The Business Strategy Game — Market Setting, How Things Work, Noteworthy Extras

In BSG, class members are divided into management teams of 1 to 5 persons and assigned to run an athletic footwear company in head-to-head competition against companies run by other class members. Companies compete in a global market arena, selling branded and private-label athletic footwear in four geographic regions—Europe-Africa, North America, Asia-Pacific, and Latin America. Company operations parallel those of actual athletic footwear companies Nike, Adidas-Reebok, and New Balance.

The challenge for each company’s management team is to craft and execute a competitive strategy that results in a respected brand image, keeps their company in contention for global market leadership, and produces good financial performance as measured by earnings per share, return on equity investment, stock price appreciation, and credit rating.

All companies begin the exercise on the same footing from a global perspective—with equal sales volume, global market share, revenues, profits, costs, product quality and performance, brand recognition, and so on. Company managers have wide strategic latitude in staking out a market position and improving their performance. They can

• Employ a low-cost leadership strategy and pursue a competitive advantage keyed to having lower costs and selling at lower prices than rivals.
• Employ a differentiation strategy that sets their company’s footwear apart from rival brands based on such attributes as a higher rating, more models/styles to select from, and such marketing attributes as more advertising, greater celebrity appeal, or higher mail-in rebates.
• Employ a more value for the money strategy (providing good quality footwear at lower prices than other good quality brands) where a company’s competitive advantage is an ability to incorporate appealing attributes at a lower cost than rivals.
• Focus strategic efforts on being the clear market leader in one or more market segments—wholesale sales to footwear retailers or Internet sales or private-label footwear manufacture for chain retailers.
• Focus strategic efforts on one or two geographic regions (as opposed to competing in all regions).
• Pursue essentially the same strategy worldwide or else have regional strategies tailored to match differing competitive conditions in North America, Europe-Africa, the Asia-Pacific, and Latin America.

Companies have a full range of competitive strategy options — low-cost leadership, differentiation, best-cost provider, focused low-cost, and focused differentiation. Company managers can pursue essentially the same strategy worldwide or craft slightly or very different strategies for the Europe-Africa, Asia-Pacific, Latin America, and North America markets. They can try to gain an edge over rivals with more advertising or a wider selection of models or more appealing styling/quality or bigger rebates or securing more appealing celebrity endorsements, and so on. They can alter their emphasis on selling their branded shoes through footwear retailers or at the company’s Web site. They can place more or less emphasis on winning bids to produce private-label footwear for chain retailers.

There’s no built-in bias favoring any one strategy, no “secret” to being the industry leader, and no “magic bullet” strategy that co-managers are challenged to discover in trying to out-compete their rivals. Which strategies end up delivering the best performance in any given group of rival companies that are competing head-to-head always hinge on the interplay and competitiveness of strategies that the rival companies are employing. Most any well-conceived, well-executed strategy and competitive approach is capable of succeeding, provided it is not overpowered by the strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness.

How Does The Business Strategy Game Work?

Companies compete in groups or “industries” consisting of 4 to 12 companies, depending on class size and the number of co-managers assigned to each company. Team sizes can range from 1 to 5 persons. There can be as many as 10 decision rounds and as many as 2 practice rounds. Each decision period in The Business Strategy Game represents a year.

You have complete flexibility to schedule the decision rounds however you see fit. The most popular decision schedules are:

• Weekly (highly recommended for semester-long courses or courses that meet once-a-week).
• Bi-weekly (recommended for situations where you want to start the simulation several weeks into the course and run it the last 5-6 weeks of the course).
• Daily or twice daily (for executive courses or where you want the simulation to be a 1-2-week exercise that perhaps functions as a final exam).

You can schedule 1 practice decision (highly recommended) or 2 practice decisions (even more highly recommended when time permits). Practice decisions are desirable because they allow students time to learn the software and learn how things work before the results impact their grade. We suggest having at least 6 decisions following the practice decision(s)—the minimum is 3. Eight decisions are even better. And 10 decisions (the maximum) provide the richest experience and encourage students to institute a long-term strategy and then have some time to fine-tune or overhaul it.

It will take company co-managers anywhere from 1½-3 hours (depending on the speed at which they work) to study the market results and decide on new decisions each round. It will take company co-managers more time in the early decision rounds (to become familiar with the software and various aspects of company operations), but a fast learning curve brings time requirements down quickly to the 1½ to 2–hour range after the first 3-4 rounds.

Everything that class members and instructors need is delivered online — participants can make hardcopy printouts of anything they desire while online. The Business Strategy Game requires use of PCs equipped with Microsoft Excel (versions 2000, XP, 2003, or 2007).

Each time company co-managers make a decision entry, an assortment of on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, unit costs, profit, earnings per share, ROE, and other operating statistics. The on-screen calculations help company co-managers evaluate the relative merits of one decision entry versus another and make it easy to try out many decision combinations in stitching the separate decisions into a cohesive whole that optimizes projected performance.

There are detailed, built-in Help screens that walk students through all of the decisions and describe cause-effect relationships. All of the reports offer “?/Help” links containing line-by-line explanations of how the numbers are calculated and what they mean. The ?/Help screens also offer “consulting advice” in the sense of providing guidance on “what to think about and why.”

All aspects of The Business Strategy Game closely mirror the competitive functioning of the real-world athletic footwear market. Cause-effect relationships and revenue-cost-profit relationships are based on sound business and economic principles. Everything about the company and industry environment has been made as realistic as possible in order to provide company co-managers with a close-to-real-life managerial experience where they can apply what they’ve learned in business school, logically decide what to do, and otherwise practice being businesslike.

When the instructor-specified deadline for a decision round arrives, the decision entries made by the companies are automatically “processed” and BSG algorithms award sales and market shares to the competing companies, region by region. The all-important factors governing how many pairs a company sells in each geographic region are how its price compares against the prices of rival brands, how its footwear styling and quality compares against rival footwear brands, how the breadth of its product line compares, how its advertising effort compares, and so on for a total of 11 competitive factors that determine pairs sold. The competitiveness of each company’s footwear offering relative to rivals is decisive—this is what makes The Business Strategy Game a “competition-based” strategy simulation. Once sales and market shares are awarded, the company and industry reports are then generated and all the results are made available 15-20 minutes after the decision deadline.

Company decisions are processed automatically and become available 15-20 minutes after the deadlines for each decision round that you establish. All co-managers and the instructor are automatically sent an e-mail indicating the results are ready. Complete outcomes for each decision period, which are available to all company managers online (and to instructors), include assorted industry statistics, company financial statements and operating reports, benchmarking data showing each company’s competitiveness on a variety of cost measures, competitive intelligence on rival companies, and their company’s competitive strengths and weaknesses in each geographic area.

Company co-managers can go online at their convenience to review the market outcomes and company results, then meet in person or chat online with co-managers to agree upon any strategy changes and make their decisions for the next round.

There is no software for students to download or install—everything is on the BSG-Online server and data is automatically transferred from the server to users’ PCs and back to the server when the program is exited.

The 33-page Player’s Guide for students is provided online and can be printed for easy reference.

The Business Strategy Game is quite well-suited for both on-campus classes and distance-learning.

Noteworthy Features & Extras

• 2 “open book” quizzes of 20 multiple choice questions each that are automatically graded and reported—Quiz 1 covers the Player’s Guide and spurs students to learn how things work; Quiz 2 covers assorted aspects of company operations.
• A built-in option to assign company co-managers the task of preparing one or two 3-year strategic plans for their company; the resulting strategic plan is automatically graded based on the degree to which a company achieves the stretch performance targets that co-managers set forth in their plan.
• Online peer evaluations where company co-managers provide you with a confidential assessment of their colleagues’ performance and contribution—a peer evaluation grade is calculated and reported in your online grade book—you can easily review the details of each class member’s peer evaluations (usually necessary only if they receive low scores).
• A Company Presentation option (that you can use at the conclusion of the simulation) where company co-managers prepare PowerPoint slides showing graphs of their company’s performance, outlining the various strategies they employed, who their closest rivals are, and so on; having company co-managers do a presentation to the rest of the class is an excellent means of winding up the exercise and drawing out the “lessons learned.”
• An online grade book that automatically records all company and individual performances; you enter weights for the various assignments and overall grades are calculated for you.
• A straightforward, easy-to-understand Course Setup procedure that enables you to launch the simulation for your course and get ready for class in less than 30 minutes the first time and in 10-15 minutes thereafter.
• A set of PowerPoint slides for introducing the simulation mechanics to your class.
• A full set of easy-to-use menu options that allow you to move students from one team to another if needed, alter the default scoring weights if you wish, and expedite the handling of any and all administrative details that can arise.
• A Learning Assurance Report that provides you with hard data concerning how well your students performed vis-à-vis tens of thousands of students worldwide who completed play during over the past 12 months. The report is based on 8 measures of student proficiency, business know-how, and decision-making skill and can also be used in evaluating the extent to which your school’s academic curriculum produces the desired degree of student learning insofar as accreditation standards are concerned. The 8 proficiency measures are precisely defined at the bottom of the report. Since the LAR provides highly credible evidence regarding the caliber of business proficiency and decision-making prowess of your students, it can be used to help assess whether your school’s academic curriculum in business is providing students with the desired degree of business understanding and decision-making acumen. Professors, department chairs, and deans at many business schools worldwide are engaged in developing ongoing evidence of whether their academic programs meet the Assurance of Learning Standards now being applied by the Association to Advance Collegiate Schools of Business; a prime goal of this Learning Assurance Report is to contribute significantly to this effort.
• A weekly ranking of the best-performing companies worldwide—all co-managers and instructors whose companies appear in the rankings are automatically notified via e-mail. You can browse through the latest rankings by clicking on the icon in the center of the homepage.
• The co-managers of the overall best-performing company in your class are automatically sent via e-mail an “Industry Champion” certificate suitable for framing at the conclusion of the simulation. This certificate serves to document an award or achievement they can put on their resumés.
• Each industry-winning company playing The Business Strategy Game across the world is invited to participate in the “Best Strategy Invitational.” The BSI is held three times annually—in late April/early May, mid-August, and late November/early December. Those teams that accept—usually some 300= teams from 125+ universities in 8+ countries—are divided into industries of 11-12 companies and compete for a period of 10 decisions for “Global Industry Championships.” All participants who complete the competition receive frame-able certificates. The industry winners of the Best Strategy Invitational get a “Grand Champion” certificate. Receipt of these certificates is also worthy of inclusion on a student’s resumé.
• The industry winners of the Best Strategy Invitational and their professors are inducted into the BSG Hall of Fame (which is viewable on the BSG home page at www.bsg-online.com).