In The Business Strategy Game, 1 to 5 class members are assigned to operate an athletic footwear company that produces and markets both branded and private-label footwear and competes head-to-head against footwear companies run by other members of the class. As many as 12 companies can compete in a single industry grouping (class sizes above 50 are typically divided into two or more industry groups). The companies compete in a global market arena, selling in four geographic regions—Europe-Africa, North America, Asia-Pacific, and Latin America.
The co-managers of each company are responsible for assessing market conditions, determining how to respond to the actions of competitors, forging a long-term direction and strategy for their company, forecasting upcoming sales volumes, and making decisions relating to:
- Production operations (up to 10 decisions for each plant, with a maximum of 4 plants)
- Upgrading plants and expanding/reducing plant capacity (up to 6 decisions per plant)
- Worker compensation and training (3 decisions per plant)
- Shipping and inventory management (up to 8 decisions each plant/geographic region)
- Pricing and marketing (up to 10 decisions in each of 4 geographic regions)
- Bids to sign celebrities to endorse their brand of footwear (2 decision entries per bid)
- Corporate social responsibility and citizenship (up to 6 decision entries)
- Financing of company operations (up to 8 decision entries)
Each time co-managers make a decision entry, an assortment of on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, total profit, earnings per share, ROE, unit costs, and other pertinent operating outcomes, enabling co-managers to evaluate the relative merits of one decision entry versus another. Company managers can experiment with many different decision combinations in in arriving at a decision combination and set of actions that seem likely to yield good company performance. In addition, there are2-4 minute video tutorials for each decision screenandcomprehensive Help sectionsthat explain cause-effect relationships, provide tips and suggestions, explain how the numbers in the company and industry reports are calculated, and otherwise inform company co-managers how things work.
Each company typically seeks to enhance its performance and build competitive advantage via more attractive pricing, a bigger selection of footwear styles and models, more appealing footwear styling and quality, greater advertising, bigger mail-in rebates, contracting with celebrities to endorse its brand, providing more merchandising and promotional support to retailers, shorter shipping and delivery times, and more aggressive promotion of online purchases at its Web site.
Any and all types of competitive strategy—low-cost leadership, differentiation, best-cost provider, focused low-cost, and focused differentiation—are viable options. A company 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. It can focus on one or two geographic regions or strive for geographic balance. It can pursue essentially the same strategy worldwide or craft slightly or very different strategies for each of the four geographic regions. It can alter its emphasis on selling branded shoes through footwear retailers or at the company’s Web site. It can place more or less emphasis on winning bids to produce private-label footwear for chain retailers.
Each company’s performance is based on a balanced scorecard that includes brand image, earnings per share, return on equity investment, stock price appreciation, and credit rating.
You have the option to schedule 1 or 2 practice rounds (2 is recommended) and anywhere from 4 to 10 regular (scored) decision rounds (6 to 10 rounds are better than 3-5 rounds). Each decision round represents a year of company operations and takes roughly two hours for company co-managers to complete.Decision rounds can be scheduled weekly, bi-weekly, or at whatever intervals instructors wish.Sample schedules for courses of varying length and numbers of class meetings are provided.
When the instructor-specified deadline for a decision round arrives, the BSG server automatically accesses the saved decision entries of each company, determines the competitiveness and buyer appeal of each company’s product offering relative to rival companies, and then allocates sales and market shares to the competing companies, geographic region by geographic region, based on:
- how each company’s prices compare against the prices of rival brands,
- how each company’s footwear styling/quality compares against the quality of rival brands,
- how each company’s product line breadth and selection compares to those of rival companies,
- how each company’s advertising effort compares to rivals’ advertising, and so on for a total of 11 competitive factors that determine unit sales and market shares.
There’s no built-in bias favoring any one strategy and no “secret set of strategic moves” that are sure to result in a company becoming the industry leader.BSG is a “competition-based” strategy simulation exercise wherethe outcomes are always unique to the competitive interplay among the specific decisions and strategies of each group of competing companies.Which strategies end up delivering the best performance in any given group of 4 to 12 companies that are competing head-to-head always depends on the competitive interplay among the specific decisions and strategies of rival companies—there absolutely is no “magic bullet” strategyor prescribed set of actions that will guarantee good company performance.
Company co-managers can access the results of the decision round 15-20 minutes after the decision deadline.Rankings of company performance, along with a wealth of industry and company statistics, are available to company co-managers after each decision round to use in making strategy adjustments and decisions for the next competitive round.
All The Business Strategy Game activities for class members and instructors take place here atwww.bsg-online.com.