Evaluating Strategic Decisions in BSG Simulation - Company E Case

This report evaluates the strategic decisions made by Company E during a six-round BSG simulation, highlighting the increase in marketing expenses and the closure of private label sales. It analyzes the company's performance across different years, noting the significant improvement in 2016 with high EPS, ROE, and stock prices. The report reflects on theoretical frameworks for understanding the internal, external, and competitive environments, including macro, meso, and micro environmental factors. It also critically evaluates the impact of artificial intelligence on the future of the business, recommending its implementation for error reduction and cost efficiency. The analysis covers political, economic, social, technological, legal, and environmental aspects, along with the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and competitive rivalry within the footwear industry.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Evaluating the major strategic decision made during the six round BSG simulation and
reflecting on one round that was good........................................................................................3
Reflecting on relevant theoretical framework for understanding of internal, external and
competitive environment.............................................................................................................7
Critically evaluating the impact of one specific technology on future of the business and
recommendation for future managers.........................................................................................9
Recommendations.....................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is being defined as the different steps and decision being taken by the
company in order to become successful. This is necessary for the reason that when the strategies
selected for the business will not be good then the operational efficiency and profitability will
reduce. The present study is based on Company E which deals in footwear industry. The current
report will outline the major strategic decision made during the six round of simulation games.
Along with this the discussion relating to internal and external environment within which
company operated. In the end the impact of one technology over the working of the company
will be analysed.
Mission
Being the leader in the industry by building good brand image in market by offering
quality based products to get the sustainability.
Vision
The vision of the company is to deign leaders with a focus on getting the best products
for the targeted audience by guaranteeing the higher effective performance with providing
comfort.
Values
The values of Company E involve the fact that they must focus on passion and integrity
along with diversity and improving the performance.
Corporate objectives
 To increase the profits by 15 % in the year 2017.
 To increase the number of employees by 22 % till end of next year.
 To increase investment in technology by 16 % by end of 2017.
MAIN BODY
Evaluating the major strategic decision made during the six round BSG simulation and reflecting
on one round that was good
The strategic decision is very important for the company to take because in case the
decisions are not correct then this will be negatively affecting the performance of company.
Hence, for this the simulation is being undertaken wherein the same situation are created and
then the results are being used in order to take the decision. Similarly, simulation was applied for

Company E as well and the financial data was generated for improving the performance of the
business (Corbo, Pirolo and Rodrigues, 2018). In the present case of Company E, the strategic
decision taken was to increase the marketing expenses as good marketing initiative will result in
increasing sales of the company. Hence, for this reason the company increased its marketing
expense as in 2015 it was $51800 for internet segment and in 2016 it was increased to $74312.
Hence, as a result of this sales and profit of the company increased to a great extent in the year
2016. In addition to this another strategic decision taken was to close the private label sales after
the year 2011.
In the first round that is year 11 the net cash balance of the company was $42122 and the
return on average shareholder equity is 19.4 %. Also in comparison of the different areas where
company operate that is North America, Europe- Africa, Asia- Pacific and Latin America is was
analysed that total number of people employed were 1856 and the supervisor employed was 46.
Also, the total production cost incurred by company in all these four region was $171426 and
$22.64 per pair.
For the year 2012 the total workforce employed in all four regions was 1853 and
supervisor were 41. Moreover, the total production cost was $197479 and $22.48 per pair of
shoe. Also, the net cash balance of the company was $36681 and the return on shareholder equity
was 22.8%. On the other hand, in case of year 2013 the performance of company was good as
the return on shareholder equity increased to 25.6 % but the case balance reduced to $17596.
Also, in case of total number of employees for all the four segment was 1702 and supervisor
employed were 34. This implies that the number of employees and supervisor has been reduced.
Further in the year 2014, the net cash balance of company was $33664 and the return on
shareholder equity was 29.8 %. Moreover, the total of marketing expense for all the four segment
was 32531 in case of internet segment and for wholesale segment is was 59020. In case of
administrative expenses, the total for all the segment is $17628 and $2.03 per pair. Also, the
ending year inventory was 808 combined of all the four segment (Silva and et.al., 2021). In
comparison to this in year 2015 the performance was not good as the return in shareholder equity
was negative that is -1.5% and the net cash balance was also $0. Also the number of employees
in all the four segment were 1047 and supervisor were 21 and the total production cost was
$184561. The total administrative cost was $47912 and marketing cost for internet segment was
$51800 and for wholesale segment was $46490.

Moreover, in the year 2016 there was drastic improvement within the performance of the
company. the net cash balance of the company was $244531 and the return on shareholder equity
was 39.8 %. Also the marketing expenses were increased that is $74312 for internet segment and
$79654 for wholesale segment for all the four geographic areas. Also, the administrative expense
for all these four area was $29185. Also, with the analysis of the comparison of all the different
areas it was evident that as compared to year 2015 the number of pairs sold has increased to a
great extent. also the operating profit margin has increased to a great extent and because of this
the overall profitability of Company E has increased to a great extent.
With the analysis of the above all the year’s performance, the year which stood out was
2016. This is pertaining to the fact that on comparison of all the years it was seen that EPS was
highest in year 16 that is $7.32 and the ROE was also 39.8 %. Moreover, the stock prices were
also high that is $127.12 and the total revenue that is including internet, wholesale and private
label was maximum in year 16 that is $939762.

The learning from this year was that it included working very efficiently and as a result of
this the working efficiency was increased. This year was very good as there were many positive
change within the performance of the company. hence, as a result of this the profitability of the
company increased to a great level and this was not high in the past years (Adulyanukosol and
Silpcharu, 2020). This whole year was a good learning because this increased the working of the
company to a great extent. with this I also learnt that there is having good analytical skill is very
important to be possessed. This is necessary for the reason that in case the critical thinking skill
is essential to take the decision in better and effective manner.
Reflecting on relevant theoretical framework for understanding of internal, external and
competitive environment
For the business to be successful it is very necessary that they evaluate the working of the
environment in better and effective manner. This is because of the reason that in case the
changes in environment will not be considered then this will be negatively impacting the
working efficiency.
Macro environment/ external environment
The macro environment is the one which involves the external environment and business exist in
this only. Hence, any change within this environment will be causing change in operation of
company as well.
 Political- in the current environment the tax rate is reducing and this is good for the
company as they will have to pay less taxes and more profit can be earned.
 Economical- with respect to current environment the purchasing power of consumer is
increasing and this is an opportunity for company. this is because now more people will
be spending over purchasing good quality product.
 Social- with respect to the attitude of the consumer they have become more conscious
relating to this health (The footwear industry Essay, 2022). Hence this will be an
opportunity for the company to grow and develop as more people will buy the footwear
of the company.
 Technological- the company is complying with all the latest technology and this will
improve the working efficiency of the company and profitability will increase.

 Legal- with respect to this legal environment includes all the laws and legislation which
the company must follow. Company E is complying with all the different laws relating to
health and safety of employees, employment and contract act and others. Environmental- this includes the working in such a manner that environment is not
harmed. This is important for reason that in case environment will be harmed then it will
be affecting the working efficiency of the company to a great extent.
Meso environment/ competitive environment
 Bargaining power of buyers- this power is high because consumer guide the working in
better manner and company also works in direction of the satisfying consumers.
 Bargaining power of suppliers- the supplier power is low as there are many different
types of suppliers. In case Company E does not like the services of one supplier then they
can switch over to another.
 Threat of new entrant- the threat of new entrant is low because the entry cost is high
and it is not necessary that every person pays the high cost.
 Threat of substitute- the substitute threat is high as in case consumer are not liking the
product then they can switch over to some other company and other products as well. Competitive rivalry- the competition within the footwear industry is very high because
already there are many different companies dealing in footwear industry (Polese and
et.al., 2019). This is particularly because of the reason that there are many competitions
in the existing environment.
Micro environment/ internal environment
Strength
The strength of company is that it has good set
of employees and it results in better working.
Another strength is that cost structure and
strategic decision of the company is good
which makes the working better (Footwear
Retailers in the UK - Market Research Report,
2022).
Weakness
The weakness of company is that the price
sensitivity is high and this can affect the
profitability of the company.
Another weakness is that there are some
limited financial resources which is negative
for the company.
Opportunities
The opportunity involves the expansion of the
Threats
The most common threat for Company E is the

business in the developing countries as well.
In addition to this another opportunity is to
work on digital marketing such that the
business can grow and develop in better and
effective manner.
competition. The competition within the
industry is very high and this affects the
working condition of the company to a great
extent.
In addition to this another threat for the
company is the changing preferences and need
of the consumers.
Critically evaluating the impact of one specific technology on future of the business and
recommendation for future managers
In the current era, there are different types of the technologies which are emerging in the
specified industry and offering the effectiveness in the overall operational practices of the
business. It is important for the firm to give emphasis on implementing the effective technology
which can aid its to accomplish the objective of higher profitable, sustainability, etc. Artificial
intelligence is one of the significant technology adoption can provide the firm to get the
numerous benefits. It is basically related with having the ability of computer or robot to do task.
AI in its operational activities can allow to reduce the errors, cost, etc. factors. This can be come
possible by providing the personalized dynamic audio feedback based on users real time
performance and training through connecting with smartphone.
The particular technology can positively affect the firm's operation as offering the ability
to incline the product innovativeness. This is helpful in meeting the changing requirements of
business in turn attaining the higher profitability with greater customers targeting can become
possible. AI technology emergence can permit the mentioned enterprise to improve quality of
shoes so that higher customer satisfaction can enable to enhance its sales revenue which
provides assistance in boosting monetary position of firm. AI is the technology that can be fitted
to the shoes which can helps in collecting the crucial information about the way of walking,
running, etc. practices so that evaluating the health condition can be evaluated (How AI is
powering the Footwear Industry Today, 2022.). Technological emergence provides assistance in
adopting the highly effective pattern of working in firm that allows to build the innovative
practices in order to get best results to cope up with prevailing trends in market which can enable
to get stability in specified organization. AI is one of the competitive technology in the current

time which can be helpful for the Company E to ensure that advanced feature based functioning
via eliminating the errors and mistakes so that quality based performance to overcome cut-throat
competition. This can be helpful in achieving productiveness via on demand which aids in
offering unique experience to clients.
Emergence of AI technology in can positively influence the firm as it is capable of
eliminating the errors and mistake which can incline its good image in shoes industry. Company
E with usage of artificial intelligence allow customers to get the shoes at affordable price by
reducing the overall expenses of delivering to end buyers via eliminating irrelevant aspects and
promoting health benefits. This can be largely taken into procedure for achieving ability to offer
customers derive of declining risk related to accidents, etc. by predicting the potential
movements, etc. The business w can faster the decision-making procedure via using AI through
ensuring optimum availability of information to gain the competitiveness. On the basis of this, it
can be specified that Company E can positively get affected by emergence of AI technology via
having innovation, increased revenue, decreased, cost, mitigating related risk, etc.
Recommendations
 It is recommended to pay attention on having significant market research strategy
implementation (Abdulkadir, Afriana and Azis, 2020). The main reason behind having
effective market research approach is to collect the information regarding the current
prevailing trends so that assessing the appropriate product offering can become possible.
With help of this data, identifying the prevailing problems in market and attain
opportunity for research and development can promote its competitiveness. AI utilization
can provide assistance in receiving better approach to deal with changing circumstances
of market in higher competitive & effective manner.
 This is suggested to focus on having idea about the technical aspects so that effective
ability to uplift performance for gaining quality performance. Having greater
technological knowledge with continuous feedback mechanism can assist in overcoming
the lacking areas in turn growth & development receiving become possible. This can help
in eliminating the irrelevant aspects in quicker manner that can boot the overall
performance of firm. The main reason for having effective application of technical
knowledge for continuous improvement by feedback mechanism to get the competitive
performance by getting good traits & tactics leading to offer quality outcomes.

CONCLUSION
In the end it is inferred that defining clear business strategy is important for the reason
that it provides direction to employee and improve working capability of company. the above
discussion outlined that 2016 was the year which was good and performance was the highest.
Also the environmental analysis stated that there is high growth opportunity within the external
environment. In the end it was evaluated that AI that is Artificial Intelligence is a technology
which creates positive impact over the working of the company.

REFERENCES
Books and Journals
Abdulkadir, A., Afriana, W. and Azis, H.A., 2020. Footwear Export Competitiveness of
Indonesia and Vietnam. Signifikan: Jurnal Ilmu Ekonomi. 9(2).
Adulyanukosol, A. and Silpcharu, T., 2020. Footwear design strategies for the Thai footwear
industry to be excellent in the world market. Journal of Open Innovation: Technology,
Market, and Complexity. 6(1). p.5.
Corbo, L., Pirolo, L. and Rodrigues, V., 2018. Business model adaptation in response to an
exogenous shock: An empirical analysis of the Portuguese footwear industry. International
Journal of Engineering Business Management. 10. p.1847979018772742.
Polese, F., and et.al., 2019. Sustainability in footwear industry: a big data analysis. Sinergie
Italian Journal of Management. 37(1). pp.149-170.
Silva, R. and et.al., 2021. Family business management: A case study in the Portuguese footwear
industry. Journal of Open Innovation: Technology, Market, and Complexity. 7(1). p.55.
Online
Footwear Retailers in the UK - Market Research Report. 2022. [Online]. Available through: <
https://www.ibisworld.com/united-kingdom/market-research-reports/footwear-retailers-
industry/>
How AI is powering the Footwear Industry Today. 2022. [Online]. Available through:
<https://www.globaltechoutlook.com/how-ai-is-powering-the-footwear-industry-today/>
The footwear industry Essay. 2022. [Online]. Available through: <
https://ivypanda.com/essays/the-footwear-industry-essay/>