Business Strategy Game - Assignment Example

?Business Strategy Game P number: Module: Module deadline: Introduction In the current constantly advancing business world, formulation of a well organized business strategy platform is one of most imperative requirements for business success (Mayer and Mastik, 2007, p.108). Therefore, we had to carefully come up with well thought out business strategy decisions for our company, Zenith Company Limited. Our decisions for each year included application of porter’s five forces of competitiveness in a market, analysis of strengths, weaknesses, opportunities and threats, the strategy clock and the focus strategy (Roy, 2009). Industry overview As we entered the footwear industry the notion of being highly competitive in the market was our main subject of concern. Through the knowledge we had gained in business studies, we had to apply Michael Porter’s five forces so that we thoroughly understand the market and promote our company’s competitive advantage (Roy, 2009). Thus, we put the following forces into close consideration. Firstly, on the bargaining power of buyers, we saw that, since the footwear industry provides an extremely competitive market, this force was at all times undergoing a steady rise. The most important opportunity under this force was that our company had the prospect of applying our differentiation principle for the products offered by our company. However, we observed that there was always the threat of consumers having a high bargaining margin thus bringing in the possibility of a lower profit than the one we had anticipated. About the bargaining power of suppliers, we saw that since there are very many suppliers in the footwear industry, this force is always very low. This was a very important opportunity to our company as it meant that, we could get supply of raw materials at low price. Thus, it aided us in meeting the strategy clock principle of selling quality products at low price. Concerning the threat of new entrants, we saw that the industry offered a great opportunity to our company. Since industry 7 was limited to five (5) groups, this threat was not applicable. In this sense, the footwear industry offered a huge opportunity for our company since we had to lay all our concentration mainly on outshining our existing competitors. Regarding the threat of substitute products, we saw this was a subject of great concern for our company. This is because, this competitive force was always very high as at most times the products available in the market were substitutes of one another. However, this force was an important opportunity to our company since it motivated us to be very innovative. Finally, we saw that the force of competitive rivalry was a great opportunity for our company to triumph in the industry. The opportunity offered by this force was that it ensured we did all our best in innovating higher quality product designs. However, our company had to face the threat of our competitors using our product designs to come up with more advanced ones. Company overview As we took over management of Zenith Company Limited, we observed several essential strengths and weaknesses that the company already put in place (Brott, 2009). Among the most essential strengths that Zenith had created is a huge market share of around 20%. Secondly, the company had a good customer base for its products particularly in North America and Europe Africa. It had also done a lot in promoting its brands over the internet thus enjoying the advantage of selling its products at higher prices per pair. Our company also had the advantage of having utilized a significant number of retail outlets (Hill and Jones, 2010, p. 178). However, the company had some weaknesses and they included lack of celebrity appeal. The company further had a weakness of taking a lot of time in delivering goods to its clients. Decisions Year 11 There are several decisions that we had to concur as a team. This was to ensure that our company was going to meet the goal of being very competitive in the footwear market and make apposite profits. The most important decisions that we employed were based on application of porter’s five forces (Roy, 2009). The reason for this decision was to sell our products at consumer friendly prices in order to create a wider customer base. Secondly, we also decided to employ strategy of analyzing our company’s strengths, weaknesses, opportunities and threats (SWOT analysis). This analysis was essential in that it aided us in determining the available strengths necessary to promote our business. Among the decisions that we made under this analysis was, increasing our advertisement budget so that we push up our sales and promote our company’s market share. These decisions resulted in our company gaining a net profit of $19,732,000. In addition, a B+ credit rating in industry 7 indicated that our decisions had played a significant role in promoting our competitive advantage. Our increased advertisement budget proved to be a great merit since we were able to collect gross revenue of $10,920,000 from the internet sales. Actually, our company’s competitiveness was awarded with the leap frog award. Year 12 In this year, we decided to apply same strategies as those of the previous year. We therefore decided to offer more models and sell our products at consumer friendly prices. We further took advantage of our strength of and made a celebrity bid, increased our retail outlets, extended our advertising budget to $8000 and increased servicer quality rating to 7 stars. These decisions ensured that our company recorded net profit of $59,764,000. Indeed, through the decisions we made this year, our company’s earning per share rose to $2.58 and 14.4 % return on equity. In promoting competitive advantage, our decisions boosted our rank in industry 7 from number five (5) the previous to number two (2). In addition, we were able to record a significant rise in our company’s earning per share along with being awarded with the leap frog award. Year 13 Our main decision for this year was implementation of the focus strategy with major emphasis laid on being a global leadership particularly on offering models (Brott, 2009). We further decided to increase of servicer quality rating to 8 stars, extend the advertisement budget, increase of retail price to $68, wholesale price to $60 and private label to $38. It is important to acknowledge that our decisions for this fiscal year proved that our business operations were among the best. We gained $36,795,000 as the net profit. Surely, investors must have been fascinated by the decisions we made for the company’s progress since the return on equity (17.5%), stock price ($51.87), earnings per share ($ 3.68) were above their expectation. Clearly, the decisions for this fiscal year were excellent enough to promote our company’s competitive advantage. This is because our company’s credit rating in industry 7 rose from B+ to A. To be specific, we were ranked at the top of the industry thus proving that we had made significant steps in promoting our company’s competitive advantage (Brott, 2009). Year 14 In this financial year, a major decision that agreed upon was the implementation of the strategy clock (Needle, 2010). In addition, we decided to make bids for two (2) celebrities, reduce corporate social expenses to $10,554,000 and create a bigger retail network. Due to the high fluctuations in Latin America and our decision of build a new plant, our company underwent a slight drop in its performance. It recorded a drop in ranking from position 1 to 2 while its credit rating drop from A to A-. In addition, we recorded a great negative change (-29) of our performance compared to year 13. The evaluation of this fiscal year’s decision reveals of employing the strategy clock led to our company had face a great challenge in promoting its competitive advantage. Firstly, our company lost its market share from 21.9% the previous year to 17.4%. Although there were significant reasons for this such as the investment made on a new plant and market fluctuations in Latin America, the negative twenty nine (-29) change compared to the previous year was far below our expectations. Year 15 For the sake of recovering our stakeholder’s confidence and promoting our company’s reputation, we decided to repurchase of shares at $29.29 per share. This was influenced by our decision of employing the strategy clock that was focused on promoting our customers’ perceived value of our company (Needle, 2010). Sincerely, the decision of employing the strategy clock led to this year being the most fabulous year for our company. We recorded a net profit of $75,370,000. Although our company was ranked at number 2, the credit rating of A+ was exceedingly above our investor expectations. In addition, $7.55 earning per share, 23.3% return on equity and $125.8 stock price were all far above investor expectations. The decision we made prove that it played a huge role in promoting the company’s competitive advantage (Kourdi, 2003). Our company made more sales that coped well with investment we had made on building a new plant. In fact, it is in this fiscal year that we were rewarded with the Bull’s eye award. Year 16 In our final fiscal year, our company recorded a good performance considering that we maintained same decisions as those of the previous. Revenue amounting to $523,432,000 was collected with a record stock price of $173.82. Our credit rating of A, earnings per share of $8.05 and return on equity of 25.5% guaranteed that our investor expectation was satisfied. Maintenance of those decisions proved to very vital in promoting our company’s competitive advantage since we were ranked at the first position in industry 7. In addition, we recorded the second best change (+5) from the previous year. Final results The final results for this business strategy game clarify that the success of a company to a great extent depends on the decisions made by the top management (Brott, 2009). Our company’s performance in the ultimate year such as a credit rating of A, a net profit of $71,182,000 and a record stock price of $173.82 clarify that our company was successful in meeting its profit making goal and maximizing its competitive advantage. Generally, our company had a total of two (2) leap frog awards, one (1) bull’s eye award and position one game to date scoreboard ranking in industry seven (7). Individually, I, Wendy Ng believe that I was exceptionally successful in playing my role in the ensuring that Zenith becomes successful in the footwear industry. I was the Chief Communications Officer and I believe I was very successful in ensuring that there was smooth communication within and outside the company. Communication was highly vital in ensuring that our company reached the high credit rating, high profits and ensured that right information was available at the right time (Brott, 2009). Key learning points It is vital to acknowledge that the business strategy game played a huge role in enlightening me on how and when to implement a business strategy. In essence, it clarified to me that, although there are different business strategies, implementation of one over another is one of the key decision making areas that a business person must put into close consideration (Kourdi, 2003). The idea of porter’s five forces along side to analysis of strengths, weaknesses, opportunities and threats was a very essential learning point for a business to become competitive. Furthermore, the idea of employing strategy clock proved to be a very important and unique principle towards ensuring that a company promotes its reputation to the consumers and respective stakeholders (Needle, 2010). Additionally, cost leadership strategy greatly enlightened our team on its importance in attracting a large number of customers. Conclusion Generally, this report clarifies that our experience in the business strategy was very fundamental in enlightening as on the necessity of making sound decisions to ensure that our company remains competitive in the market and meets the goal of making profits (Kourdi, 2003). This is revealed by the fact that our decision making all through the fiscal years helped us in making reasonable profits and ended up with two frog awards for most improved overall score. By year sixteen, we had become successful in developing a new plant, collecting a bull’s eye award for accurately forecasting total revenues, earnings per share, imaging rating, vary by no more 5% from projected performance. Furthermore, we promoted our company’s market share along with promoting our rank in industry 7 gaining an overall scoreboard ranking of position one. Basically, the success seen in our company was as a result of our bursting ambition and drive of practicing the best business strategies that we had learnt (Brott, 2009). Appendix 1 Strategy clock (Needle, 2010) References Brott, R. (2009). Maximizing your business success: 11 critical principles that lead to prosperity! [S.l.], ABC Book Publishing. Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: an integrated approach. Boston, MA, Houghton Mifflin. Kourdi, J. (2003). Business Strategy a Guide to Effective Decision-making. London, Economist Books. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=305727. Mayer, I., & Mastik, H. (2007). Organizing and learning through gaming and simulation: proceedings of Isaga 2007. Delft, Eburon Needle, D. (2010). Business in context: an introduction to business and its environment. Andover, South-Western Cengage Learning. Roy, D. (2009). Strategic foresight and Porter's five forces: towards a synthesis. Mu?nchen, GRIN. Read More