Competition and Business Risk - Assignment Example

s Table of Contents List of Figures 3 REFLECTIVE REPORT ON STRATEGIC MANAGEMENT OF HEAD START FOOTWEAR 4 1.0Introduction 4 2.0 The business strategy (BSG)-online game 4 2.1 The benefits of the BSG- online game 4 2.2 Weaknesses of the business risk strategy game 6 3.0 Teamwork evaluation 7 3.1 Using the Belbins typology-analyse my team members 7 Besides, they were also resource investigators due to their curiosity, extroverted and enthusiastic traits. According to Fisher, Hunter and MacRosson (2001), they enjoy and like exploring innovative opportunities. Yuan and Niki are humble with a very strong sense of inquisitiveness and readiness to establish the possibilities of something new coming up. Their core was exploring what resources were available and developed external contacts helpful to the project team. However, their major weakness is that sometimes they had a limited attention span. 7 3.2 My own contributions using the Belbin’s typology 8 3.2.1 Strengths 8 3.2.2 Weaknesses 10 3.3 Team efficiency 10 4.0 Course integration 11 5.0 Change strategy 12 5.1 What Learnt about business strategy 12 5.2 What I would do differently next time 14 6.0 Conclusion 15 7.0 References 16 8.0 Appendices 18 List of Figures Figure 1: The net revenue for Company H in (Millions of Dollars) from year 10-15. Figure 2: Figure showing earnings per share. Figure 3: Figure showing credit rating of Head Start Footwear. Figure 4: Figure showing the global market share of Head Start Footwear Company. Figure 5: Figure showing image rating of Company H. Figure 6: Showing global unit sales of firm H. Figures 7, 8, 9, & 10: Figures showing Head Start Footwear’s market in Europe-Africa, Asia-Pacific, North America, and Latin America REFLECTIVE REPORT ON STRATEGIC MANAGEMENT OF HEAD START FOOTWEAR 1.0 Introduction The individual reflective report will act as an overview of the strategies that were implemented by Head Start Footwear through the business strategy game (BSG) that was played from year 11 to year 15 on a period of 5 weeks. The major aim of this reflective report is be to make an evaluation of my knowledge of how to run a business by making use of the business strategy game. The report will also highlight how I used the Belbins typology to analyse my team members and myself, the theories that I have found helpful from other courses that studied on my masters programme, and what I have leant in relation to business strategy. Figures and facts retrieved from business strategy game will be provided to support the report’s arguments in the report such as the image rating and investor expectation as shown in the figure below. 2.0 The business strategy (BSG)-online game 2.1 The benefits of the BSG- online game The business strategy game (BSG) offers me practice to make business decisions. The game also enables me to learn how to come up with strategies for winning in a highly competitive market. It also enables me to be held answerable for my actions, in comparison to the business managers who are held responsible for their firm’s performance in the real world (Thompson, Stappenbeck, & Reidenbach, 2013:33). The other benefit is that we can learn more of the BSG exercise by taking up a role a business expert attempting to attain the best organizational performance by making use of managerial prudence and responsible business approaches (Thompson, Stappenbeck, & Reidenbach, 2013:34). BSG gives the opportunity to put what I have learnt into action in order to gain some expertise in applying the skill of strategic analysis. I was able to access the most recent industry-wide developments, create a long-term direction for my company H, create and attain strategic financial goals, and lastly, I came up with ways of producing best results and possibly result to gaining some competitive advantage. Consequently, there the results for Head Start Footwear were increased net revenues as shown below. Figure 1: The net revenue for Company H in (Millions of Dollars) from year 10-15. The decision report in year 10, 11, 12, 13, 14, and 15 the revenues were $250, $250, $289, $324, $389 and $286 respectively. The data shows that the decisions made a significant impact on the firm’s revenues increasing gradually. However, the revenues dropped in year 15 showing exhibiting a setback in industry operations. The BSG involves a wide variety of concepts covered in earlier business courses. Therefore, each period of decision-making gives me a better understanding of the manner in which various pieces of business ideas fit together, and it also taught me how to come up with an integrated and cohesive strategy. From my company analysis, I was ranked 5th with an investor expectation of 96 and an overall G-T-D score of 88 compared to Bare Foot’s 102. As shown in the figure below, the investor expectation was highest in year 14 and lowest in year 12. In year 10, 11, 12, 13, 14 and 15 the investor expectation was $2.50, $3.06, $2.15, $3.05, $4.36, and $2.43 respectively. Generally, the decisions made resulted to an increase in investor expectation, thus leading the company to be ranked 5th. Figure 2: Figure showing earnings per share. BSG deepens my comprehension of the relationship between revenue, cost and profit thus enabling me to make use of the information that is contained in the firm’s operating reports and financial statements due to the number oriented nature of BSG. The reports indicated that there was a direct relationship credit and investor expectation. This was evident as shown in the figure below. Figure 3: Figure showing credit rating of Head Start Footwear. The credit rating and investor expectation was highest in year 14 and lowest in year 11, 12 and 15. The credit rating for these years was B+. This may be attributed to high cost of borrowing, stiff competition and changing customer demands. The business strategy game provides a valuable decision-making practice and sharpens my sense of making sensible business decisions, while implementing strategic decisions for my firm the caliber of my decisions (Thompson, Stappenbeck, & Reidenbach, 2013:34). This was evident in the net revenues as shown in figure 1 above. 2.2 Weaknesses of the business risk strategy game The major disadvantage of the online BSG is that it makes some company managers are overzealous by putting the performance of their firms at risk through irrelevant marketing tactics thus bringing down the performance of the organization. Other disadvantages are that in the game, the numbers of competitors are not changed and it remains unchanged. Not in real life that does not happen. Moreover, human management is also not visible in the game. The other weakness of the BSG is that little value will be realised if I run my firm as a daring adventure that is out to win some variant of a video game with whatever un-business like decisions that I would have entered. The other weakness is that, in the BSG, no two groups of competing companies have the likelihood of adopting the same marketing strategies, as well as the execution of decisions in the firm. 3.0 Teamwork evaluation 3.1 Using the Belbins typology-analyse my team members Yuan and Niki were considered complete finishers because they were orderly, painstaking, conscientious, and paid attention to detail people (Furnham, Steele & Pendleton, 1993: 248). As a complete finisher, each one of them had a great capacity to follow through what they had started, and they could not start something that they could not finish. Sonia and Yuan are described as the monitor evaluators because they were prudent and serious. They were the ones who were very anxious make sure that the consequences of any decisions arrived at are fully thought through. They enjoyed evaluating ideas and analysing problems, and provided precise answers when they were asked to make decisive decisions on the advantages and disadvantages of various viable options.  Their major contribution was to make an evaluation of the practicality of ideas and feasibility that come from both outside and within the group. Nevertheless, observed that they had a weakness of being prone to prone to ‘analysis paralysis and sometimes lacked inspiration or ideas Diluk and Niki were team workers because they were generally sensitive, sociable, and rather mild character. As cited by Dess, Lumpkin and Eisner (2009), team workers are viewed as the most supportive members of the group. This is because they were concerned with the manner in which others members were feeling, as well as adapting readily to varied state of affairs and people.  Additionally, they were good listeners and had the capability to resolve conflicts and assisted the members to understand one another without necessarily becoming confrontational. Their major undoing was that we struggled under pressure and found it hard to make decisions. Besides, they were also resource investigators due to their curiosity, extroverted and enthusiastic traits. According to Fisher, Hunter and MacRosson (2001), they enjoy and like exploring innovative opportunities. Yuan and Niki are humble with a very strong sense of inquisitiveness and readiness to establish the possibilities of something new coming up. Their core was exploring what resources were available and developed external contacts helpful to the project team. However, their major weakness is that sometimes they had a limited attention span. Niki and Diluk were shapers due to their assertiveness and dynamism (Fischer, Hunter, & Macrosson, 1998). They were highly motivated individuals with a strong desire and a lot of nervous energy to achieve. Yuan and Niki were the most crucial members since they were the ones who made things happen. When the group encountered obstacles, they found a way of getting past it. They also enjoyed handling confrontation and challenge.  Their major contribution in the group was to provide shape and form to the teams activities towards the attainment of the project’s outcome. On the contrary, I observed that their weakness was that they were easily irritated (Thompson & Stappenbeck, 2010). Diluk was the plant since she was creative, unorthodox and individualistic. Diluk produced ideas and suggestions that released the team from impasse and allowed it to continue with its work of analyzing the business strategy of Company H (Fischer, Hunter, & Macrosson, 1998: 286). Due to Diluk’s creativity, he was able to offer the seeds from which major developments sprung and the solutions to complex problems.  As a plant he was independent-minded, always original and often clever. Diluk’s major contribution as plant is that he acted as the core source of ideas driving the group to attain its objectives. Since Diluk did most of the work as the group leader, he was the coordinator. He was calm, controlled, confident, and had the tendency to be mature both in outlook and approach (Fisher, Macrosson, & Sharp, 1996: 63). He was focused on the team as a whole and how everyone worked together to attain the group’s shared goals. Diluk’s major contribution as a coordinator is that my calm ability enabled me to organize and control the team in a manner that gets the best collective performance. 3.2 My own contributions using the Belbin’s typology 3.2.1 Strengths In the group I was the implementer. Implementers are regarded as being loyal, systematic, practical, and conservative. Belbin (1993:12-18) notes that they also exhibit copious amounts of common sense, down to earth and self disciplined characters. My major contribution as an implementer is that turned general plans and theoretical concepts into a practical brief, and then systematically worked through that brief. This was evident in the firm’s market share as shown in the figure below. Figure 4: Figure showing the global market share of Head Start Footwear Company. Since the projects implementer, I ensured that the image rating of the company remained high due to the high initial investment. From the decision made in the BSG game, the firm posted a gradual increase of image rating due to extended market share attained in the 5-year period as shown in Figure below. Figure 5: Figure showing image rating of Company H. There was a gradual increase in image rating due to extensive advertisement and promotional efforts by the firm. In year 10, the image rating was 70 same to year 11 and 12. The ratings increased to 77 and 89 in year 13 and 14 due to initiation of changes as a result of external pressures such as stiff competition and advancements in technology. My other strength is that utilized my calm determination to mask rigidity or obstinacy. I also took the credit for the team’s successes and never blamed anyone for failure. I used my talents to obtain the best form the group. I also ensured perfectionism and paying attention to detail in the group’s efforts thus ensuring nothing was overlooked. I exercised self-discipline and listened actively to the comments of the other members 3.2.2 Weaknesses The major weakness that I had as an implementer is that I lacked flexibility, even though one allowable weakness is that I attempted to strike a balance between adaptability and perseverance. I sometimes exhibited low creativity during the project process. I lacked clear objectives in the team’s progress. I also focused more on the detail at the expense of the overall project outcomes. My other weakness is that I was anxious to get things right affecting the morale of the team. 3.3 Team efficiency My team work effectively because we relied on interdependence and mix of my members. Our team also worked efficiently because we aimed for a broader coverage of all the major team roles by selecting individuals basing on the nature of the task. For instance, for tasks with deadlines we selected complete finishers and shapers. The efficiency of the team was improved since we secured a good match between functional role and team role. In our group, we used shapers and coordinators in leadership roles. That is why Diluk was the leader of the group. We encouraged group cohesiveness and dynamism by not over-dominating other team members and stifling their creativity. I also created awareness among team members of the different team roles and how they will impact on the performance of the team. That is why Company H posted increased sales as shown in the figure below. Figure 6: Showing global unit sales of firm H. For instance, in year 10 the Internet sales were 226, the wholesale sales were 4276and private-label sales were 740.In year 14 there was a general increase in Internet sales, wholesale sales and private-label sales being 693, 5835 and 1625 respectively. However, these values dropped in year 15 with the Internet sales being 552, the wholesale sales were 4641 and no private-label sales were made. 4.0 Course integration In incorporated the following concepts: SWOT analysis, PESTEL analysis, the Porters five forces Porter Generic Strategy, value chain marketing mix (4P), and profitability concept in accounting. In relation to SWOT analysis, I used it to find my strengths and weaknesses. However, I tried very much to reduce the weaknesses so that I could become a valuable member of the group. Besides, I also used SWOT analysis establishing the internal and external factors that are considered to be vital in achieving Company H’s goals and objectives. The internal factors are identified by the strengths and weaknesses, while the external factors are determined by opportunities and strengths (Hill & Westbrook, 1997). Some of the external factors that affected Head Start Footwear are: changes in technology, macroeconomics matters, legislations, social changes, cultural changes, and changes in the competitive position. From my course I learnt that the marketing strategy involves the process of the placement of the four P’s: (product, placement, pricing, and promotion) (Laermer & Simmons, 2007). These four items are the pillars of the marketing mix and need to be considered in any marketing strategy. This marketing strategy will help gain an understanding of how we will position ourselves in the market offering. I used pricing and promotion mix to make Company H gain competitive advantage. I advertised the firm both on electronic and print media to offer good product at affordable price. By having the knowledge of how pricing is perceived in the target market, it was very easy to come up with a pricing strategy. The target audience will both be the physical store shoppers and online shopper. The prices varied according to the purchasing power of the target population. Pricing affected revenue generation of Company H. I used PEST (political, economic, social, technological) analysis to evaluate the influences of macro structures on doing business. Politically, the product will be sold to various stable nations. Economically, the firm would operate in an economically viable environment with favorable exchange rates, cost of capital, business growth opportunities, and cost of capital. Socially, Company H will be obliged to support community projects in the area it is situated and respect their cultural values. Legally, the firm would comply with all the legal requirements since legal factors affect how a firm operates, as well as the demand for its goods and services. The environmental factors include environmental and ecological aspects which require that a firm operates sustainably. In relation to technology, I learnt that shifts in technology influences the quality, costs, in addition to leading to innovation. In relation to the Porters generic strategy, I used the differentiation strategy. Company H differentiated its products in order to compete effectively. Our firm’s differentiation strategy was suitable since the target customer segments were not price-sensitive and the market was also highly competitive (Porter, 1980). Lastly, I also integrated the profitability concept since in every case that we took decisions, we significantly depended on ROE and EPS. This enables us to make profits from all the business activities the firm. This is because the real evaluations of the profitability segments usually take place by the use of key figures or evaluation sizes. 5.0 Change strategy 5.1 What Learnt about business strategy I learnt that business strategy means long-term planning of the business (Dess, Lumpkin, & Eisner, 2009). I learnt that a business strategy usually takes about three to five years sometimes taking even longer. For instance, in the BSG I took five years (from year 11-15) to measure investor expectation as shown in figure 2. The other things that I learnt about business strategy is that it is concerned with pooling together resources to initiate major projects such building a new factory and offices (Thompson & Stappenbeck, 2010). Strategies are also concerned with business activities’ scope, for instance, where and what to produce. Head Start Footwear expanded its market share to Asia-Pacific, Europe-Africa, Latin America, and North America as shown in the figures below. Figures 7, 8, 9, & 10: Figures showing Head Start Footwear’s market in Asia-Pacific, Europe-Africa, Latin America, and North America According to Hill and Jones (2012), there are two major categories of strategies namely generic and competitive strategies. The generic strategies comprises of growth and internationalisation. Growth involves buying new assets and developing new services and products. Globalisation entails moving operations to more countries. In that respect, I learnt that the use of Internet marketing increases sales and revenue in general as shown in the figure 1 and 6. On the other hand, competitive advantage entails performing your activities more than your rivals (Mulcaster, 2009:69). I learnt that the two major competitive business strategies involved include selling my products at lower prices than my competitors and differentiating my goods and services from those of my rivals through branding, packaging and labeling, extra features, and customer care. I came to learn from the BSG that you need to come up with a winning competitive strategy that typically makes maximum use on continuing consumer interest. I also came to learn that the major outputs of a business strategy process are managerial consensus, customer value proposition and customer segmentation, the strategic agenda of the business, the budget and metrics, and lastly, the strategic agenda of the adaptive processes such as customer targeting and operational effectiveness (Johnson, Scholes, & Whittington, 2009). 5.2 What I would do differently next time I would ensure that I come up with a differentiation strategy that separates my firm’s footwear from the rival brands basing on age group, and geographical coverage. For a company to be truly efficient and effective in its operations, it will develop a brand that succinctly captures the product being offered in a manner that answers the questions and dwells in the minds of the customer (Aeker, 2010). Besides, I will make sure brand equity increases the financial value of the brand to the firm. Moreover, the knowledge of the consumer towards a brand governs how the advertisers and manufacturers market their brand (Lopo, Billet, & Morgan, 2009). I would strengthen my advertising through increasing expenditure to ensure a wider audience is reached is through written and electronic media, for example, using the internet and social networks (Berkowitz, 2011). This is because advertising on the part of footwear producers has been found to strengthen brand awareness, as well as helping to pull buyers into retail stores that carry the firm’s brand. The other thing that I would do differently is that I would also ensure that the current-year advertising expenditures are way above the annual advertising expenditures. This is because when other competitive factors are at equilibrium, companies that have an above-average current-year advertising expenditures have been reported to outsell those companies with below-average current advertising expenditures. Few managers have the ability to step back and make an assessment of their brand’s particular strengths and weaknesses objectively (Mckeown, 2012). I would ensure that the strong brands of footwear excel at delivering the benefits that the customers truly desire. I will also make sure that the strong brand of athletic footwear is properly positioned to make the brand stay consistent. Moreover, there is the need for the sub-brands such as water bottles, caps, to have a relationship with one another in an orderly manner within the portfolio of brands, from which I will be able to formulate a comprehensive brand report card. I will ensure that I position by quality by creating a unique and distinctive image for the footwear brand exclusively for the professional groups since most of them prefer quality items. I will ensure I position the products according to the users (Trout, 1999). For the top athletes, they would have special footwear to justify the higher prices as compared to the other customers. 6.0 Conclusion To sum up, the BSG enabled me to be conversant of how a business is operated in the real environment. It provided me with the opportunity what I have been reading into action, as well as gaining some proficiency in using tools and concepts of strategic analysis. The game also incorporated a host material covered in the earlier business courses. I also came to appreciate that BSG provides you with practice in decision making thus enhancing your business judgement. The utilization of the Belbins typology evaluated the group members as implementers, team workers, complete finishers, monitor evaluators, coordinators, specialists, the plant, shapers, and resource investigators. In relation to course integration, I incorporated the accounting theories such as the pricing model to estimate market expectations and the intrinsic value method for stock options. I appreciated the three theories of motivation by Fredrick Maslow, Elton Mayo and Frederick Herzberg. About the business strategy, I learnt that it means long-term planning of the business (Dess, Lumpkin, & Eisner, 2009), and it takes about three to five years sometimes taking even longer. Although they are two major business strategies, I dwelt on competitive strategy for Company H in the BSG. To sum up, what I will differently for the firm was to ensure that it increased average profit margins and gain competitive advantage, such using differentiation strategy, ensuring brand equity, and price reduction. 7.0 References Aeker, A., D. (2010). Building Strong Brands. London: Simon & Schuster. Belbin, R. (1993). A reply to the Belbin Team-Role Self-Perception Inventory by Furnham, Steele and Pendleton. Journal of Occupational and Organizational Psychology, 66(3), 259-260. Czinkota, R., & Ronkainen, I., A. 2004. International Marketing, Seventh Edition, Thomson Learning, Ohio Dess, G., Lumpkin, G. T., & Eisner, A. (2009). Strategic Management: International Edition. Sidney: McGraw-Hill. Fischer, S. G., Hunter, T. A., & Macrosson, W. D. (1998). The Structure of Belbins Team Roles. Journal of Occupational and Organizational Psychology , 71, 283-288. Fisher, S., Hunter, T. & MacRosson, W. (2001). A validation study of Belbins team roles. European Journal of Work and Organizational Psychology, 10(2), 121-144. Fisher, S.G., Macrosson, W.D.K. & Sharp, G. (1996). Further evidence concerning the Belbin team-role self-perception inventory. Personnel Review, 25, 61–67. Furnham, A., Steele, H., & Pendleton, D. (1993). "A psychometric assessment of the Belbin Team-Role Self-Perception Inventory". Journal of Occupational and Organizational Psychology 66 (3): 245–257. Furnham, A., Steele, H. & Pendelton, D. (1993). A response to Dr. Belbins reply. Journal of Occupational and Organizational Psychology, 66(3), 261-261. Hill, Charles W.L., Gareth R. Jones, 2012. Strategic Management Theory: An Integrated Approach, New York: Cengage Learning, 10th edition. Hill, T., & Westbrook, R. (1997) SWOT Analysis: It’s Time for a Product Recall. Long Range Plaaning , 30 (1), 46-52. Johnson, G., Scholes, K., & Whittington, R. (2009). Fundamentalsof Strategy. London, New York, Sidney: Prentice Hall. Kotler, P., Adam, S., Brown, L., & Armstrong, G (2003). Principles of Marketing, Edition, Sidney, Australia: Prentice Hall. Laermer, R., & Simmons, M. 2007. Punk Marketing, New York: Harper Collins. Lopo, L., Billet, M., & Morgan, N. (2009). Consumer-Based Brand Equity and Firm Risk,. Journal of Marketing , 73 (1), 47-60. Mckeown, Max, 2012. The Strategy Book, Sidney: Prentice Hall. Mulcaster, W.R. 2009. "Three Strategic Frameworks," Business Strategy Series, 10 (1). pp68 – 75. Porter, M.E., 1980. "Competitive Strategy: Techniques for analyzing industries and competitors" New York: The Free Press. Rohleder, E. (2010). Taylor’s theory of Scientific Management and the implications for contemporary management practice. Sidney: GRIN Verlag. Spinello, R. 2011, “Privacy and Social Networking Technology,” International Review of Information Ethics, 16. 41–46. Thompson, A., & Stappenbeck, G. (2010). The Business Strategy Game. Sidney: McGraw-Hill. Thompson, A., Stappenbeck, G., & Reidenbach, M. (2013). The Business Strategy Game: Competing in a Global Marketplace. Burr Ridge Parkway, Burr Ridge Parkway: McGraw-Hill/Irwin. Thompson, A.A., Peteraf, M.A., Gamble, J.E. and Strickland, A.J .2009. Crafting and Executing Strategy, New York: MGraw-Hill Irwin. Trout, J. 1999, "Positioning" is a game people play in today’s me-too market place", Industrial Marketing, 54 (6). 51–55. Vallor, S. 2010, “Social Networking Technology and the Virtues,” Ethics and Information Technology, 12 (2), 157–170. Val Gelder, S. (2005). ‘The New imperatives for Global branding: Strategy, Creativity and Leadership’, Journal of Brand Management, 12(5), 395-404. 8.0 Appendices Names of my group members: Diluk V Rathnayake -Student ID -000772180 Sonia Verma -Student ID -000584696 Nikitha Trikha -Student ID- 000806056 Jia Zhou-Student ID -000772180 Yuan Xu-Student ID – 000637026 Branding refers to symbols, names, designs and signs, or a combination of these in order to differentiate a firm’s product offerings from competitors (Czinkota & Ronkainen, 2004). Effective branding can develop brand equity; the value of a brand in terms of brand loyalty, company name awareness and high perceived quality. These ideas are at the core of why effective brands can be the base of a firm’s marketing strategy (Kotler et al., 2003). Brand building as outlined by Aaker (2005) improves a brand’s equity directly through advertising campaigns and indirectly via promotions, for instance event sponsorship or cause championing. Strategic management consists of two major processes; formulation and implementation. While formulation involves an analysis of the environment in which the company operates from, then making a sequence of strategic decisions how the firm will compete, implementation involves the decisions made about how the company’s resources such as people and IT systems will be aligned and mobilized towards the organizational objectives. Read More