Business Strategy: Major Strategic Decisions and Impact of Factors

BUSINESS STRATEGY
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Table of Contents
INTRODUCTION................................................................................................................................................................... 3
TASK 1: Identification and evaluating the major strategic decisions made during the BSG simulation:.................................3
TASK 2: Making use of relevant management models and concepts to evaluate the impact of a range of factors in the
business environment which is considered in taking decisions in developing a competitive strategy:.....................................5
Macro Environment Analysis...............................................................................................................................................5
MESO Environmental Analysis...........................................................................................................................................6
MICRO Environment Analysis............................................................................................................................................9
Task 3: Impact of emerging Technologies and recommendations-.........................................................................................10
Conclusion.............................................................................................................................................................................10
References.............................................................................................................................................................................. 12
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INTRODUCTION
The concept of business strategy refers to a formulation of some objectives or plans after having a proper
analysis by applying certain frameworks which gives a clear and fair picture of business within industry. It
includes analysis of company’s internal as well as external analysis in a form of SWOT or PESTLE analysis.
Business strategies help firms in successful achievement of business objective by following a specific path and
measures. No company in industry operates without formulation of effective business strategies having various
internal, external and competitive forces in mind. The present report comprises of identification and evaluation of
the major strategic decisions that are being made during the BSG year by year simulation, impact of certain
business factors that are being considered in the decisions taken for development of competitive strategy. Further
it also comprises of an impact of emerging technologies on the future competitiveness of the business along with
making of useful recommendations to future manager of the organisation.
TASK 1: Identification and evaluating the major strategic decisions made during the BSG
simulation:
Strategic decisions are those decisions which are taken by a business after considering all the factors like
micro economic factors and macro-economic factors. Strategic decisions are taken for growth and survival of the
business. These decisions provide competitive advantage to the company and can change overall direction of
company. There are some issues in strategic decision making which includes understanding the changed
behaviour of customer, IT implications and maximizing customer influence. Here is the year by year analysis of
Footwear Company.
Year 11 –
In the starting of this year, Footwear plant capacity in terms of production was 6 million. Target are of this
production was North America and Asia pacific areas. Production for these two areas was higher compared to
others. Footwear Company had some plans related to its operations and administrations so production for north
America is 2 millions and for Asia pacific it is 4 millions.
Footwear Company encouraged its production it means demand of product is high as company is offering
discount on products, providing free shipping and offering the model at attractive prices. At the end of financial
year it is observed that company earned more profit than previous year. Company holds 5th position in the market.
Credit rating of the company also improved from B+ to A-. Credit rating improves because of improvement in
net profit and revenue of the company compared to previous year. Return on equity also improved from 15% to
15.60%.
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Year 12-
Intention of company is to maximize the profits and revenue and reducing the cost and covering of
market. Company covers the wholesale market but as it increased the private label sales market share of company
falls from 8.50% to 8.10%. In 11th year image rating was constant but in year 12th it fell down. In 11th year stock
price per pair was risen to $34 but in this year it was only $2.
This also affected emotions of investors as ROE and EPS were below expectations. ROE in this year is
14.39% and EPS is $2.71 and investors are expecting nearly $2.95. Rejected footwears are almost 7 to 8%. Out of
5300 pairs almost 390 pairs are rejected. In European Africa operating expenses are very high because production
is very huge in this area. It is $2.03 per pair in wholesale segment and 0.80 in internet segment.
Year 13-
Company performed very well in this year. Company did not make any changes but decisions made in
previous year are much useful. Market share of the company is high compared to 12th year. Credit rating also
improved from A- to A but there is fall in image rating. Value of stock price in this year is $64.
In this year company performed beyond expectations as ROE of the company increased from 14.95% to
20.70% and investors are only expecting that it will went up to only 15%. EPS also increased from $2.71 to $4.67
per share. However, investors were expecting only $3.05%
Year 14-
In this year, company increased its production in north America by 300 pairs. Company also have good
quality management this year so rejected pairs in this year reduced to 4 to 5% from 7 to 8%. Company also does
charity this year. This year company introduced green footwear material this results in increase in expenditure. As
there is increase in expenditure ROE and EPS fell down this year. Operating expenses and administrative
expenses remains same this year. Exchange rate of Europe and Africa is increased this year so it also increased
the cost highly but return is low. The manager decided to not to sale private label brand in north America as
shipping cost and production cost in this area is very high. This results in low net profit compared to 13th year.
Company also announced dividend per share of $0.10 this year from previous profits. Company’s internet market
segment decreased compared to wholesale market in this year.
Company’s liquidity is good this year as its net cash balance at the end of year is 51,061. This year
company decided to raise funds from banks of $23,000 as it wants to overcome from its expenses.
Year 15-
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