1. Business Strategy MBA International Level 6
The Business Strategy Game:
Overview and Orientation
John Threlfall
Room 201

2. Business Strategy Teaching Team

3. The Business Strategy Game
A computer-based exercise where you manage an athletic footwear company in a head-to-head competition against companies run by other class members
The marketplace is worldwide: production and sales activities can be undertaken in North America, Latin America, Europe-Africa and Asia Pacific
There are 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

4. Your company’s situation
All companies start out on the same footing; with equal sales volume, global market share, revenues, profits, costs, footwear quality etc.
Each decision period in The Business Strategy Game represents a year
The company you will be running began operations 10 years ago and the first set of decisions you and your co-managers will make is for Year 11
The company had Year 10 revenues of $238 million, net profits of $25 million (equal to $2.50 per share), an ROE of ~17%, and a solid B+ credit rating
Your company has sound finance, is performing well and its products are well-regarded in the market

5. The decisions you will be making
You and your co-managers will make decisions 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 at 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)
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 company’s footwear (2 decision entries per bid)
Financing of company operations (up to 8 decisions)
Plus, there is a screen for making annual sales forecasts and deciding whether to have inventory clearance sales

6. Competition is head-to-head: Company against company
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)

7. You have many strategic options
Company managers have wide strategic latitude in staking out a market position and striving for improved performance. There is no built-in bias that favours any one strategy
Companies can pursue a competitive advantage keyed to low- cost/low-price or top-notch footwear features and styling or more value for the money
Companies can have a strategy aimed at being the clear market leader in (a) selling branded footwear to retailers or (b) selling directly to online buyers or (c) both
Companies can put as little, or as much, emphasis on producing private-label footwear as management prefers
Companies can focus on one or two geographic regions or strive for geographic balance
Companies can pursue essentially the same strategy worldwide or craft slightly or very different strategies for each geographic region

8. No single strategy is “best”
Any well-conceived, well-executed competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors, or 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
There positively is no mystery ‘silver bullet’ strategy, or decision combination that players are challenged to discover

9. A company’s competitive advantage vis-à-vis it’s 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.
Hence, every company’s strategic challenge is to craft a competitive strategy (consisting of its prices, S/Q ratings, advertising, models, delivery times, retailer support etc.) that it believes will produce the desired sales and market share outcomes when pitted against the competitive strategies of rival companies, region by region

10. The contest in the marketplace is a ‘battle of strategies’
Following each year’s decisions, you will be provided with competitive intelligence reports containing information of the actions rivals took to capture the sales and market shares they achieved
With this information, you will be in a good position to figure out some of the strategic moves that rival companies are likely to make in the next decision period
Just as in sport where it is customary for every team to scout its next opponent thoroughly and develop a game plan to defeat them, you will need to scout the strategies of rivals, try to judge what they will do next, and identify a competitive strategy of your own aimed at “defeating” their strategies and boosting your company’s performance

11. Outcompeting rivals is the key to market success
You will have to stay on top of changing markets and competitive conditions. Try to avoid being outmaneuvered by the actions and maneuvers of rival companies and make sure your footwear is attractively priced and competitively marketed
Just as you are trying to win business from rival companies some, or all, competitors will be actively striving to take sales away from your company
It is the competitive power of your strategy vis-à-vis the competitive power of rivals’ strategies that is the deciding factor in determining sales and market shares

12. 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
When the simulation is complete, the only thing separating the best-performing company from those with weaker performances will be the caliber of the decisions and strategies of the management teams of the respective companies
It is an exercise calculated to spur competition

13. Some features of the market and company environment
The industry environment in The Business Strategy Game is modeled to closely approximate the real-world character of the globally competitive athletic footwear industry
The functioning of the marketplace in The Business Strategy Game mirrors the competitive functioning of the real-world athletic footwear market, thus allowing you and your co-managers to proceed rationally and logically in deciding what to do
Company operations are designed to be as realistic as possible:
Operations are patterned after those of an athletic footwear company that makes its footwear at company-operated plants
All cause-effect relationships and revenue-cost-profit relationships are based on sound business and economic principles

14. The whole concept underlying The Business Strategy Game is to place you and your co-managers in as realistic a company and competitive market setting as possible and challenge you to manage all aspects of the company’s operations
This allows you to test your ideas about how to run a company in a competitive marketplace
And you will be provided prompt and detailed feedback on the outcomes of your decisions

15. Requirements and mechanics
BSG activities take place online
BSG-Online automatically transfers the needed software from the BSG server to your PC; 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

16. How company performance is judged
Board members and shareholders/investors have set five performance objectives for the company:
Grow earnings per share at least 7% annually through year 15 and at least 5% annually thereafter
Maintain a return on equity investment (ROE) of 15% or more annually
Maintain a B+ or higher credit rating
Achieve stock price gains averaging about 7% annually through year 15 and about 5% annually thereafter
Achieve an “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)

17. Score Weighting EPS 20% ROE 20% Credit Rating 20% Stock Price 20%
The weighting that will be placed on your company’s achievement for each of the five annual performance targets are as follows:
EPS 20%
ROE 20%
Credit Rating 20%
Stock Price 20%
Image Rating 20%

18. The two scoring standards
2 scoring standards are used in calculating “performance scores” for each company:
The investors expectations standard
Did you meet or beat the annual performance targets for each of the 5 performance measures?
The best-in-industry standard
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?
The scoring standards are explained in the Player’s Guide and the ‘Help’ screens (1, 2 & 3 of the Footwear Industry Report)

19. What you can expect to learn
Running an athletic footwear company in head-on competition with rivals will give you a chance to put into play the things you are reading in the text about crafting and executing strategy in a globally competitive marketplace - there is a very tight connection between the text for the course and The Business Strategy Game
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
You’ll 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
You’ll 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 outcompete 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

20. What you can expect to learn
The Business Strategy Game is designed to provide you with an experience that will:
Draw together information and lessons of prior modules consolidate your knowledge about the different aspects of running a company and provide a capstone experience
Deepen your understanding of revenue-cost-profit relationships and build your confidence in utilizing the information contained in company financial statements and operating reports. You will experience why you cannot hope to understand a company’s business and make prudent decisions without full command of the numbers - it will not take long to appreciate why emotional and naïve decisions will produce disastrous outcomes
Provide you with practice in sizing-up a company’s situation, making sound, responsible business decisions and being accountable for delivering good results

21. How do you register and get started?
The registration process consists of 5 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). Your instructor provides this code
Step 2: Go to
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 either a credit card or a Prepaid Access Code that came on a card bundled with your text

22. How do you register and get started?
Step 5:
Complete the personal registration information (user name, password, etc.)
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

23. The Corporate Lobby page
Each time you log-on to you are automatically routed to your company’s “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:
The Player’s Guide
Decision Schedule
Assignments
Support
Company Name
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

24. Creating a name for your company
After registering, you and your co-managers should decide on a name for your athletic footwear company
Your company’s 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 company’s 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

25. Further 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 30 minutes after the decision deadline
You will be notified via as soon as the results are ready. At that point you can log-on, see what happened, and proceed with the next decision

26. Tips for Success
Follow the Suggested Decision Procedures (see the Support Menu on your Corporate Lobby page)
Learn as much as you can from the practice decisions and become fully acquainted with all the menus and how things work on the screens
Make full use of all the “Help” sections for each decision screen - these provide full explanations of the factors surrounding each and every decision entry and provide all kinds of tips and suggestions to guide your thinking
Make full use of the “Help” sections for the Company Reports, the Footwear Industry Report, and the Competitive Intelligence Reports - these screens provide essential details of what the numbers mean, how they are calculated, and how to use the information to good advantage

27. Business Strategy Game Videos*
BSG Online Winning Guides and Tips - 30 Tips Collection - Part 1-Part 3
BSG online Winning Tips from Champion - Industry 61 - All years 11 to 20
BSG Winning Guides and Tips from Champions - Year 11 - Strategy 1
BSG Online - Guide 01 - Business Strategy Game - Tutorial - Winning Tips - Year 12
New Glo-Bus Guides and Tips - All Decisions 01

28. Bibliography
The business strategy game online
"Business Strategy Game" Top Tips & Strategies by WinBSGOnline.com
BSG Online Basic Guides 06 - Private Label Operations - Finance and Cash Flow
BSG Online Year Strategic Plan - Guides - Part 1-Part3
A well-educated mind vs. a well formed mind: Dr. Shashi Tharoor at TEDxGateway 2013