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The Business Strategy Game

The Business Strategy Game. Everyone started with same set of parameters. What would the other teams do? We read the book to see what values or strategies counted most. All depends on competition Prepare our company for future competition. Keep an eye on competition.

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The Business Strategy Game

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  1. The Business Strategy Game

  2. Everyone started with same set of parameters. What would the other teams do? • We read the book to see what values or strategies counted most. All depends on competition • Prepare our company for future competition. Keep an eye on competition

  3. Initial Key Strategy goals  • Move towards building an international market • Plant decisions - build slowly, one step at a time • Increase productivity and profitability in Ohio by running factory at capacity  • Open in Asia first, then move into Europe • This saved import fees and reduced manufacturing cost • Most profitable due to low wages • How to finance growth in USA, Asia and Europe • Issue stock (decreases per share value but is equity not debt) • o       Issue a long-term loan for remainder • o       Keep bond rating up by limiting debt ratio • ·        Set a reasonably low price to ensure that we will not be priced out of the market and can sell our share • o       Did not try to be a volume dealer • ·        Tried to make quality, low priced shoes relative to market • ·        Increase model availability and quality by a factor of 50 • o       Initial goal was 100 then see what everyone else did • o       It looked like most teams made this adjustment too • ·        Increase service rating and see what happens • ·        Maintain visibility in private-label market • o       Low profitability market. Increased price to break-even • ·        Sold most of production in branded markets for higher profits • ·        Get some celebrity endorsement • o       Focused on candidates with 50 or over • o       Bid 1000 on first one - then more reasonable expenses • Read and analyze all reports looking for opportunities and strategy changes. • Initial evaluation year 11 • Evaluated competitor’s strategy to counter threats • B- massive worldwide construction and productive capacity in all areas • Appeared to want to be largest producer • Set lower price than us is Asia • Stock-outs concerned us but we did not to raise our price too quick or too much. • Increased prices slowly so would not drive the customers away. • Plant capacity • Build in Asia 1,000 • Came in sixth!!! Do not panic! Set up strategy for long run.

  4. Evaluation year 12 • Evaluated competitor’s strategy to counter threats • D- strong competition in Europe next year • Several teams setup factories in Asia but forgot to pay workers. • Plant capacity • Build in Europe 1,000 • We had very low service ratings – stock outs again • Raised prices again all areas • Moved up to third

  5. Evaluation year 13 • Evaluated competitor’s strategy to counter threats • A-    Building in Europe • a.       Have 2,000 in Asia. Selling @ 37.50 • b.      Carried large inventory (835) in private label Selling @ 27.00 • Massive building in Europe for yr 14 –10,000 capacity, demand 8,077 • Asia has 11,000 capacity, demand only 5,177 • Add automation to Ohio to increase efficiency and lower cost • Increased capacity in Texas (1,000) and Europe (1,000) • We will have 7,000 worldwide • Strategy finally showing

  6. Evaluation year 14 • Evaluated competitor’s strategy to counter threats • A – moving down but still has 7,000 capacity • Still carrying large inventory in private-label Selling @ 29.00 • Prices too high in NA $50.00 • H – building in Asia now (1,000) has 9,000 capacity • B – quality below 50 in private • Massive inventory (11,209) and (5000) from other teams can be let loose soon • Lots of excess capacity worldwide – hold on new construction • Raised price in NA to avoid stock out 

  7. Evaluation year 15 • Evaluated competitor’s strategy to counter threats • A – moving up • Currnetly has 8,000 capacity • Still carrying large inventory in private-label Selling @ 30.00 • Prices too high in NA $50.00 • Low sales in Asia but may be moving up • H – has 9,000 capacity • Prices higher in NA and Europe but competitive Watch for move • Did not set wages in Asia • B – quality below 50 in private • Massive inventory (11,434) can be let loose soon • Add automation to Texas plant and expanded 1,000 

  8. Summary: • Slow growth and minor corrections everywhere rather than jumping in full steam • Started at sixth place year 11, then moved to third place year12, and then kept first place remainder • NOTE: If you would have bought 100 shares of our company in year 10 at $15.00 per share, today they would be worth $17,425!!!

  9. NOTE: If you would have bought 100 shares of our company in year 10 at $15.00 per share, today they would be worth $17,425!!!

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