simulation
DESCRIPTION
TRANSCRIPT
- 1. The Business Strategy Game TM
2. Hands-On Learning Opportunity
- Look for Ways to Secure Competitive Advantage
- Evaluate Different Courses of Action
- Chart a Course for Your Company
- Assess Changing Industry and Competitive Conditions
- Diagnose the Strategies of Competitors and Anticipate Their Moves
3. What You Can Learn
- Proficiency in Using Strategy Tools
- Reinforce Functional Course Learning
- Stronger Understanding of How Functional Disciplines Fit Together
- Improved Insight Into Global Competition
- Enhance Understanding of Revenue/ Cost/ Profit Relationships
- Challenging and Fun!
4. The Business Strategy Game TM The Industry: Athletic Footwear 5. Market Segments Europe 10 - 25% Asia 15 - 35% Latin America 15 - 35% North America 5 - 20% Geographic Market Projected Annual Growth 6. Industry Sales Projections (000S Pairs Per Company) Year 11 12 N.A. 1,500,000 1,650,000 Asia 450,000 575,000 Total 3,225,000 3,950,000 Private Label 650,000 700,000 L.A. --300,000 Branded Europe 625,000 725,000 7. The Role of theS&P 500 Index
- Year to Year Changes In Index Effect Next Year's Industry Demand
- Maximum Impact Is +/-10%
8. The Role of Competitive Aggressiveness
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- Prices
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- Quality
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- Service to Retailers
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- Number Models in Product Line
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- Product Image
- Actual Numbers Are Influenced by Industry Marketing Efforts
- Industry Demand Forecast Assumes Year 10 Levels of:
9. The Weapons of Competitive Rivalry
- Product Quality
- Service to Retailers
- Number of Retail &Company Owned Outlets
- Annual Advertising
- Number of Models
- Customer Rebates
- Product Image
- Wholesale Selling Price
10. Branded Footwear Sales
- Combination of All Competitive Weapons for Your CompanyAs Compared to Competitionby Geographic Market
11. North American Private-Label Sales
- Offer Price at Least $2.50 Below Average ofBrandedWholesale Prices in North America
- Lowest Price Wins
- Ties Go to Higher Quality Company
- Offered in Multiples of 50,000 Pairs
- Minimum Acceptable Quality and Models Levels
12. Demand Forecasts
- Getting good estimates gives you a reliable profit forecasts
- Conservative estimates are better
The Business Strategy Game TM 13. The Business Strategy Game TM Operations Decisions 14. Product Quality Quality Driver Impact % Long-Wear Materials 0 - 90 points Current QC/Pair 0 - 45 points Cumulative QC/Pair 0 - 80 points Styling/Features Expenditures Per Model 0 - 90 points 15. Material Prices
- Drop If Industry Capacity Utilization Falls Below 90%
- Rise When Industry Capacity Utilization Exceeds 100%
- When Total Usage of Long-Wear Materials Goes Above 25%
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- Long-Wear Prices Rise / Normal-Wear Prices Fall
- When Total Usage of Normal-Wear Materials Goes Above 75%
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- Normal-Wear Materials Prices Rise / Long-Wear Prices Fall
16. Labor Force Decisions
- Number of Workers to Hire
- Annual Wages
- Incentive Pay
17. Labor Productivity Drivers
- Incentive Pay As Percentage of Total Compensation
- Total Compensation (Without OT) Compared to Rivals Local Plants
- Automation Options Installation
- Cumulative Production Methods Improvement Spending
- Percentage Increase in Annual Wage
18. Reject Rate Drivers
- Current Quality Control Expenditures Per Pair Produced
- Piece Rate Incentive/Pair
- Number of Models
19. Production Methods Improvement (PMI)
- Reduce Materials Costs by As Much As 25%
- Improve Worker Productivity by up to 500 Pairs Per Worker
- PMI Spending Effectiveness Drivers:
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- Cumulative Spending at Plant Per Pair of Plant Capacity
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- Greatest Impact at Texas Plant Due to its Older, Less Efficient Layout
- Reduce Supervision Costs by up to 25%
20. Number of Styles/Models Number of Models Production RunSet-Up Cost 50 100 150 200 250 $1 million $2 million $3 million $4 million $5 million 21. The Business Strategy Game TM Plant Decisions 22. New Plant Construction
- Maximum of 4 Plants
- Texas: 1 Million Pairs Current Capacity
- Asia: 3 Million Pairs Current Capacity
- Europe: Potential Construction Site
- Latin America: Potential Construction Site
23. New Plant Construction Size Capacity in Pairs Small 1 million Medium 2 million Large 3 million 24. Expansion
- In Millions of Pairs
- Up to 4 Million Pairs at a Time
- As Many Times As You Want
25. Automation Options
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- Increase Labor Productivity And/Or
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- Reduce Production Run Setup Costs And/or
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- Plant Supervision Costs And/or
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- Production Capacity
- Up to 3 Options Per Plant
- Six Options Available Basically for
26. Other
- Permanent Capacity Shutdown
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- Entire Plant or Portion
- Temporary Plant Shutdowns
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- Approximately 90% Productivity Upon Recall
- Purchase and Sale
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- Entire Plant or Portion
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- Require Advance Instructor Approval
27. The Business Strategy Game TM Marketing Decisions 28. Private Label Market
- Bid Price
- Number of Pairs to Offer
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- 50,000 Pair Lots
- Number of Unsold Pairs to Convert for N.A. Branded Market
29. Branded Markets
- Wholesale Price
- Advertising Expenditures
- Retail Dealers
- Customer Rebates
- E-tailing is an increasing % of Market
30. Service Rating
- Delivery Time Achieved in the Previous Year
- Stockouts the Previous Year
- On average you should spend $500 per representative
- High of 80 for Not Stocking Out
- Low of -170 If Stockouts Exceed Branded Sales by 100% or More
31. Service Rating Delivery Time Cost per Pair Service Points 4 0.00 0 3 0.20 20 2 0.50 60 1 1.00 100 32. The Business Strategy Game TM Financial Decisions 33. Financial Strategy
- Significant Element in Determining Company Performance
- Financing Will Be Required To Expand With Industry
- Maximize Shareholder Wealth
- Search For Optimal Capital Structure
34. Short-Term Loans
- Rates Determined by:
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- Current Year's Bond Rating
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- Current Year's Interest Rates
- Maximum Issue/Year $100 Million
- Automatic Loans to Meet Cash Requirements
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- 2 Point Interest Rate Penalty
- Interest Received On Cash Balances
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- 3 Points Below Prime Rate
- One Year Term
35. Bonds
- Rates Determined by :
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- Previous Year's Bond Rating
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- Current Year's Interest Rates
- Maximum Issue/Year $100 Million
- Require 2.0 Times Interest Coverage
- Early Re-Payment Possible
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- 2% Prepayment Penalty
- Maximum of 8 New Bond Issues
- Ten Year Term
36. Common Stock
- Maximum Issue/Year $200 Million
- Currently 5 Million Shares Outstanding
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- Minimum of 3 Million Shares
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- Maximum of 50 Million Shares
- Issued/Retired at a Discount/Premium From the Current Price
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- Price Shown on Screen
37. The Business Strategy Game TM
- Backups Can Save You Time & Effort
- SCANYour Disk Before and After Use
- If Disk Goes Bad, Have it Restored
Computer Operations 38. Bad Data Entry No Excuse
- Company Data Disks Have Year 10 Decisions
- Program Checks for Data Entry Errors
- Invalid and Out-of-Range Decisions areExposed
- Player's Manual and Screen Instructions Explain Correct Data Requirements
39. Winners
- Develop a Unique Strategy and Stick With It
- Understand Company Operations
- Analyze Their Competition
- Are Proactive
40. Losers
- Fail to Develop a Unique Strategy
- Typically Change Strategies Significantly Several Times As They Try to Copy Successful Competitor's Strategies
41. Losers
- Don't Analyze Whats Going on & Consequently Mis-Guess Competition
- Are Always Trying to "Catch-up"
- Don't Understand Company Operations
- Don't UnderstandHow to Run the Game
42. Strategic Issues
- How to Position the Company in the World Footwear Market
- Where Should Additional Production Capacity Be Located
- What Competitive Strategy to Follow and What Kind of Competitive Advantage to Try to Build
43. Operating Issues
- Whether Cost Savings Can Be Realized in Any Portion of the Value Chain
- Whether to Continue Comparable Offerings in All Market Segments
- Employee Compensation in Texas & Asia
- What to Do in Year 11 to Prepare for the Expected Demand in Year 12
- What to Do About Texas Plant's High Costs
44. The Business Strategy Game TM Questions