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Team B Members:
Calvin Amos Momodou Drammeh Sheila Hutton Shanika Olivero Rebecca Wentworth
BUS5480
Strategic Management
Lessons Learned
There were three significant areas of lessons learned that stood out to our team: 1) It is not surprising that the winning team did well on their EPS, however more surprising is that two teams, EDSY and E-shoes, who ranked behind us also did well on EPS, exceeding the investor expectation in three out of five weeks. The fact that some companies did better than we did in certain graded areas, yet ultimately lost to us, goes to show that the BSG game and industry competition is all about doing relatively well in several areas rather than exceedingly well in a couple of areas. 2) A second and important lesson that we learned was in regard to the Branded Production area. At first we simply were not manufacturing enough shoes to be competitive.
Fortunately, we caught on to the problem by Year 2 and increased production so we would not run out of product and lose sales. This, along with aggressively increasing our spending on Best Practice Training, proved to be the valuable decisions in the area of Branded Production. 3) Thirdly, going into the final week of the game, we felt like we learned a lot about operating within the industry, and we felt that we had a good understanding of the strategies being used by the other companies within the industry. This was generally evidenced by our continuing improvements from last place in year 12 to second place at the end of year 14. While knowing we could not beat the winning team C, our estimates and expectations were set to meet all investor and industry standards. However, what we did not count on was Team A company, which clearly had a low S/Q and low price strategy through out the game (steadily dropping its S/Q down to S/Q 2), would change its strategy on the last week of the game to become an industry average S/Q rating and industry low price leader (raising their S/Q by 4 points to S/Q 6 and dropping their retail price down to an industry wholesale price). The significance of Team As last year strategy change was that it caused the industry average S/Q to shift upward to S/Q 7, and the industry average price to shift significantly downward. Team As sudden S/Q 6 rating, now equal to our own (which was now below the industry average), coupled with an industry lowest price, allowed their company to siphoned off significant sales and market share from our company strategy in year 15. During year 15 strategy discussions, we discussed raising our S/Q to 7, in case of something like this, but did not think the overall S/Q and price average would change by much, based on the current position of each company. The lesson learned is that you have to expect the unexpected, and to watch what area your company may be most vulnerable to within the industry.
whereby we came close, but never quite met expectations during any given annual performance period.
Details Earnings per Share (EPS) Results The chart below shows the annual target (in parenthesis) for EPS and our annual results below.
(Team B results in $) With a final rated average of $2.43, we clearly missed investor expectation on EPS year after year. Our best performance on investor expected EPS were years 11 and 14. Although we failed to meet the expected EPS on those two years, we happened to miss it by the smallest margins, i.e. $0.29 per share and $0.24 per share respectively.
Stock Price Results The chart below shows the annual target (in parenthesis) for Stock Price and our annual results below.
(Team B Results in $) With the exception of year 14, we failed to meet expected investor stock price. In year 12, we had the lowest stock price in the industry, but bounced back somewhat in year 13 ($30.56), and actually exceeded expectations in year 14 at $41.59. The final year 15 saw stock our Team B stock price drop again to $24.50, primarily due to an unexpected strategy change by an unexpected company, which siphoned off significant market share. This will be discussed more in lessons learned.
Credit Rating Results The chart below shows the annual target (in parenthesis) for Credit Rating and our annual results below.
(Team B Results) With the exception of year 12, we exceeded investor expected credit rating in all the other years, and ended with an overall "A" credit rating. Managing our credit was one of the bright spot for our company. This was partly accomplished by paying off certain debts early and then borrowing strategically based on our company goals.
Image Rating Results The chart below shows the annual target (in parenthesis) for Image Rating and our annual results below.
(Team B results) Ending with a final weighted average of 66, we missed our image rating goal every year, starting in year 11 with a low of 59. However, we steadily improve each year to only missing it by two points (score 68) at the end of year 14. Although in the last year 15 we dropped by two points end the game at 66. This is partly attributed to non-aggressive celebrity bids, which was based on our original internet strategy, which we abandoned after year 12.
Return on Equity (ROE) Results The chart below shows the annual target (in parenthesis) for ROE and our annual results below.
(Team B results in %) With a final weighted average of 14.4%, we reach our expected ROE two out of the five years and missed it by less than 1.3% on another two of the five years. Thus our results were very respectable with the exception of the final year 15 (at 12.2%), which missed by 2.8%. This drop is primarily due to an unexpected strategy change by an unexpected company, which siphoned off significant sales and market share. This will be discussed more in lessons learned.
of 93; again our score was average compared to five out of six teams, but nowhere close to the winning teams score. Credit rating is the only area our Team B, either did better than or equal to the winning team C every year of the games performance period, except year 12. For each year of the game, our credit rating was A-, B, A+,A+ and A, where as Team C credit rating was B-, A,A,A and A. We ended up having the exact same final credit rating of A.
References
BSG Footwear Industry Report (p.2 and p.3) Retrieved from: http://www.bsg-online.com/