- 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
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
8. The Role of Competitive Aggressiveness
-
- Number Models in Product Line
- Actual Numbers Are Influenced by Industry Marketing
Efforts
- Industry Demand Forecast Assumes Year 10 Levels of:
9. The Weapons of Competitive Rivalry
- Number of Retail &Company Owned Outlets
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
- 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%
-
- Long-Wear Prices Rise / Normal-Wear Prices Fall
- When Total Usage of Normal-Wear Materials Goes Above 75%
-
- Normal-Wear Materials Prices Rise / Long-Wear Prices Fall
16. Labor Force Decisions
- Number of Workers to Hire
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
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:
-
- Cumulative Spending at Plant Per Pair of Plant Capacity
-
- 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
- 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
- Up to 4 Million Pairs at a Time
- As Many Times As You Want
25. Automation Options
-
- Increase Labor Productivity And/Or
-
- Reduce Production Run Setup Costs And/or
-
- Plant Supervision Costs And/or
- Up to 3 Options Per Plant
- Six Options Available Basically for
26. Other
- Permanent Capacity Shutdown
- Temporary Plant Shutdowns
-
- Approximately 90% Productivity Upon Recall
-
- Require Advance Instructor Approval
27. The Business Strategy Game TM Marketing Decisions 28.
Private Label Market
- Number of Unsold Pairs to Convert for N.A. Branded Market
29. Branded Markets
- 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
-
- Current Year's Bond Rating
-
- Current Year's Interest Rates
- Maximum Issue/Year $100 Million
- Automatic Loans to Meet Cash Requirements
-
- 2 Point Interest Rate Penalty
- Interest Received On Cash Balances
-
- 3 Points Below Prime Rate
35. Bonds
-
- Previous Year's Bond Rating
-
- Current Year's Interest Rates
- Maximum Issue/Year $100 Million
- Require 2.0 Times Interest Coverage
- Early Re-Payment Possible
- Maximum of 8 New Bond Issues
36. Common Stock
- Maximum Issue/Year $200 Million
- Currently 5 Million Shares Outstanding
-
- Minimum of 3 Million Shares
-
- Maximum of 50 Million Shares
- Issued/Retired at a Discount/Premium From the Current
Price
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
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