business STRATEGY GAME - Learning Financial Management

Report
PRESENTED BY:Ruchi Rani
Anjali saini
Kajal bhuwania
YEAR-11
The strategy adopted for year all the 3 year is ‘Differentiation’
strategy.
In order to increase Earnings Per Share, Return on Equity,
Credit rating and image rating of the company from the
previous year
Objective:
To maximize the profit and market value of the organization
INTERNET SEGMENT
 In year 11 in all the regions i.e. North America, Europe-Africa,
Asia-Pacific and Latin America, the price and the models offered of
the online products was kept same as year 10 but increased the SQ
rating from 5stars to 6 stars to attract more customers for online
shopping.
 The advertisement budget was also increased.
 There was no free shipping offered as increasing the net profits
and net revenue was the main aim.
 The competitors offered a lower price than the price offered by F
company and also increased the SQ rating. Due to this the market
share decreased from year 10(12.5%) to year 11(8.7%) decreased.
WHOLESALE SEGMENT
 Price was increased from the previous year as the products are
catered to premium section of the society in all the regions.


SQ rating: increased in North America as the customers want high
quality products and the plant is also situated in North America.
Whereas the SQ rating in Europe , Asia-Pacific and Latin America
was kept same as year 10.
Models availability: There was increase in no. Of models offered
from 200 to 250 in all the regions.

Advertising and Rebate offer: as the company increased no. of
models/styles, it required higher advertising.

Retail outlets and retailer support:there was no need to increase the no.
of retailers as it would have lead to excessive demand which the
company could not fulfil.

Delivery time: the delivery time in North-America was cut down from 3
weeks to 1 week and in Asia-Pacific from 3 weeks to 2 weeks. The
delivery time in other two regions were kept throughout the 3 years.

Celebrity Appeal: as the advertising budget has increased every year,
according to F Company there was no requirement of endorsing celebrity.

Issue of stocks and plant up-gradation in North America
PRIVATE-LABEL SEGMENT
 To increase EPS, return on equity and image rating we increased the
price of private-label from average industry price in all the regions
except Asia and kept the SQ rating same. This resulted in low market
share even though the products were sold in all the regions.
STRATEGY- YEAR 12
 Objective: to maintain the Year 11 strategy and increase the market share
and sales of the company
INTERNET SEGMENT
 After analysing the competition in market for internet sales after year 11,
we as co-managers decided to lower down the online prices and increase
the no. of models offered as these are the main global determinants of the
unit volume sold online. Free shipping was not offered as it effected the
revenues drastically. The SQ rating of the pairs available in each region’s
distribution centre was also increased with increase in company’s
advertising budget.
 This change resulted in increase in market share in internet sales i.e.
maximum market share (16.6%) in all the companies.
WHOLESALE SEGMENT
 In North America, all the components are kept constant as year 11 to
maintain the consistency of the company except expenditure on
advertisements, which was increased in Year 12. This resulted in increase
in market share of the company from year 11.
 After analysing competitors, In Europe-Africa the wholesale price for
branded footwear in Year 12 was lowered down from year 11. Instead,
there was an increase on expenditure on advertisements and mail-in
rebates offered, which attracted more customers and resulted in increase
in market share of the company.



In Asia-Pacific region, again there was a decrease in price of
wholesale branded footwear and increase in expenditure on
advertisements, rebates and retailers support. Again there was an
increase in market share and sales in this region as compared to
year 11.
Similar changes were done in Latin America region as were done in
Asia-Pacific except no increment was done in expenditure on
advertisements.
The main aim in Year 12 was to increase the cash flows and sales of
the company. For this some of the stock which was issued in Year 11
was repurchased in Year 12, which increased the ROE,EPS, image
rating of the company. As a result of this change the default risk
ratio changed from low to medium i.e. , interest coverage rate also
increased and debt/asset ratio lowered down.
PRIVATE-LABEL SEGMENT
 After analysing the competitors market strategy in year 11, we as
co-managers decided to lower down the prices of the private label
footwear and increased the SQ rating by 1 star. The change has
consistent and not too drastic. Due to this the company was able to
gain market share in private label segment.
STARTEGY- YEAR 13

Objective- the main aim was to increase the market share and image
rating as the other factors i.e. EPS, credit rating and ROE were as per
investor’s expectations since year 11.
INTERNET SEGMENT

By gaining the maximum market share in Year 12, the main aim was to
increase the market share in year 13 again. For this the price was lowered
down and the models and advertising were increased. This resulted in
maximum market share in internet segment i.e. 23.1 % which is a huge
change from year 11 i.e. 8.6% in all the three regions except North
America which had a greater percentage.
WHOLESALE SEGEMENT

From year 12 to year 13, there was increase in price of the branded
footwear as the SQ rating, models/styles offered, advertising and retail
support were increased in all the regions which again resulted in higher
market share.

The workers productivity was increased as more incentives were
provided as increase in SQ ratings and there were less rejection
rates due to up-gradation in North America plant.

In year 13, to boost EPS, ROE and stock price, the company
repurchased the shares.

There was much increase in interest coverage ratio in year 13
than in year 12. The default risk ratio was maintained to medium
level and debt/asset ratio decreased more which resulted in
maintaining the credit rating.

To increase the image rating of the company, corporate social
responsibilities were also undertaken by the company such as
‘Ethics Training/ Enforcement for all employees’ to
develop/enforce a code of conduct and ‘Workforce Diversity
Program’ to achieve and maintain workforce diversity concerning
age, sex, ethnicity and other factors. This was possible as
company had enough ending cash and revenues in year 13 which
were gained through year 11 & year 12.
PRIVATE-LABEL SEGMENT
 Due to excessive competition from rivals and their greater
market share in private-label due to very low prices, the
co-managers decided not to provide private label in North
America and Asia-Pacific region. A little private label was
provided in Europe-Africa and Latin America as in the F
company had good amount of sales in previous year.

Even though strategy changed from gaining profits to
gaining market share in year 11 & year 12, the company
worked very consistently without making major changes in
all the aspects like SQ rating was increased by 1 star every
year. The reason for this strategy was to work towards long
term goals and gain profit and always tried to increase
EPS, ROE and credit rating in which the company exceeded
the other rival companies in the business simulation
exercise.
 In
the simulation game there were different
decision entries for all the geographic region
of the world market.
 There were 8 entries where the projected
no. were entered and at the bottom instant
calculation was done.
 The bottom of the screen showed the net
profits, earnings per share, return on equity
and credit rating
DEFINING
PLANNING
EXECUTING
DELEIVERING
• We as the co-managers defined the goals
for the company year 10 onwards. We
learnt how to perform the given tasks so
that we don’t lose our sales, market
share, revenues, retail networks and so
on.
• The game helped us to analyse all aspects
of a company from sourcing to
distribution
• The game helped us in making projected
sales forecast vis-a vis the industry
average. The market snapshot gave better
insight in number crunching and largely
increasing the market share.
• There were demand of different S/Q rated
products, models and advertising. In the three
decision period i.e Y-11,Y-12, Y-13 we were able
to analyze the demand of the target group and
served them better with the right kind of
products and styles.
BRANDED SALES
FORECAST
• Sales forecast for different regions were done by studying
the industrial avg. and the company’s strategy.
• Forecast was done on the assumption of the growth rate in
the industry.
• Inventory clearance decision were taken to get new styles.
Capacity
sales/upgrades/
additional
decisions
• This screen required to fill the decision regarding the plant
up gradation
• In both the years north America plant was upgraded.
BRANDED
PRODUCTION
DECISION
• This screen required to fill the entries in terms of
production and how to achieve the desired S/Q rating.
• How many pieces , models , how much to spend on plant up
gradation was decided.
BRANDED
SHIPPING
DECISION
• As the plant being in north america
and asia pacific the decision for
shipping is an important factor for
good inventory management
INTERNET
MARKETING
DECISION
• Due to different demands in the
geographic region marketing of
internet sales was important.
• It was the direct competitor for the
retailer.
• More models were offered on
internet to increase the S/Q rating.
Whole sale
distribution
• In the wholesale distribution each
as a strategy we increased one star
every year to increase the S/Q
rating.
Private Label
Decision
• Private label decision helped to
increase the market share.
• Bidding was done for different
regions depending upon the
competition
Finance decision
and cash flows
• The finance decision was
important to maitain a high
interest coverage ratio, low
default risk ratio in order to
maintain high credit rating,
image rating and high EPS.

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