Longer range, the challenge will be how to build a sustainable nominative advantage, counter the strategic moves of rival companies, and build long-term value for the company’s shareholders. You and your co-managers will have full authority over the company’s selling prices, product quality, customer service effort, advertising, product line breadth, retail outlet network, promotional rebate offers, and online sales at the company’s Web site, thus giving you an array of competitive strategy options in each market arena in which you decide to Compete.It will be entirely up to you and your co-managers to decide how to try to out-compete rival companies?whether to strive to become the industry’s low-cost reducer and use your low-cost advantage to undersell competitors, whether to differentiate your company’s footwear lineup on the basis of quality or service or other Section 1: The Industry and the Company attributes, and whether to compete worldwide or to focus on just one or two market segments.

You can elect to position the company in the low end of the market, the high end, or stick close to the middle on price, quality, and service.You can put the marketing emphasis on brand-name footwear or you can stress sales to private-label retailers. You can concentrate on selling wrought independent footwear retailers or you can shift more emphasis to online sales and/or company-owned retail megastars. You can stick with the company’s current North American and Asian production bases or you can build new plants in Europe and/or Latin America. And, you can finance the company’s growth with whatever mix of cash, short-term loans, long-term bonds, or new issues of common stock that you deem appropriate.Whichever long-term direction and business strategy is chosen, you and your co-managers will be held accountable for achieving acceptable financial performance, increasing shareholder value, and making the company a expected industry leader. The success your executive team has in managing the company will be based on how well your company compares against other companies on six performance measures: sales revenues, after-tax profits, return on investment, bond rating, stock value, and strategy rating. Each decision period in The Business Strategy Game represents a year.

Very likely, you and your co-managers will be asked to make anywhere from 6 to 12 complete sets of decisions, meaning that you will be in charge of the company for 6 toll 2 years?long enough to test your strategy-making, strategy-implementing skills. Expect the action to be fast-paced and exciting as mind gusty conditions change and as companies jockey for market position and competitive advantage. What You Can Expect to Learn The Business Strategy Game is a hands-on learning exercise designed to: Deepen your understanding of revenue-cost-profit relationships and the factors that drive profitability. Provide an integrative, capstone experience. Enhance your understanding of the strategies for competing successfully in globally competitive and e-commerce environments. Provide valuable decision-making practice and helpful develop good cuisines judgment.

Gaining a Deeper understanding of Revenue-cost-profit Relationships. Playing The Business Strategy Game will boost your understanding of basic revenue-cost-profit relationships and the factors that drive profitability.The what-fifing and numerical analysis that you’ll find essential in operating your company in a businesslike manner will help you gain greater command of the numbers commonly found in company financial and operating reports. You’ll get valuable practice in reviewing operating statistics, identifying costs that are out-of-line, comparing the profitability of different market segments, assessing your company’s financial condition, and deciding on what remedial and proactive approaches to take.Since the simulation is played on personal computers, the unity-gritty number crunching is done in a split second.

You’ll be able to see the revenue-cost-profit impact of each decision entry, making it easy to explore alternative “what-if’ scenarios and determine which of several different strategy options and decision combinations seems to offer the best profit potential. There’s an option to construct a strategic plan and evaluate which of several longer-range strategies is more attractive.The power of avian the computer instantaneously calculate the consequences 2 of each decision will make you appreciate the importance of basing decisions on solid number-crunching analysis instead of the quicksand of “l think”, “l believe”, and “Maybe it will work out K. ” Consolidating Your Knowledge and Skills: An Integrative, Capstone Learning Experience. The Business Strategy Game incorporates much of what you have studied in your production, marketing, finance, accounting, human resources, and economics courses.

The company you will be managing has plants to operate, work forces to hire and pay, inventories to control, marketing and ales campaigns to wage, prices to set, a Web site and online sales channel to manage, accounting and cost data to examine, capital expenditure and investment decisions to make, shareholders to worry about, sales volumes to forecast, tariffs and exchange rate fluctuations to consider, and ups and downs in interest rates and the stock and bond markets to take into account.The simulation involves as many as 195 decision entries each period and 85 what-if entries to forecast unit sales. Wrestling with so many decision variables will not only give you a stronger understanding of how all the efferent functional pieces of a business fit together but also teach you the importance of looking at decisions from a total-company perspective and unifying decisions in a variety of functional areas to create a cohesive strategic action plan. You’ll see why and how decisions made in one area spill over to affect outcomes in other areas of the company.The simulation is very much a capstone learning experience that ties together the information and analytical tools covered in earlier courses. Understanding the Functioning of Globally Competitive Markets and the Economics of E-tailing.

The Business Strategy Game will give you much deeper insight into the ins and outs of global competition, the different strategies companies can pursue in world markets, and the challenges of competing in a global market environment.We have designed The Business Strategy Game to be as realistic and as faithful to the functioning of a worldwide competitive market as a computerized simulation exercise can be. The game brings into play many of the business issues and competitive conditions characteristic of today’s global markets.

Your company will have to contend With exchange rate fluctuations, riff barriers, and cross-country production cost differences. You will have to decide whether to locate plants where wage rates are low or whether to avoid import tariffs by having a production base in each primary geographic market.You will have to decide whether to use much the same competitive strategy worldwide or whether to customize your strategy to specific conditions in the North American, European, Latin American, and Asian markets. Furthermore, you’ll be able to experiment with the use of a “bricks- and-clicks” e-tailing strategy?the company you’ll be managing has recently begun selling its products online. Learning to Make Sound Decisions and to Exercise Good Business Judgment.The Business Strategy Game will give you valuable decision-making practice and help you learn to exercise good business judgment.

The simulation involves as many as 195 decision entries each period and 85 what-if entries to forecast unit sales. Dealing with so many decision variables and business issues simultaneously will not only give you a stronger understanding Of how all the different functional pieces of a business fit together, but also cause you to appreciate the value of making decisions from a accompanied perspective.In making the strategic and operating decisions that arise in the simulation, you and your co-managers will encounter an array of fairly typical business issues and decision situations. You’ll have to assess changing industry and competitive conditions, diagnose the strategies of competitors and anticipate their next moves, pursue ways to secure a competitive advantage, evaluate different courses of action, chart a strategic course for your company to take, and adjust strategic plans In response to changing 3 conditions.

There will be ample opportunities to gain proficiency in using the incepts and tools of strategic analysis. You will learn what it means to “think strategically” about a company’s competitive market position and the kinds of actions it will take to improve it. As your skills in “market-watching” and . Com petition-watching” get sharper, your sense of business judgment about how to strengthen a company’s competitive position and financial performance will improve.

You will get to test your ideas about how to run a company, and there will be prompt feedback on the caliber of your decisions. Preparing You for the Game of Business in Real Life and Stimulating Your Competitive Spirit. In sum, playing The Business Strategy Game will draw together the lessons and information of prior courses, build your confidence in analyzing the revenues-profit economics of a business, help you understand how the functional pieces of a business fit together, give you valuable practice in crafting profitable growth strategies, and sharpen your business judgment.You will gain needed experience and practice in assessing business risk, analyzing industry and competitive conditions, making decisions from a accompanied perspective, thinking strategically about a Meany’s situation and future prospects, developing strategies and revising them in light of changing conditions, and applying what you have learned in business school.

The bottom line is that playing The Business Strategy Game will make you better prepared for playing the game of business in real life. We predict that in the process your competitive spirit will be stimulated and that you will have a lot of fun.The Company You Will Manage Your company began footwear manufacturing operations ten years ago in a converted јo-story warehouse in Cincinnati using makeshift equipment. John Delegated, Richard Debt, and Sam Rustles?the three co- founders?developed a modestly innovative line of athletic footwear and then proceeded over the next ten years to transform their fledgling Ohio-based enterprise into an $1 00 million public company with budding opportunities in the global market for athletic-style shoes.

The company has two plants?a 1 million pair per year plant outside San Antonio and a new state-of-the-art Asian plant that can turn out 3 million pairs annually. Distribution warehouses have been opened in the United States (in Memphis, Tennessee), n Europe (Brussels, Belgium), and in Asia (Singapore) to serve the world’s three biggest geographic markets. The company’s stock price has risen from $5. 0 in Year 7, when the company went public, to $15 at the end of Year 10.

The stock is traded in the over-the-counter market (NASDAQ); there are 6 million shares of the company’s stock outstanding. The company was founded 1 0 years ago by John Delegated, Richard Debt, and Sam Rustles to manufacture and market running and jogging shoes. John and Richard had tried various brands of shoes while members of the track team ATA well-known Midwestern university.Both had experienced shoe-related difficulties of one sort or another and felt that no company made shoes that provided good foot protection and that performed well under the conditions encountered in cross country running and in longstanding marathons run on hard pavement. Long discussions about what they were going to do after graduation led them to think about forming a small company of their own to develop and market a new-style shoe line with features that would be welcomed by runners and serious joggers.John’s father had been a manufacturer’s representative for one of the rotational athletic equipment companies ever since John was in the second grade. When John and Richard began to talk in earnest about starting their own athletic shoe company, John’s 4 father arranged for John and Richard to spend a day touring one of the New England shoe plants affiliated with the athletic equipment manufacturer he represented. During the tour, John and Richard met Sam Rustles, who at age 32 had risen quickly through the ranks to become plant manager.

Sam had a degree in mechanical engineering and was fascinated with machinery and the technical manufacturing aspects of the athletic footwear-making process. The three young men hit it off well together, and John and Richard immediately decided to invite Sam to join them in exploring the possibility of setting up their own company. Two months after John and Richard graduated, plans for the new company were in high gear. Hours of brainstorming and intensive study of shoes then on the market produced three shoe designs with features no other manufacturer had.One feature involved a special air cushion sole, another involved the use of a waterproof fabric that breathed and wicked away foot perspiration, and a third involved a new type of heel support. Cam’s technical now-how proved invaluable in drawing up designs and figuring out how to manufacture the shoes. Meanwhile, John located a building on the outskirts of Cincinnati that was being vacated and some used manufacturing equipment in reasonably good condition, all of which could be leased for $7,500 per month with an option to buy.

The three partners contributed $50,000 in equity capital and secured a $100,000 loan from Richard Taboo’s well-to-do parents. The First Five Years. The company was formally incorporated in August, with each founder having a one-third ownership. John Delegated functioned in the ole of president and handled the financial and administrative chores; Richard Debt took charge of the distribution and sales functions; and Sam Rustles assumed responsibility for product design, purchasing, and manufacturing operations.

The first pair of shoes rolled off the production line in mid- October, and the first shipment to a retail dealer was personally delivered by Richard Debt in time for the Christmas shopping season. The first two years were a struggle?long hours were spent testing various features and types of materials, perfecting shoe designs for different activities (jogging, walking, nines, and aerobics), working the bugs out of the makeshift equipment and plant setup, demonstrating the shoes to dealers, and convincing dealers to handle the company’s shoe line.Hundreds of pairs Were given away free to high school athletes to try; Debt spent many hours listening to user reactions and monitoring how well the shoes held up under wear and tear. The company lost money in its first year and had to use nearly $92,000 of the $1 00,000 loan extended by Richard Debts parents.

But the shoes coming off the assembly line were looking better, manufacturing efficiency was improving and reaction to the company’s shoes was positive. In the second year of operation, the company sold a total of 28,000 pairs and revenues topped $500,000.Most of the sales were to independent retail dealers in the southern Ohio and northern Kentucky areas. Richard Taboo’s persistence in calling on these dealers frequently, explaining the features of the shoe models to them, and even assisting the store clerks in selling customers on the shoes was a big factor in giving the company a market toehold. In the company’s third year of operation, cash flows improved and the company’s financial status grew less precarious.

Pairs sold topped 150,000 and revenues surpassed the $3 million mark. The founders plowed all their profits back into the business, concentrating on designing more models and broadening geographic distribution. As teenagers and young adults began to wear athletic-style shoes for everyday, woolgathering purposes, the company started marketing to retail shoe stores as well as sporting goods and athletic apparel stores.

A line of walking shoes for men and women was introduced. Section 1: The Industry’ and the Company By the company’s fourth year of operation, market demand for athletic outwear started to take off in the United States and Europe. The rising price of leather shoes made fabric shoes an attractive money-saving option.

At the same time, dress styles were becoming more casual among adults, and more people of all ages were taking up jogging, walking, aerobics, and regular exercise. Athletic footwear became a standard item in people’s personal wardrobes.A comfortable casual-wear line of shoes for men, women, and children was introduced. In Year 5, demand for the company’s brand jumped to 475,000 pairs and revenues rose to $17 million. Meanwhile, to accommodate rising sales and improve production efficiency, the decision was made to relocate the company’s production facilities to the outskirts of San Antonio, Texas, where a then state-of-the-art 1 million-pair plant was constructed at a cost of $20 million and financed largely with longer debt.The co-founders saw San Antonio as an attractive plant location because of the ready availability of nonunion labor and the strong work ethic of area residents. A central distribution center was leased in Memphis, Tennessee, to handle all shipments to retail dealers in North America.

The Second Five Years. Over the last five years, the company’s footwear sales have expanded fivefold to almost 2. 5 million pairs; revenues for Year 10 totaled $1 02 million. To achieve this growth, the company took some aggressive steps.The company leased a warehouse in Brussels, Belgium, to handle distribution of the company’s brands throughout the European Community; sales to European retailers began late in Year 6, eight months after the San Antonio plant came on line. In Year 8, the co-founders decided to expand again, this time opting to constructs 1 million-pair plant with state- fete-art manufacturing equipment in Asia, where the majority of the world’s athletic footwear was being produced.Asia had become the world’s most popular place to manufacture athletic footwear in the 1 sass because the region’s lower wage rates, coupled with good labor productivity, greatly reduced labor costs per pair produced (as compared to footwear plants in North America and much of Europe).

Also in Year 8 the company began to supply private-label athletic footwear to such North American retail chains as Sears, J Penny, Wall-Mart, and Smart on a competitive bid basis; the many used the Memphis warehouse to handle shipments to private-label customers.