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Always submit a 1 paragraph Prospectus along with your decisions whenever you buy or sell stock, explaining exactly hat you are going to do with the money, etc. This explanation should be strategic and should be acceptable to existing shareholders. Unless notified otherwise, you do not need prior permission to trade stock, just the Prospectus. b. Bad reasons to sell stock: to raise cash without an immediate need; to pay dividends; to buy back stock in the future. These may all actually hurt your ROI and have long term negative performance consequences. c.
Although all actions are potentially strategic, if the professor feels there is stock price manipulation, the team is liable for a fine (see above). This fine ay include cancellation of stock sale and/or 10% of the stock issue valuation. Predatory pricing is pricing below marginal cost with the intention of running a competitor out of business. It is a violation of the Clayton Act. You must cover all marginal costs for the market in which you are selling as listed in your firm’s Cost Report. Your marginal cost (per geographic region)=Total Cost/Pair less Maintenance/Depreciation.
You do not actually know these figures beforehand (unless you predicted your demand perfectly! ), so this is the retrospective measure by which good faith can be evaluated. Exceptions o predatory pricing rule: -If your price is below the current year’s marginal cost (as calculated above), but it is at or above the previous year’s marginal cost (assuming you did not increase the current year’s marginal cost by investing in supervision, quality, design, wages, incentives, advertising, number of dealers, or dealer support).
This assumes that you did not mean to price below marginal cost, but you miscalculated. -If you are exiting a market. In this case, you must leave the market for three years after the final sale of inventoried shoes and you may not transfer any shoe into the market during this period. If you are matching the last year’s price of a competitor. However, if the competitor raises its price in the current period, you must also follow suit in the next year. Fine for predatory pricing is the greater of: a) see above, or b) (price – your lowest marginal cost) X( pairs sold at that price) X 3.
If you believe another team is guilty of predatory pricing, please submit a brief letter to the SEC chairman (your professor), explaining why you believe that team is pricing below their marginal cost simply to run others out of business. You can use the benchmarking report to see the cost structure of the industry. In most cases, however, the accused team is not guilty, but has managed to reduce its unit cost to a very competitive rate. II. ASSIGNMENTS Students come away from The Business Strategy Game with needed experience and practice in: Working with the information commonly found in company financial statements.
Analyzing industry and competitive conditions in a dynamic market setting (a simulation is really a “live case” where events unfold over the term of the course, requiring both analysis and responses)”players have to be market-aware and competitor-aware in order to be successful. Tying together all the production, marketing human resource, and financial aspects of a business and making decisions from a company-wide perspective. Thinking strategically about a company’s situation and future prospects. Developing strategies and revising them In light of changing conditions.
Preparing multiyear strategic plans and doing ongoing strategy reviews/updates. Doing what-ifs, conducting sensitivity analysis, running best-case and worst-case scenarios, and otheMise crunching the numbers to ferret out decisions and strategic actions with the most favorable projected outcomes. Evaluating the tradeoffs between preserving short-term profitability and the longer-range need to strengthen a company’s competitive position. Assessing and coping with business risk and market and competitive uncertainty. Integrating and applying what they have learned in business school.
To assist you in meeting the above goals, you have a series of assignments associated with the BSC. 1. BSG Quizzes, 5 points. (see syllabus for date) Individual Assignment. You are going to have two detailed, online, open-book, multiple choice tests of 20 questions. Quiz 1 covers the contents of the Player’s Guide. Quiz 2 checks understanding of key aspects of company operations. The purpose of Quiz 2 is to prod students to read the on-line Help pages and gain full command of where the numbers in the reports are coming from and what interpretation should be placed on them. . Competitor Analysis Report, 5 points. (see syllabus for date) Team Assignment. The competitor analysis report is a detailed identification of and investigation into your close competitor(s). See the Competitor Analysis Report handout for details. On the due date (see syllabus), each team is likely to be asked to show its report to other teams. . Overall BSG Report, 8 points. (see syllabus for due date) Team Assignment. The BSG paper is a strategic analysis of your industry, your competitors, and your firm, in order to direct your strategic choices in the future.
Your report should begin by discussing your firm’s goals, strategy to meet those goals, and expected outcomes. Next, you should provide a Market Analysis, looking at both the whole industry (e. g. , Porter’s 5 Forces, life cycle, etc. ), and competitors (following the Competitor Analysis Report). After thorough Industry and Competitor Analysis, you will use the conclusions and insights ou gained to identify key opportunities and threats thatyou must respond to strategically. The components of this document should include: Goals Statement. Describe the goals of your firm.
The goals should be specific, aggressive, and outcome-oriented (e. g market share, profit, EPS, ROI, etc. ). It is better to state your specific goals with respect to the industry (e. g. , goal of EPS at 15% higher than industry average), rather than a goal that is independent of industry levels (e. g. , EPS). Strategy Formulation. What generic business level strategy (e. g. , low cost) are you pursuing to reach your goals? Describe the combination of competitive weapons you have assembled to create your integrated, distinctive, strategy.
Remember, there are eleven or twelve competitive weapons described in the manual. You should discuss the key strategic weapons for your strategy, and the target ratings you expect for these weapons. Be specific. Absolute or relative target numbers will clarify your strategy. Strategy Implementation. Implementation is HOW you will 1) achieve your strategy (i. e. , reach the targets on the competitive weapons), 2) produce footwear to supply your demand, and 3) do all of this and still make a profit!! This section should detail your manufacturing, human resource, marketing, and financing plans to implement your strategy.
Again, specific targets demonstrate thoughtful planning. For instance, if you have outlined a strategy that requires a low price, you should emphasize how you are achieving a low cost advantage, relative to the rest of the industry. The benchmarking report may provide critical information here. Market Analysis: a. Industry analysis. Using the Porter 5-Forces model and stages of the industry life cycle, outlining the key competitive forces that have evolved in he industry and how these affect your goals and strategy.
Based on your 5- Forces analysis, is the industry attractive or competitive and why, and how will you use this assessment to your competitive advantage? b. Competitor analysis. Use the Competitor Analysis Report format to do an analysis of your firm’s own competitive situation (Yl 8-Y20). Include all the components of the report this time, modified to highlight your firm’s key issues. You may also include an examination of companies that are not currently your closest competitor, but who may be a potential threat in the future. Modify the eport format to highlight your key issues.
For instance, you may decide that a strategic group map for NA, Year 18 is enough to get your NA point across. Please change the format of the graphics that you used earlier, if another format will get the information across more clearly and quickly. Your grade includes a consideration of the thoroughness and usefulness of your graphics, but not the “fanciness. ” I really don ‘t care if you do some graphs by hand, as long as they are neat and get the key point across. If any of the questions in the Competitor Analysis Format are not relevant, just give a brief entence explaining why. For example, if you have never competed in Private Label, you may just state briefly why you do not participate in private label and why you consider the trends in that market not relevant for your firm. ) Also, you may combine some analyses onto the same graph, if the information is clear and relevant and they are on meaningful scales. Remember that graphs are an excellent format for condensing complex information into a meaningful format. Be thoughtful about how to best highlight the points of interest for each component of the competitor analysis.
Do not do graphs because I asked you to – do them because they clarify and simplify your points. Conclusions and Strategic Responses based on the above analysis. What are the key challenges your firm is facing in the industry, based on the industry and competitor analyses? How are your future plans addressing this so thatyou can attain your goals successfully? In essence, now that you have completed a thorough analysis, what are you going do with this information? This section should include a 3 year pro forma Income Statement (from the Strategic Planning option in the Analysis ection of the Menu Bar).
Do not just attach the pro forma printout from the model. Instead, you need to discuss the assumptions you have made and the key decisions you made to forecast your performance over the next three years. This statement should mirror your intended strategy and highlight how you plan to reach your goals. (For example, if you are targeting a higher than average market share, it would not make sense to assume an enormous increase in pricing. ) This final section is last BUT NOT LEAST!! Here you tie together the strategic conclusions of your analyses. 4. Team Presentation, 0 points. We will assign specific dates later in term). Each team will host the Annual Stockholder’s Meeting, presenting its accomplishments through year 20. The presentation should include: a. ) an brief overview of the goals and strategy you were/are pursuing; b. ) an explanation of past performance with respect to industry and/or close competitors (please clarify how you determined your close competitors, strategic group, etc. ; most reports include strategic group maps to clarify the team’s standing, strategically); Be careful that your presentation does not bog down here. c. description of Current standing, including: Strategy; distinctive competencies achieved; value created for shareholders; current problems/concerns; and key challenges or opportunities with respect to your close competitors. This is a very key part of the presentation. d. ) future plans for competing in the industry; especially how you will position yourself with respect to close competitors, industry demand forecasts, etc. What are you planning to do to improve your strategic positioning? How will you accomplish this? Make sure this section is clearly linked to sections a-c, and, e.