BSG Final PaperThe paper is to be an analysis of your strate

BSG Final Paper
The paper is to be an analysis of your strategy and firm
performance.
Section 1: What is your firm’s strategy? What were your top
priorities? How did this guide your approach to the simulator?
Our firm pursued a combination of strategies, which include
both global differentiation and focus strategy and we made
moves based on previous industry trends. We agreed on
pursuing whatever opportunities look most promising based on
the competition that arises.
At the beginning, the top priority was to differentiate from the
other companies by being able to dominate three out of four
markets which are: North America, Europe-Africa, and Asia-
Pacific. We concentrated heavily on three markets so that we
could start out strong and take as much market share as
possible. We started differentiating ourselves from other
competitors by continuously expanding our product line and
increasing the S/Q rating. We increased our number of
models/styles to a maximum of 500 and invested more in
Enhanced styling/ features in order to offer our customers a
variety of high quality choices and match their demand. In
addition, we also focused on investing more in our brand
marketing both for internet and wholesale segments, and we
targeted the private-label market since there was a huge demand
that wasn’t being met. In Year 14, we managed to hold one of
the largest market shares of the industry and we also decided to
enter the Latin American Market in order to increase our Image
Rating. We also succeeded in increasing the market share and
becoming the market leader in the high-end sneaker market with
one of the largest product lines. We were looking to become the

"Nike" or "Adidas" in this industry but as previously mentioned,
we would have to shift this strategy if it was needed. In years
15-17, we continuously worked toward being the market leader
in the high-end sneaker market by focusing more on a
differentiation strategy. However, in years 18-19 we had to
change our strategy for two of the geographic regions which are
North America and Europe Africa. We focused on a budget
based strategy and we were not charging premium prices for
these two regions. Nevertheless, we still continued to focus on
differentiation and price premium strategy for the Latin
America and Asia Pacific markets while still spending a
considerable amount on marketing.
.We worked toward becoming a market leader by also operating
in a socially responsible manner as a top priority. There was no
pressure to spend anything on the seven initiatives but it was
very important for us to operate in an ethical and sustainable
way and take interest in social issues rather than focus only on
those issues that impact the profit margins. Being committed to
ethical practices, we decided to pursue and embrace all seven
CSRC initiatives throughout the years.
Section 2: Simulation narrative. I prefer to read about trends
and themes, not a year by year rundown of what was done (so
translate your journals into something more concise) Discuss
how you deployed your management decisions and what
justifications guided you. Also, discuss competitors, which
teams were a threat and how did their actions impact your firm?
Do not neglect to also offer up a short discussion of the larger
systemic influences that impacted the entire industry. Then,
discuss how successful you were… what challenges did you
face? How did your competitors influence you or thwart your
actions? How did the overall market and trends impact you?
Was there turmoil within your team?

BSG
BSG Journal #1
1. What is your strategy for the firm (your view, not the group)?
So we decided to only concentrate on three markets (US,
EU/AF, and AS/PAC) to really start out strong and take as much
market share as possible. We looked to increase our star rating
to 5.5-6.0 to be a good middle-ground offering to the general
public, but we had a feeling that people would target a similar
star rating; so, to really separate ourselves from the others, we
increased spending in the following marketing areas:
a. Wholesale Marketing by $7,000
b. Retailer Support by $500
c. Search Engine Advertising by $1000
d. Celebrity Endorsements $1,000 Cap and got Bud Birkenstock
In doing so, we were able to get very high sales numbers and
overall had the second to third highest market share % in
mentioned regions.
2. What is the basis for your strategy going into the next week?
So, for this week, I recommended to the group that we should
start differentiating ourselves from others by increasing our star
rating and the number of models/styles we offer. In doing so,
we can separate ourselves from our main two competitors,
Company C and Company H. Also, I saw that they and almost

all other firms don’t have as much cash on hand (based on the
financial performance summary) so they couldn’t look to spend
as much as we do in marketing still. Due to this, I feel we
should be able to differentiate and gather more of the market
share previously.
One big area that I also mentioned was to really target the
private-label market because there is a huge demand that isn’t
being met. With roughly 1,000k of demand not being fulfilled,
we should look to increase our offered numbers from approx.
200k shoes to 500-600k. In doing so, not only will we get
another channel of revenue, but also our image and credit rating
will increase.
3. Access the effectiveness of your strategy
So, overall, our strategy was very effective in the first week,
but didn’t live up to expectations as being the market leaders.
As mentioned in a previous question, we were ranked 3rd
overall in the shoe industry receiving an Investor Expectation
Score of 111 and a Best-In-Industry Score of 84. However, we
did overestimate the amount of money other companies would
budget in their marketing efforts and ultimately, were short of
100-200k shoes in our three markets. If we have decreased our
marketing budget by around $2,000, we would have gotten the
desired outcomes without being out of stock which could have
led to a higher B-IND score and Average Score. We also would
have had more cash in our pockets which would have been used
to make manufacturing/production/training upgrades. With that
said, we know what we did well and what we can improve for
the next year and overall, are very happy with starting off
strong.
4. What did your group decide to do and what strategic
proposals did you forgo (assess what was decided and what
strategic proposals were not successful… would they have been

successful, in retrospect?)
So, overall, the group did decide to take my proposals or had
similar proposals for the next week:
1. Increase the pairs offered to private-label which will become
a good source of revenue
and brand/credit image.
2. Increase the number of models/styles from 300 to 400 to
diversify the firms offering and increase overall sales.
3. Increase our production by maxing out equipment in both
facilities to meet the forecasted demand. Also sell our
refurbished equipment to increase star rating while decreasing
reject rates. We will continue to purchase new equipment in the
future to because we are expecting the need to replace all of our
current/previous machines in the next 3-4 years
4. Keep our prices the same to maintain/increase attractiveness
and competitiveness; we doubt that other firms won’t increase
the prices of their offerings to meet the increased costs
inputted. We are also okay with our current profit margins until
the next year, but will look to increase them in the future.
5. Pay off our current debts and replace them with smaller,
short-term loans. Even if the payment period is decreased from
8-year period to 5, we have managed to decrease our yearly
payment amount due to our current credit rating.
6. Increase the marketing budget slightly to compete against
other firm’s increased budgets; we doubt that they can reach
similar expenditures because they are spread out in four markets
compared to our three, but it is imperative to remain the highest
spender in marketing to get our desired demand.
With the following decisions made, we are looking to carve our
place as the upper-end shoe brand with the largest product line.
In theory, we will have the dominant market share if we are able
to maintain costs while maintaining our high quality but we will
have to see how other firms react and strategize.

One proposal we didn’t pursue this week was to increase our
shoe’s star rating due to the very high costs. This is something
we will look to target in the near future, but as of right now, we
aren't looking to overspend in case we don’t live up to
expectations and the desired profit/revenue. Overall, we moved
on from our goal to be the middle-end shoe option due to the
competitiveness. Firm A, C, and D are similarly positioned and
even though we are the current leader, this can change in the
future. So, we decided to move closer in terms of Firm H and
their targeted market, but still differentiate by having a higher
price/sq-rating ratio. The next moves we’ll make will be based
on the results, but as of right now, we played it generally safe.
BSJ Journal #2
We continued our decision to concentrate on the three markets
(US, EU, AS) and dominate them. With that said, I am very
surprised that every other firm had the same strategy of
increasing the variety and quality of their shoe offerings.
Frankly, our firm should still be in the top 3 firms in market
share because we have the highest marketing budget, the best
gross/operating/net profit margins, the lowest debt, and the best
cash flow. It will be very hard for everyone to compete in the
same market without making any major changes and because of
that, we will have a short-term competitive advantage which we
hope will become a sustainable competitive advantage.
So, for this week, I recommend to the group that we should
increase our marketing budget again because other firms have
looked to copy our success by concentrating on certain markets
like we have. So for that to happen, we would look to:

· Increase Brand Advertising by roughly +$3000
· Increase Retail Support by roughly +$1000
· Increase Search Engine by roughly +$2000
· Spend a maximum of +$12,000 of Celebrity Endorsements (to
prevent others from getting endorsements without overpaying;
however, we will break even if we get them at our bidding price
based on our current profit margins)
Alongside the increase in marketing, I’d also recommend to
increase our production capabilities and increase our star rating
by:
· Purchasing Option C for both facilities as a one time cost
(superior material costs will look to increase based on the
current trend, so this will be really cost effective in the long
run)
· Increase wages by +1% to have continue increasing workforce
productivity
· Increase Best Practices Training to reduce materials cost,
increase star ratings, and increase workforce productivity
· Aggressively increase Supervisory Compensation by +6-11%
to again increase workforce productivity (and also increases our
net profit)
· Continue replacing 1,000 machines because all of our old
machines will be scrapped in two years; I am betting that almost
all firms will not expect this, so they will have to spend one
lump sum to replace all old machines.
· Build a production facility in Europe that can build roughly
2,000 shoes to increase production, to bypass
customs/delivery/exchange rates, and to prepare our entry into
the Latin Market in the next two-three years.
However, even with these increased costs, we will keep the
price the same because we predict others will raise their prices
in order to offset costs (there is almost no way for them not to
based on past trends/future predictions); when that happens, we

will have higher demand for our shoes. We can also afford to
lower our profit margin this year.
So, overall, our strategy should continue to be very effective
because of our increasingly high budgets to make these
decisions. Based on the financial statistics, there is not much
other companies can do to increase their share without making
drastic changes and/or incurring high risks. We will continue to
hold the major market share and soon look to become the
market leader in the next 3-4 years based on some reasonable
predictions. Our main goal in the next 2-3 years should be to
enter the Latin American Market in order to increase our Image
Rating. Our current image rating was boosted due to our
private-label productions but I believe this isn’t something that
we can rely on long-term as other firms will look to enter based
on the profitability and high demand/low supply.
So, frankly, we will see what my group decides on and forgoes.
I feel they will go along with my proposals due to the amount of
research and thought I have put into them. The arguments for
my decisions are also very strong and backed by the financial
and industry reports. Also, there weren’t much decisions that
they have brought up specifically.

BSJ Journal #3
What is your strategy for the firm (your view, not the group)?
Honestly, our firm hasn’t had a set strategy and we made moves
based on previous industry trends. However, except for
Company B and G, everyone is trying to be a dominant, higher
end shoe-brand with wide product lines and current, so are we.
With that said, we are also able to differentiate from the other
companies due to our concentration in only three markets and
our very high marketing/branding budget.
So, right now, we are trying to be the market leader in the high-
end sneaker market with a wide product line. Even though our
shoe quality was 1 S/Q rating lower compared to everyone else
in the previous year, we were able to outsell our competitors
(except for Company H). However, this year, we will be able to
easily reach a similar, if not higher, S/Q rating due to our
production improvements and with the overall highest
marketing budget, we will get a drastic increase in demand that
the other firms won’t expect. Without making any changes, our

projected demand increased by 1,500,000-2,000,000 shoes in
our three locations. Now, because we don’t have the capabilities
to fulfill this demand, we will look to increase our prices to
decrease the overall demand and to get a better profit margin;
But we will also look to increase our SE/Brand marketing to
reach the right point if necessary.
One thing that a lot of other companies aren’t preparing for
(loosely based on the info from page 4) is the automatic
scrapping of old production equipment after this year. With
$80,000,000 worth of shoe production equipment needed to be
replaced in all NA production facilities, there will be some
costly decisions to be made. Unlike most, our company has been
slowly replacing our machines for the past two years, and will
look to do so again this year. So when that time comes, we will
only realistically need to spend $20,000,000 on equipment
purchases. With that said, we should look to aggressively
increase our Facility Spaces and the # of Production Equipment
in all the three markets (NA, EU, ASIA) this year to really
capitalize on the frenzy to come.
Overall, we will not expect the same amount growth of net
profit as previous years due to the costs of replacing equipment
and increasing our facility spaces. However, starting next year,
with the production improvements being made in our new
European facility, we will be able to supply the EU demand
through it solely while maintaining our S/Q Quality. Our firm
will look to save money on shipping costs and tariffs which will
increase our profit margins in the long run. . We will also be
ready to enter the Latin American Market due to the increased
production which no company will expect.

and industry reports.
BSJ Journal #4
As of right now, we hold one of the largest market shares of the
industry. In the next three years, we are hoping to increase that
share and become the market leader in the high-end sneaker
market with one of the largest product lines. We are looking to
become the "Nike" or "Adidas" in this industry but with that
said, we don’t mind shifting this strategy if needed.
As we are currently building to be the market leader in the high-
end sneaker market with a wide product line, we will be looking
to lower our manufacturing costs in hopes of shifting the
amount saved to our marketing budget and our S/Q Rating. We
are in a better state compared to a lot of the other firms,
because I am positive that a majority didn’t plan for the
equipment sell-off and will need to purchase $8m worth of
production equipment to replace them.
Now that we have our third production facility up and running
in Europe, we should be able to fulfill all the demand in the
region which will save us a lot of money from tariffs and
shipping. In the near future, we will look to create a fourth
production facility for the Latin American Market in order to

save similar costs: Compared to every other market, our profit
margins are very small (5% vs 15%) which we won’t mind for
the next two-three years to keep a high image rating.
One thing that we did notice is that the majority of the
companies who have similar offerings are now looking to
increase their marketing budget, so in turn, we will as well to
maintain our dominance. It is something that we will have to
consider moving forward if companies still look to position
themselves similarly to ours as it will become increasingly
competitive.
The final part that we will be concentrating on is to raise our
ROE by repurchasing more stock while handing out small
dividends. We would like to at least meet investor expectations
which will get increasingly difficult based on the competition.
The effectiveness of the strategy will depend on how our
competitors react, but we do feel we are in a better position
compared to others. We still have one of the highest profit
margins, the best credit status, and one of the highest image
ratings. We will look to continue in doing so, but we are
looking to spend $1.8m to increase our production capabilities
which we won’t have to move forward.

and industry reports.
BSJ Journal #5
For the next year, we will continue to establish our firm as the
market leader of the industry through a differentiation strategy.
By the next year, we will enter a minimum efficient scale which
will allow us to have one of the highest, if not top, economic
value. I believe we will reach our goal of becoming the
Nike/Adidas of our industry.
With more firms (especially firm A with C & D) rising to
compete in the same market segment we will look to increase
our product line, our S/Q rating, and marketing budget.
However, we are able to actually save on costs in 3 out of 4
geographic markets due to our investment/growth in production
capabilities in all regions.
In order to increase demand for our product, we maxed out the
product offerings from 400 to 500. Along with incremental
spending of Styling Enhancements and the Quality Program, our
S/Q Rating has increased by .5 points. With the increased
spending in brand/SE marketing, these three tactics elevated our
projected demand in both internet sales and wholesale with a
17.1% in Asia being the lowest of our projected market share.
Even with the increased spending, we are able to grow our
profit margins due to our investments/growth in production
capabilities. We are reaching a point where all four
manufacturing facilities are able to fulfill their own regional
demand (even with high reject rates), allowing us to shift some

of the costs saved from tariffs and international shipping costs
to other decision areas. The only region that has a smaller profit
margin is the North American market due to the increased
competitiveness, but we are able to make up for it through the
increased margins in the other regions substantially.
Finally, one important area we have started concentrating on is
in raising our EPS and ROE by aggressively repurchasing our
stocks and continuing to pay dividends.
The effectiveness of the strategy will depend on how our
competitors react, but based on projected numbers and personal
competitive assumptions, our strategy will continue to be as
effective, if not more so. Our overall measures have increased
substantially from our EPS shooting from $8.58 to $11.99, our
ROE increasing from 25.7% to 29.7%, our net revenues
increasing by 22.5%, and our net profit increasing 37.2%. We
are also confident in our abilities to hold high marks in both
credit rating and image rating with industry-leading scores of
A+ and 100 in respective categories.
My group has decided to implement all mentioned strategic
proposals but have shifted some numbers to increase our scoring
measures. Most of our moves, if not all, have been very
successful and we hope to maintain it.

BSJ Journal #6
There isn’t much difference in our strategy for the next year.
We are looking to maintain our position as the market leader in

the industry along with a differentiation strategy. However, we
are about to reach a peak in market share and therefore, will
look to lower our operating costs more to gain a better profit
margin. At this point, we still have the second highest net profit
margin, but we will have to rethink our overall strategy if we
cannot maintain it.
We have increased our S/Q Rating from 8.3 to 9.0 to increase
our projected demands, but we will stop increasing the S/Q
rating as it has reached its peak in attracting new customers and
cost-effectiveness. The money that could be spent on increasing
the rating will be better served in increasing our marketing or
administrative efforts which we have also increased slightly in
terms of SEO marketing, brand marketing, and retailer support.
We are still increasing facility space in all regions to continue
to meet regional demands. We have also decreased our budget
in compensation and training due to the costs; there was a small
tick in rejected pairs, but not enough to overset the savings
made in reducing wages. Due to these changes, we have slightly
increased our profit margins in all three segments (internet,
wholesale, and private-label) in all four regions.
Finally, we have repurchased 500 stocks to raise our EPS and
ROE aggressively.
Based on our competitive assumptions and projected numbers,
our strategy will still be very effective. Our projections show
that our EPS and ROE should reach $13.44 and 28.7%
respectively while our Credit and Image Ratings reach the max
scores of A+ and 100. Other important measures show that our
net revenues and profits will increase to 14.4% and 10% which

does indicate that our growth rate will slow down in the future.
All of my strategic proposals were accepted due to the
projections that appeared. However, we will need to rethink our
strategy in the next 2-3 years and see if we can still maintain
our lead or be proactive about changing our strategies in the
future.
BSG Journal #7
Still not much of a difference compared to last year as we want
to position the firm as the market leader combined with
differentiation. We expected to reach a peak in market share,
but we are projected to increase our market share in three out of
the four markets. We will continue to increase production in
these three markets while lowering our operating costs. As
mentioned previously, we will still consider changing our
strategy if necessary.
So, we are basing our strategy and our projected performance
for year 18. For year 17, we have overestimated our revenue,
profits, and overall performance and missed some of the
investor expectations, but for this year, we have better
management of our overall projections/estimations. We have
conservatively estimated the competitive assumptions to make

sure we won’t make the same mistakes and based on the data,
we are expecting the following measures:
· EPS: $16.71
· ROE: 31.7%
· Credit Rating: A+
· Image Rating: 100
· Net Revenue Change: +21.1%
· Net Profit Change: +38.4%
Based on our competitive assumptions and projected numbers,
our strategy should be very effective. We have lowered the
overall production costs by reducing certain parts of worker’s
compensation, material usage, and spending in the Quality
Program. We have also increased our marketing efforts in
Search Engine Marketing, Celebrity Endorsements, and Brand
Advertising to get more brand visibility. We have also increased
our prices very slightly to make sure we get the desired
operating profit margins. In our next year, we will look to
increase our market share in the Latin American Market as we
have a large, temporary competitive advantage in terms of
operating costs.
The strategic proposals were accepted due to the great projected
results. We believe it will be successful, but we will see how it
goes based on actual competitive efforts. Last year, we didn’t
reach our projected numbers due to one company increasing
their marketing budgets from basically $0 to over $1-2 billion
in one year.
BSG Journal #8

We have changed our strategy based on the geographic region.
In NA/EU we have shifted from a price premium to a budget-
based with a differentiation strategy concentrating on
marketing. However, for AP/L.A.m, we are still maintaining the
price premium strategy with very high marketing.
So, we are cautiously optimistic for our strategy due to our
projections for year 19.
For year 18, we have still overestimated our overall sales,
revenue, profits, and overall performance and missed our
investors’ ROE expectations. However, even if we don’t reach
the desired sales, we are likely to maintain ahead due to a
substantial increase in operating profit ($ per pair sold) for all
regions. We’d like to argue that we have conservatively
estimated the competitive assumptions to make sure but we’ll
wait to see.
· EPS: $18.64
· ROE: 31.0%
· Credit Rating: A+
· Image Rating: 100
· Net Revenue Change: +11.4%
· Net Profit Change: +29.7%
Our current strategy for this week is looking to be very
effective based on our overall projected numbers. Even though
we don’t reach the highest overall operating profits, we are well
above the mean due to the changes we have made. We will
remain holding one of the largest, if not largest market shares in

all regions. The changes in strategy will help us move forward
and if we need to change our strategy again, we will.
All proposals were accepted because the numbers don’t lie.
These should be very successful unless a firm drastically
changes their business strategy and competitive efforts by the
end of the week.
BSG Journal #9What is your strategy for the firm (your view,
not the group)?
We are continuing our strategy from last week where we are
maintaining a low cost strategy in NA/EU while maintaining the
price premium strategy in LA/AP. We are still spending a
considerable amount on marketing.
We are continuing this strategy due to our amazing results in
year 18. We got the highest
Earnings per Share, Return on Equity, and Stock Price ever.
Even though we aren’t projected to have even better results due
to competitive factors, it is still a profitable business model. We
will have decent results even if it doesn’t live up to our past
growth. We have conservatively estimated the competitive
assumptions to feel confident in our choices, but we will see
what happens.

Competitive Scores
Year 18 Results
Year 19 Projected Results
EPS
$18.95
$15.99
ROE
31.4%
25.9%
Stock Price
$436.26
$290 (our assumptions)
Image Rating
100
100
Credit Rating
A+
A+
Even though we got great results last year and have decent
projections for next year, we couldn’t maintain it due to one
important factor: celebrity endorsements. We put in very high
bids, but we were outbid by our competitors. With the loss of
our marketing multiplier, our overall demand has shrunk
considerably. However, our market share for internet sales are
forecasted to be above 15% in all regions while our wholesale
market share is forecasted to be at 17% minimum.
All proposals were kept as this led to the best possible

projections. We considered switching back to a price premium
in NA/EU but all projected numbers were lower than the ones
we have currently due to the high costs in manufacturing and
distributing.
Macroeconomic conditions – Inflation, Supply chain, Labor,
Political risk (like vaccine mandates, infrastructure spending) –
2 pages

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