Final answer:
In CAPSIM, R&D designs innovative products impacting costs and appeal, Sales and Marketing set prices and forecast demand, Production determines manufacturing processes and Finance secures funds, with all departments aligning with market structure and competition to achieve profitability.
Step-by-step explanation:
In CAPSIM, a business simulation game, the Research and Development (R&D), Sales, Marketing, Production, and Finance departments are interconnected in making strategic decisions that affect the performance of a firm. R&D decisions determine the design and innovation of products, affecting customer appeal and production costs. Sales and Marketing departments work together to set prices, promote products, and forecast demand, thereby influencing the revenue generation.
Production is responsible for the manufacturing process, deciding on capacity, inventory levels, and labor. Their decisions affect the cost structure and ability to meet sales forecasts. Finance manages the capital to support R&D, Marketing, Production, and Sales. They decide on capital investment, securing loans, issuing stocks or bonds, and managing cash flow to ensure the company has the funds needed to operate and grow.
These departments must align their decisions with the market structure and conditions such as market power, product differentiation, and barriers to entry to ensure that they make strategic choices that maximize the company's profitability and competitive edge in the market.