1. T HE B USINESS S TRATEGY G AME Overview and Orientation

2. What Is The Business Strategy Game ?  BSG is an online exercise where you manage an athletic footwear company in competition against companies run by other class members.  The marketplace is worldwide — production and sales activities can be pursued in 4 regional markets:  And in each region there are 3 market segments: Internet Segment (online footwear sales direct to retail customers) Wholesale Segment (footwear sales to local retailers) Private-Label Segment (unbranded sales to large retailers)

3. Company Situation  All companies start out in the same position with equal sales volume, market share, revenues, profits, costs, and so on.  Each decision-making round represents one year of company operation.  There are 10 years of history and you will assume management of the company beginning with Year 11.  In Year 10 the company had: Sales Revenues of $238 millionReturn On Equity of about 17% Net Profit of $25 milliona Stock Price of $30.00 Earnings Per Share of $2.50a Credit Rating of B+  The company is in sound financial condition and is performing adequately.

4. The Decisions You Will Be Making Each decision round (year) you and your co-managers will make decisions relating to:  Corporate social responsibility and citizenship  Plant capacity additions/sales/upgrades  Production of branded and private-label footwear  Worker compensation and training  Shipping and warehouse operations  Pricing and marketing  Celebrity endorsement contracts  Financing of company operations Plus, you will be responsible for annual sales forecasting and inventory management.

5. Competition The competition among companies to sell their brand of athletic footwear is based on 10 factors:  Price  Styling/quality (S/Q) rating  Number of models/styles  Advertising  Size of retail network  Celebrity endorsements  Delivery time  Retailer support  Mail-in rebates  Shipping charges (internet sales only)

6. There Are Many Strategic Options  There is no built-in bias that favors any one particular market or strategic approach. There is no secret “answer” or approach that will guarantee success.  Most any well-conceived, well-executed competitive approach is capable of succeeding unless:  it is not overpowered by the strategies of competitors, or  it is defeated by the presence of too many copycat strategies that dilute its effectiveness.  In other words, which strategies deliver the best performance hinges on the strength and interplay of each company’s strategy and decisions against the strategies and decisions employed by rival companies.

7. The Contest in the Marketplace Is a “Battle of Strategies”  Following each decision round, you will be provided with a Competitive Intelligence Report containing information of the actions rivals took to capture sales and market share.  With this information, you will be in good position to anticipate some of the strategic moves that rival companies are likely to make in upcoming years.  Just like in football or other competitive sports, you will need to scout the strategies of rivals, try to judge what they will do next, and come up with a competitive strategy of your own aimed at “defeating” them and boosting your company’s performance.

8. It’s 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 of the simulation, what will separate the better-performing companies from those with weaker performances is the caliber of the decisions and strate- gies that company managers have employed.  BSG is an exercise designed to spur competition and to get your competitive juices flowing.

9. How Your Company Performance is Judged Board members and shareholders/investors have set five performance objectives for the company: 1.Grow EPS (earnings per share) by at least 7% annually through Year 15 and at least 5% annually thereafter. 2.Maintain ROE (return on equity investment) of 15% or more annually. 3.Grow Stock Price at about 7% annually through Year 15 and about 5% annually thereafter. 4.Maintain Credit Rating of B+ or higher. 5.Maintain Image Rating of 70 or higher (a company’s image rating is tied to the styling/quality of a company’s branded footwear, market share penetration, and its actions to display corporate citizenship and social responsibility).

10. The weights that will be placed on your company’s achievement of each of the five annual performance targets are as follows: EPS20% ROE20% Stock Price20% Credit Rating20% Image Rating20% Scoring Weights

11. Your Company Performance Is Measured Against Two Standards  The Investors Expectations Standard ( I.E. ) — Did you meet or beat the annual performance targets for each of the 5 performance measures ?  The Best-In-Industry Standard ( B-I-I ) — How well does your company’s performance stack up against the company with the best EPS, ROE, Stock Price, and Image Rating and against an industry-best A+ Credit Rating ? These scoring standards are explained in the Player’s Guide and even more fully on the “Help” pages associated with the Footwear Industry Report.

12. There are 2 “open book” 20 multiple-choice question quizzes built into the exercise. The quizzes are taken online by each individual company co-manager: Quiz 1:Covers the Player’s Guide — its purpose is to assure that you to read and absorb the information in the Player’s Guide in preparation for managing your company. Quiz 2:Covers the Company Operating Reports and certain information in the Footwear Industry Report — this quiz serves as a check to see if you understand the numbers and how they are calculated. BSG Quiz 1 and Quiz 2

13. The Peer Evaluation Exercise  When the simulation ends, you will be asked to complete a 12-question evaluation of each of your co-managers as well as a self-evaluation of your own performance.  Peer evaluations are done on- line within your BSG account.  Peer evaluation results are kept confidential, only to be seen by the course instructor.

14. What You Can Expect To Learn Managing a company in competition with rivals will allow you to experience the things you are reading in your text about crafting and executing strategy in a globally competi- tive marketplace:  chart a long-term strategic direction  set and achieve strategic and financial objectives  craft a strategy and adapt it to changing conditions  analyze industry, operating, and financial data  think strategically about competitive and market position  assimilate information and lessons of prior courses  better understanding of revenue-cost-profit relationships  practice in making sound, responsible business decisions  accountability for delivering good company performance  and much more

15. Account Registration How To Get Started Step 1:Go to www.bsg-online.com and click the button for New Students. Step 2:Enter the Company Registration Code provided by your course instructor. Check the box to accept the BSG Terms of Use. Then click the Continue button. Step 3:Fill out the registration form creating your account user name (your e-mail address) and password. Then click the Continue Registration button. Step 4:Pay the one-time account registration fee by credit/debit card using the secure online payment form. If you have a Prepaid Access Code (payment code) that you received from a school official or that came on a card bundled with your text, you may enter it (rather than credit card info) to complete your account registration.

16. The Corporate Lobby Upon registration (and each time you log in) you will arrive at your Corporate Lobby page. The Corporate Lobby page is your gateway to all BSG activities. Near the top of this page is a series of buttons that provide access to all of the information, materials, and tools you will need.

17.  Name Your Company — You and your co-managers should decide on a name for your company. The company name must begin with your assigned Suggested Procedures company letter. To enter a name for your company, click the Enter Company Name button at the top-right of the Corporate Lobby page. All company names are public, so choose a name that you will be proud of.  Read The Player’s Guide — It is important that you read and under- stand the material in the Player’s Guide. Click the Player Materials button and choose Player’s Guide from the drop-down menu. You can read it online, print, or download the Player’s Guide PDF. To be a strong contributor to your company’s management team, thorough knowledge of the material in the Player’s Guide is vital.  Know the Schedule — Click the Decision Round Schedule button to see the deadline dates/times that your instructor has entered for each decision round, quiz, and assignment. Decision round dead- lines are strictly enforced, and the results for each round are automatically generated by the BSG system and made available within about 15 minutes of the scheduled deadline.

18. The Decisions / Reports Program For every decision round, all company management activities (decision entries and data review/diagnosis) are done Use the Decisions/Reports Menu at the left to navigate the decision entry screens and available reports. There is a Help and Print button at the top of every screen and report page. Use the Save Decisions button to save your decision entries to the BSG server. You may change and save entries a often as you like until the scheduled dead- line for the decision round arrives. using the Decisions/Reports Program. To launch the decision program in a new window, click the green button.

19. Tips and Advice  Watch the Videos — The Player Materials drop-down contains a link to the Intro to BSG video and a link to a page of a dozen or so Video Tutorials.  Use the Help Pages — Every decision entry screen and report page has a Help button. When you need more information than is contained in a Video Tutorial, click on the Help button.  Follow the Recommended Decision-Making Procedures — click the BSG Support button at the top of the Corporate Lobby.  Take Advantage of the Practice Round (s) — the purpose of the practice round (s) is to help you become fully acquainted with the decision entry screens and the reports that come available at the end of each round. The more you learn from the practice rounds, the better your chances for getting off to a good start !

20. Tips and Advice (concluded)  Manage the Company in a Serious, Professional Manner — The overriding purpose of The Business Strategy Game is to give you practice in making business decisions, crafting winning strategies in a competitive market, and being fully accountable for the results of your actions (just as managers in the real-world are held accountable for the performance of the companies they manage).  Be very wary of trying things that are imprudent, highly risky, or un-businesslike (things that would get a manager fired in a real company) — You are not playing a game, you are running a business. This is NOT the time to be a daring adventurer out to win some variant of a videogame by making wild and extreme decisions. Those who approach the simulation as a game usually end up shooting themselves in the foot.