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The Business Strategy Game

Overview and Orientation

McGraw-Hill/Irwin

2009 The McGraw-Hill Companies, All Rights Reserved

What Is The Business Strategy Game All About?


Its an online simulation where you run an

athletic footwear company in competition against companies run by other class members.
Global marketplace: production and sales

activities can be pursued in North America, Latin America, Europe-Africa, and Asia Pacific
12 market segments: 4 geographic segments

each for branded footwear sales to retailers, for online footwear sales direct to consumers, and for private-label sales
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Your Companys Situation


All companies start out in sound

condition & with identical numbers


Each decision period represents a year.

The company began operations 10 years

ago: the first set of decisions will be for Year 11.


Each company had Year 10 revenues of

$238 million, net profit of $25 million (equal to $2.50 per share), an ROE of ~17%, and a solid B+ credit rating.
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The Decisions You Will Be Making


You and your co-managers will make decisions in up to eight categories each period relating to:
Corporate social responsibility and citizenship

(up to 6 decisions)
Production of branded and private-label athletic

footwear (up to 10 decisions each plant, with a maximum of 4 plants)


Plant capacity additions/sales/upgrades (up to

6 decisions per plant)


Worker compensation and training (3 decisions

per plant)
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Decisions (cont.)
Shipping (up to 8 decisions each plant) Pricing and marketing (up to 10 decisions in

4 geographic regions)
Bids to sign celebrities to endorse your

companys footwear (2 decision entries per bid) decisions)

Financing of company operations (up to 8

Plus there is a screen for making annual

sales forecasts and deciding whether to have inventory clearance sales


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Competitive Variables That Determine Company Sales and Market Shares


The head-to-head competition among companies to persuade consumers to buy their brand of athletic footwear is based on 10 factors: Price Number of models/styles Styling/quality (S/Q) rating Advertising Size of retailer network Celebrity endorsements Delivery time Retailer support Mail-in rebates Shipping charges (Internet sales only)

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You Have Many Strategic Options


Company managers have wide strategic

latitude in striving for competitive advantage and good performance. Theres no built-in bias that favors any one strategy.
Some examples:

Low-cost/low-price

Differentiation
Emphasize branded footwear Emphasize private-label or internet
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More Strategy Options


Focus on one or two geographic regions
or strive for geographic balance.

Put little or much emphasis on privatelabel footwear

Pursue essentially the same strategy


worldwide or craft slightly or very different strategies for each geographic region.

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No One Strategy Is Best


Most any well-conceived, well-executed

competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors or diluted by the presence of too many copycat strategies.
Which strategies deliver the best performance

depend on the strength and interplay of each companys strategy and decisions against the strategies and decisions employed by rival companiesthere is no mystery best strategy.
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A Companys Competitive Effort vis--vis Rivals Is Crucial


All the sales and market share differences

among companies are attributable to differing competitive efforts on price, S/Q rating, advertising, models offered, delivery times, retailer support, etc.
Every companys strategic challenge is to

craft a competitive strategy (and related decisions) that it believes will produce the desired sales and market share outcomes when pitted against the competitive strategies of rival companies, region by region.
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The Contest in the Marketplace Is a Battle of Strategies


Following each years decisions, youll

get Industry & Competitive Intelligence reports


It is vital to study these reports and

understand what your competitors are doing.


You need to implement your strategy,

while anticipating and countering moves by your competitors

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Outcompeting Rivals Is the Key to Market Success


Youll have to stay on top of changing

market and competitive conditions, try to avoid being outmaneuvered by competitors, and make sure your footwear is attractively priced and competitively marketed.
It is the competitive power of your

strategy vis--vis the competitive power of rivals strategies that is the deciding factor in determining sales and market shares.
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Its All About Developing Winning Strategies


The Business Strategy Game is all about

practicing and experiencing what it takes to develop winning strategies in a globally competitive marketplace.
At the end, the only things separating the

best-performing companies from the others will be the caliber of the decisions and strategies of the management teams.
Its an exercise calculated to spur

competition and to get your competitive juices flowing.


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PC Requirements and Mechanics


Virtually all BSG activities take place online, on

any PC with an Internet conection, Internet Explorer and Microsoft Excel (any of the 2000, XP, 2003, or 2007 versions).
BSG-Online automatically transfers the needed

software from the BSG server to the PC you are working on quickly; when you exit a session, your work is saved and transferred back to the server. The last decisions saved to the BSG server at the time of the decision deadline are the ones used to generate the results.
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How Company Performance Is Judged


Board members and shareholders/investors have set five performance objectives for the company: 1. Grow earnings per share at least 7%
annually through Year 15 and at least 5% annually thereafter.

2. Maintain a return on equity investment


(ROE) of 15% or more annually.

3. Maintain a B+ or higher credit rating. 4. Achieve stock price gains averaging about
7% annually through Year 15 and about 5% annually thereafter.

5. Achieve an image rating of 70 or higher


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Scoring Weights
The weights that will be placed on your companys achievement of each of the five annual performance targets are as follows:

EPS ROE Credit Rating Stock Price Image Rating

30%

20%
15% 20% 15%

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The Two Scoring Standards


The best-in-industry standard (How well

does your companys performance stack up against the company with the best EPS, ROE, stock price, and image rating and against an industry-best A+ credit rating?)
The investors expectations standard (How

well did you meet or beat the annual performance targets for each of the 5 performance measures?)

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The Two Quizzes


There are two open book 20 multiple-choice question quizzes built into the exercise. The quizzes are taken online and scored immediately upon completion: Quiz 1 (required): Covers the Players Guide its purpose is to spur you to read and absorb how things work in preparation for managing your company. Time Limit = 45 minutes. Quiz 2 (not required) Click on the links for the quizzes on your Corporate Lobby web page for more informationthe three sample questions for each quiz give you an idea of what to expect.
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The Peer Evaluations


At the end of the semester, you will be

asked to complete a confidential evaluation of the contributions of each of your comanagers and yourself.
Individuals who contribute significantly more

or less than the team may receive BSG grades higher or lower than the team
The professor will supply the form; it will not

be the long BSG online form


The peer evaluations are for your professor

only and are completely confidential.


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What You Can Expect to Learn


Running the athletic footwear company in head-on competition with rivals will give you a chance to put into play the very kinds of things you are reading in the text about crafting and executing strategy in a globally competitive marketplace.

You and your co-managers will have to chart a long-term direction


for your company, set and achieve strategic and financial objectives, craft a strategy, and adapt it to changing industry and competitive conditions.

Youll have to wrestle with a full array of industry statistics,


company operating reports and financial statements, and an assortment of benchmarking data and competitive intelligence on what rivals are doing.

Youll have to match strategic wits with the managers of rival


companies, "think strategically" about your company's competitive market position, and figure out the kinds of actions it will take to out-compete rivals.

Learning to do all these things and gaining an appreciation of why they matter are the heart and soul of courses in business strategy.
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What You Can Expect to Learn


In addition, The Business Strategy Game is designed expressly to provide you with an experience that will:
Draw together the information and lessons of prior

courses, consolidate your knowledge about the different aspects of running a company, and provide a capstone experience for your business school education.
Deepen your understanding of revenue-cost-profit

relationships and build your confidence in utilizing the information contained in company financial statements and operating reports. Youll see why you cannot hope to understand a companys business and make prudent decisions without full command of the numbersit wont take you long to appreciate why shooting from the hip is a sure ticket for managerial disaster.
Provide you with practice in sizing up a companys

situation, making sound, responsible business decisions, and being accountable for delivering good results.

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How Do You Register and Get Started?


The registration process consists of five steps:
Step 1: Have your assigned company registration

code handy (this code is used to put you into the database for this specific course and to certify you as a co-manager of your assigned industry and company). See link in New & Misc. Notes.
Step 2: Go to www.bsg-online.com Step 3: Click on the Create Student Account button

and enter the company registration code provided by your instructor in the box.
Step 4: Continue on to the next step of the registration

process where you will need a credit card.


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How Do You Register and Get Started?


Step 5: Complete the personal registration

information (user name, password, and so on) and the credit card payment process. The Web site for credit card payment is fully secured; you will receive a receipt e-mail. If you have no credit card or Prepaid Access Code, the easiest way to complete this step is to arrange to use a friends or comanagers credit card and reimburse them directly with cash or a check.

Once you are registered, you will have full use of the student portion of the BSG Web site and access to all of the materials and information you will need.
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The Corporate Lobby Page

Each time you log-on to www.bsg-online.com, you are automatically routed to your companys Corporate Lobby web page. The Corporate Lobby page is your gateway to all BSG activities. Near the top of this page is a series of menu selections that provide instant access to all the necessary information, materials, and tools you will need, including the Players Guide & decision schedule. Below these menu items are (1) a Decisions and Reports box for accessing the decision entry screens and viewing reports, (2) a message center box, and (3) information showing the latest exchange rate adjustments, current interest rates, and a company performance scoreboard. You have anywhere, anytime access to your Corporate Lobby page from any PC that is connected to the Internet.
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Creating a Name for Your Company


Shortly after registering, you and your co-managers

should decide on a name for your athletic footwear company.


Your companys name must begin with the letter of the

alphabet that you have been assigned. Names can be up to 20 characters. To name the company, click on the Company Name menu item near the top of the Corporate Lobby screen and enter your companys full name in the space provided.
All company names are public and appear in the

Footwear Industry Report; thus you should select a name that you are proud of and that reflects the image you want to project to your customers, shareholders, other company stakeholders, and the general public.
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Some Procedures
Check the Decision Schedule link on your

Corporate Lobby page for the dates and deadlines for the decisions. The decision deadlines are strictly enforced, since the results are processed automatically on the BSG servers minutes after the deadline.
The results of each decision will be available

online about 15-20 minutes after the decision deadline.


You will be notified via e-mail as soon as the

results are ready. At that point you can log-on, see what happened, and proceed with the next decision.
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Losers
Don't understand company operations Don't understand how to run the game Fail to develop & implement a specific

strategy
Typically change strategies several times as

they try to copy successful competitor's strategies


Don't analyze what is going on and

consequently miss-guess competition


Are always trying to "catch-up"
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Winners
Understand company operations Learn well how to run the game Develop a specific strategy & stick with

it (many different strategies can work)


Analyze competitors and industry

trends
Maintain balance between demand

and supply
Are assertive & proactive
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