Strategic Analysis of BSG Simulation: Performance and Decisions

This report presents an analysis of a Business Strategy Game (BSG) simulation, evaluating key strategic decisions and their impact on various performance indicators. The report examines the increasing trend of earnings per share and return on equity, highlighting the company's financial success. It also assesses the credit and image ratings, indicating improved credibility and brand reputation. The analysis further delves into the factors influencing market share, including marketing strategies and technological adoption. The report evaluates the company's performance across different segments, including internet, wholesale, and private label, and assesses the impact of production costs, workforce productivity, and pricing strategies on overall profitability. The report also explores the application of strategic management models such as the Balanced Scorecard and SWOT analysis to support business approaches and decision-making within the simulation.

STRATEGY GAME

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
Evaluating the main strategic decisions during the BSG simulation..........................................1
Task 2...............................................................................................................................................4
Six strategic and management models supporting strategic business approach.........................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The present report will show BSG simulation game with the help of which the company is
determining its business performance and current market position. On the basis of BSG decision
and report, interpretation will be made.
Task 1
Evaluating the main strategic decisions during the BSG simulation
The strategic decisions highlighting the performance as the earning per share for the BSG
simulation shows an increasing trend year by year. This indicates that the income increase
increases with the increase in the share price of the simulation. Earning per share for the year
2010 resulted as $2.00 which considered as the better income generated against the number of
shares outstanding. For the year 2011 it increases to $3.39 which with the coming years the
earnings gained against the shares increases which is counted as the better results for the
simulation of the game. The return on equity also depicts the rising trend from one period to
another which reflects that the earnings on the equity increases which leads to the creation of
better wealth of the shareholders. Return on equity rises due to the increase in the value of the
share's year by year. For the year 2010 the return on equity in the game computed as 20.0%
which is adequate and a better percentage in the simulation. In 2011,12,13 the ROE rises and
evaluated as 27.8%, 31.6% & 29.9% then again in 2013 the value calculated as 31.5% which
basically indicates the success of the game in the BSG simulation. The credit rating for the
model in the beginning period resulted as B due to the starting period and after that in the
upcoming years the rating gets better and better with A+ which clearly stated as a good rating.
Credit rating depicts the credit worthiness of the game which the capability to meet its debt
obligation. In the simulation it shows the better credibility of the game as the returns and the
earning shows an increasing trend because of many people shows favorable attitude towards the
game. The image rating in the performance highlights of the BSG simulation shows positive
results as the rating number getting higher and higher from one year to another which reflects
that the reputation has been developed. Image rating is directly linked with brand image of the
game under BSG decision which is improving due to the increase in the stock price and the
profitability. The net revenues at the internet wholesale private-label also showing the rising
trend of the which means sales increases with an increased amount which would lead to high
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market share. The net revenues for the year resulted as 90315 and for the year 2011 it evaluated
as 114,848 and goes on rising with changing years. This means that customers are more and
more interested in using and purchasing this game under the BSG simulation model. These are
the information relating to the financial performance of the game under the BSG strategic
decisions which shows as the better and good performance in terms of the returns, profitability
and ratings. However, the production cost under is increasing due to the high labor cost.
Likewise, in the year 2010 the production cost resulted as 23.98 and in the coming it increases to
27.60, 29.22 as the charges on the labor increases that equates to 8.98 for 2010 and 9.45,9.67 for
the year 2011 and 2012. By this it can be analyzed that during the medium term and the long
term the cost on the factors of production increases. On the other hand, with increase in the cost
the productivity of the workers is declining which clearly indicates that the quality of the game
reduces as the workers are not performing well over the years. This can be due to the lower
morale or if the workers are not satisfied. The ratings of the pairs of the game sold in different
regions depends on the S/Q ratings which as per the performance highlights getting higher and
higher with the upcoming years. Like, in the year 2010 the rating resulted as 4.0* and during the
year 2016 it shows as 8.0* which means double in 6 years. This means the strategic decisions
taken as BSG under the simulation leads to a growing success. The strategic decisions made in
the game that includes effective marketing strategy and the adopting new and latest technology
are the major reasons for the success and favorable ratings of the game. The operating profit also
increases year by year which means that after meeting all the expenses and the cost the
profitability rises. The grounds due to which profitability increases are their strategic decisions in
relation to the market share as the market share also showing a rising trend. This is due to the
decisions made by the company like offering great deals at reasonable price with attractive
features improves the performance of the company.
On the basis of given data, it can be interpreted that there has been an increasing trend in
the segment area of Internet, wholesale as well as Private label. The company F has achieved
high growth in the market share over the last 10 years which shows that company is improving
its operational function as well as business performance. The market share has increase from
8.3% in the year 2010 to approx. 14% which is a good indicator of company's profitability.
Company by focusing on niche market demand, making good customer relationship by
increasing customer engagement, delivering quality product and services can acquire high
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market share in the competitive market. Market share helps company in building brand position
and image in the mind of customer as well as competitor. BSG decision and report has also
disclosed that company is laying down more emphasis on the brand advertising activities. The
company had incurred huge expenses starting from $7500 000 in the year 2010 on the
promotional as well as advertising activities which has increased with the year up to $18500 000.
On the basis of S/Q rating which is done by giving either 1 star to 10 star, company has achieved
the highest rating of 8 star in the last 6 year which shows that company has made significant
improvement in the styling and quality aspect of its product and services which was earlier only
3 star. It can be observed that there has been a significant increase in the retail pricing segment
from $67 per unit in the year 2010 to $105 per unit in the year 2016. Also, the wholesale pricing
has shown fluctuating trend starting from $48 per pair to the maximum price of $75 per pair with
the change in time. The report has also shown that use of celebrity appeal, company has been
facing fluctuating and constant trend. On the basis of BSG decision and reports study, it can be
evaluated that company has been growing over the year which can be understood by the increase
in the market share. With the change in time period it can be determined, that company is also
making changes and improvement in the field of business operations, quality product and
services, performance level which in turn is increasing the profits and market value of the
company. These changes are considered necessary for the betterment of company goals and
objectives.
BSG decision and report has contained all the statistical and financial information as well
as data related to the different country part including North America, Europe Africa, Asia Pacific
and Latin America in which company is having its delivering its services and having its business
operations. If the Facility space segment of company is observed it can be clearly visible that the
gross investment made in the facility space at the beginning in total is $312 000 with zero
amount of additional investment made. The overall facility space available for construction
equipment is for 16000 pairs. When the production equipment and cost section is studied, it has
been identified that the total production capability of company is 120% in which the company is
producing 19200 000 pairs including the rejected pairs as well. As per the workforce statistics,
the total cost incurred in relation to base wages is $79221 000. There has been an increase in the
workforce productivity which depicts that company is taking care of its employee need and
weaknesses which results in motivation factor among employees. As per the S/Q rating made in
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respect of Warehousing operations, company has received an average rating of 7.5 star in
country where it is having its business operations. The company has also maintained the
inventory clearance function properly and earned a revenue of $48800 000 by selling $51.91 per
pair. Company is conducting marketing and administrative function in a cost effective manner by
managing all irrelevant cost factor and developing sound business strategies and plans. From the
point of evaluation, it can be concluded that the net revenue of the company by making footwear
sales is $1 369 186. Also, the company is yielding good amount of dividend for its shareholders
in the year 2016 i.e. $5.00 per share as compared to non distribution dividend policy of 2015.
Company is also sharing its high profit with its shareholders which is resulting in their wealth
creation. The earnings available per share has increase from $1.99 to $13.4 during the year 2015
and 2016 respectively which has created satisfaction among its shareholders that they had
invested in right and correct company.
Task 2
Six strategic and management models supporting strategic business approach.
Company having sound and effective business policies, plans and strategies can perform
better in the long as well as short run. Strategic management is defined as the process and
mechanism adopted by company which helps the company in formulation and development of
business goals and objectives, different business related policies, norms, guidelines, frameworks
and procedures, plans etc. related to the procurement and effective utilization of the business as
well as financial resources. Company should always take in to consideration all the micro as well
as macro business factors which are going to create negative impact on the functioning of
business operations.
With the help of strategic management models, the employees of the company are able to
understand the current business strategic position, strategies, code of actions and plans which are
formulated and implemented by the company. This strategic management helps company in the
smooth functioning of its business operations, processes and works towards the betterment of
business growth and success in the near future.
The strategic and management models which supports the business approaches, decision
and ideas are as follows:
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1. Balance scorecard – It is considered as one of the effective strategic performance
measurement and management model which helps company in providing all the
information related to the management strategy, chosen strategy of the company. With
the help of balance scorecard, company can manage and undertake the feedback received
by the customer or any other company stakeholder. It also helps in managing and
monitoring all the learning processes, procedures which has been adopted by company in
successful completion of its business operations. By determining the targeted figures,
balance scorecard facilitates the four main perspective of business viz. Financial,
Customer, Internal Business and Innovation & learning (Keyes, 2016). With the help of
BSG simulation gaming, company is evaluating its business performance and operational
efficiency. The company is able to identify the different functions of a business
organisation taking place internally along with their resulting external outcomes. With
balance scorecard necessary improvement if any required can be made in its internal
business process. As per the BSG decision and report, company has improved its market
share acquisition by considering the all four perspective of business.
2. SWOT analysis – The SWOT analysis is another useful strategic and management
model in which SWOT stands for strength, weakness, opportunity and threat factor
associated with the business. The strength and weakness are considered and measured as
the internal business issues of the company whereas all the opportunities and threat
prevailing in the market are the external issues. With the help of SWOT analysis and as
per the BSG decision and report, company has focuses on enhancement of its business
strengths by grabbing more business opportunities (Bull and et.al., 2016). Company has
engaged in the corporate social responsibility by carrying on social activities for the well
fare of the society in which it is operating its business functions. In the beginning of the
year 2014, company has been awarded by the World Council for Exemplary
Corporate Citizenship by presenting a distinguished award
for making the highest cash outlays in the form of percentage of revenues for carrying on the
corporate social responsibility and citizenship initiatives. This helps company in grabing more
business opportunities and growth. On the flip side, in the year 2015, company is having a
negative or declining trend in the market share value which is one of the threat for company
which in the coming year was overcome.
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3. PEST analysis – This strategic and management model helps company in determining all
the factors which are affecting or going to affect the business health or market position.
The PEST analysis model works by considering all the political, economical, social as
well as the technological factors. Company is having its business operations in the
different areas of the world which creates adverse impact on the functioning of business
operations (Abushova, Burova and Suloeva, 2016). For conducting the BSG simulation
game, company has chosen the PEST analysis as strategic and management model for
monitoring all the threats which are associated with the production function, operational
activity of business and what strategies and plans should a company made to reduce and
mitigate such risk or threats. With the help of PEST analysis, company is able to achieve
high performance b considering all the political plans, policies taxation norms and
guidelines which are laid down by the government of different country. Company is able
to increase its workforce statistics, by improving and updating the technological factor of
the business.
4. Porter's five forces – One of the most important strategic and management model with
the help of which company can easily determine that how all the future micro as well as
macro business aspects of business will create influencing factor on the upcoming
business operations or business growth and success. The porter's five forces model
involves all the threat which the company is having by entry of any new competitor,
threat of launching or producing of products and services which will act as substitute to
the company products and services (Mathooko and Ogutu, 2015). Company in BSG
simulation game, by using porter's model has determined the bargaining power of its
customer and suppliers. This model has helped the company in seeking the competitive
advantage by timely evaluating the available business opportunities and utilizing it in its
business operations for successful completion of business goals and objectives. As the
porter's model helps in ascertaining the business factor related to the competitive rivalry
among the existing firms, changing business policies and plans in accordance with the
business and market condition helps company in improving its business performance.
5. Goal based strategic planning – the goal based strategic planning model helps company
in framing different planning and strategies related to the achievement of business goals
and objectives. Company is using this strategic and management model in formulation of
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strategies, plans, actions, solution as well as policies which are in line with the attainment
of business objectives and goals (Phelps and et.al., 2016). Company has develops it
strategies in relation with the different operational segments of the company viz. Internet,
Wholesale and private label. The goal and objectives of company has been achieved with
high market share and revenue.
6. Gap planning – This strategic and management model is also known by name The
strategic planning gap, Need assessment or Need Gap analysis. This strategic
management model is used by the company for making assessment as well as to compare
the thought process of where the business organization is currently existing, the point
where it is expecting to be in the near future. By using gap planning tool company is
acknowledged of how to solve the gap arising in between the internal business operations
and processes. It mainly helps company in assessing the loophole which is impacting the
overall business performance by lowering the profitability margin and thereby declining
customer base as well. In BSG simulation game, company by using the Gap planning can
evaluate all the internal shortages, drawbacks or errors which is leading to the downfall in
the growth as well as the success graph of the company (Turner-Stokes and et.al., 2015).
The company can make strategies and plans in accordance with the level of desired sales
it wants to achieve in near future as compared to the projected sales of the company.
CONCLUSION
From the above report it can be concluded that BSG simulation game played by company
has helped in assessing the business performance level and profitability margin in the different
business scenarios. The report has defined the interpretation on the basis of BSG decision and
report. Also, the report has discussed about strategic and management model which has been
used by company for successful completion of the BSG simulation game. Furthermore, the
report has disclosed factors related to the successful attainment of the set defined business goals
and objectives efficiently and effectively.
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REFERENCES
Books and Journals
Abushova, E., Burova, E. and Suloeva, S., 2016. Strategic analysis in telecommunication project
management system. In Internet of Things, Smart Spaces, and Next Generation Networks
and Systems (pp. 76-84). Springer, Cham.
Azevedo, C.L., Almeida, J.P.A., van Sinderen, M. and Pires, L.F., 2015, September. Towards
capturing strategic planning in EA. In 2015 IEEE 19th International Enterprise Distributed
Object Computing Conference (pp. 159-168). IEEE.
Bull, J. W., and et.al., 2016. Strengths, Weaknesses, Opportunities and Threats: A SWOT
analysis of the ecosystem services framework. Ecosystem services. 17. pp.99-111.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
Auerbach Publications.
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management. 29(3). pp.334-354.
Phelps, C., and et.al., 2016. Strategic planning in population health and public health practice: a
call to action for higher education. The Milbank Quarterly. 94(1). pp.109-125.
Turner-Stokes, L., and et.al., 2015. Patient engagement and satisfaction with goal planning:
Impact on outcome from rehabilitation. International Journal of Therapy and
Rehabilitation. 22(5). pp.210-216.
Online
13 Strategic Planning Models To Consider. 2019. [Online]. Available through:
<https://www.clearpointstrategy.com/strategic-planning-models/>.
Strategic Management Model with Examples. 2019. [Online]. Available through:
<http://higherstudy.org/strategic-management-model-with-examples/>.
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