Business Strategy Game Simulation Report: Elaine Footwear

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Business Strategy Game
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Introduction
This report is made by us to have an understanding of the Business game simulation and major
strategic decisions made during the BSG Simulation. Simulation for any business is conducted to
evaluate the areas of success for any business along with the problems which such business
might face in future. Business game simulation is the type of games which has a focus on
economic process management which can be understood in the form of a business. In this report
we have done a BSG Simulation for a footwear company named Elaine which is engaged in
specific manufacturing of athletic footwear in North America, Europe Africa, Asia Pacific and
Latin America. The simulation has been run on the data and different strategic decisions and
management models have been specified in the report by us.
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Question 1
BSG Simulation is a game played by students to gain an understanding of the business and areas
of expansion of such business by running the simulation on the data and analyzing the results
from such data to gain a competitive advantage in the industry related to that business. The major
aspect of the business strategy game focuses on the parallel functioning of the real company thus
helping in deciding logically what to do and take various business decisions helping in
understanding the competitive conditions in real world. In this case we have done a BSG
simulation for a footwear company named Elaine which is engaged in manufacturing and selling
of athletic footwear (Turner, et. al., 2018). After running the BSG simulation on the data of
Elaine following strategies have been analyzed by us which have been adapted by the company
to gain competitive advantage:
 Starting of new manufacturing plants: Elaine has started out with two manufacturing
plant which will help in increasing the productivity and market for selling of athletic
footwear for Elaine. The manufacturing plant was set up in the region of North America
which has a capacity of 2 Million pairs and another plant in Asia Pacific which has a
capacity of 4 million pairs. Bigger plant was set up in Asia pacific as it was estimated that
more sales will take place is Asia pacific. Following is the strategy of manufacturing of
branded shoes by Elaine in old as well as new factory for Year 11 to Year 16 where Year
16 depicts the projections of the footwear that are estimated to be manufactured by the
company.
Branded Footwear
Production
Year
11
Year
12 Year 13 Year 14 Year 15 Year 16
North America Facility
Superior Materials % 36% 40% 40% 60% 60% 60%
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Branded Pairs to be
manufactured (000s) 5000 6000 7200 7200 7200 5700
Increase and decrease in
Percentage as compared
to previous Year 0% 20% 20% 0% 0% -21%
Europe-Africa Facility
Superior Materials % 0% 20% 20% 40% 40% 40%
Branded Pairs to be
manufactured (000s) 0 2400 2400 2400 2400 3000
Increase and decrease in
Percentage as compared
to previous Year 0% 100% 0% 0% 0% 25%
Asia-Pacific Facility
Superior Materials % 56% 40% 40% 40% 40% 40%
Branded Pairs to be
manufactured (000s) 5100 7200 8400 8400 8400 7500
Increase and decrease in
Percentage as compared
to previous Year
0% 41% 17% 0% 0% -11%
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Latin America Facility
Superior Materials % 0% 0% 0% 0% 0% 30%
Branded Pairs to be
manufactured (000s) 0 0 0 0 0 2400
Increase and decrease in
Percentage as compared
to previous Year 0% 0% 0% 0% 0% 100%
Thus it can be seen from the above analysis done by us using the simulated data that the numbers
of branded pairs that are manufactured in different facilities are stable and same number of pairs
is made in the factories for the past 3 years. However it is noted that due to the slowdown in the
market of Asia pacific and North America the manufacturing projections have reduced in the two
regions and the same has been shifted to the other two areas including Latin America facility
which was not under operation for earlier years but is expected to operate during Year 16 as per
the projections. Also it is noted that the quality of the material used has been increased in earlier
year but the same is maintained for years after such increase and the same is expected to stay for
year 16 also. It should be noted that the above table has been made by us from the simulated data
and it shows the percentage increase/ decrease in the manufacturing of Branded pairs by the
factory each years and after the analyses it can be seen that there has been an increase in the
projections for Latin America and Europe-Africa Facility to compensate for the slowdown in the
market of other two regions and decrease in the manufacturing in these two regions.
 Training and additional incentive Strategy: This strategy involves giving proper
training to the employees and workers of the company so that it brings better efficiency
in working of the employees thus ultimately bringing efficiency in the production of
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units. Also to motivate the employees, strategy for providing the incentive can be used by
the company. It can be seen that Elaine is planned a strategy where it is providing
training sessions which however is increasing cost by 600 per worker in North America
and 400 per worker in Asia Pacific but it will help in increasing the efficiency of the
workers engaged in production facilities. Also the newly set up factory in North America
and Asia Pacific is providing with the additional incentive to motivate the employees and
increase the production of the shoes. The incentive has been proposed to be provided @
$1.25 per pair in North America and $0.75 per pair in Asia Pacific. Following are the
details of the simulation data relating to the training and incentive fees:
Workforce
compensation &
training
Year
11
Year
12 Year 13 Year 14 Year 15 Year 16
North America Facility
Base wage 1% 1% 1% 1% 1% 1%
Incentive pay $1.25 $1 $1 $1 $1 $1
Fringe benefits $3,007 $2,500 $2,500 $2,500 $2,500 $2,500
Best practices $600 $800 $1,000 $1,000 $1,000 $1,000
Supervisory staff 35 to 1 40 to 1 40 to 1 40 to 1 40 to 1 40 to 1
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Supervisory
compensation 0% 1% 4% 3% 3% 3%
Europe-Africa Facility
Base wage 0% 0% 1% 1% 1% 1%
Incentive pay $0.00 $0.25 $0.25 $0.25 $0.25 $0.25
Fringe benefits $0 $1,750 $1,750 $1,750 $1,750 $1,750
Best practices $0 $400 $600 $600 $600 $600
Supervisory staff 0 to 1 40 to 1 40 to 1 40 to 1 40 to 1 40 to 1
Supervisory
compensation 0% 0% 5% 7% 7% 7%
Asia-Pacific Facility
Base wage 1% 1% 1% 1% 1% 1%
Incentive pay $0.75 $1.00 $1.00 $1.00 $1.00 $1.00
Fringe benefits $1,536 $1,250 $1,250 $1,250 $1,250 $1,250
Best practices $400 $800 $600 $600 $600 $600
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Supervisory staff 35 to 1 45 to 1 45 to 1 45 to 1 45 to 1 45 to 1
Supervisory
compensation 0% 1% 4% 6% 6% 6%
Latin America Facility
Base wage 0% 0% 0% 0% 0% 0%
Incentive pay $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Fringe benefits $0 $0 $0 $0 $0 $0
Best practices $0 $0 $0 $0 $0 $0
Supervisory staff 0 to 1 0 to 1 0 to 1 0 to 1 0 to 1 50 to 1
Supervisory
compensation 0% 0% 0% 0% 0% 0%
Thus it can be seen that the incentive payment made by Elaine has been reduced after year 11 in
the facility of North America as the employees have been provided training which has increased
the efficiency automatically and company does not have to provide with high amount of
incentive to the employees (Carman & Gibson, 2016). Thus it can be seen that the incentive have
been reduced in North America but the same has been increased in other regions as employees
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were not motivated and the production was not as expected in these regions even after providing
incentive. However in case of Latin America region the company is able to meet the expectations
without providing any incentives thus the same strategy is expected to be followed in coming
years also.
 Projections for Year 16: After the analysis of the simulated data and market we have
prepared the table for the projections related to the Year 16 for Elaine and it states the
following:
Projected year 16 performance
Scoring measures Year 16 Investor
expectation
Other
measures
Year 16 Change
from Y15
EPS $7.51 $5.25 Net revenues
($000s) 935779 25%
ROE 21.80% 26.00% Net profit
($000s) 151670 100%
Credit rating A+ A- Ending cash
($ 000s) 43380 -122163
Image rating 72 77
It can be seen from the above analysis that the company is expected to provide with an
EPS of $ 7.51 which is more than the expectation of the investor. But in case of ROE and
Credit rating the projections computed by us shows that the company is not able to meet
the investor expectation and the company should take various measures to improve such
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projections relating to ROE and credit rating. Also it can be seen that it is expected that
the company will increase its net revenue by 25% and net profit by 100% which is a very
good sign for the company and it states that the strategies of the company has succeeded
in improving the performance of the company.
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Question 2
Management model is a set of activities that specify how the work of management is to be done
along with defining and coordinating such activities. Also it includes allocating of resources
properly to various departments of the organization. Main features of management model include
making choices by selecting the best alternative and second are to make the employees help in
achieving the goals of the organization by aligning the goals of the specific department with the
goals of the company.
Following are the different management and strategic models that have been applied in deciding
the strategic approach of the organization as stated above:
 Lewin's change management model: This model focuses on the changes that are to be
taken place in the organization and states the steps or modes of transition of such changes
so that the changes in the organization takes place smoothly without any disruptions. The
model has been derived by Kurt Lewin and has been divided into three stages named
Unfreeze, Change (Transition) and Freeze. Elaine has adopted this support strategy to
take decisions regarding the start of the new factory in North America and Asia Pacific as
when the decision for start of a new factory in these two areas were taken then in that
case the company will have to make certain changes in the organization and its processes
(Cummings, et. al., 2016). In case of Lewin’s model the company the first step is to
unfreeze which include making people aware about the change that is about to take place
in the organization. Second step is considered as the stage of transition where the
company makes changes in the workings and move towards transferring work to the new
factory. Final phase of this model includes adapting to the changes which has taken place
in the organization relating to the start of the new factory.
 McKinsey 7-S model: This model focuses on the tools that makes an analysis of the
design of the organizational structure by overviewing seven key internal elements which
includes, Strategy, style, skills, system, structure, staff and shared values. This model was
developed by McKinsey and focuses on the above seven factors which help in achieving
objectives of the company and bring effectiveness in the company (Alam, 2017). This
model helps the company in proper facilitation of change in the organization,
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implementing of new strategy and identifying the areas which require changes in the
organization. In case of Elaine the company is engaged in implementing the strategy
relating to providing training and incentive to the employees and this model helps in
analyses of the 7 S of the organization which overviews about whether the strategy would
be beneficial for the organization and its operations. After the analysis it was held that the
company will benefit from such incentive and training model as it would help the
company in increasing the production and efficiency in the factories located in different
regions around the world. For making analysis using this model the company divides the
different ‘S’ into Hard and soft which specifies the areas which are harder to manage and
easier to manage respectively. Hard ‘S’ includes strategy, structure and systems whereas
Soft ‘S’ includes other remaining ‘S’ under this model.
 SWOT Analysis: In this type of model the company if deciding to expand conducts the
analysis of the strategy or alternative available and on the basis of such analysis takes the
strategic decision for implementation of the alternative. It should be noted that SWOT
analysis includes Strength, weakness, opportunities and threats of the proposed
alternative that is under consideration to evaluate the competitive position of the
company in the market after implementation of such strategy. Elaine has planned to open
a new factory in North America and Asia Pacific for which it should conduct the SWOT
analysis to confirm that it is a good proposal for the company to go ahead with such
proposal. Strengths and weakness are dependent on the internal factors of the
organization whereas opportunities and threats are dependent on the external factors. As
it can be seen from the analysis that SWOT analysis is in favor of the strategy of
expansion as strength and opportunities are way better than the weakness and threats of
the option thus Elaine has opted for such strategy of expansion and setting factory in
North America and Asia Pacific (Phadermrod, et. al., 2019). It can be noted that the
supporting strategy of SWOT analysis has helped as the factory opened are of great
success and helped Elaine in attaining sustainable success.
 PEST Analysis: It is also a strategic tool used by the organization to make an analysis of
the macroeconomic factors of the company which might have an impact on the new
strategy in future. Macroeconomic factors that are covered under PEST analysis includes
analysis of Political, economic, social and technological factors of the company. PEST
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