesting given the fact that President Hu Jintao just completed his visit to the U.S.

For years, China has been pressured by the outside world to open up its economy and revalue its currency. Applying Porter's business strategy model, we can see that during past years China has employed a cost strategy to fuel its rise as one of the world's largest economies. For most of its history, China has refused to revalue its currency because the dollar pegged yuan has helped fuel its export market.

The time is coming for China to think about adjusting its strategy. Perhaps the revaluing of the Chinese yuan will prove a catalyst for China in adopting a different strategy- be it a differentiated one or otherwise. Granted, such a change will take time. But the idea is interesting. With growing foreign exchange reserves, primarily U.S. dollars, China faces substantial risks. President Hu's visit, along with other collaborations with U.S. officials indicate that China officials are on the move. It will be interesting to see how the situation plays out within the coming years.