These debates and discussions should be presented professionally, as they would be in a real-life work environment. Question: How can I increase my credit rating? This will create synergy. Last updated: Oct 13, 2022 4 min read. In my "Combination Strategy", I am able to generate atypical profit margins through aggressive marketing, product pricing, and cost controls. These actions also have the ability to attract socially conscious investors. The simplest way to do so is to reduce the number of employees and ensure that each employee is performing at their optimal level. Inventory clearance should be done at the end of every year. There are tariffs that need to be considered with regard to the geographical location of the plants. Investing in efforts that motivate workers and also boost their productivity has a direct impact on the quality of work in the shoes that they produce. Practically speaking, only three basic business strategies exist: a cost strategy, a differentiated product or service strategy, and a focus on a niche strategy. How To Win BSG Using the Best-Cost Strategy. I hope this helps. To get the lucrative market share of the private label production, you should take a look at the market snapshot from the previous years to get a guide for the bidding ranges. A company can increase sales because of the low-price products. The BSG. For example, a company that sells energy drinks could target a city that has a high . In the business simulation game, it is important for your team to come up with ways that can grab the internet market share. To successfully achieve this without drastically cutting revenue, a business must reduce costs in all other areas of the business, such as marketing, distribution and packaging. However, game strategy is a completely different subject. Here are factors to be considered before picking a celebrity. is a form of business strategy, believed to have been designed by American academic Michael Porter, that establishes a competitive advantage for an organization by helping it achieve the lowest cost of operation in its industry. These are some of the strategies that you can employ in the business strategy game. B. primarily focused on replacing a firm's competitive advantage with competitive parity. BSG Game Report competition and business an analysis of business strategy game abstract in this competitive business arena it is crucial to strategize and come. In the same breath, you are able to attract workers that seek out attractive and higher compensation packages. Company removed from High Score rankings due to out-performance. During periods of growth, organizations can branch out into sectors they dont need to, manufacturing goods that their customers dont want from them. 7.0 Competitive risks of cost leadership strategy. Here is another free tip: start with the production screen (buy the guide for detailed instructions on what to do before you begin entering decisions). Angelo (author) from College Park, MD on March 05, 2019: Sorry Jay, I do not. Use a low-cost leadership strategy where you will sell the shoes at a lower price than . Investing in upgrades later in the simulation does not allow enough time to break even on the investment. When setting up the wholesale prices for your shoes, remember that the average price of your branded shoes compares to the industry average price. If you adopt low price as your strategy, then your business must be . Daily resets and interventions by the publisher against my company inhibited performance. In the long run, though, it often proves to be the most effective. The ideal credit rating you should strive to maintain is at least a B+. Answer: Warehouse cost is a fixed cost. How do you get your image rating to go up? This boosts the confidence of the investors and has a positive impact on the stock price of the company shares. Location of plant facilities and distribution centers. Extremely important! Secure the best celebrity endorsements to help you achieve this goal, celebrity endorsements are a great boost for online sales. There is a simple method to create a ballpark figure. This notion was met with resistance but after toggling the percentage increase back and forth it became apparent that our team member who didnt allow herself to be drowned out was well-informed. from a BSG Grand Master! For more on that and more on how to balance your costs, perhaps you should consider buying the study guide. Workers' productivity is sensitive to your rivals' compensation package you will have to outdo them in this area as well to keep your people happy, your rejection rate lower and hence your cost per pair. Producing products or services in high volumes can enable companies to reduce their overall costs and benefit from economies of scale. How can we fix this? Written by MasterClass. Note well that lowering the internet price can cause the cannibalization of the wholesale segment because the gap between internet price and wholesale price is related to the number of retail outlets that will carry your footwear. If there are numerous entrants, make sure your prices are lower than your competitors prices. The advantage of purchasing an existing plant is that it is ready for use in the same year it is purchased, whereas new construction takes a year. The following are 12 cost leadership strategy examples that demonstrate how businesses can achieve a cost leadership advantage: 1. This is measured by the percentage of the companys total compensation package accounted for by incentive pay. 3. Price is the final amount that a consumer pays for a product or a service, while cost is the expense an organization incurs on producing a product or service. An example of an organization that has successfully engaged in low-cost leadership for a long time is the American retail chain Walmart. This tip is most likely precisely apposite of what you have been told when it comes to group meetings. A cost focus strategy is similar to a cost leadership strategy, but the major difference is that in a cost focus strategy your business targets a very specific segment of the market and offers that market the lowest prices available. competitive intelligence reports. Taking up stock offering is a cheaper alternative to loans in case of an expansion into a particular geographic area, but caution should be taken as this move might lead to a drop in the cost of the earnings per share (EPS). Cost Leadership is a strategy to reduce the cost of operation and produce the lowest priced products or services, to outdo the closest competitors and gain market share. It is always better to have a surplus inventory above the pairs required to meet the retailers demand. All Posts; Search. The actions of your competitors are likely hurting your scores, for example, if they have tweaked their production to create the same quality product at a lower cost then they will gain an advantage in several ways including higher ROI, more savings available for plant investments, debt servicing, advertising, stock repurchase, etc. 1. Strategies, decision screens, reports and tests. We took a ton of smart folks and spanked their little bottoms like a bunch of children. In other words, Ritu follows a cost leadership strategy, which makes her products more feasible for customers with less purchasing power. In such scenarios, using already existing technologies may also go a long way in realizing an organizations aim of cost leadership. The whole point of the business strategy simulation is to see which team comes up with the winning strategy. To boost their productivity, consider the following key points. However, there remain exceptional cases where organizations are so desperate to achieve price leadership that they end up reducing prices by big enough margins for their profits to take a hit. Inventory storage costs on carrying surplus inventory from one-year to the next is $1.00 per pair (handling and storage of required inventory entails annual costs of $0.50 per pair). The celebrity should also be compatible with the product, for instance, a football player would be ideal for a sports shoe endorsement. Open Document. As part of a cost leadership strategy or low-cost leadership, an organization usually becomes the cheapest manufacturer or provider of a particular product that has more than one supplier. The strategies proposed depend on: The Competitive Advantage of the company. Pay attention to the needs of your customers as well as the capacity demanded by the market. Decent Essays. To get the bidding contract, make sure your S/Q rating is 4 and above. Focus on making the delivery time to the retailer shorter. A company strategy of selling its products at a price lower than its competitors is known as a cost leadership strategy. Year 14 into year 15 spend just enough cash needed to affirm an A+ image rating, pay down enough loans to secure a AAA/ A+ credit score. For instance, rivals may become technologically innovative and make the processes used by the cost leader outdated (Kozami, pp.231). But you can relax because the study guide will show you some very simple ways to improve your score, regardless of business strategy. Footwear industry report. Grave danger awaits the fool hearty approach. Achieved Rank 1 performance against industry competitors. You will also receive a copy of Currency Made Simple. There are several strategies that companies may use to achieve a competitive advantage. Finding a balance is important so that the future growth of the company as well as the initiatives are guaranteed. By patenting a technology, organizations can prevent competitors from accessing the same technology. When coming up with a CSR initiative, ensure that the budget can be sustained over time without burdening the company. The amount of loans the company carries has the greatest effect on the companys Credit Rating. That's Walmart. Whether to employ the same competitive strategy in all countries or to modify the strategy country by country. COGS include the following charges: Direct labor; Materials needed to create good; The cost of the goods sold comprises the costs associated with manufacturing the item or service you offer (e.g., screws, wood, paint labor . Business strategy, of course, relates to the stuff you have been learning in class and is supposed to be the main focus of the game. In the case of cost leadership, one advantage is that cost leaders' emphasis on efficiency makes them well positioned to withstand price competition from rivals (Table 5.3 "Executing a Low-Cost Strategy"). Implementation of green initiatives in the company, like the adoption of efficient energy use, use of renewable energy at your plants, and use of environmentally friendly materials, like the use of recycled packaging. A balance must be struck between how much a company can afford to spend on CSR before it becomes a burden on the business to the point it affects future growth and prevents the company from being equally committed to CSR in the future. I would suggest looking into upgrades that specifically improve plant operations. advertising dollars This enhances the marketing efforts for the brand. The BSG became a central focus of my TA work, as I have spent hundreds of hours guiding and tutoring undergraduate and graduate students on how to formulate and implement effective strategy. The simulation involves CSR as the very first menu option. I've tried most of what you suggested. Preferably under 4 weeks. Achieving strategic outcomes will require you to carefully analyze and digest competitive intelligence and the company operating report to that all the decisions that you make as a team, you are assured that your company spent enough time to research and come up with a sound strategy. Increasing the annual base pay. High volume production. Understanding these strategies is critical to writing a good strategic business plan. Overspending in this sector can lead to a decrease in earnings per share (EPS), the return on equity (ROE), and even hurt the credit rating of the company. . The first time I played, we played against 10 other teams, each made up of four intelligent people who were specialists in various areas (marketing, finance, accounting, management, IT, etc). 2 likes. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). Cost leadership occurs when a company is the cheapest manufacturer of a particular commodity in its market. Size of the company matters a lot in economies of scale. Cost leadership occurs when a company is the category leader for low pricing. Learn tips & tricks, from a BSG Grand Master! Use tab to navigate through the menu items. Cost leadership examples #2: Walmart. When products are manufactured in bulk, the cost of production reduces, which facilitates the organization to keep the prices of its products low . HubPages is a registered trademark of The Arena Platform, Inc. Other product and company names shown may be trademarks of their respective owners. Diverse opinions should be encouraged especially if they are grounded in research. This helps the plants to run at a full capacity and even more importantly failure to clear will lower the S/Q ratings for the coming year. Top-20 stock price of $1,106.76 per share. Leadership and Management . Student BSG Material; More. To better understand the rules of the game, the forecasts as well as get an idea of what your competitors are doing, you have to digest competitive and market intelligence and other information that is found in the following reports. Cost Focus. . This question is critical, but, sorry, you have to buy the guide for the answer. I have noticed that advertising spend and quality directly affect internet market share whereas, the cheapest goods will corner the wholesale market so you will have to manage your production/distribution accordingly. The game requires a level of precision which can only be achieved if the team is pushing the same strategy; therefore, it is very important to select a strategy that is compatible with the various points of view of members. Two competitors could apply a very similar strategy but one has the benefit of several celebrity endorsements whom they've locked into multi-year deals at low bids, therefore, they will enjoy a competitive advantage in internet sales in the regions where these celebrities appeals are most potent. Implementing some of these things will not only increase your score, but the reciprocal event should occuryou will royally screw the competition and often times they will never even understand why they are getting screwed! Ritus. This doesnt mean that an organization following, charges the lowest prices in the industry. Description: Cost leadership is a part of . As this article demonstrates there are a number of strategy combinations that would work to fit the particular needs of your company. Beat the Business Strategy Game. Cost leadership is the strategy to secure a competitive advantage by lowering the price of the products. B. mechanistic. When a company opts for this strategy, they achieve tremendous success because their competitors cannot deliver the same quality. focused low-cost strategy, focused differentiation strategy, best-cost provider strategy. click-and-mortar firms). Whether to customize the firms offerings in each country's market to match local buyers' tastes or offer standardized products worldwide. To become successful at the simulation the first order of business is to integrate with team members and learn of the different ways that members complement each other. C. extremely tall. Hello! Question: How do I know what to put for competitive assumptions in the Business Strategy Game? This is because it requires the management to constantly work on minimizing costs at every level. If there are five groups competing in the market aim for at least 20% market share in each segment because being evenly represented across the geographical regions bodes well for the companys overall image. I hope other players will chime in with their comments on this. Employ a differentiation strategy that sets their company's footwear apart from rival brands based on such attributes as a higher rating, more models/styles to select from, and such marketing attributes as more advertising, greater celebrity appeal, or . To retain top employees and high-performing individuals in your company, it is important that you pay them well so that they can stay loyal to your company and not quit in favor of another company. Recent Posts See All. is based on reducing prices to target a narrow market. No. It is difficult to deploy the strategy because the management must constantly work on reducing cost at every level to remain competitive. This appeared as changes made to the underlying environmental designs of the game. The modern business environment is a very complex and sophisticated one with consumers being aware of the choices available to them. Purchases for the plants are done on a first-come, first-served basis. The target market may be defined by any number of metrics, such as demographics, purchasing power or geographical location. Im pretty sure the professor had never seen anything like that. An early investment in these areas will allow the company to enjoy a return on investment for several years. The greatest pitfall to avoid is switching strategy because of poor execution. Question: My class will be limited to only playing through week 15, how do I need to alternate my strategy? There should be a balance. Learning Which Rivals Have Winning Strategies And Which Ones Have Weak Strategies Is: The managerial payoff from spending the time and effort to gather and digest competitive intelligence about rivals' strategies and situations and gain some inkling of what moves they will be making. Porter (1980) developed three generic strategies for business and argues that any business can focus on cost leadership . Revamping the working hours and using better equipment, wherever applicable, can also have a major impact on manufacturing times, which is bound to positively affect efficiency.