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?
The marketplace is worldwideproduction and

sales activities can be pursued in North

America, Latin America, Europe-Africa, and Asia
Pacific
There are 12 market segments4 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 on the same footingwith

equal sales volume, global market share, revenues,

profits, costs, footwear quality, and so on.
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 is in sound financial condition, is
performing well, and its products are well-regarded
by the buyers of athletic footwear.
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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 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 companys
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
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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)
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You Have Many Strategic Options

Company managers have wide strategic latitude in

staking out a market position and striving for good

performance. Theres no built-in bias that favors 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.
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No One Strategy Is Best

Almost 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 companys 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.
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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, and so forth.
Hence, every companys strategic challenge is
to craft a competitive strategy (consisting of its
prices, S/Q ratings, advertising, models,
delivery times, retailer support, and so on) 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 be

provided with Competitive Intelligence reports

containing information of the actions rivals took
to capture the sales and market shares they got.

Armed with this information, you will be in

pretty good position to figure out some of the

strategic moves that rival companies are likely
to make in the upcoming decision period.

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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 or placed into

a competitive bind by the actions and maneuvers

of rival companies.
Make sure your footwear is attractively priced and

competitively marketed.
While you are trying to win business away from

rival companies, they are doing like wise.

It is the competitive power of your strategy verses

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.
When the game is over, the only things

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.
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Some Features of the Market and

Company Environment
The industry setting in The Business Strategy

Game is modeled to closely approximate the

real-world character of the globally competitive
athletic footwear industry.

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.

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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
2.
3.
4.
5.

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
companys image rating is tied to the styling/quality
of a companys branded footwear, market share
penetration, and its actions to display corporate
citizenship and social responsibility).
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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

20%
20%
20%
20%
20%

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The Two Scoring Standards

Two 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 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?)

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The Two Quizzes

There are 2 open book 20 multiple-choice question
quizzes built into the exercise. The quizzes are taken
online and scored immediately upon completion:

Quiz 1: Covers the Players Guideits purpose is

to spur you to read and absorb how things work in

preparation for managing your company. Time Limit
= 45 minutes.

Quiz 2: Covers the Company Reports and certain

information in the Footwear Industry Reportthis

quiz serves as a check to see if you understand the
numbers and how they are calculated. Time Limit =
75 minutes.
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Tips for Success

Make use of the short Video Tutorials
Whenever you want more in-depth explanations

and details than contained in a Video Tutorial,

click on the Help button at the top of a decision
screen or report page.

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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
decision(s)the chief purpose of the practice
decisions is to help you become fully acquainted
with
All the menus
The decision entries
The on-screen calculations that appear when you
make a decision entry
The information that appears on all the various
reports that become available after each decision
round is complete
The more you learn from the practice rounds, the
better your chances for getting off to a good
start!!!
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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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PC Requirements and Mechanics

Virtually all BSG activities take place online, on a PC

that must be installed with (1) any Web browser (such

as Internet Explorer, Safari, or Firefox) and (2) the
Flash plug-in, Version 10.0 or later.
BSG-Online automatically transfers the needed

software from the BSG server to the PC you are

working on very 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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My Final Advice
Run the company in a serious, professional manner.

You will be held fully accountable for the results of

your actionsjust as managers in the real-world are
held accountable for the performance of the
companies they run.

Be very wary of trying something that is imprudent or

highly risky or un-businesslike (things that would get

a manager fired in a real company).

Students who resort to trying to game the

system usually shoot themselves in the foot.

This is not the time to be a daring adventurer out
to win some variant of a videogame by making
wild decisions or extreme decision entries.
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You are a Team of Executives

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