The Business Strategy Game

Overview and Orientation

McGraw-Hill/Irwin

2009 The McGraw-Hill Companies, All Rights Reserved

What Is The Business

Strategy Game All About?
Its an online simulation where you run an

athletic footwear company in competition

against companies run by other class
members.
Global marketplace: production and sales

activities can be pursued in North America,

Latin America, Europe-Africa, and Asia Pacific
12 market segments: 4 geographic segments

each for branded footwear sales to retailers,

for online footwear sales direct to consumers,
and for private-label sales
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Your Companys Situation

All companies start out in sound

condition & with identical numbers

Each decision period represents a year.
The company began operations 10 years

ago: the first set of decisions will be for

Year 11.
Each company had Year 10 revenues of

$238 million, net profit of $25 million

(equal to $2.50 per share), an ROE of
~17%, and a solid B+ credit rating.
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The Decisions You Will Be Making

You and your co-managers will make decisions in
up to eight categories each period relating to:
Corporate social responsibility and citizenship

(up to 6 decisions)
Production of branded and private-label athletic

footwear (up to 10 decisions each plant, with a

maximum of 4 plants)
Plant capacity additions/sales/upgrades (up to

6 decisions per plant)

Worker compensation and training (3 decisions

per plant)
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Decisions (cont.)
Shipping (up to 8 decisions each plant)
Pricing and marketing (up to 10 decisions in

4 geographic regions)

Bids to sign celebrities to endorse your

companys footwear (2 decision entries per

bid)

Financing of company operations (up to 8

decisions)

Plus there is a screen for making annual

sales forecasts and deciding whether to

have inventory clearance sales

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Competitive Variables That Determine

Company Sales and Market Shares
The head-to-head competition among companies to
persuade consumers to buy their brand of athletic
footwear is based on 10 factors:
Price
Number of models/styles
Styling/quality (S/Q) rating
Advertising
Size of retailer network
Celebrity endorsements
Delivery time
Retailer support
Mail-in rebates
Shipping charges (Internet sales only)
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You Have Many Strategic Options

Company managers have wide strategic

latitude in striving for competitive advantage

and good performance. Theres no built-in
bias that favors any one strategy.
Some examples:

Low-cost/low-price
Differentiation
Emphasize branded footwear
Emphasize private-label or internet
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More Strategy Options

Focus on one or two geographic regions
or strive for geographic balance.

Put little or much emphasis on privatelabel footwear

Pursue essentially the same strategy

worldwide or craft slightly or very different
strategies for each geographic region.

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No One Strategy Is Best

Most any well-conceived, well-executed

competitive approach is capable of succeeding,

provided it is not overpowered by the strategies
of competitors or diluted by the presence of too
many copycat strategies.
Which strategies deliver the best performance

depend on the strength and interplay of each

companys strategy and decisions against the
strategies and decisions employed by rival
companiesthere is no mystery best strategy.

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A Companys Competitive Effort

vis--vis Rivals Is Crucial
All the sales and market share differences

among companies are attributable to

differing competitive efforts on price, S/Q
rating, advertising, models offered, delivery
times, retailer support, etc.
Every companys strategic challenge is to

craft a competitive strategy (and related

decisions) that it believes will produce the
desired sales and market share outcomes
when pitted against the competitive
strategies of rival companies, region by
region.
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The Contest in the Marketplace Is a

Battle of Strategies
Following each years decisions, youll

get Industry & Competitive Intelligence

reports
It is vital to study these reports and

understand what your competitors are

doing.
You need to implement your strategy,

while anticipating and countering moves

by your competitors

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Outcompeting Rivals Is the Key

to Market Success
Youll have to stay on top of changing

market and competitive conditions, try to

avoid being outmaneuvered by
competitors, and make sure your
footwear is attractively priced and
competitively marketed.
It is the competitive power of your

strategy vis--vis the competitive power

of rivals strategies that is the deciding
factor in determining sales and market
shares.
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Its All About Developing

Winning Strategies
The Business Strategy Game is all about

practicing and experiencing what it takes to

develop winning strategies in a globally
competitive marketplace.
At the end, the only things separating the

best-performing companies from the others

will be the caliber of the decisions and
strategies of the management teams.
Its an exercise calculated to spur

competition and to get your competitive

juices flowing.
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PC Requirements and Mechanics

Virtually all BSG activities take place online, on

any PC with an Internet conection, Internet

Explorer and Microsoft Excel (any of the 2000,
XP, 2003, or 2007 versions).
BSG-Online automatically transfers the needed

software from the BSG server to the PC you

are working on quickly; when you exit a
session, your work is saved and transferred
back to the server.
The last decisions saved to the BSG server at
the time of the decision deadline are the
ones used to generate the results.
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How Company Performance Is Judged

Board members and shareholders/investors have
set five performance objectives for the company:
1. Grow earnings per share at least 7%
annually through Year 15 and at least 5%
annually thereafter.

2. Maintain a return on equity investment

(ROE) of 15% or more annually.

3. Maintain a B+ or higher credit rating.

4. Achieve stock price gains averaging about
7% annually through Year 15 and about 5%
annually thereafter.

5. Achieve an image rating of 70 or higher

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Scoring Weights
The weights that will be placed on your
companys achievement of each of the five
annual performance targets are as follows:

EPS
ROE
Credit Rating
Stock Price
Image Rating

30%
20%
15%
20%
15%

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The Two Scoring Standards

The best-in-industry standard (How well

does your companys performance stack

up against the company with the best EPS,
ROE, stock price, and image rating and
against an industry-best A+ credit rating?)
The investors expectations standard (How

well did you meet or beat the annual

performance targets for each of the 5
performance measures?)

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The Two Quizzes

There are two open book 20 multiple-choice
question quizzes built into the exercise. The
quizzes are taken online and scored immediately
upon completion:

Quiz 1 (required): Covers the Players Guide

its purpose is to spur you to read and absorb
how things work in preparation for managing
your company. Time Limit = 45 minutes.

Quiz 2 (not required)

Click on the links for the quizzes on your
Corporate Lobby web page for more
informationthe three sample questions for
each quiz give you an idea of what to expect.
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The Peer Evaluations

At the end of the semester, you will be asked

to complete a confidential evaluation of the

contributions of each of your co-managers
and yourself.
Individuals who contribute significantly more

or less than the team may receive BSG

grades higher or lower than the team
The professor will supply the form; it will not

be the long BSG online form

The peer evaluations are for your professor

only and are completely confidential.

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What You Can Expect to Learn

Running the athletic footwear company in head-on competition with
rivals will give you a chance to put into play the very kinds of things you
are reading in the text about crafting and executing strategy in a globally
competitive marketplace.

You and your co-managers will have to chart a long-term direction for
your company, set and achieve strategic and financial objectives, craft a
strategy, and adapt it to changing industry and competitive conditions.

Youll have to wrestle with a full array of industry statistics, company

operating reports and financial statements, and an assortment of
benchmarking data and competitive intelligence on what rivals are
doing.

Youll have to match strategic wits with the managers of rival

companies, "think strategically" about your company's competitive
market position, and figure out the kinds of actions it will take to outcompete rivals.

Learning to do all these things and gaining an appreciation

of why they matter are the heart and soul of courses
in business strategy.
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What You Can Expect to Learn

In addition, The Business Strategy Game is designed
expressly to provide you with an experience that will:
Draw together the information and lessons of prior

courses, consolidate your knowledge about the different

aspects of running a company, and provide a capstone
experience for your business school education.
Deepen your understanding of revenue-cost-profit

relationships and build your confidence in utilizing the

information contained in company financial statements and
operating reports. Youll see why you cannot hope to
understand a companys business and make prudent
decisions without full command of the numbersit wont
take you long to appreciate why shooting from the hip is a
sure ticket for managerial disaster.
Provide you with practice in sizing up a companys

situation, making sound, responsible business decisions,

and being accountable for delivering good results.

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How Do You Register and Get Started?

The registration process consists of five steps:
Step 1: Have your assigned company registration

code handy (this code is used to put you into the

database for this specific course and to certify you as
a co-manager of your assigned industry and
company). See link in New & Misc. Notes.
Step 2: Go to www.bsg-online.com
Step 3: Click on the Create Student Account button

and enter the company registration code provided by

your instructor in the box.
Step 4: Continue on to the next step of the registration

process where you will need a credit card.

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How Do You Register and Get Started?

Step 5: Complete the personal registration

information (user name, password, and so on) and

the credit card payment process. The Web site for
credit card payment is fully secured; you will receive
a receipt e-mail. If you have no credit card or
Prepaid Access Code, the easiest way to complete
this step is to arrange to use a friends or comanagers credit card and reimburse them directly
with cash or a check.

Once you are registered, you will have full use

of the student portion of the BSG Web site
and access to all of the materials and
information you will need.
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The Corporate Lobby Page

Each time you log-on to www.bsg-online.com, you are

automatically routed to your companys Corporate Lobby

web page.
The Corporate Lobby page is your gateway to all BSG

activities. Near the top of this page is a series of menu

selections that provide instant access to all the necessary
information, materials, and tools you will need, including the
Players Guide & decision schedule.
Below these menu items are (1) a Decisions and Reports box

for accessing the decision entry screens and viewing reports,

(2) a message center box, and (3) information showing the
latest exchange rate adjustments, current interest rates, and a
company performance scoreboard.
You have anywhere, anytime access to your Corporate Lobby

page from any PC that is connected to the Internet.

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Creating a Name for Your Company

Shortly after registering, you and your co-managers

should decide on a name for your athletic footwear

company.
Your companys name must begin with the letter of the

alphabet that you have been assigned. Names can be

up to 20 characters. To name the company, click on the
Company Name menu item near the top of the
Corporate Lobby screen and enter your companys full
name in the space provided.
All company names are public and appear in the

Footwear Industry Report; thus you should select a

name that you are proud of and that reflects the image
you want to project to your customers, shareholders,
other company stakeholders, and the general public.
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Some Procedures
Check the Decision Schedule link on your

Corporate Lobby page for the dates and

deadlines for the decisions. The decision
deadlines are strictly enforced, since the results
are processed automatically on the BSG servers
minutes after the deadline.
The results of each decision will be available

online about 15-20 minutes after the decision

deadline.
You will be notified via e-mail as soon as the

results are ready. At that point you can log-on,

see what happened, and proceed with the next
decision.
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Losers
Don't understand company operations
Don't understand how to run the game
Fail to develop & implement a specific

strategy
Typically change strategies several times as

they try to copy successful competitor's

strategies
Don't analyze what is going on and

consequently miss-guess competition

Are always trying to "catch-up"

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Winners
Understand company operations
Learn well how to run the game
Develop a specific strategy & stick with

it (many different strategies can work)

Analyze competitors and industry

trends

Maintain balance between demand

and supply

Are assertive & proactive

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