Bsg Report Essay Example
Bsg Report Essay Example

Bsg Report Essay Example

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  • Pages: 5 (1303 words)
  • Published: April 26, 2017
  • Type: Report
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Introduction to the Report Our team Group E of Industry 1 consisted of the following three members: 1. Nirius Irani 2. Masoud Alawi 3. Claudio Ramirez. Despite our best efforts, we did not perform well in the BSG game. There were various reasons that contributed to our final rank. In all honesty, we struggled to understand the game and by the time we started grasping it, it was already too late for us. Upon reflecting on our performance, we have recognized certain lessons and insights. Our strategy revolved around cost reduction but failed to adequately plan for the predicted increase in demand, which ultimately resulted in us ending up at the bottom of the competition.

Our Strategy (Year 11 – Year 16) During the initial 6 years, we were still trying to understand the market and find our footing. While other teams w


ere establishing themselves and building a customer base, some may argue that we were wasting our time. Wholesale Market During this period, our priority was to reduce the cost of our product. We achieved this by cutting back on miscellaneous expenses.

Despite reducing investment in TQM and styling/features, which impacted our product image, we were able to maintain a 50% quality of materials. This led to us obtaining approximately 15% market share in the wholesale market. Initially, we did not prioritize the private label and instead focused on stocking for the wholesale market during the first 6 years. Recognizing the trust-based nature of the internet market, we leveraged stable prices and quality over recent years to set a fair price. As a result, we achieved an average share across all geographic locations. From Year 11 to

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Year 16, we adopted a cost-saving approach by avoiding significant risks and understanding the importance of maintaining financial stability. We obtained loans for construction purposes and refrained from distributing dividends. However, it became apparent that those who took risks ultimately emerged as market leaders.

We acquired a loan for the purpose of financing the construction and refrained from distributing any profits. At that specific time, we were unaware that it was the risk-takers who held dominance in the market. It became apparent to us during this timeframe that expanding our capacity would be necessary in order to meet the growing demands of the market. The majority of the construction work was completed during this period. An important factor we took into account was initiating construction when the currency value was lower compared to the North American market, since our North American office provided all funding for the construction and a stronger United States Dollar (USD) would result in increased returns on investment.

Initially, our marketing strategy focused on cost reduction, which led to the elimination of celebrity sponsorships and limited funding allocation towards it. We also aimed to rebuild trust in our declining market reputation by establishing ourselves as a leading company in corporate citizenship. Our efforts were fruitful, as demonstrated by receiving the "Gold Star Award" for three consecutive years for our contributions.

In terms of finances and cash flows, we acquired short-term loans to finance the construction of our plant with the goal of repaying them within a five-year period.

We made an effort to use 50% of our own finances for the construction instead of relying heavily on bank financing. Our Strategy (Year 17 – Year

20) involved a complete redesign, targeting a different market. However, we started this phase too late and had to start everything from scratch.

Regrettably, the implementation of our new strategy was delayed, resulting in the need to start over. By year 17, we decided to target a different market - Wholesale Market. We reduced our range of models from 200 to 150 and significantly improved our average S/Q rating by almost 40%. Achieving this required a significant investment in Total Quality Management (TQM) and additional features. Although our market share slightly increased, our net revenue decreased, causing financial difficulties towards the end of the year and affecting cash flow. Furthermore, we introduced Private Label as part of our new approach.

During the latter part of our trading period, we placed significant focus on the private label market and found our specialized area within it. We recognized that the lowest product cost is what determines market share, so we conducted experiments with S/Q Ratings and the proportion of superior materials to develop the optimal product at the most affordable price. By adding a minimal profit margin to the cost, we successfully obtained a substantial portion of the private label market. Below are some snapshots illustrating our achievements in this market. Our strategy from Year 17 to Year 20 involved considerable dedication to the Private Label market.

Undoubtedly, our performance in the private label market was exceptional, but unfortunately, it caused us to neglect the wholesale market. It is evident that our strategy was not well-planned, as we constantly veered off course. From Year 17 to Year 20, we exerted great effort in the private label market and achieved considerable

success. However, this success came at the expense of our focus on the wholesale market. We acknowledge that our strategy was flawed and led to continuous diversion. Additionally, we recognized that the internet sales market displayed limited variations in statistics. As a result, we established a trusting relationship and made minimal adjustments to our costs.

Company C dominated the internet market until year 20, when we achieved our goals of expanding plants and constructions by year 16. After year 16, our main focus was to maximize plant capacity and manufacture shoes for the private label market, even utilizing overtime if it proved profitable. Additionally, paying off loans swiftly was a top priority in order to enhance Company C's credit rating. Consequently, by the end of year 20, all loans had been successfully repaid. These efforts formed the core of our marketing strategy.

At first, investing in corporate citizenship proved ineffective in boosting our market share and was deemed as a financial waste. Consequently, we gradually reduced expenditure in this domain. Additionally, we acknowledged our weak market position and sought guidance from industry leaders. Upon observing their substantial investments in celebrity sponsorships, we chose to imitate their approach. Our primary mistake was initially pursuing a different strategy compared to our later course of action, which targeted a separate market for the initial 6 years of the game.

This was a significant setback for our company as we had to begin anew. The final outcome would have been superior if we had identified our approach earlier and built upon it over a 10-year period. The above figure clearly illustrates that our strategy had erratic movements. The reason for this was

our inability to forecast market movements, causing us to constantly follow it. However, this approach did not yield positive results as the teams with the largest market share were the ones accurately predicting market direction and foreign exchange curves.

The main effect of this change in strategies had an impact on our stock price. Initially, our stock price was leading the pack but then suffered a steady decline. Dividend payments also contributed to the decrease in our stock price. In the beginning years, we opted not to distribute any dividends so that we could allocate enough funds for construction and improving capacity. Towards the end, we were unable to provide dividends because there was limited cash left after investing in advertising and endorsement costs. However, in the final year, we did manage to pay a substantial dividend of $4.

My belief is that by distributing dividends throughout the year, our company could have gained trust from shareholders and prevented a decrease in stock price. Additionally, repurchasing small amounts of stock would have potentially boosted our stock price; however, we lacked the necessary funds to do so. The lesson learned is to carefully plan and adhere to strategies, rather than constantly changing course, as this only provides a new beginning that most companies are not seeking while competing.

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