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Simulation

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  • 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 (000’S 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 the S&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
      • Prices
      • Quality
      • Service to Retailers
      • Number Models in Product Line
      • 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 Company As Compared to Competition by Geographic Market
  • 11. North American Private-Label Sales
    • Offer Price at Least $2.50 Below Average of Branded Wholesale 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%
      • 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
    • 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:
      • 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 Run Set-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
      • Increase Labor Productivity And/Or
      • Reduce Production Run Setup Costs And/or
      • Plant Supervision Costs And/or
      • Production Capacity
    • Up to 3 Options Per Plant
    • Six Options Available… Basically for
  • 26. Other
    • Permanent Capacity Shutdown
      • Entire Plant or Portion
    • Temporary Plant Shutdowns
      • Approximately 90% Productivity Upon Recall
    • Purchase and Sale
      • Entire Plant or Portion
      • Require Advance Instructor Approval
  • 27. The Business Strategy Game TM Marketing Decisions
  • 28. Private Label Market
    • Bid Price
    • Number of Pairs to Offer
      • 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:
      • 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
    • One Year Term
  • 35. Bonds
    • Rates Determined by :
      • 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
      • 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
      • Minimum of 3 Million Shares
      • Maximum of 50 Million Shares
    • Issued/Retired at a Discount/Premium From the Current Price
      • Price Shown on Screen
  • 37. The Business Strategy Game TM
    • Backups Can Save You Time & Effort
    • SCAN Your 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 are Exposed
    • 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 What’s Going on & Consequently Mis-Guess Competition
    • Are Always Trying to "Catch-up"
    • Don't Understand Company Operations
    • Don't Understand How 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