Business Strategies

Geo-Shoes final report

Co managers: Tommy Aurea, Csar Len & Carlos Jacome
2015-2016

Content
The strategic vision for the company ........................................................................................................2
Companys performance for all decision rounds .......................................................................................2
Review of the financial and strategic performance ...................................................................................3
Trends in the companys annual total revenues ...................................................................................3
Trends in the companys annual earnings per share (EPS) ....................................................................3
Trends in the companys annual returns on equity (ROE) .....................................................................4
Trends in the companys annual credit rating .......................................................................................4
Trends in the companys year-end stock price ......................................................................................5
Trends in the companys annual image rating ......................................................................................5
Trends in global units sales ...................................................................................................................6
Trends in the companys global market share ......................................................................................6
The companys present strategy and how it has evolved. Which is the competitive advantage of your
company? .................................................................................................................................................7
Description of ...........................................................................................................................................7
Corporate citizenship strategy ..............................................................................................................7
Production strategy .............................................................................................................................. 7
Marketing strategy (including celebrities) ............................................................................................8
Wholesale strategy............................................................................................................................... 8
Internet strategy ..................................................................................................................................8
Private label strategy............................................................................................................................8
Closest competitors for Geo-Shoes. ..........................................................................................................8
Year 19 .................................................................................................................................................8
North America .................................................................................................................................8
Europe-Africa .................................................................................................................................10
Asia-Pacific .....................................................................................................................................13
Latin America .................................................................................................................................15
Year 20 ...............................................................................................................................................17
North America ...............................................................................................................................17
Europe-Africa .................................................................................................................................19
Asia-Pacific .....................................................................................................................................21
Latin America .................................................................................................................................24
Performance targets for the next years. .................................................................................................26
Competitive actions against closest competitors. ...................................................................................26
Lessons learned ......................................................................................................................................27

Geo-Shoes
it suits you!
The strategic vision for the company
Geo-Shoes plans to become a company which creates value to customers, offering
them high quality athletic footwear at an attractive price.

Companys performance for all decision rounds

This is a summary of Geo-Shoes position throughout the 10 decisions of the Business
Strategy Game. In the charts below the year of the decision, the overall score and the
scoreboard are shown as follows:

This chart shows the companys performance in the athletic footwear industry all along
the 10 years. As it can be appreciated, the company hasnt had a truly admirable
performance in the game; its scoreboard position has been in average 11 out of 12
companies. The overall score reached its critical peak from year 13 to 15 because of

irreversible and high-risky decisions, but fortunately in year 16 it could go up a little bit
due to several changes in the sales forecasts and branded production screens.

Review of the financial and strategic performance

Trends in the companys annual total revenues

As it can be observed in the charts the total revenues, which is the sum of three sale
components: branded footwear, private-label and internet; it reached its top in year
14 but by next year fell drastically and finally since year 17 started to keep an average
amount of revenues.

Trends in the companys annual earnings per share (EPS)

This chart shows the whole performance of the earning per share ratio along the years
in the Business Strategy Game. As it can be appreciated, years 14 and 15 both are the
worst results of this financial ratio due to significant losses in the companys net
income. Then after several changes throughout the game decisions, this ratio could go
up a little bit.

Trends in the companys annual returns on equity (ROE)

About the returns on equity ratio performance, it can be observed its up-and-down
behavior along the annual decisions in the game. Similar as the previous ratio
analyzed, the disappointing outcomes are explained by losses in net incomes for year
14 and 15 even though the company was doing it well in sales.

Trends in the companys annual credit rating

The chart above shows the companys credit rating in the game which has been
remarkable indeed since year 16 due to a financial stability. But as it was explained in
previous financial measurements, years 14 and 15 represented significant losses for
the company so an unavoidable overdraft was required to maintain its cash flow.

Trends in the companys year-end stock price

It wasnt easy at all to exceed investors expectations, the companys stock price was
usually under the price they demanded. As the company never paid dividends to
shareholders, this made difficult to get a more-attractive stock prices for them all
along the Business Strategy Game.

Trends in the companys annual image rating

For this company to get a higher score in this index was one challenge to overcome
decision after decision, but unfortunately that was never possible due to some
variables influencing on it as the market share which wasnt strong at all in the industry
and the corporate social responsibility which didnt have the proper investment. Just in
year 14, ironically one of the worst for the company in terms of financial ratios, this
index reached its top score not by far compared to other years and of course other
competitors.

Trends in global units sales

It can clearly be appreciated that the companys main segment target was the
wholesale all along the decisions, sales just fell drastically in year 13 and since then
they kept performing well until the last decision. Internet sales also performed well in
the market, they kept in average almost the same amount of units sold. The company
had private-label bidding just in year 13, there was no approach in this segment
because it was not convenient due to its negative profit operating margin forecasts.

Trends in the companys global market share

The global market share for this company is expressed as a proportion of its total
revenues relative to the total revenues of the industry. As it can be observed in the
chart, this company always had a weak global market share throughout the game
decisions, never exceeded at least 10% of the whole market, perhaps two facts can
explain this weakness: first, the lack of bidding in private-label and second, selfconstruction of additional plant capacity in another regions.

The companys present strategy and how it has evolved. Which is

the competitive advantage of your company?
Geo-Shoes got started in this athletic footwear industry with a cost leadership strategy
since the two practice decisions previous to begin the real game. The main approach of
the managers at the beginning of the business simulation was to produce high quality
shoes at a moderately low price, of course to achieve this it was necessary to start
investing on plant upgrades such as worker productivity and reject rate reductions,
thus the employees would improve their efficiency and then they could be able to
produce more shoes in both North America and Asia Pacific plants, with lower rates of
defective units. Also to contract a celebrity was required to boost sales in every region,
the chosen one was Oprah Beyons as the game didnt provide too many choices to all
companies but that was OK considering this celebrity had a noticeable appeal in every
continent.
As the decisions run the two early years, the companys market share started going
down so the managers immediately tried to understand what was going wrong after
the several efforts in efficiency and price-bidding. It turned out that this companys
footwear quality was not as high as the close competitors ones and this was affecting
directly the branded sales. The year 13 marked the worst period for the company as
managers couldnt handle the situation and desperately started to increase footwear
prices and this represented irrevocable net income losses for the next two years,
therefore an overdraft was necessary to correct this highly-costly mistake.
From year 16 on, managers learned from past mistakes and began focusing on quality
and market share without altering irresponsibly the athletic footwear price-bidding.
Sadly the company was never able to reach at least a top 5 position in the ranking but
at least its performance smoothly improved in terms of market share especially on the
internet segment, and financial stability.
About Geo-Shoes competitive advantages, some of them that could stand out since
the beginning were the delivery time, the celebrity appeal even though represented
high fixed costs for the company, and the rebate offer.

Description of
Corporate citizenship strategy
Geo-Shoes invested on workforce diversity program, energy efficiency initiatives and
ethics trainings for managers only.

Production strategy
In both North America and Asia Pacific plants, the percentage of superior materials
was over 52% and 54% in average, the number of models was set on 200 for almost

every decision, the enhanced styling features on 34 thousand dollars per model, the
TQM/Six Sigma Program on $1 per pair, the change in annual base wages expressed as
a percentage was +1%, the incentive payment per non rejected pair was $1.50 and
finally the best practices trainings was 800 thousand dollars.

Marketing strategy (including celebrities)

At the early two decisions in the game the managers didnt focus on advertising as
they would have to, it was OK to get a contract with a celebrity but that was just the
first step, it was also important to invest on advertising budget, option located in the
sales forecast screen, in order to boost branded footwear sales.

Wholesale strategy
Unlike the last two years that the managers decided to produce in Asia Pacific only and
then distribute to all markets from this regions warehouses, the company always had
both plants to work approximately at 80% or 90% full capacity each one in order to
supply every regions warehouse.

Internet strategy
Geo-Shoes managers focused on offering free shipping in order to get a bigger market
share in this segment.

Private label strategy

There isnt much to say about private label because Geo-Shoes didnt make efforts to
supply this segment.

Closest competitors for Geo-Shoes.

Year 19
North America

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
75.00
70.98
64.00
70.15
76.75
64.00
69.99
83.99
60.00
78.49
71.99
68.99

S/Q Rating
9
7
7
6
9
8
6
10
4
9
8
6

Market Share
9.04%
5.80%
17.57%
4.76%
6.53%
13.88%
4.22%
4.87%
9.07%
7.74%
5.80%
10.70%

Closest competitors: B enterprises, Latria Sport, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 54.99
B
$ 45.50
C
$ 45.49
D
$ 63.50
E
$ 55.00
F
$ 44.00
G
$ 46.66
H
$ 61.99
I
$ 50.00
J
$ 59.49
K
$ 49.99
L
$ 48.99

Closest competitors: B enterprises, Latria Sport.

S/Q Rating
9
7
7
6
9
8
6
10
4
9
8
6

Market Share
11.36%
7.89%
18.57%
2.58%
8.04%
13.22%
5.74%
6.42%
4.99%
8.09%
5.92%
7.19%

Private-label segment
Company
Price
A
$
B
$ 28.90
C
$
D
$ 29.01
E
$
F
$
G
$
H
$ 29.99
I
$
J
$ 30.99
K
$
L
$
-

S/Q Rating
0
6
0
6
0
0
0
6
0
6
0
0

Market Share
0.00%
48.70%
0.00%
6.10%
0.00%
0.00%
0.00%
29.80%
0.00%
15.40%
0.00%
0.00%

S/Q Rating
9
7
7
6
9
8
6
10
4
9
8
6

Market Share
7.91%
6.67%
15.46%
5.60%
6.45%
14.50%
4.62%
4.87%
9.07%
7.94%
5.80%
11.12%

Closest competitors: None of the companys.

Europe-Africa

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
75.00
70.98
64.00
70.15
76.75
64.00
69.99
83.99
60.00
78.49
71.99
68.99

Closest competitors: B enterprises, Latria Sport, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 57.00
B
$ 52.00
C
$ 50.00
D
$ 52.20
E
$ 55.00
F
$ 54.00
G
$ 47.50
H
$ 61.99
I
$ 50.00
J
$ 60.99
K
$ 50.99
L
$ 50.99

S/Q Rating
9
7
7
6
9
8
6
10
4
9
8
6

Market Share
10.35%
6.68%
13.66%
6.29%
9.30%
9.79%
7.51%
7.92%
5.71%
9.63%
6.44%
6.72%

Closest competitors: B enterprises, Latria Sport, Discovery Shoes.

Private-label segment
Company
Price
A
$
B
$ 35.00
C
$
D
$ 29.01
E
$
F
$
G
$
H
$
I
$
J
$ 37.75
K
$ 36.99
L
$
-

S/Q Rating
0
6
0
6
0
0
0
0
0
6
6
0

Market Share
0.00%
25.40%
0.00%
21.22%
0.00%
0.00%
0.00%
0.00%
0.00%
37.46%
15.92%
0.00%

Closest competitors: None of the companys.

Asia-Pacific

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
75.00
70.98
64.00
70.15
76.75
64.00
69.99
83.99
60.00
78.49
71.99
68.99

S/Q Rating
9
7
7
6
8
8
6
10
4
9
8
6

Market Share
8.42%
6.52%
15.84%
4.12%
6.89%
14.97%
4.42%
4.69%
10.10%
8.00%
5.95%
10.07%

Closest competitors: B enterprises, Latria Sport, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 54.00
B
$ 45.50
C
$ 45.42
D
$ 48.00
E
$ 51.00
F
$ 45.00
G
$ 46.99
H
$ 59.00
I
$ 50.00

S/Q Rating
9
7
7
6
8
8
6
10
4

Market Share
9.69%
8.09%
14.32%
7.18%
8.75%
13.48%
6.03%
6.78%
5.55%

J
K
L

$
$
$

58.24
48.99
46.99

9
8
6

7.57%
5.76%
6.79%

Closest competitors: B enterprises, Latria Sport, Cloud Shoes, FDJL Shoes, Discovery Shoes.

Private-label segment
Company
Price
A
$
B
$
C
$
D
$ 29.01
E
$
F
$
G
$
H
$
I
$
J
$ 30.99
K
$ 29.99
L
$
-

S/Q Rating
0
0
0
6
0
0
0
0
0
6
6
0

Market Share
0.00%
0.00%
0.00%
11.01%
0.00%
0.00%
0.00%
0.00%
0.00%
62.19%
26.80%
0.00%

Closest competitors: None of the companys.

Latin America

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
75.00
70.98
64.00
70.15
76.75
64.00
69.99
83.99
60.00
78.49
71.99
68.99

S/Q Rating
9
7
7
5
8
8
6
10
3
9
8
6

Market Share
8.06%
6.76%
15.12%
4.45%
6.76%
15.51%
4.06%
5.12%
9.60%
8.72%
6.00%
9.85%

Closest competitors: B enterprises, Latria Sport, Cloud Shoes, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 60.00
B
$ 52.45
C
$ 45.20
D
$ 58.32
E
$ 51.00
F
$ 46.00
G
$ 49.99
H
$ 59.00
I
$ 50.00
J
$ 62.99
K
$ 55.99
L
$ 52.99

S/Q Rating
9
7
7
5
8
8
6
10
3
9
8
6

Market Share
7.48%
6.67%
17.85%
4.41%
11.13%
12.37%
5.37%
9.41%
6.52%
7.79%
4.92%
6.09%

Closest competitors: B enterprises, Latria Sports.

Private-label segment
Company
Price
A
$
B
$ 40.00
C
$
D
$ 29.01
E
$
F
$
G
$
H
$
I
$
J
$ 40.63
K
$ 41.99
L
$
-

S/Q Rating
0
6
0
6
0
0
0
0
0
6
6
0

Market Share
0.00%
63.01%
0.00%
4.69%
0.00%
0.00%
0.00%
0.00%
0.00%
23.21%
9.10%
0.00%

Closest competitors: None of the companys.

Year 20
North America

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
78.40
70.98
67.00
70.01
78.00
69.00
69.99
86.79
70.00
86.79
75.60
75.60

S/Q Rating
9
7
7
6
9
9
6
10
4
10
8
5

Market Share
8.94%
7.30%
21.34%
4.15%
6.17%
14.40%
5.44%
5.03%
6.52%
6.37%
6.52%
7.83%

Closest competitors: B enterprises, Cloud Shoes, FDJL Shoes, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 54.99
B
$ 45.50
C
$ 43.62
D
$ 49.50
E
$ 55.50
F
$ 43.00
G
$ 46.66
H
$ 61.99
I
$ 50.00
J
$ 56.00
K
$ 50.99
L
$ 51.99

S/Q Rating
9
7
7
6
9
9
6
10
4
10
8
5

Market Share
9.31%
6.94%
20.94%
3.69%
6.87%
15.49%
5.24%
4.94%
5.83%
10.35%
4.49%
5.92%

Closest competitors: B enterprises, Cloud Shoes, Discovery Shoes.

Private-label segment
Company
Price
A
$
B
$ 28.50
C
$
D
$
E
$
F
$ 27.00
G
$
H
$
I
$
J
$ 35.00

S/Q Rating
0
6
0
0
0
7
0
0
0
6

Market Share
0.00%
66.90%
0.00%
0.00%
0.00%
24.90%
0.00%
0.00%
0.00%
8.20%

K
L

$
$

0
0

0.00%
0.00%

S/Q Rating
9
7
7
6
9
9
6
10
4
9
8
5

Market Share
8.21%
7.96%
19.71%
6.65%
6.08%
14.59%
5.55%
4.83%
6.15%
6.20%
6.50%
7.56%

Closest competitors: None of the companys.

Europe-Africa

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
78.40
70.98
67.00
70.01
78.00
69.00
69.99
86.79
70.00
86.79
75.60
75.60

Closest competitors: B enterprises, Cloud Shoes, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 55.99
B
$ 50.70
C
$ 48.50
D
$ 50.01
E
$ 55.50
F
$ 49.00
G
$ 47.50
H
$ 61.99
I
$ 50.01
J
$ 60.99
K
$ 52.99
L
$ 51.99

S/Q Rating
9
7
7
6
9
9
6
10
4
9
8
5

Market Share
9.74%
6.94%
16.77%
6.43%
8.88%
8.74%
6.97%
6.66%
6.70%
10.04%
5.68%
6.46%

Closest competitors: B enterprises, Latria Sport, Cloud Shoes, Discovery Shoes.

Private-label segment
Company
Price
A
$
B
$ 34.00
C
$
D
$
E
$
F
$ 30.00
G
$
H
$
I
$
J
$ 40.00
K
$ 36.99
L
$
-

S/Q Rating
0
6
0
0
0
7
0
0
0
6
6
0

Market Share
0.00%
29.47%
0.00%
0.00%
0.00%
24.15%
0.00%
0.00%
0.00%
27.96%
18.42%
0.00%

S/Q Rating
9
7
7
6
9
9
6
10
4

Market Share
8.15%
7.89%
20.41%
4.94%
6.82%
15.00%
5.51%
4.65%
7.26%

Closest competitors: None of the companys.

Asia-Pacific

Internet Segment
Company
A
B
C
D
E
F
G
H
I

$
$
$
$
$
$
$
$
$

Price
78.40
70.98
67.00
70.01
78.00
69.00
69.99
86.79
70.00

J
K
L

$
$
$

86.79
75.60
75.60

9
8
5

5.91%
6.45%
7.00%

Closest competitors: B enterprises, Latria Sport, Cloud Shoes, FDJL Shoes, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 54.99
B
$ 45.50
C
$ 44.00
D
$ 47.00
E
$ 53.00
F
$ 43.00
G
$ 46.99
H
$ 59.00
I
$ 50.00
J
$ 57.24
K
$ 50.99
L
$ 47.99

S/Q Rating
9
7
7
6
9
9
6
10
4
9
8
5

Market Share
8.09%
7.72%
18.29%
5.47%
8.14%
14.49%
5.26%
5.96%
5.82%
9.67%
4.89%
6.20%

Closest competitors: B enterprises, Latria Sport, Cloud Shoes, FDJL Shoes, Discovery Shoes

Private-label segment
Company
Price
A
$
B
$
C
$
D
$
E
$
F
$ 27.00
G
$
H
$ 29.00
I
$
J
$ 40.00
K
$ 29.99
L
$
-

S/Q Rating
0
0
0
0
0
7
0
6
0
6
6
0

Market Share
0.00%
0.00%
0.00%
0.00%
0.00%
25.15%
0.00%
28.79%
0.00%
25.71%
20.35%
0.00%

Closest competitors: None of the companys.

Latin America

Internet Segment
Company
A
B
C
D
E
F
G
H
I
J
K
L

$
$
$
$
$
$
$
$
$
$
$
$

Price
78.40
70.98
67.00
70.01
78.00
69.00
69.99
86.79
70.00
86.79
75.60
75.60

S/Q Rating
9
7
7
5
7
8
6
10
3
10
8
5

Market Share
7.97%
8.28%
19.94%
5.38%
5.61%
14.80%
5.38%
5.12%
7.17%
6.80%
6.75%
6.80%

Closest competitors: B enterprises, Cloud Shoes, FDJL Shoes, Discovery Shoes.

Wholesale Segment
Company
Price
A
$ 55.99
B
$ 50.70
C
$ 42.66
D
$ 50.01
E
$ 53.00
F
$ 46.99
G
$ 49.99
H
$ 59.00
I
$ 50.00

S/Q Rating
9
7
7
5
7
8
6
10
3

Market Share
7.77%
6.51%
21.96%
5.06%
8.43%
13.11%
4.56%
7.64%
6.66%

J
K
L

$
$
$

61.99
53.99
52.99

10
8
5

7.94%
4.74%
5.62%

Closest competitors: B enterprises, Latria Sport, Discovery Shoes.

Private-label segment
Company
Price
A
$
B
$ 38.50
C
$
D
$
E
$
F
$ 35.00
G
$
H
$ 38.99
I
$
J
$ 42.00
K
$ 41.99
L
$
-

S/Q Rating
0
6
0
0
0
7
0
6
0
6
6
0

Market Share
0.00%
56.68%
0.00%
0.00%
0.00%
12.26%
0.00%
9.34%
0.00%
12.51%
9.20%
0.00%

Closest competitors: None of the companys.

Performance targets for the next years.

Performance targets
Variables
Year 21 Year 22
Earnings per share
1.37
1.44
Return on Equity
8.04
8.47
Credit Rating
A+
A+
Image Rating
50
53
Stock Price
13.67
14.33

Based on the experience and the statistics methods to determine confidence intervals,
Geo-Shoes has determined an increase in the key ratios due to increase in S/Q Rating;
this because an upgrading in the equipment within the production facilities. The
company doesnt have the intention of issuing shares in the market, maintaining its
credit rating at A+. By investing more in best practices training and energy efficiency
initiatives, the company intends to increase the image rating 2 and 3 points for the
next years, respectively.

Competitive actions against closest competitors.

Geo-Shoes has planned to implement the next actions with the goal of increasing
market share in each region and aiming at stabilizing a standard limit of pairs sold
during the operating year. These are the next decisions for the following years:

Invest in social responsibility expenditures, aimed to increase image rating.

Increase capacity production within A-P Plant, as to increase compensation and
incentives payments to workers.

Increase from 52% at 70% superior materials used in production, decrease

models to 100 and more investment in TQM and Six Sigma programs, aimed to
increase S/Q rating.
Increase by 3% prices in all regions, except LA region which price would
increase a 4.48% for the next following years.
Decrease the advertising budget 20% for NA and EA markets, 23% in AP market
and 27% in LA market.
Signs with at least two celebrities; with the objective of promotion in EA and AP
markets, main objectives of market consolidation.

These measures will decrease the cash inflows, profits and ending cash for year 21;
seeking in the following year for more sales by pursuing an integrated differentiation
cost-leadership strategy.

Lessons learned
With the simulator, the co-managers of Geo-Shoes could experience the management
of a company and its key factors about the operating process. Although, Geo-Shoes
stood for the almost the entire simulation in 10 th, 11th, and 12th position; the thrill
about the decisions and factors affecting the market distribution across the other
companies was -and still is- the same.
Along the experience BSG we could estimate very closely the stress that demands to
manage a company, the importance of controlling its performance in all the areas
involved, which direct or indirectly are correlated.
One major knowledge the co-managers learnt was the measures to acquire a global
low-cost strategy. In order to offer the best price, the main decision was producing
only in AP Plant which is one of the main strategies that most of the companies in the
practice adopt. The weight that lower production costs induces the outsourcing to
other regions. Against it, social responsibility investments are heavy requirements for
any company that adopt these practices; without it, the firms brand, corporate and
social image perceived will fall and neither measures could revert this situation.
The BSG requires full time involvement and commitment from the whole team. The
results given are the prove of how much a team was integrated to work or the
responsibility of each one of the team members. Recognizing that as one of the
problems inside Geo-Shoes, weve achieved the main purpose of acquiring the most
knowledge possible from the simulator as for future purposes.