Company Operations Companies begin the simulation producing branded and private-label footwear in two plants, one in North America and one in Asia.
Management has the option to establish production facilities in Latin America and Europe-Africa as the simulation proceeds, either by constructing new plants or buying previously-constructed plants that have been sold by competing companies. Private-label footwear must be produced to the specifications of chain footwear retailers with private label brands.
If a company has more production capacity than is needed to meet the demand for its branded footwear, it can enter into competitive bidding for contracts to produce footwear sold under the private-label brands of large chain retailers. Company co-managers exercise control over production costs based on the styling and quality they opt to manufacture, plant location wages and incentive compensation vary from region to region , the use of best practices and six sigma programs to reduce the production of defective footwear and to boost worker productivity, and compensation practices.
All newly-produced footwear is shipped in bulk containers to one of four regional distribution centers North America, Latin America, Asia-Pacific, and Europe-Africa. All incoming orders from internet customers and retailers in a geographic region are filled from footwear inventories in that same regional distribution center. Since internet and retailer orders cannot be filled from inventories in a distribution center in another region because of prohibitively high shipping and distribution costs , company co-managers have to be careful to match shipments from plants to the expected internet and retailer demand in each geographic region.
Costs at the four regional distribution centers are a function of inventory storage costs, packing and shipping fees, import tariffs paid on incoming pairs shipped from foreign plants, and exchange rate impacts. The countries of North America, which strongly support free trade policies worldwide, currently have no import tariffs on footwear made in either Europe-Africa or Asia-Pacific. Instructors have the option to alter tariffs as the game progresses.
In running their footwear companies, the challenge for each management team is to craft and execute a competitive strategy that results in a respected brand image, keeps their company in contention for global market leadership, and produces good financial performance as measured by earnings per share, return on equity investment, stock price appreciation, and credit rating. All companies begin the exercise with equal sales volume, global market share, revenues, profits, costs, product quality and performance, brand recognition, and so on.
However, market growth rates vary by geographic region, and growth rates are also affected by the aggressiveness with which companies go after additional sales by making their product offerings more appealing. On-Screen Support Calculations Each time co-managers make a decision entry, an assortment of on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, total profit, earnings per share, ROE, unit costs, and other operating outcomes. All of these on-screen calculations help co-managers evaluate the relative merits of one decision entry versus another.
Company managers can try out as many different decision combinations as they wish in stitching the separate decisions into a cohesive whole that is projected to produce good company performance. The Quest for a Winning Strategy All companies begin the exercise with equal sales volume, global market share, revenues, profits, costs, product quality and performance, brand recognition, and so on. Each company typically seeks to enhance its performance and build competitive advantage based on some combination of selling its footwear at more attractive prices, offering a bigger selection of footwear styles and models, having more appealing footwear styling and quality, outspending rivals on advertising, offering bigger mail-in rebates, outbidding rivals in signing celebrities to endorse its brand, and so on for each of the various determinants of competitiveness.
Any and all competitive strategy options—low-cost leadership, differentiation, best-cost provider, focused lowcost, and focused differentiation—are viable choices for pursuing better company performance and competitive advantage in the branded footwear segment. It can focus sales efforts on one or two geographic regions or strive to build strong market positions in all four geographic regions. It can pursue essentially the same branded strategy worldwide or craft slightly or very different strategies for each of the four geographic regions.
Most any well-conceived, well-executed competitive approach in branded footwear is capable of succeeding, provided it is not overpowered by the opposing strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness. However, vigorous price competition prevails in the private-label segment.
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For obvious reasons, chain retailers prefer to source their requirements for private-label footwear from companies offering the best lowest prices. Then they must be successful in bidding against rival companies for contracts. Companies offering to supply specified quantities of private-label footwear with lower price bids are awarded contracts over companies that bid higher prices. A low-cost, low-price strategy is thus mandatory in the private-label segment if a company expects to be profitable but this does not require pursuing the same strategy in the branded segment.
How the Outcomes Are Determined Instructors specify a deadline date and time for company co-managers to complete for each decision round and other related assignments. Instructors have the flexibility to change the deadlines at any time for any reason.
Decision rounds can be scheduled once per week, twice per week, daily, or even twice daily, depending on how you want to conduct the exercise. You will be able to peruse sample decision schedules when you are settling on the times and dates for the deadlines. When the instructor-specified deadline for a decision round arrives, the BSG algorithms allocate sales and market shares to the competing companies, region by region.
The overall competitiveness. The greater the differences in the overall competitiveness of the branded product offerings of rival companies, the bigger the differences in their resulting sales volumes and market shares. Conversely, the smaller the overall competitive differences in the offerings of rival companies, the smaller the differences in sales volumes and market shares. The results of the decision round are available to class members and the instructor about minutes after the deadline passes. Special Note: The cause-effect relationships and underlying algorithms in The Business Strategy Game are based on sound business and economic principles and are closely matched to the real-world athletic footwear market.
The Business Strategy Game is predicated on the principle that the more BSG mirrors real-world market conditions and real-world managerial decision-making, the more pedagogical value it has. Time Requirements for Company Co-Managers Data from our servers indicates that each company team spends an average of about 2.
The first couple of decision rounds take longer not only because co-managers have to explore the menus, familiarize themselves with the information on the screens, and absorb the relevance of the calculations shown whenever new decisions are entered but also because it takes time for them to establish a working relationship with one another and debate what sort of long-term direction and strategy to pursue. As discussed earlier, you can offset the hours students spend on the simulation by trimming the number of case assignments, eliminating a written case assignment which can take students hours to prepare , and perhaps allocating one or more regularly-scheduled class periods to having class members meet in a computer lab to work on their decisions or a 3-Year Strategic Plan assignment.
It will consume part of a class period to introduce class members to the simulation and get things under way. All activity for The Business Strategy Game takes place at www. Company Operations Companies assemble action cameras and drones of varying designs and performance capabilities at a Taiwan facility and ship finished goods directly to buyers in North America, Asia-Pacific, Europe-Africa, and Latin America.
Both products are assembled usually within two weeks of being received and are then shipped to buyers no later than days after assembly. Companies maintain no finished goods inventories and all parts and components are delivered by suppliers on a just-in-time basis which eliminates the need to track inventories and simplifies the accounting for plant operations and costs.
Company co-managers determine the quality and performance features of the cameras and drones being assembled. Plus, company managers have accounting and cost data to examine, import duties and exchange rate fluctuations to consider, and shareholder expectations to satisfy.
Read Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases
On-Screen Support Calculations Each time co-managers make a decision entry, an assortment of on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, total profit, earnings per share, ROE, costs, and other operating outcomes. Company managers can try out as many different decision combinations as they wish in stitching the separate decision entries into a cohesive whole that is projected to produce good company performance.
The Quest for a Winning Strategy All companies begin the GLO-BUS exercise on the same footing from a global perspective—with equal sales volume, global market share, revenues, profits, costs, product quality and performance, brand recognition, and so on. How the number of week-long sales promotion campaigns a company has in each region compares against the regional average number of weekly promotions.
Competition among rival makers of commercial copter drones is more narrowly focused on just 9 salesdetermining factors: 1. As with BSG, all the various generic competitive strategy options—low-cost leadership, differentiation, best-cost provider, focused low-cost, and focused differentiation—are viable choices for pursuing competitive advantage and good company performance. A company can have a strategy aimed at being the clear market leader in either action cameras or UAV drones or both.
It can focus on one or two geographic regions or strive to build strong market positions in all four geographic regions. It can pursue essentially the same strategy worldwide or craft customized strategies for the Europe-Africa, Asia-Pacific, Latin America, and North America markets. Just as with The Business Strategy Game, most any well-conceived, well-executed competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness.
How the Outcomes Are Determined When the instructor-specified deadline for a decision round arrives, the GLO-BUS algorithms allocate sales and market shares in the action-camera and UAV drone segments to the competing companies, region by region.
How many units a company sells in each region is based on the competitiveness and overall buyer appeal of its product offering versus the product offerings of rivals for each competitive factor. For example, a company can offset the adverse impact of an above average price with above-average performance and quality, more advertising, longer warranties, and so on. The greater the differences in the overall competitiveness of the product offerings of rival companies, the bigger the differences in their resulting sales volumes and market shares. Conversely, the smaller the overall competitive differences in the product offerings of rival companies, the smaller the differences in sales volumes and market shares.
Crafting & executing strategy the quest for competitive advantage 20…
Once sales and market shares are awarded, the company and industry reports are then generated and all the results become available minutes after the decision deadline passes. Company performance is judged on five criteria: earnings per share, return on equity investment ROE , stock price, credit rating and brand image. Special Note: The time required of company co-managers to complete each decision round in GLOBUS is typically about to minutes less than for The Business Strategy Game because a there are only 8 market segments versus 12 in BSG , b co-managers have only one plant to operate versus as many as 4 in BSG , and c newly-assembled cameras and drones are shipped directly to buyers, eliminating the need to manage finished goods inventories and operate distribution centers.
Guidance about which simulation might be best for your course is provided later in this section. There is also a video tour for instructors. The Help pages for each decision entry screen also contain tips and suggestions for making wise decision entries.