The Business Strategy Game Overview and Orientation McGraw Hill Irwin 2009 The McGraw Hill Companies All Rights Reserved What Is The Business Strategy Game All About It s an online PC based exercise where you run an athletic footwear company in head tohead competition against companies run by other class members The marketplace is worldwide production and sales activities can be pursued in North America Latin America Europe Africa and Asia Pacific There are 12 market segments 4 geographic segments each for branded footwear sales to retailers for online footwear sales direct to consumers and for privatelabel sales 1 2 Your Company s Situation All companies start out on the same footing with equal sales volume global market share revenues profits costs footwear quality and so on Each decision period in The Business Strategy Game represents a year The company you will be running began operations 10 years ago and the first set of decisions you and your co managers will make is for Year 11 The company had Year 10 revenues of 238 million net profits of 25 million equal to 2 50 per share an ROE of 17 and a solid B credit rating Your company is in sound financial condition is performing well and its products are well regarded by the buyers of athletic footwear 1 3 The Decisions You Will Be Making You and your co managers will make decisions each period relating to Corporate social responsibility and citizenship Production of branded and private label athletic footwear maximum of 4 plants Plant capacity additions sales upgrades Worker compensation and training Shipping Pricing and marketing Bids to sign celebrities to endorse your company s footwear Financing of company operations Plus there is a screen for making annual sales forecasts and deciding whether to have inventory clearance sales 1 4 Competition Is Head to Head Company Against Company The head to head competition among companies to persuade consumers to buy their brand of athletic footwear is based on 10 factors Price Number of models styles Styling quality S Q rating Advertising Size of retailer network Celebrity endorsements Delivery time Retailer support Mail in rebates Shipping charges Internet sales only 1 5 You Have Many Strategic Options Company managers have wide strategic latitude in staking out a market position and striving for good performance There s no built in bias that favors any one strategy Companies can pursue a competitive advantage keyed to low cost low price or top notch footwear features and styling or more value for the money Companies can have a strategy aimed at being the clear market leader in a selling branded footwear to retailers or b selling directly to online buyers or c both Companies can put as little or as much emphasis on producing private label footwear as management prefers Companies can focus on one or two geographic regions or strive for geographic balance Companies can pursue essentially the same strategy worldwide or craft slightly or very different strategies for each geographic region 1 6 No One Strategy Is Best 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 In other words which strategies deliver the best performance hinges on the strength and interplay of each company s strategy and decisions against the strategies and decisions employed by rival companies there positively is no mystery silver bullet strategy or decision combination that players are challenged to discover 1 7 A Company s Competitive Effort vis vis Rivals Is Crucial All the sales and market share differences among companies are attributable to differing competitive efforts on price S Q rating advertising models offered delivery times retailer support and so forth Hence every company s strategic challenge is to craft a competitive strategy consisting of its prices S Q ratings advertising models delivery times retailer support and so on that it believes will produce the desired sales and market share outcomes when pitted against the competitive strategies of rival companies region by region 1 8 The Contest in the Marketplace Is a Battle of Strategies Following each year s decisions you ll be provided with Competitive Intelligence reports containing information of the actions rivals took to capture the sales and market shares they got Armed with this information you will be in pretty good position to figure out some of the strategic moves that rival companies are likely to make in the upcoming decision period Just as in sports where it is customary for every team to scout its next opponent thoroughly and develop a game plan to defeat them you will need to scout the strategies of rivals try to judge what they will do next and come up with a competitive strategy of your own aimed at defeating their strategies and boosting your company s performance 1 9 Outcompeting Rivals Is the Key to Market Success You ll have to stay on top of changing market and competitive conditions try to avoid being outmaneuvered and put into a competitive bind by the actions and maneuvers of rival companies and make sure your footwear is attractively priced and competitively marketed Just as you are trying to win business away from rival companies some or all rivals are certain to be actively striving to take sales away from your company It is the competitive power of your strategy vis vis the competitive power of rivals strategies that is the deciding factor in determining sales and market shares 1 10 It s All About Developing Winning Strategies The Business Strategy Game is all about practicing and experiencing what it takes to develop winning strategies in a globally competitive marketplace When the exercise is over the only things separating the best performing company from those with weaker performances will be the caliber of the decisions and strategies of the management teams of the respective companies It s an exercise calculated to spur competition and to get your competitive juices flowing 1 11 Some Features of the Market and Company Environment The industry setting in The Business Strategy Game is modeled to closely approximate the real world character of the globally competitive athletic footwear industry The functioning of the marketplace in The Business Strategy Game mirrors the competitive functioning of the real world athletic footwear market