Business Strategy Reflective Report: Company E, ARU, MOD003337, Sem 2

This report presents a reflective analysis of Company E's performance within a business strategy simulation game. The report begins with an executive summary and then delves into the company's mission, vision, and values. It provides a year-by-year evaluation of the major strategic decisions made from Year 11 to Year 16, assessing their impact on the company's objectives. The report analyzes the macro, meso, and micro environments, utilizing relevant management models and concepts to evaluate the factors influencing the competitive strategy. The analysis includes financial ratios, market share, and the company's ability to meet investor expectations. The report concludes with an overall performance review and references.

Business Strategy: Reflective report
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Project: 011
Module: MOD003337

Executive summary
Company E is engaged into the manufacturing of the footwear product is
having its presence in the different parts of the world. The company mainly
targets North America and Asia Pacific which is its central base and having large
customer base. The company acknowledges that there are different firms which
exists in the global market and in order to determine its feasibility in the
footwear industry. The business simulation game provides a platform to the
people with an opportunity to run the business by developing winning strategies.
In this report, game is undertaken in respect to E company which requires
careful decision making, based upon the analysis of the decision taken, it can be
concluded that the company achieved its desired objectives but it failed to meet
with the investor’s expectations. The charts and financial ratios were analyzed
for carrying out the simulation exercise for completing the tasks.

Table of Contents
Executive summary........................................................................................................................... 2
Introduction...................................................................................................................................... 4
Mission............................................................................................................................................. 4
Vision................................................................................................................................................ 4
Values............................................................................................................................................... 4
1.1. Year 11..................................................................................................................................... 6
1.2. Year 12..................................................................................................................................... 6
1.3. Year 13..................................................................................................................................... 7
1.4. Year 14..................................................................................................................................... 7
1.5. Year 15..................................................................................................................................... 7
1.6. Year 16..................................................................................................................................... 8
(2) Making use of relevant management models and concepts to evaluate the
impact of a range of factors in the business environments which you
considered in the decisions taken in developing a competitive strategy
(Business environment analysis)............................................................................................. 8
2.2. Macro-environment (External Environment).....................................................................................8
........................................................................................................................................................... 8
2.2. Meso-environment (Competitive Environment)..................................................................................9
2.3. Micro-environment (Internal Environment)....................................................................................11
(4) Conclusion (Overall performance review against investor expectations)......13
References........................................................................................................................................ 14

Introduction
It would be difficult to successfully operating and managing the company
is not an easy task especially for those who have never run a business before.
The BSGS provides people with an opportunity to get an insight into how to run
the business. Thus, this is the business strategy reflective report based on
company E which is engaged into the manufacturing different types of footwear
and is distributed to the customers across various parts of the world. It involves
designing, manufacturing, marketing of the footwear and services related to it
when it enters the market.
Mission
The mission of company is to fulfill the dreams and desires of the clients
with the help of motivated and satisfied staff generating better and effective
return to its shareholders while keeping in mind its overall responsibilities.
Vision
The E company’s vision is aimed at becoming the leading brand within the
footwear industry by the way of establishment of one-stop shopping locations
that will serve its customers. The E company lacks the sufficient level of
resources in order to compete with its peers in the market and it intends to put
structures in the market which would help in letting the company sustaining
growth and match with the industry.
Values
The firm intends to provide high quality products to its customers from the
diverse background whether they are rich class, middle or lower class. The
company demonstrate higher commitment towards the sustainability among the
employees and the business at large by its participation in various community
development and integration programs. Pertaining to its decision-making
process, it takes into account the expectations of its shareholders and puts value
on workers performing well and bringing prosperity to the business and thus,
benefitting its stakeholders.
Corporate objectives

In order to meet with the vision of becoming benchmark in the market and
to be admired to become favored brand in the industry, the market strategies is
being determined which will help in effectively fulfilling the same. Based upon
the Porter’s Generic strategies, a differentiation strategy if implemented by E
company which seeks to offer its customers with the products and services which
provides benefits that are unique in comparison from its competitors and is
highly valued by the customers.
The corporate objective of the BSG online simulation is:
 To become a market leader in the footwear and shoe industry.
 To attain a higher market share of not less than 20%
 To meet with the objective by Year 16

(1) Identifying and evaluating the major strategic
decisions made during the BSG simulation (Year-by-year
evaluation)
In this section, a critical analysis of the decision which were being
undertaken throughout the Year 11 to year 16 to determine how the decisions
undertaken have assisted in accomplishing the stated objectives. A year-on-year
evaluation is being provided below.
1.1. Year 11
In order to become a market within the footwear industry, E company decided to
made some contribution towards charity which will help in reducing the tax
payable by the company at the end of the year. The company implemented
workforce compensation and training program which helped it in reducing the
reject rates in relation to the defective workmanship and also improving its S/Q
rating under both branded and private label footwear. In addition to this, any
unsold stock which is being left will be provided at the clearance sales. At the
end of first year, the company was having an image rating of 72 which was good
due to charity and credit rating of B because of less credibility. Along with that,
the net profit margin for the 1st year was 6.9% and the return on equity was
13.6% while the current ratio of the company was at 1.96 times and the days of
inventory is 80 days. The inventory days is the point of concern for the company
E. Therefore, year 1 was aimed at securing a market place and determining the
financial strengths and weakness of the company.
1.2. Year 12
In the year 12, the strength of the company in the regions were the models
offered. The inventory clearance was initiated in the year 11 itself based upon
the belief that it would attract more customers. The major weakness which is
being determined in the two years is the style and the quality along with the
wholesale price which is being offered. The company lacked behind the in terms
of timely delivery, celebrity appeal and free shipping, the return on equity in the
two years was 11.3% while the NP margin was 5.1% which is a decline over the

Year 11 which clearly states that the company is not able to effectively sell its
products which resulted into decline in the profits. Along with that, the current
ratio of the company was 2.38 times was an increase over the last year depicting
favorable liquidity position of the company. Thus, decision was taken to focus
more on marketing and advertisement in order to have market presence and
position the brand in the mind of the customers. Along with that, in order to raise
its S/Q ratings an adjustment to the production of the superior material in regard
to effectively meeting up with the high quality market which it is targeting.
1.3. Year 13
In respect to its strength, is the regions where its offers free shipping. The net
profit margin stood at 5.2% while the ROE was at 9.1% which is declining and is
also a point of concern. In addition to this, the stock price of the company is also
decreasing which clearly states its inability to meet with the expectations of the
investors. The credit rating is B- which is not good and increases the chances of
default. There is also a decline in amount in respect to the CSR&C which had an
impact over the image rating points of the company. This decision of the
company has resulted into increasing the risk of default and also the days of
inventory has also rose to 138 which clearly explains the company is not able to
quickly sell its products which has affected its overall performance. The decision
ae not rightly and thus is affecting and deteriorating the performance of the
company. The decision in respect to the credit sale is not taken effectively and
also there is also a rise in the amount of cost. The company paid a dividend of
$0.25 per share this shows some strength of the company but the outcome is not
satisfactory as the operating profit of the company is very low in comparison to
its peers.
1.4. Year 14
In the Year 14, the company E has renewed the production equipment in the
North America (94%) and Asia Pacific (29%). This has helped in effectively
meeting up with the desired product demand and meeting with the supply. This
has resulted into improvising the net profit margin of the company to 9.6% with
the high current ratio of 2.86 and inventory days of 171 days making it hard for

the company to sell its products. This decision of increasing the production
capacity and production equipment has resulted into increment in the profits of
the company leading to increase in the ROE to 19.5% along with rise in the stock
price of the company to $50.59 and earnings per share at $3.01. All this, all
together resulted into increasing the image rating to the investors expected level
which is 76. Along with that, company has invested in its CSR activities as well
played an important role in building the image.
1.5. Year 15
In the year 15, the current ratio was 1.54, inventory days 288 days and Roe was
9.1 which declined. The decisions taken by the company pertaining to the pricing
strategy and renew of production equipment has led to increasing the
expenditure of the company resulted into affecting its credibility as its credit
rating reached B-. But the image rating of the company has remained stable and
favorable which has helped it in achieving its desired set objectives. As the E
company has established a positive image in the market which has helped it in
acquiring higher market share.
1.6. Year 16
In comparison to the Year 15, there is -23 change in the score of the company
which resulted into attaining the position 6. This is the last year, the company
lead o make use of all the tactics and strategies in order to effectively meet with
its objectives. The company chose to focus mainly on the Asia Pacific and North
America regions explaining the increasing number of internet and wholesale
purchases in respect to these regions. The company managed to maintain the
prices of both internet and wholesale products. The company also increased its
marketing expenses for establishing an image within the market.
(2) Making use of relevant management models and
concepts to evaluate the impact of a range of factors in

the business environments which you considered in the
decisions taken in developing a competitive strategy
(Business environment analysis)
There are different models used in order to evaluate the business environment of the company which
are as mentioned below:
2.2. Macro-environment (External Environment)
The model deals with the external environment of the company that might affect the business.
Such that
Political: Stable political situation of the country causes positive impact upon the
business. As per the current situation, the entire world is affected due to Covid and that is
why, unstable political factor causes direct impact upon the business. Whereas, fluctuation in
tax rate also causes direct impact upon business (Park and Mithas, 2020).
Economical: There is an increasing trend identified within footwear industry and that
is why fluctuation in the economy of a country affects performance in adverse manner. If the
price of the athletic shows is increases then customer do not spend amount which leads to
decrease financial performance.
Social: The perspective of customer changes according to their lifestyle, media views,
fashion and role models. That is why Easy should analyze such needs in order to encourage
people to buy such products (Moktadir and et.al., 2020).
Technological: Company should improve the performance by involving within
different technologies that helps to increase the selling. Such that using cloud computing,
online bookings etc assist business to improve the performance.
Legal Factor: Changes in laws and legislation affect the business and that is why,
quoted firm should adhere with such laws in order to run its business operations smoothly.
Environment: The raw material used for making shoes should not cause any negative
impact upon environment and company also comply with sustainability act to protect
environment from pollution and other harmful gases.

2.2. Meso-environment (Competitive Environment)
Bowman strategy clock : Low price and low value added: If the company offer the product at large quantity
then price should be low. Low price: The price of product should be low that helps to remain competitive in
market. Hybrid: It is about to ensuring price is competitive that helps to maximize the
margins. Differentiation: It is about to produce the product at low price with unique features. Focused differentiation: It is about providing high value at high price that helps to
generate higher profit (Farrukh and et.al., 2020). Risky high margin: Offer product at high rates which might affect Easy in adverse
manner. Monopoly pricing: It means it is a single firm who control the product and price but
Easy is not the only company who offer footwear products. Loss of market share: Due to high price company might decreases their market share.
Porter’s Five Forces
This model helps in determining the competitive edge of the company
within the market which will help determining the effectiveness of the company
in terms of survival. The key forces are stated below:
Bargaining power of suppliers: The power of suppliers is low as there
are large number of firms selling footwear items which makes it easy for the
company to acquire the required from the other supplier instead of paying high.
In the game low price strategy is being followed for attracting the customers.
Bargaining power of buyers: The power of consumers is high, there a
huge market of footwear which makes it easy for the consumers to switch to
another brand at zero cost (Porter's Five Forces Analysis Tutorial. 2020).
Therefore, the E company set the price the price of its products in such a way
that helps in retaining customers.
Threats of new entrants: The threat new entry is low as the market is
already occupied by the large firms making it difficult for the new firm to enter
and attain the same position.
Threats of Substitutes: This threat is low in case of big firms with little

similarity but they are unique in nature while for small firms, the substitution is
high.
Existing competition: The current competition in the market is intense
as each firm coming up with innovative and creative products which one product
better than another.
Porter generic strategy
There are four types of generic strategy which includes cost leadership, focus,
differentiation and focus differentiation. Among all, Easy uses cost leadership because it
helps a firm to improve the market position and offer the product at low cost in order to
improve selling. This is chosen over other because it helps to increase the market share and
able to expand the business within new emerging areas.
Horizontal integration
It is a competitive strategy which can be used by the companies in order to acquire the
business activities who are working at same level. In this, Easy may acquire small footwear
companies operating in different region in order to gain a foothold in foreign markets. This in
turn assists to improve the overall performance of a company and gain high competitive
market. It is analyzed that the trend of footwear industry is increasing and that is why, it
helps Easy to transport the raw material easily from another countries. This in turn causes
positive impact upon the business performance and also stays ahead in the competition as
well. As the industry is growing and that is why, it helps to increase the economies of scales
which in turn offer the product at low cost in order to improve the brand image
internationally.
2.3. Micro-environment (Internal Environment)
McKinsey 7S framework
Structure Easy uses hierarchical organization structure in which each employee
are accountable for their own roles and responsibility.
Strategy In order to gain a competitive advantage, company involves all
stakeholder to make better decisions.
System It has enough technical infrastructure which entails that company
establish the workflows and decisions (Bai, Cordeiro and Sarkis, 2020).

Skills The employees have enough competencies and capabilities that help
employee to attain objectives.
Style The senior management must establish code of conduct that helps to
improve communication.
Staff It has talents staff members who make good decision and encourage
employee to improve the business performance.
Shared values To maintain effective organizational design, its mission, objectives are
form that play important role.
Handy’s cultural model
The culture of an organization also affect the internal environment of the company
which is as mentioned below:
 Power: In this, power remain in few hands and only authorized people make
decision. It is not possible in the Easy because it affect the internal environment
because only one person enjoy the special privileges at workplace.
 Role: In this, each individual of a firm are aware with own roles and responsibilities
and people are ready to accept the challenges. This type of culture contribute towards
positive working environment and make employees motivated.
 Task: In this, specific team has designed to attain the defined task and this helps to
understand a sense of responsibility. All people work in a team which helps to
accomplish task in most innovative way (Kong and et.al., 2020).
 Person: This type of culture affects the culture in opposite manner such that they
think they are an important key people. Such employees enjoy the rights and never
think for the welfare of a firm.
SWOT analysis
Strength Weakness
 Brand image
 Strong financial performance
 Make enough competitive efforts in
marketplace
 Low level of modernization and up
gradation of technology
 Environmental problems
 Non availability of quality of
footwear components
Opportunity Threats