Business Strategy Simulation Analysis

The actions build into my strategic plan to light upon competitive victor with my schema were to 1. Offer a capacious variety of point of intersections in arrangement to give consumers to a greater extent choices and appeal to the diverse preferences of a larger consumer keister. This was to be accomplished by increasing the descend of models produced at both the North Ameri bottom of the inning (NA) and Asia-Pacific (AP) plants for sale in the internet and wholesale segments in wholly four neck of the woodss. 2. Offer attractive, high-quality products that will hold up to put out and tear in order to provide consumers with ontogenyd value.This was to be achieved by using a higher(prenominal) percentage of superior materials versus standard materials for exertion, incorpo valuation more deepen styling features into the products, and investing heavily in Six Sigma/TQM programs to improve the quality of the workmanship that went into the products and to reduce the number of defects. 3. Offer products at a price that is reason commensurate and well lower than that of rivals offering shoes of similar style and quality.This was to be accomplished by managing production be andsetting a lower pro check up on margin. To get along production cost, the majority of the products were to be produced at the AP plant and shipped to the early(a) regions. Due to the lower production costs at the AP plant, the fellowship would still be able to achieve the target pro kick the bucket margin even with the sumal costs of shipping the products to the other regions. Since the costs of production in the NA plant were substantively higher, the additional costs of shipping to the other regions would not totallyow the come with to offer the products at the lower cost. Therefore, most of the product from the NA plant were to be sold in that region to avoid the additional shipping costs.Additionally, production costs were to be managed by increasing the number of p roducts produced per employee and reducing the number of rejects by with(predicate) investment in best practices training, higher base wages, and change magnituded incentive stipend to the employees for ameliorate and increased production. The selling price for each product was to be kept the same and increase only slightly each grade in order to increase and maintain a loyal customer base through consonantly reasonable pricing.The actions built into my strategic plan to achieve financial success with my dodging were to 1. Reduce production costs through improved efficiency of operations. This would be accomplished by investing heavily in Six Sigma/TQM programs in order to improve the quality of workmanship that went into every product. erupt quality production reduces the likelihood that customers will end up with defective, low-quality products that could severely damage the companys ensure.Additionally, by investing in best practices training for the employees and off ering higher base wages and incentive collapse, the plan was to increase the number of products produced per employee and reduce the number of units ultimately rejected. Increasing employee production allows the company to create more product with the same get along of resources and improving the quality of their work reduces the amount of resources wasted on rejected units. 2. Take a conservative approach in finance operations. This was to be achieved by reducing the amount of debt and not pickings any unnecessary financial jeopardizes.To reduce the amount of debt, the plan was to dedicate the company pay off loans early in order to save monthly pursuit set downs. To avoid taking financial risks, the company was to use financial resources to improve the efficiency and causeance of the exist NA and APplants rather than invest in new plants in other regions. The other objective of these action plans was to increase the companys financial rating so that future pay could be obtained at reduced interest rates should the select arise to finance the construction of a new plant. why you selected the strategy you usedThe reason I selected the Best-Cost Provider Strategy for Kix Footwear was two-fold. First, the competitive strategy of offering a wide variety of attractive, high-quality shoes was based on what consumers, such as myself, would like to see from a shoe manufacturer. As a middle-income consumer, I work hard to earn the money I restrain and my disposable income is limited. When I shop for shoes I want to have a variety of shoes to choose from that argon well- do and will perish without sacrificing style or having to secure a loan to purchase them.The large majority of consumers are also middle-income and I wanted to target the largest market. Therefore, I persistent that my strategy would be to provide consumers more value for their money. I planned to achieve this by producing and offering a large number of models to satisfy the need for more choices and to inembodied more conjure upd styling features into each model, use higher quality materials, and invest in Six Sigma/TQM programs in order to improve the attractive force and quality of the shoes produced.My strategy to maintain reasonable prices was to invest in best practices training and offer higher base wages and incentive pay to employees in order to increase the number of pairs produced per employee and reduce the number of rejected pairs, thereby reducing the production costs per pair.Secondly, the financial strategy of reducing production costs and taking a conservative approach to financing operations was based on improving profit margins and managing risks. Therefore, my strategy to reduce production costs and improve profit margins was to invest in best practices training and offer higher base wages and incentive pay to employees in order to increase the number of pairs produced per employee and reduce the number of rejected pairs, thereby reducing t he production costs per pair.With lower production costs per pair, the company would be able to forbear more of therevenue generated from sales resulting in an increased profit margin. My strategy to manage risks was to reduce the companys debt obligations by repaying loans early and not incurring any save debt unless absolutely necessary. To avoid further debt, the strategy was to maintain a cash flow sufficient to pay expenses as they came overdue without having to obtain short-term financing and to increase production mental ability by improving or expanding existing production facilities rather than by constructing new facilities in other regions.1. Evaluate the strength of your strategy.The effectiveness of my Best-Cost Provider Strategy to provide consumers with a wide variety of attractive, high-quality products at an affordable price by using better materials, improving efficiency, and taking a conservative approach to financing operations was fairly successful. With th e exception of the starting signal and closing classs, Kix Footwear was one of the top three companies in the industry.As the plot of primer began, Kix started out in 5th place overall with slight increases in Earnings Per Share (EPS) of $0.02, Return on Equity (ROE) of 1.3%, and Stock charge of $0.42/share. By the end of the second year (Year 12), the company had more moderate increases of $2.33 in EPS, 8.3% in ROE, and $56.15/share in Stock Price, putting me 3rd place overall with a +13 point change from Year 11.Kix maintained its standing(a) in 3rd place end-to-end the farinaceous until the final year, occasionally manduction it with Company E. The final EPS for Kix Footwear at the end of the game (Year 18) was $9.08, an increase of $6.39 overall ROE increased 4.2% to a final score of 19.2% and the Stock Price in the final year was $172.67/share which was an increase of $140.67/share. trance my strategy for Kix Footwear was fairly successful, I believe that the companys performance could have been better if I had been more willing to take financial risks. My attempts to increase production capacity were not as effective as I had hoped, causing my company to lose many sales to my competitors with the foresight to build additional capacity at the onset ofthe game.Additionally, I underestimated the competitions aggressiveness in obtaining celebrity endorsements and was too risk-averse to ships boat high, which resulted in my initial bids to be incredibly low compared to those of my competitors. Ultimately, I was not able to obtain celebrity endorsements forthwith due to my low bids, which hurt my image and cost me sales.Due to my setbacks in failing to adequately increase capacity and obtain celebrity endorsements, I lost focus on my original deliberate strategy and began implementing a reactive strategy based on mimicking the actions of the 1st and 2nd place competitors. I reduced the number of models I offered and raised my prices substantially, b oth of which are directly in conflict with my initial strategy. Mimicking the strategy of a rival is rarely successful and did not prove to be so in this situation.As a result of this change in strategy, the company slipped slightly in Year 14, with EPS falling from $5.08 to $4.57, ROE decreasing from 20.4% to 16.0%, and Stock Prices slipping from $96.87/share to $83.20/share. I immediately realized my error and returned to my original strategy by offering more models at lower prices. The outcome was that I was able to regain my competitive advantage the following year (Year 15) and my scores reflected this as EPS pink wine to $6.03, ROE to 18.7%, and Stock Prices to $105.63.C. Evaluate your ability to identify competitors strengths, weaknesses, and strategies during the color.My ability to identify my competitors strengths, weaknesses, and strategies during the simulation were at first not as good as I had hoped they would be. My focus at the lineage of the game remained only o n those companies that were ahead of me or directly to a lower place me. The other companies did not factor into my strategic decision-making and, as a result, I lost out on a vital purchase of additional capacity at the beginning of the game which set me back slightly.Additionally, because of my failure to monitor my external environment, I was taken by surprise when Company E gained ground in Year 13, coming from 6th place to being tied for 3rd place with me. I realized at that point, that it was necessary to watch all of my competitors, not just the ones that I wanted to surpass. An ambitious company can make significantchanges to their strategy and overcome rivals quickly. For a company to maintain a competitive edge, it is important to closely monitor the external environment in order to identify competitors with the ambition, capabilities, and resources necessary to pose a real threat and hold a strategy to protect against that threat.As the game act my ability to identify competitor strengths, weaknesses, and strategies improved. I watched the behaviors of all of the companies, not just the most successful ones, and made strategic decisions based on taking advantage of weaknesses in my competitors in order to gain their market shares and adjusting my strategy to take advantage of consumer preference trends. For example, I noted that there were a lot of sales in the wholesale segment were lost in all of the four regions by companies that were offering products for the private-label segment. I decided to avoid the private-label segment because the profit margin was less than in the internet and wholesale segments and to provide as lots product as I could to those segments in order to gain the market shares of those companies supplying the private label segment.Additionally, there was more production capacity available than there was demand and this continued to be more pronounced each year. Therefore, rather than create more capacity through new constr uction, I decided to increase my capacity by purchasing it from other companies. With this increased capacity, I was able to better meet the demands of the wholesale and internet segments in all four regions without the monthly interest expense of a construction loan. The results were that I had fewer lost sales in the wholesale segment than those companies offering product for the private-label segment, achieved higher takes of sales revenue, and received an A+ credit rating.1. Discuss how successful you were in predicting your competitors next moves.My success in predicting my competitors next moves was initially very good and then began to lag as the game continued. I believe that my initial success was due to the fact that every company was starting out in exactly the same position and face with identical market conditions. Therefore, I simply predicted that my competitors, in reviewing and analyzing the same market conditions as I, would come to the same or similar conclusion s and react in oft the same way as I would. Regardless of the strategy each company wanted to execute, the fact remained that production costs were less in the AP plants than in the NA plants.So I predicted that most of the companies would concentrate their production in the AP region and ship to the other regions. I also assumed that most of the companies would raise their prices, a few would keep them the same, and that none were likely to lower prices. My predictions were accurate enough during the first two years that I received bonus points for being so close.As the game progressed, I was not as successful in predicting the moves of my competitors. I believe the first cause for this outcome was the fact that I was focusing only on the actions of the companies that were ahead of me of just below me rather than monitoring the entire external environment. I failed to recognize the importance of watching all of my rivals in order to identify potential threats to my market share.My predictions, therefore, were essentially my predictions for only those 3 or 4 successful competitors as a group, not the entire industry as a whole. Additionally, as the game continued, I found it difficult to find enough cadence to analyze each company properly given the time constraints. There was very little time between years for depth psychology and decision-making and, coupled with working full-time and family obligations, I only had enough time to perform a cursory review and analysis before entering my decisions in order to meet the deadlines. I believe that given more time, I would have been able to more accurately predict my competitors moves inwardly the game. D. Discuss how sustainable the most dominant competitive advantage achieved by any company at bottom your industry was.I believe that the most dominant competitive advantage achieved by any company within the industry was very sustainable. The top company within the industry, Company B, achieved competitive adva ntage by building capacity within the first two years and continuing to build throughout the game in all four regions winning and maintaining celebrity endorsements year after year and by investing significantly in advertising.This strategy was abouttaking significant risks and it resulted in increased buyer demand, product differentiation, and perceived value. Company B had the capability of producing more product in all four regions than any of the other companies in the industry and enabled them to better meet the increasing demand for their product due to their successful advertising campaigns and celebrity endorsements. They were also able to eliminate all costs associated with shipping product from one region to another, which the other companies were not able to do. This company was able to maintain a 1st place standing overall throughout the game, with the exception of Year 13.By immediately increasing capacity and doing so in all four regions, Company B was able to increase production to meet increasing demand and eliminate the additional operating costs of shipping product from one region to another, keeping production costs down and increasing profit margins. The company also managed to successfully win bids for celebrity endorsements by the second year and maintain a high level of celebrity contracts throughout the game by bidding high. These celebrity endorsements, along with significant investments in advertising campaigns, allowed the company to pass on consumer demand, increase product differentiation, enhance consumer perceived value, and command a higher price for their product.This company shot to the top of the industry immediately by taking advantage of market conditions through aggressive strategy and risk-taking. Once at the top, the company was able to sustain their competitive advantage by building on their strengths of increased capacity and demand. change magnitude capacity allowed the company to gain market shares from those compa nies unable to meet demand and demand for their product was created through numerous celebrity endorsements and considerable advertising.E. Compare the selected strategy to three following tests of a winning strategyThe generic competitive strategy that I selected for Kix Footwear was to provide consumers with a wide variety of attractive, high-quality products at an affordable price by using better materials, improving efficiency, and taking a conservative approach to financing operations. A winning strategy can be determined by applying three tests The Fit Test, The Competitive Advantage Test, and The mathematical process Test.The Fit TestTo pass The Fit Test, a companys strategy must fit the current situation, both internally and externally. Internally, the company must be able to execute the strategy with their available resources and current capabilities. For a good external fit, the strategy must be aligned with the current market conditions.I believe that my strategy passed The Fit Test because it was a good fit internally and an adequate fit externally. Internally, my strategy was based on improving the resources available to me and building on our capabilities, such as existing facilities and current employees. My strategy consisted of investing in improvements to existing facilities in order to increase capacity and investing in enhancements to my labor force through best practices training and higher base wages and incentive pay in order to retain their valuable knowledge and experience.My strategy from an external standpoint was only adequate. As it turned out, industry demand go up much higher than I expected and my strategy to increase capacity through improving existing facilities was not enough to keep up or get ahead. As a result I lost sales to those competitors with enough courage to take risks and build additional capacity.The loss of sales due to being out of stock damaged my companys image and affected future sales. My reactive strategy to loss of sales due to insufficient capacity was to purchase capacity from other competitors in the industry. This allowed my company the ability to better meet demand and lose fewer sales due to being out of stock. As a result, my company was able to regain the 3rd place position in the industry and remain there until the final year. The Competitive Advantage TestFor a strategy to pass The Competitive Advantage Test it must be capable ofhelping the company achieve a sustainable competitive advantage. To be considered sustainable, a companys competitive advantage over rivals must be long-lasting and not just a brief period of exceptional performance. My companys strategy throughout the game was to provide a wide variety of high quality shoes for a reasonable price, which was followed each year with the exception of Year 14. During this year, I lost focus and changed my strategy to mimic those of the companies ahead of me, resulting in considerable losses.I returned to my original strategy in Year 15 and saw significant increases, returning my company to its former position in 3rd place where it remained until the final year. The ability to remain within the top 3 companies in the industry for the sight of the game and have steadily increasing sales revenues each year speaks to the sustainability of my companys competitive advantage and, therefore, I believe that my strategy passed The Competitive Advantage Test.The Performance TestThe Performance Test requires that a winning strategy result in strong company performance. Indications of strong company performance are profitability and market standing. I believe my companys strategy passed The Performance Test because it resulted in excellent profitability and good market standing. In terms of profitability, my company experienced consistent increases in net revenue each year and, with the exception of Year 14, showed a steady increase in EPS. Additionally, ROE met or exceeded investor expectations every ye ar and unit sales in both the internet and wholesale markets increased steadily each year with the exception of the final year. In terms of market standing, my company maintained a global market share of between 8% to 10% throughout the game, met or exceeded investor expectations for image rating every year starting in Year 14, and remained one of the top 3 companies in the industry until the final year.F. Explain how effectively you applied value chain analysis during the simulation.My effectiveness in applying value chain analysis during the simulation was fairly good, but I failed to recognize the reasons for my competitors success in the beginning and it cost my company image points, resulting in less market share.As the game began, I analyzed what my competitors were doing to add value for their consumers and my conclusion was that they were increasing capacity so that they could provide more product in each region without the additional costs of shipping from one region to ano ther. What I failed to realize is that, in addition to building capacity, they were also building demand for their shoes through product differentiation and increasing consumer perceived value. This was accomplished by investing heavily in advertising and placing high bids for and winning celebrity endorsement contracts.Since I was unable to secure any celebrity endorsement contracts immediately and my competitors were offering the same number of models with the same S/Q rating as my company, I tried to create more value for my customers by increasing the number of models I produced, increasing the amount of enhanced styling, and raising my products S/Q rating.My analysis of my competition also revealed that they had an advantage in that they were able to provide better value to consumers by producing locally in order to avoid shipping charges and costs lower. To create more value for my consumers in this activity, I purchased more capacity in the AP region because the production co sts there were much lower than those in the NA region and, even with the additional costs of shipping product to the EA and LA region, I would still be able to provide my customers with high quality shoes at a reasonable price as well as achieve a healthy profit margin.G. Evaluate how effectively you addressed three important issues in order to achieve competitive and financial success for your simulation company.Model availability My effectiveness in addressing model availability in order to achieve competitive and financial success for Kix Footwear was very good. I initially kept the number of models consistent the first year (Year 10), but quickly realized that without the advantages of having celebrity endorsements I needed to offer something to consumers that would differentiate my product, provide more value to my customers, and give me a competitive edge. To achieve these objectives, I increased the number of models I produced and offered for sale as well as increased the sty le and quality above that of my competitors. As a result, despite not being able to obtain very many celebrity endorsements, consumer demand and sales rose enabling Kix Footwear to come from 5th place in Year 11 to 3rd place in Year 12, remaining there until the final year, and showed steady increases in sales revenue throughout the simulation. Corporate CitizenshipMy effectiveness in addressing corporate citizenship in order to achieve competitive and financial success for Kix Footwear was dismal at first and improving only slightly by the end of the simulation. When I began the simulation I did not pay much attention to the corporate citizenship aspects of decision making, but due to my falling image rating and inability to obtain celebrity endorsements, I turned my attention to corporate citizenship.I invested in using recycled materials throughout the simulation, then began making small charitable donations, increasing it slightly each year. Towards the end of the simulation, in an attempt to further boost my image rating I began investing in ethics training and enforcement. While the efforts did boost my companys image slightly, I believe I could have demonstrated better corporate citizenship and realized better competitive and financial success by increasing my attention to this area.Fiscal responsibility My effectiveness in addressing financial responsibility was very good during the simulation, but not excellent. I was very focused on eliminating all outstanding debt to avoid the monthly interest expenses and achieve an A+ credit rating in preparation for the possibility of needing capital in the future at a lower interest rate. While this aspect of my strategy was quite effective and I believe that my credit rating helped boost the companys attractiveness to investors in that the credit risk was very low, my companyshould have been putting the available capital to use to increase investment earnings. Rather than simply sitting on the available capita l, the company should have invested it in order to increase investors return on equity. In that respect, I feel that I was not effective in addressing fiscal responsibility.