INTRODUCTION

The business strategy game is an online, PC-Based game in which you run the world wide athletic footwear market in confronting each other competition against other markets companies run by different group of students into different industry. But this paper only focus on the industry 10 where 12 different companies named Air Nike, Dolce and Banana, IMF vs WTO, Fabulous Foots, Galpha, BAD BOYZ III, Legs supreme, CHU WUB CHU WUB, KVincci, , E-XIE, HA-N Ltd., and Just walk are included. In my industry BAD BOYZ III includes five members (Virayudh Baram, Saif Ur Rehman, Ying Zhao, Maliha Hasin and Imran Shahzad) are responsible for managing all aspects of the company’s operation. Every company tried to use their best technique and execute well planned strategies for their company specially considering against the strategies of competitor companies, delivers good bottom-line results (Net Revenue, Earning per share (EPS), the return on equity (ROE), stock price, credit rating and image rating) and builds shareholder value.

This paper is divided in three main sections. First section describe the strategy adopted by BAD BOYZ III Company with the help of Michael Porter “Five Forces” theory, second section describes the external analysis of company using PESTLE analysis and at end the BAD BOYZ III company analysis from year 11 to year 17 will be discussed with each year progress diagrams shown in Appendix.

BUSINESS STRATEGY IMPORTANCE

The business strategy game is real time practice business environment. In this game our role is as Manager who responsible to use productive and efficient strategies for company production and profit. In strategic management the role and effect of top managers on company performance and importance of this relationship how may be affected by company’s strategy is always recognize as critical issues (Hambrick and Mason (1984), Gupta and Govindarajan (1984), Gunz and Jalland (1996)). Business strategy is influenced by top management team of any firm (Hambrick and Mason, 1984).

MICHAEL PORTER (1985) BASIC STRATEGY MODEL

Michael Porter (1985) describes market Industry constitution and arrangement within the market is key factor for establishment of competitive strategy. Competitive advantages of any company against other competitors can be described by the “Five Forces” diagram shows the main idea of Porter’s theory of competitive advantage. This theory helps companies to know about the rules and regulation of competition in market. Porter argues, “The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm’s behavior (1985, p. 4).” According to Porter five forces find out company prosperity and profitability.

Micheal Porter (1985) five forces are given below:

• Threat of substitutes
• Threat of new entrants
• Bargaining power of buyers
• Bargaining power of suppliers
• Competition among existing companies

Porter’s 5 Forces – Elements of Industry Structure

In strategy implementation, competitive advantages, utilizing new production, new inputs for Foot Wear industry Porters “Value Chain” and “Activity Mapping” ideas give us useful information to applying these all activities.

The value chain activities help BAD BOYZ III Company for examining all activities related to company performance and interaction such as (e.g. development, marketing, sales, operations, etc.) as a potential source of advantage. In year 12 company situation was little bit down and we were losing market shares in such situation we adopted the value chain activities of Porter. These activities help company existing and potential sources of differentiation e.g. products, associated services. The reason to choose this strategy ‘low cost and value chain system’ was helpful to underline the competitive advantages that cannot come from production side but anywhere from value chain. It also helps us to fit into value chains like suppliers, buyers and channels.

PESTLE ANALYSIS

PESTLE analysis is usually used to measure the organization’s external factors like position, potential and direction for a business or organization. PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors. BAD BOYZ III Company PESTLE analysis is measured below:

Political Factors

Political factors illustrate that how and to what extent government intervenes in the investment. The main politics factors are trade barriers, tax policy, trade policies, labor law, export tariffs and environmental law. As concern to BAD BOYZ III Company not much influenced by these factors as all four regions North America, Asia Pacific, Latin America and Europe are associated with WTO.

Economical Factors

Economic factors show how business operate and what of decision would be make, these factors include economic growth, interest rates, exchange rates and the inflation rate. In the success and development of BAD BOYZ III company exchange rate, affect the costs o exporting products and the supply and price o imported product in an economy, plays a major role. From year 11 to year 17 company maintained a steady exchange rate. Even though company made some mistakes but due to healthy exchange rate company never fall badly.

Social Factors

These factors show cultural effects, health and safety aspects, people their age, population and growth rate, age and careers approaches. BAD BOYZ III Company participated in charity an as well Corporate Social Responsibility (CSR) and also providing complete health and safety environment.

Technology Factors

Technology factors are ecological and environment aspects like Research and development (R & D), technology usage rate and automation, determine barriers to entry, low productive manufacturing level and impact on outsourcing decisions. BAD BOYZ III knows the importance of technology and benefits in business environment. Company all private label capacity stocks in Latin America and Asia Specific was up to date because these technology shifts can affect costs, quality, and lead to innovation.

Environment Factors

In environment major factors are weather, climate and variation in climate include weather, climate, and change. These factors can be analyzed as company insurance, farming and tourism. Up to date with weather inform company operation according to weather and products they offer to their customers.

Legal factors

Legal factors determine company legal boundary, discrimination law, consumer law, antitrust law, employment law, and health and safety law. These are average fixed value of any country and companies cannot across these boundaries.

ANALYSIS OF BAD BOYZ III COMPANY FROM YEARS 11 TO 17

A complete and in depth analysis of BAD BOYZ III company is given below:

Year 11

In the begging of year 11, BAD BOYZ III has total production plant capacity 6,000,000 to complete the requirements of production only for two regions North America and Asia Pacific. BAD BOYZ III Company has also managed to fulfill the production requirements of remaining regions Latin America, Europe-Africa. In the start of year 11 the demand in North America and Asia Pacific is not much high as compared to present production. So our company decided to sell 200,000 production in North America and 800,000 in Asia Pacific.

BAD BOYS III adopt strategies free shipping, model offer and attractive price and advertisement in internet segment and in whole sale garment we offer rebate and model with delivery time guaranteed and advertisement to compete in competitive market. With these strategies we got good market share in internet segment but the market share in whole sale was not according to wish.

At the end of year 11 our company’s progress was good in contrast with other market companies with 7th position out of the 12. BAD BOYZ III company overall progress was good in footwear industry with revenue $266583000, net profit $ 30224000 with credit rating A-. Year 11 complete detail of BAD BOYZ III competitive strengths and weakness and development can be seen from appendix-1.

Year 12

In year 12 BAD BOYZ III company co-managers made some changing in their management and business strategy to get maximum profit from footwear industry market. As the result of year 11 and market competitive approach we decided to sell our products with high and standard quality. As the result of new strategy, quality of product, profit was good and also helped to get high position.

In internet segment our competitive strength was marketing, celebrity appeal, S/Q rating and model offer but with some weakness like retail price and shipping charges was some kind of not good factor in competitive market. In whole sale market our S/Q rating, rebate offer and retailer supports were our competitive strength points while the competitive weakness were wholesale price and retail outlets.

At the end of year 12 because of some weaknesses in whole sale market and internet segment, company overall progress and position of BAD BOYZ II was down 10 out of 12 with revenue 201395000, net profit 8,587,000, EPS 0.86 and credit rating “c”. The complete description of BAD BOYZ III company year 12 weaknesses, strengths and overall progress is shown on appendix -2.

Year 13

Year 12 result forced the BAD BOYZ III management to seriously take the notice of company performance that is going down. After a long discussion among BAD BOYZ III company co-manager we concluded that we should re-evaluate the company strategy and offer high quality products with low price that strategy lead to ‘low cost and increase market shares’ described by Portal(1985) five forces theory which is focus on high quality with low price. To achieve maximum profit and top position in footwear market we also considered about the private label segments.

Year 13 is the year of thinking for us as the result of year 12 that make us to re-think our all strategies and policies that makes impact on our competitive strategies. With adoption of new strategy our competitive strengths retail price, advertising and model significantly increased but still some weaknesses are shipping charges and retail outlet are there.

Because of change in strategy and improvement in retail segment, at end of year 13 Company received very good response in private label segment and got satisfaction results in other segments like revenue $ 393,872,000 that is double of last year 12, net profit was $ 31,854,000 with the ratio of earning per share equal to 3.19. These out comes caused company’s rank improvement like was 8th out of 12th. In appendix-3 the BAD BOYZ III Company’s year 13 overall progress including strength and weaknesses has shown.

Year 14

Year 13 results increase our confidence and courage to getting more effective and efficient in the market and also lead us to understand the purchasing behavior of consumers. In year 14 we continued our last used strategy high quality with cheap price to attract more and more customers. It can only be achieved with high production as amount of consumers increased compared last year. To complete this target we need high amount money that’s why BAD BOYZ III Company took a long term loan $ 248,000,000 from the bank. That loan enabled us to fulfill the production plant capacity 4600,000 per year in North America.

To get high profit and maximize the sale production we seriously focus on private label that enables BAD BOYZ III competitive strengths increased as compare to the year 13 and sufficient reduction in weaknesses like internet segment and wholesale segment.

End of the year 14 BAD BOYZ III Company almost received 100% response and overall progress was getting better with revenue $577,496,000 and net profit $41612, 000. In private label segment company done well and sell all pairs in private label segment caused the market share of private label segment increased such as 76.6% in North America, 52.0 % in Asia-pacific and 62.9% in Latin America as contrast to other market shares. This year increase in private label segment and overall progress helped BAD BOYZ III Company to improve its position like 6th out of 12th. For over all progress see Appendix-4.

Year 15

Year 15 was little bit thinking year for BAD BOYZ III management team as the competition and consumers increasing unexpectedly. So our management decided to fix with no cost leadership and customer purchasing behaviors strategy by following Porter (1985) five forces and considering more on North America’s private label segment. The main reason to focus on North America was company high expenditure in this region because of more consumers and demands. Company wanted to get 100% feedback from that region as last year our management bought new plant capacity for it.

Increased in demand and production caused the increase in BAD BOYZ III competitive strengths as compare to previous year such as ‘celebrity appeal’ but weakness remained same as ‘model availability’.

End of the year 15th brought good news in market share as BAD BOYZ III achieved all market share from North America in private label segment as compared to other regions but with some sad news as company lost his market share in rest of regions. The total revenue was $ 530,284,000 and net profit $ 55474,000 which is somewhat increased as contrast to year 14. In BAD BOYZ III company success story another success was stock prize $ 102.49 and company also offered amount 10,135,000 dividend this year. The company’ rank was getting better and better as was 5 out of 12. In Appendix-5 year 15 overall progress is shown.

Year 16

In year 16, BAD BOYZ III Company decided to remain fixed with same strategy as in year 15 company sold almost all products. To achieve this target company decided to increase the production and plants in different segments especially in North America and Asia Pacific to produce more revenue. Company was getting satisfaction feedback from North America, so company decided to build more plant capacity in North America as well in Asia Pacific region. BAD BOYZ III Company purchased 1500 plant capacity and build 500 in North America and also considering Asia Pacific purchased 800 plants capacity in that region.

In year 16th the company’s competitive strengths were celebrity appeal and advertising same as last year and company also tried to get rid of the weakness related to company production and profit. Company decided to sell quantity of 500 stocks in the price of $ 96.72 as stock price was really high.

At the end of the year 16th the BAD Company revenue was $ 537,898,000 that is little bit high as contrast the previous year and net profit was $30,721,000. As company was getting almost 100% market share in private label from North America caused BOYZ III market share strong position in foot wear market. Appendix-6 represents the Year 16 over all progress.

Year 17

Year 17 was decision year for BAD BOYZ III management because company management decided to buy new plant in North America with capacity of 1,900,000 pairs per year. This decision is made on behalf of the year 16 results as consumers increase unexpectedly. Company also reduced the 50% prices of pairs to sell more and more products in all regions to accomplish this strategy and apply these prices we need more and more stocks. Company decided to purchase new 3135 stocks with the price of 57.73 per share. These share prices were higher than the average market shares and company still focusing on North America private label segment with 90.5% share.

As mentioned above year 17 was decision year for BAD BOYZ III to make another major decision in market. For this purpose we make a commission to discuss all aspects of Footwear Company including stocks and competitive environment. In this commission we included that we should offer 4000 pair at price of $ 40, was doubled as compare to last year, in North America private label region. That decision is made on two reasons:

• From the last few years company was getting required feedback from North America.
• There were no strong competitors in North America.

At the end of year 17th the decisions made and strategies applied resulted in excellent outcomes. In North America private label company sold 3546 pairs out of 4,000 at double price $40. BAD BOYZ III company revenue was 690,317,000 and net profit was 107,491,000 increased highly up to 300%. These successful factors boost company rank to top three positions like was 3rd out of 12. The other big achievement was in region of Earning per Share (EPS) that was $14.33 helped to come in 76th position from all over the world in footwear industry.

APPENDIXES

Appendix-1

Year 11th BAD BOYZ III Annual Summary Report

Appendix-2

Year 12th BAD BOYZ III Annual Summary Report