Compensation and Training_______________________

Base Wages - Can increase productivity due to increased morale. Requires 2% or more
increase.
Higher productivity can lead to smaller workforce
Base pay can be cut but will lower productivity.
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Incentive Pay - Higher incentive pay will increase productivity, but has
diminishing returns past 25% of regular compensation. They spend more time making
sure it's done correctly and lose speed.

TIP: "Consider entering various “what-if” values for base pay increases and
incentive pay per pair, to search out
the combination that yields the best outcome from the standpoint of worker
productivity, labor costs per pair,
reject rates, and the costs of pairs rejected. Bear in mind that it makes no
business sense to set incentive
payments per pair the same in all facilities, since there are wide differences in
worker compensation per facility."

- Based on this tip, it may be possible to play with the numbers of base pay and
incentive pay and create a quadratic equation to represent an optimal point.
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Fringe benefits - Provide the same incentive as increasing base wage, but are more
temporary and can be added or removed with less long-term penalty.
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Best Practices Training - Reduces materials cost with less waste, reduces rejection
rate for defective pairs, increases quality rating for competing for private-label,
can increase productivity by up to 1%.
Likely more important if you're making more expensive material and/or if you want
private label.

TIP: Since wasteful spending is allowed and, most definitely, can occur in The
Business Strategy Game, it is best not to be cavalier and naively assume that any
and all amounts spent on best practices training will pay off (the same goes for
most all other types of spending as well).

This seems like a specific warning against spending too much on best practices
training.
--------------------------------------------

Worker Productivity is effected by:

- Annual Base pay increase of 2% or more, deminishing returns at 10%
- Compensation package, match to around 25% of total compensation for best results
and avoid deminishing returns
- Comparison to rivals pay
- Best Training Practices
- Number of models assembled. More models, less efficiency
- Supervisor salary to regional average
- Ratio of supervisor to production workers - More supervisors, better quality and
speed
- *Production D Improvement Option* Whatever this is, gets you a 50% productivity
increase.

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Supervisor Ratio - Low ratios increase productivity
Supervisor Compensation - MUST BE 10% or more higher than production workers, not
including overtime. System will automatically correct for this.
Final Tip - Try things out. Look for cost-effectiveness and production.

but is not changed direcly. It is also a *PROJECTION* and may not be entirely
accurate.

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Private Label_____________________________________

Note - You don't necissarily want the highest S/Q for private label - They don't
want to pay for it. Being one star below the prior years global average is actually
the better, or at least 5* if the average is over 6*.
Also must have 100 models or styles minimum.

Private label production set-up costs are 75% below that of branded pairs.

Will not take bids that are not at least $10 per pair below regional average
wholesale price of the current year.

Profitablility of Private Label - Watch your Margin over Direct Costs closely.

Tip #1: If you intend to make private-label contracting a major and ongoing part of
your business, consider man-
aging your production facilities in a manner that allows the company to produce
private-label footwear and deliver it at a comparatively low cost to a region’s
chain retailers. Given that chain retailers award private-label production
contracts to those footwear-makers with the lowest price offers (subject to the
earlier specified market share limitations on footwear manufacturers bidding to win
super-large volume orders), earning attractive profits on private-label sales
typically requires keeping the delivered cost per private-label pair as low as
possible.

In short, keep low cost and acheive good economy of scale.

Tip #2: Do not cut back on the number of private-label pairs you offer to supply to
chain retailers just because of possible market share limitations (which may or may
not be imposed). Offer whatever number of pairs you would like to supply. There is
no way to predict in advance whether market share limitation will be imposed or
what the percentage size of such limitations will be because there is no way for
you to know in advance how many private- label pairs rivals will offer to supply to
chain retailers. Limitation are imposed only when the demand of chain retailers is
overbid, and even then the percentage size of the limitation depends on the amount
by which total chain retailer demand is overbid.

In short, we can't predict what our opponents will do or what their prices will be.
Make the best bids for us.

---------------------------------------
Production Decisions
- Superior Materials Percentage - Keep low to keep costs low, but high enough to
maintain the star rating to keep the contracts
- Enhanced styling/features - Again, keep minimized
- Number to produce - Minimu contract size is 100k pairs. Ensure they end up in the
right distribution warehouse for the contract if they're made elsewhere.
---------------------------------------
Determining winners for private label -
1 - Meets requirements (S/Q, quantity, Price of at least 10 below branded average)
2 - Lowest price offered for desired amount
3 - Best company image rating
4 - Highest percentage of quality materials

TIP 1 - Lowest price only matters if you want to capture the ENTIRE market in the
region. Eg - Demand is 200k. Opponent offers lower price, but only for 100k tops.
Our higher price second offer earns us more than their lower price first offer.

Tip 2 - Invest in Cost saving production, low cost per pair relative to rivals,
operating at full capacitity, out-managing rivals

Tip 3 - Benchmarking (Page 7 of industry report) is important to watch for

obtaining private label.

Tip 4 - Profit margins are smaller on private label, so don't let your branded
suffer.

Tip 5 - Private label is the bonus marks section. You can conservatively do only
branded and perform very well. But if you're confident you can win, it's worth it.

------------------------------------------
Incorporating projected outcomes into performance

Tip 1 - You can switch the 'win the contract' from yes to no to see what it does to
your overall projections.

Tip 2 - Some regions may be easier to win bids than others. Watch the competitive
intellegence report to see where people are winning/losing/putting their efforts.

---------------------------------------------

Corporate Citizenship______________________________

Note: Everything here is technically voluntary

Image rating is based on:

- S/Q Rating in each region
- Market shares for branded and private
- actions to display corporate citizenship

You CANNOT obtain a negative image rating if you don't spend on social
responsibility and citizenship.

To get anything out of it, ongoing efforts of 4-5 years in every area are required,
otherwise it's simply token efforts.

The different initiatves are weighted differently. Green and Charity have higher
weights.
------------------------------------------
Recycled packaging or boxes - Costs .15 per pair at all facilities. Simple yes or
no.
-------------------------------------------
Energy Efficiency - Invest up to 500k for every million pairs of production (Not
including overtime). These are a capital investment and depreciate 10% each year.
-------------------------------------------
Charity - Either dollar amount (10mill max) or pre-tax profit (10% max)
Tax deductable. Reduce net profit by 70% of amount as income tax rate is 30%
-----------------------------------------------
Ethics Training Enforcement - Yes or no. Costs 400k a year.
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Improved Working Conditions - Cafateria and on-site child care
Yes or no. 2.5 million per facility for the first year - depreciates at 2.5% per
year over 40 years. 100 pairs per worker increase in productivity. Costs 600k per
year per facitily to continue to operate.
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Improved working conditions - Ventilation, lighting, saftey
Yes or no. Costs 3 million per facility, 40 year 2.5% depreciation. 100 pairs per
worker per facility. 500k per year per facility operating cost.
----------------------------------------------------
Code of Conduct
Yes or No. Maxes out at 50 hour workweeks, cannot use sub-standard wages, underage
labour, toxic materials, or lax saftey practices. Costs 750k per year per facility.
----------------------------------------------------
Tip 1 - Not a big impact on image rating. 5 years of concerted effort for 15-20
points improvement.

Tip 2 - You can overspend.

Tip 3 - Starting in year 12, use historical data that will be available.

Tip 4 - Starting in year 12, use benchmarking data that will be available.

Tip 5 - Bottom of page 3 of Footwear Industry Report is valuable to Image Rating.

There is a CSR Award for the highest CSRC initiative contributions. It's worth
literally nothing.