Competitiveness and Sustainability in a Changing Global Landscape: The Business Strategy Game Simulation.

Author:Goralski, Margaret A.
 
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INTRODUCTION

The Strategic Integrated Management Seminar (SIMS) course is mandatory for every senior student in the school of business at a mid-size private university in the northeastern United States. The course allows students to integrate their accumulated knowledge and apply this knowledge to issues from a strategic perspective. It examines a firm from the position of top level management, focusing on the role of the general manager in formulating and implementing corporate and business level strategy. Strategic issues of an entire athletic footwear company (hereon, "footwear company" or "company") and industry are analyzed. Students are expected to draw their accumulated knowledge of the functional areas of their majors into a homogenous team effort. Each individual student works on developing his/her ability to analyze information, draw logical conclusions, and offer sound supporting evidence for their arguments in written form and classroom discussions. The course is highly interactive with students taking the lead and the professors sharing knowledge and offering supplementary support.

The SIMS course uses the Business Strategy Game (BSG) simulation to enable students to experience a top management team perspective in running a company and experiencing competitive conditions in the athletic footwear industry. In the BSG, students compete in teams (each team constitutes a company, hereon team/company will be synonymous) within a global arena that encompasses four regions--Europe-Africa, North America, Asia-Pacific, and Latin America (The Business Strategy Game, 2016). They compete against teams in their individual classes and compare/contrast data with teams/companies worldwide. Each company competes head-to-head against footwear companies run by other teams in the course, hence competition plays an important role in the experience. Each company sells its brand of footwear to retailers worldwide and to individuals buying online at the company's website.

Competing in the BSG requires a series of complex decisions by the students, taking into account the team's strategy for their company and the competitive conditions in the industry and the strategies of their competitors. The simulation allows for numerous decisions for each round, requiring students to choose which decisions are most important to implement their strategy and which areas of the business must receive attention in order for their firm to be its most competitive. Beyond overall strategy (corporate, competitive) are several key functional areas for decision making. Decision areas in operations include capacity planning (either adding to existing plants or building new plants in new geographic locations), production quality decisions for the athletic footwear, plant operations efficiency, and labor decisions. Footwear must be shipped to distribution centers around the world and students must choose where it is best to manufacture the footwear and where to ship taking into consideration demand, shipping costs, tariffs, and exchange rates. Marketing decisions include pricing the product in a wholesale and a retail environment, advertising and use or non-use of celebrity endorsements, rebates, and incentives to retailers. Financial decisions include funding the capital structure of the firm using debt, equity, and/or cash. Dividend payouts and stock repurchases may be used by the companies.

The simulation has students take control of an athletic footwear company that has been in operation for ten years. Teams make in total eight years of decisions (years 11-18), approximately one per week. Each decision rollover represents one year and includes many decisions within the "decision." The simulation evaluates team performance based on five investor expectation performance targets: Earnings Per Share (EPS), Return on Equity (ROE), credit rating, image rating (a combination of market share and shoe quality), and stock price. Each measure of performance is equally weighted at 20% of the total score (The Business Strategy Game, 2016). After each decision rollover, teams receive reports based on each year's decisions. These reports include a Footwear Industry Report, Competitive Intelligence Report, and Company Reports. Students use these reports to determine whether their company is performing at or below investor expectations. Teams are ranked on the Footwear Industry Report from first to last place based on the five investor expectation performance targets. This ranking and comparison between firms spearheads additional competition between teams.

TEAMS AND INITIAL ASSIGNMENTS

Students are placed onto teams that are composed in the most diverse way possible. In a best case scenario, one student would be from marketing, another from finance or accounting, and the third from one of the other business majors. We try to have at least one student with a strong financial background on each team as the finance and accounting area is usually perceived to be their weakest for the other school of business majors. Marketing also plays a key role in the simulation and fortunately marketing, finance, and accounting are typically the most popular majors at our university, enabling at least one team member from marketing and a financial area. However, students soon discover that each of the majors plays an important role in creating and implementing strategy in business competition and sustainability. Males and females are as evenly divided on a team as possible since having one male on a female team or at least one female on a male team changes the dynamic of the team and usually strengthens the team. Foreign students in the course are also divided into teams as equitably as possible since they bring with them a cultural dimension that would otherwise be missing. And finally, students of different ages, e.g. military veterans with vast amounts of world experience, are distributed on various teams to add another dimension to the team and the course. Students must learn to work with people who have different opinions and areas of expertise. Frequently students are in the position of teaching others about their specific area of knowledge. A marketing major may think that more money should be spent on advertising and/or celebrity endorsements, while a finance major may think that more important uses of funds are dividends and stock repurchases. Students have to learn to listen to other's opinions and to back up their own individual arguments with sound evidence in persuading the team to follow a particular path or make a particular decision. This is an important experience and skill for students to develop.

In addition to competing in the BSG, students are given assignments that add to their knowledge in business acumen. The first assignment for team members is to conduct an individual SWOT (strengths, weaknesses, opportunities, and threats) analysis of their own and the team's strengths and weaknesses and then discuss these SWOT analyses with their team members. In this way, the team finds out the strengths and weaknesses of its internal make-up. For example, if all team members realize that they are procrastinators, then they must define an approach to compensate for their internal weakness and try to turn it into a strength.

One assignment at the beginning of the course is preparation of a team contract. The team contract allows the participating team members to set the ground rules and expectations for working as a team. There is no right or wrong way to write a team contract. There are suggestions for what should be included in a team contract, but the contract is theirs exclusively. They must define how it will be written and how it will be administered. The contract should contain information that they have gleaned from each other regarding their strengths and weaknesses, and how to best set up a working relationship based on these strengths and weaknesses. Students must create a mission statement for their team, outline team expectations and goals, and decide what decision-making process the team will strive for. In addition, team members must decide who will facilitate or chair their meetings and if the role will rotate or stay permanent throughout the semester. Distribution of the workload and what team member will be responsible to make sure that tasks are completed on time are other integral pieces of the contract. Students must outline how the team will manage time expectations and team conflict. As the students are assigned to teams, they do not choose their team members, and therefore often are placed on a team with students they have not worked with previously. Students must define how they will ensure that members are meeting the team's objectives and what they will do to ensure that the team agreement is met. Evaluation of the performance of individual members and the performance of the team must also be defined within the contract. Finally, and probably most problematic for students, is to establish a procedure for firing a team member for nonperformance. If a team member is not producing work as outlined in the contract, students are expected to refer to the measures outlined in their contract and handle the situation accordingly. Students are responsible for their work and their team, as they prepare to become the next generation of leaders.

Another important assignment during the first crucial weeks of class is the Initial Strategic Plan. This plan is the roadmap for defining the company's strategy and competitive actions for the duration of the...

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