BSG Simulation (BUS 497A)

Winning the BSG Business Strategy Game:

1. Buy plant upgrades early in the game, because they have an accumulative effect. In the
"Plant Capacity" screen you are given four different plant upgrade options per plant. Depending
on what your strategy is, one should upgrade their plant in each region with at least two different
options.

2. In the "Branded Production" screen you will want to make TQM/sigma six have a value of
2.50 because it helps you achieve a higher SQ rating and set Best Practices at 5000 because it
will save you money per pair of shoes produced. Keep these values the same from the start of
the game and until the end because they also have an accumulative effect.

3. Take out loans early on in the game because you have a better credit score starting out. I
recommend the maximum amount for the first few years. Use the money from the loans to build
more plant capacity in existing plants as well as building a new plant in another geographic
region such as Latin America. Once your company starts making more and more revenue every
year, you can repay your loans early, buy back stock, and pay dividends.

4. After the game is run, I would recommend buying excess capacity that all of the other teams
sell. The number of excess capacity will be shown on the "Corporate Lobby" screen, and to buy
it you just go to the “Plant Capacity” screen and click purchase capacity. The excess capacity
should be purchased as soon as the amounts are listed before someone else does. Buying
excess capacity that others are selling will cost you 20% less than if you had built plant capacity
on your own!

5. During the beginning of the game, it is important that you win bids in the "Private Label"
screen. Your company is able to produce private label shoes at a fraction of the cost. In addition,
if you are able to secure these markets you force your competitors out of the private label
competition. My advice is to produce at the lowest S/Q rating for private label competition and
make your bid price low so that it beats out everyone else (but so that you make a profit of at
least $1.00 per pair of shoes). A winning strategy would be to produce enough pairs to supply
50% - 100% of the private label market for the geographic regions in which you are bidding.

Some Key Considerations For Teams:

1. Whether to customize the firm’s offerings in each country's market to match local buyers'
tastes or offer standardized products worldwide.

2. Whether to employ the same competitive strategy in all countries or to modify the strategy
country by country.
3. Deciding where to locate facilities, distribution centers, and service operations to maximize
locational advantages.

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.

How To Win BSG Using the Best-Cost Strategy.

The best-cost strategy means offering customers a product with the highest attributes of quality
and style at a lower price thus allowing them to gain the best value for their money.

Improving the Image Rating

The best-cost strategy benefits the company’s image because increasing the S/Q rating while
having a lower price is directly related to achieving a high image rating. 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 company’s overall
image. If there are other groups pursuing the best-cost strategy try to be the first to get to 10
stars. CSR initiatives will boost the image rating but be cautious about how much you spend in
this area.

Improving EPS, ROE, and Stock Price.

Substantial growth in revenues and net profits will fuel tremendous growth in EPS and Stock
Price. Therefore, growth-minded companies should consider expanding especially if plants are
operating at over 80% capacity. The stock repurchase is also an almost instant way of
increasing the stock price and EPS given the company continues to see reasonable growth.

Remarkable growth minimizes the need to pay out dividends, but when growth begins to taper
off, consistent dividend payments, as well as steadily increasing dividends by $0.05 year over
year, will help stabilize the company’s stock price. On the other hand, an increase in the stock
offering will allow the company to finance expansion at a likely cheaper cost than taking a loan
but will dilute the EPS.

Tips for Lowering Cost and Winning the Game

Toggle the advertising spending to see the lowest cost at which the company can achieve the
desired market share. Turn delivery time to four weeks because it has no noticeable effect on
sales but significantly affects EPS and Net Profit. Marginally reduce spending on retail support
each year because it has a benign effect on sales.

Then, toggle between each set of options on the branded production screen to see which
combination of materials, styling, and TQM will be the most cost-effective for production. Do this
for each simulated year because the cost of materials varies.
Invest early in plant upgrades, especially the S/Q rating improvement. An early investment in
these areas will allow the company to enjoy a return on investment for several years.

The amount of loans the company carries has the greatest effect on the company’s Credit
Rating. However, once an A+ Credit Rating is achieved it doesn’t get any better than that,
therefore, instead of paying down loans consider stock repurchase or some other investment.

The Blue Ocean Type of Offensive Strategy.

This involves abandoning efforts to beat out competitors in the existing markets and, instead,
inventing a new industry or distinctive market segment that renders existing competitors largely
irrelevant and allows a company to create and capture altogether new demand. Focus on
making your product distinctive in terms of quality or style and pay less attention to
out-promoting your competitors.

Pitfalls to Avoid
Do not neglect the information in the market snapshot but pay more attention to the footwear
industry report rather than the portion that provides you with strength and weakness analysis;
for example, advertising may be identified as a weakness, however, spending less on
advertising while yielding better results than your competitors is actually an advantage.

Investing in upgrades later in the simulation does not allow enough time to break even on the
investment. Avoid spending too much on CSR. Be leery of how much is spent on celebrities
because there are no metrics to calculate the usefulness of celebrity endorsements.

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. The greatest pitfall to avoid is switching strategy
because of poor execution.

Learning which rivals have winning strategies and which ones have weak ones is the
managerial payoff for 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.

Question: How can I increase market shares on internet and wholesales marketing?

Answer: The simple answer is to increase advertising spending but a comprehensive approach
is needed to get the best results. Research your market, look at market intelligence reports to
see what competitors are offering in terms of style and quality, how much are they spending on
ads as well as how are they distributing their products. 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.
Pay attention to the needs of your customers as well as the capacity demanded by the market.
Regarding the internet market, offering a superior product at the lower price than a competitor
charges for an inferior product ensures that your products will be bought before the second tier
product, however, selling at a lower price is not always the best idea for example, if North
America needs 60,000 pairs of shoes but the total distribution of your company, as well as your
competitors, is only 55,000 then each and every pair will likely sell regardless of the price.

Owlcation home
Tips on How to Win the Business Strategy Game (BSG)
ANGELOUPDATED:SEP 12, 2023 12:05 AM EDT
The BSG helps students experience fulfilling the expectations of not only their bosses but also
the consumers of their goods or services.
The BSG helps students experience fulfilling the expectations of not only their bosses but also
the consumers of their goods or services.

Startup Stock Photos via Pexels

Teamwork is Essential
The Business Strategy Game (BSG) simulation creates the environment for teams to immerse
themselves in the collaborative nature of getting business done. 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.

Read More

Teams become better assets than individuals when members are able to fit into the grooves of
each other like the gears on a well-oiled machine. This will create synergy. 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.

Diverse opinions should be encouraged especially if they are grounded in research. Follow the
instinct that says there is a better option, always investigate this thought, and never be afraid to
challenge the soundness of a decision.

For example, when I was doing the simulation, one team member offered the opinion that giving
employees an increase in base wages would lower the total cost of compensation as well as the
total cost of production. This notion was met with resistance but after toggling the percentage
increase back and forth it became apparent that our team member who didn’t allow herself to be
drowned out was well-informed.
If you want top honors focus on the insight provided in this article as it will help you formulate a
winning strategy.
If you want top honors focus on the insight provided in this article as it will help you formulate a
winning strategy.

Photo by Angelo Grant

Some Key Considerations For Teams

1. Whether to customize the firm’s offerings in each country's market to match local buyers'
tastes or offer standardized products worldwide.

2. Whether to employ the same competitive strategy in all countries or to modify the strategy
country by country.

3. Deciding where to locate facilities, distribution centers, and service operations to maximize
locational advantages.

Corporate Social Responsibility

The simulation involves CSR as the very first menu option. Thompson (2018) states that a
company’s “license to operate” comes with an obligation to act as a responsible citizen and do
its fair share to promote the general well-being of society and has the burden to operate
honorably. 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.

A successful business is always able to give back!

A successful business is always able to give back!

Photo by Angelo Grant

How To Win BSG Using the Best-Cost Strategy

The best-cost strategy means offering customers a product with the highest attributes of quality
and style at a lower price thus allowing them to gain the best value for their money.

Improving the Image Rating

The best-cost strategy benefits the company’s image because increasing the S/Q rating while
having a lower price is directly related to achieving a high image rating. 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 company’s overall
image. If there are other groups pursuing the best-cost strategy try to be the first to get to 10
stars. CSR initiatives will boost the image rating but be cautious about how much you spend in
this area.

Improving EPS, ROE, and Stock Price

Substantial growth in revenues and net profits will fuel tremendous growth in EPS and Stock
Price. Therefore, growth-minded companies should consider expanding especially if plants are
operating at over 80% capacity. The stock repurchase is also an almost instant way of
increasing the stock price and EPS given the company continues to see reasonable growth.

Remarkable growth minimizes the need to pay out dividends, but when growth begins to taper
off, consistent dividend payments, as well as steadily increasing dividends by $0.05 year over
year, will help stabilize the company’s stock price. On the other hand, an increase in the stock
offering will allow the company to finance expansion at a likely cheaper cost than taking a loan
but will dilute the EPS.

Perhaps the most reliable way for a company to improve its financial performance over time is to
recognize that a balanced scorecard approach to measuring company performance has much
to recommend because pursuing and achieving strategic outcomes that boost a company's
competitiveness and strength in the marketplace puts it in a better position to improve its future
financial performance.

Masterful strategies come from doing things differently from competitors where it
counts—out-innovate them, be more efficient, and adapt faster.

Tips for Lowering Cost and Winning the Game:

Toggle the advertising spending to see the lowest cost at which the company can achieve the
desired market share because once you reach a certain amount for each round you see
diminishing returns for EPS, Net Profit and ROE. Turn delivery time to four weeks because it
has no noticeable effect on sales but significantly affects EPS and Net Profit. Toggle between
each set of options on the branded production screen to see which combination of materials,
styling, and TQM will be the most cost-effective for production. Do this for each simulated year
because the cost of materials varies.

Recommended:
Invest early in plant upgrades, especially the S/Q rating improvement. An early investment in
these areas will allow the company to enjoy a return on investment for several years.

The amount of loans the company carries has the greatest effect on the company’s Credit
Rating. However, once an A+ Credit Rating is achieved it doesn’t get any better than that,
therefore, instead of paying down loans consider stock repurchases, dividends or some other
investment.

The Blue Ocean Type of Offensive Strategy:

This involves abandoning efforts to beat out competitors in the existing markets and, instead,
inventing a new industry or distinctive market segment that renders existing competitors largely
irrelevant and allows a company to create and capture altogether new demand. Focus on
making your product distinctive in terms of quality or style and pay less attention to
out-promoting your competitors.

Winning a bigger market share is not a typical competitive weapon that a company can use to
battle rivals and attract buyers.

Pitfalls to Avoid:
Do not neglect the information in the market snapshot but pay more attention to the footwear
industry report rather than the portion that provides you with strength and weakness analysis;
for example, advertising may be identified as a weakness, however, spending less on
advertising while yielding better results than your competitors is actually an advantage.

Investing in upgrades later in the simulation does not allow enough time to break even on the
investment. Avoid spending too much on CSR. Be leery of how much is spent on celebrities
because there are no metrics to calculate the usefulness of celebrity endorsements.

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.

The greatest pitfall to avoid is switching strategy because of poor execution.

Using The Footwear Industry Report To Put Things Into Perspective

Learning which rivals have winning strategies and which ones have weak ones is the
managerial payoff for 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.

Understanding the Company Intelligence Report is Integral to Success

Understanding The Company Operating Report is Integral to Staying Ahead of The Competition

Questions & Answers:

Question: What should my team do if two years in a row there were regions with fully
depreciated equipment?
Answer: I would suggest looking into upgrades that specifically improve plant operations.

Question: How can I increase market shares on internet and wholesales marketing?

Answer: The simple answer is to increase advertising spending but a comprehensive approach
is needed to get the best results. Research your market, look at market intelligence reports to
see what competitors are offering in terms of style and quality, how much are they spending on
ads as well as how are they distributing their products. 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. Pay
attention to the needs of your customers as well as the capacity demanded by the market.
Regarding the internet market, offering a superior product at the lower price than a competitor
charges for an inferior product ensures that your products will be bought before the second tier
product, however, selling at a lower price is not always the best idea for example, if North
America needs 60,000 pairs of shoes but the total distribution of your company, as well as your
competitors, is only 55,000 then each and every pair will likely sell regardless of the price.

Question: How can I increase the net revenue of my business?

Answer: To increase your company's net income you should focus on improving your bottom
line as well as your top line, try to trim labor, materials, warehouse, and delivery expenses.
Optimize your advertising dollars by finding the balance between trimming excess spending,
growing your market share and fetching the highest possible price for your products. Anticipate
your competitors' strengths and weaknesses. Exploit areas where they are weak to gain market
share or to increase profit margin. An underserved market will pay what you charge especially if
you're the only player or if your product is significantly better than other offerings.

Question: What's the best way to distribute pair per region?

Answer: This should be heavily dependent on market intelligence. Work with the forecast, as
well as historical data; locate the markets that are underserved, focus on your strengths by
maintaining dominance in markets where you do well, expand your footprint to markets where
your rivals show weakness.

Question: How do I improve my credit rating?

Answer: Pay down loans faster!

Question: How do I know what to put for competitive assumptions in the Business Strategy
Game?

Answer: Understanding your competitors' strategy will help you to beat them. You will need to do
a detailed analysis of the intelligence reports each time the simulation runs, in order to assume
correctly what offensive and defensive strategies are most suitable. The items you're looking to
derive these assumptions from include competitors prices (low price, low quality = wholesale
strategy), large advertising spend correlates with internet expansion, geographic expansion
raises the barrier to entry in that region and it could also mean that the competitor making such
an investment is financially stretched and an opportunity exist for your company to put a hurting
on them.

Large stock buy-back and huge increases in dividend is an indicator that a competitor is
struggling/will struggle to achieve growth and further efficiency because sufficient funds are not
being invested in new factories, technology, training, etc. The timing of these assumptions are
also important. For example, in the later years of the simulation it will just make more sense to
invest in paying down debt, stock buy-back and dividend increase rather than new factories,
training, and technology because there isn't sufficient time to achieve an ROI.

Question: We increased our S/Q however, our snap shot is below average. How can we fix this?

Answer: Quality best effects online sales, however wholesale is price sensitive. 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. React to your competitor's strategy, anticipate their next
moves.

Question: My class will be limited to only playing through week 15, how do I need to alternate
my strategy?

Answer: I would recommend initiating stock buyback right away. Do not invest in plant
improvements/expansions unless you'll see an ROI prior to year 15. Focus on dominating the
US, Europe, and Asia markets. Secure the best celebrity endorsements to help you achieve this
goal, celebrity endorsements are a great boost for online sales. 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.

Question: How can I decrease days of inventory?

Answer: Great question, here is why; “allowing surplus inventories to grow out of control is
costly in two respects. 1. 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).

2. There is a 1-star penalty applied to the S/Q rating of unsold branded pairs carried over to the
following year—this penalty, which is part of the IFF’s S/Q rating formula, is to reflect the fact
that unsold pairs are last-year’s models and styles, making them less attractive to buyers.”
(Player’s Guide, 2018) Fix this by making sure you sell what you produce, and extending your
delivery time may not affect you negatively and may benefit how much inventory you have to
carry. People will wait for their favorite kicks, phone, games, gadget as long as it appeals to
them.

Question: My team has placed at the bottom for the last 2 years, how do we improve our
figures? I've tried most of what you suggested

Answer: Competitive and market intelligence will affect the nuance of your strategy. If your
competitors are 'besting' you at applying their strategy then they will continue to dominate. 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.

They may also dominate the wholesale market simply because their pairs are $0.25 cheaper
than every other company and if they have plenty of capacity to meet the demand of those
markets then no one else's pairs will ever sell.

Question: How can I reduce the cost per pair sold?

Answer: Early investments in upgrades to plants and training can pay big dividends in the
following years by lowering the cost per pair. However, you must ensure that prior to investing in
any upgrades that there is adequate time remaining in the simulation for ROI. "Expenditures for
best practices training have four highly positive benefits in all plants: (1) helping curb reject rates
associated with defective workmanship, (2) helping improve S/Q ratings for both branded and
private-label footwear, (3) curtailing materials waste and potentially lowering material costs at
the plant by as much as 20% annually over a period of years, and (4) increasing worker
productivity up to a maximum of 2.2% annually.

In Year 10, the company spent about $44 million on standard and superior materials, so making
use of best practices training to achieve (over time) materials cost savings of even 5-10%
annually (and maybe 15% to 20% annually over a period of years with an all-out long-term best
practices training effort) is one way to achieve a sustainable cost advantage over rival
companies." (Player's Guide, 2018).

After each round of the simulation toggle between annual base pay increase, incentive
compensation, best practices training, no. of models assembled. Workers' productivity is
sensitive to your rivals' compensation package. You will have to outdo them in this area (you
only have to be slightly over average) as well to keep your people happy, your rejection rate
lower and hence your cost per pair will go down.

Question: How can I increase my credit rating?

Answer: Pay off your loans faster!

Question: How can I lower the warehouse costs when playing the Business Strategy Game?

Answer: Warehouse cost is a fixed cost. I believe what you're looking at lowering is the cost of
having excess inventory on hand, and because some inventory is necessary in order to fill
orders quickly... correctly forecasting sales is the only way to right size the inventory on hand.

Question: Is there any negative impact (this year or in the following ones if a take a loan as high
as necessary to repurchase as much stock as possible? EPS and ROE will increase and the
following year I can sell stock to pay the loan and keep the earning due to stock price increase.

Answer: It’s an interesting gamble. If your speculation turns out to be correct then there are only
a few drawbacks (1) Your credit rating will likely be impacted (2) When you sell shares it will
dilute your stock value. It’s a bold move and I like it especially if it is done early when the stock
price is cheapest.

Question: Do you have tips for the last year that can boost your company?

Answer: Significant stock repurchase will help to push up your stock price. Spending on
employee ethics training, and green initiatives will improve your corporate image. In a dead heat
race - all other things equal having the best Corporate image will give you the will with socially
conscious investors.

how to increase the ROE in the BSG?

Early investments in training, machinery, trim cost, bolster revenue, stock buyback, maintain a
good image.

The image rating is particularly easy to influence by spending on ethics training, eco-friendly
packaging etc.

Best Strategy to Win BSG:

High Model, High S/Q.

I’ll get right to the point. Nearly all of the students that I have helped take advantage of this
strategy from the start do very well. The only time this strategy doesn‘t work is when there are a
lot of copycat teams that simply follow the leader. They don’t understand that they would be
better off trying to differentiate from the leading company instead of trying to compete directly
with them. Now the question is… “How do I actually do well in the High Model, High S/Q
business strategy?”

Invest in long-term initiatives.

Starting your game off strong with decisions like maxing our Best Practices Training and Total
Quality Management can help your team take a lead in later years. Yes, you will technically be
missing out on some EPS and profits during the beginning years, but you will be ecstatic when
you can drop them back down to zero and watch your EPS skyrocket in years 15, 16, or 17.
Another important long-term investment is opening space in Latin America and possibly
Europe-Africa. Latin America facility is essential to doing well. First, it reduces tariffs by $10 in
LA AND you get super cheap labor costs. Be sure to build at least 3,000 to gain economies of
scale!

Get celebrities AND be sure to advertise.

Celebrity and wholesale advertising is a combination that can help you gain massive strides in
points against your competition. You need to make sure you have enough supply though or you
will not realize the true potential of having the increased demand. Be careful while bidding on
celebrities to not spend too much. For example, don’t be spending $15,000 in year 12 or if your
company isn‘t making enough money to afford them.

Now you can start to advertise (although you don’t NEED celebs to start advertising). Put a
decent surplus in a certain area like Asia-Pacific and then start to increase advertising. Does
EPS rise? Now, you can make other decisions in that area and then move the shoes to another
area to do the same thing.

Don‘t be scared to raise prices.

I will keep this one short. While you have a surplus of shoes in an area, try increasing the price
and see what happens to EPS. Does it go up or down? The game pretty much tells you what
price is best based on your competitive assumptions.

No Private Label = Lost Profits.

Private Label is a great place to make extra money WHILE taking money from your competition
by outbidding them. Many companies that I help tutor can make an extra $1-$3 EPS per year
minimum by selling full market cap in each area. Make sure you have enough production
capacity or you will have to decide between selling more or less in wholesale/internet marketing.

Final Thoughts.
I have experimented with two forms in the same industry and found that the one that followed
this strategy outperformed the one that choose to do High Model | Low S/Q strategy. If you have
the opportunity to start your game off with these tips you will most likely do well if you can make
effective decisions on all the other pages. Do option B in equipment improvement options if you
are doing this strategy.

Tip #1 - Build in Latin America

Building in LA is probably THE most important long-term cost savings strategy you can employ
in your game. The sooner you build space and equipment in Latin America, the faster you start
saving $10 per shoe in tariff expenses, PLUS it's one of the cheapest places due to labor costs.
Remember to build at least 3,000 space because you will realize economies of scale, which
leads me into the next tip…

Tip #2 - More Production = Cheaper Shoes

Here is a simple mistake I see quite often in BSG. Many companies only build 1,000-2,000
space in Europe-Africa and Latin America or let their equipment depreciate in years 15/16, but
never build the equipment back. Producing only a few thousand shoes in each area will
skyrocket your cost per shoe. It is very important to make sure you are producing at least 3,000
shoes in a production facility or you should seriously consider using another facility that can
produce more OR find other efficient ways to decrease your demand while increasing profits.

Tip #3 - Don't Drop Retailer Support (yet...)

A personal mistake I made while in my simulation when I was obtaining my MBA. Although it
may seem that dropping retailer support to zero helps your EPS and net profits, it is actually
harmful to do until the final year (hint hint). This is because dropping retailer support will reduce
your demand year over year. You need to keep it above the industry averages to continue
growing your demand.

Tip #4 - My Greatest Tip

As you can see in the picture at the end of this document, there are four corners that you can
potentially go to for your business game strategy. Each one has its play style and will need to be
handled differently. My favorites are 3 and 4 due to being able to sell a lot of shoes and usually
making the most profit. I have helped hundreds of students succeed in these corners. The best
one would probably be number 4, but you need to be the industry leader to do well up there.
Your company will need extensive investments in Best Practices Training and TQM as well if
you want to do well in the top right corner.

Bonus: NEVER go to corner number 1. You will likely fail your game and I haven't seen anyone
do well there in BSG.
 Appendix #1:

you will learn that all the decisions are interconnected and BSG Online will pretty much show
you how to make the best decisions!

First, you will have to do a little legwork though. If you head over to the wholesale marketing
page, do you see the competitive assumptions at the bottom? If you can figure this out, you can
BEAT BSG.

To do proper competitive assumptions is difficult though. You have to understand and guess
what your competition will be doing this decision year which is much easier said than done.
Please be careful not to screw this up either.

If you happen to make competitive assumptions on the Business Strategy Game that are further
from what they ACTUALLY are, you will notice a huge drop in your projections to actual scores.
Many students are confused why they were projecting such high EPS, ROE, and Image Rating
to only find out their score sucked this year. This is why.

Once you know your competitive assumptions you can start to play with the numbers and the
game will pretty much tell you exactly what to do. For example, you will notice that if you change
wholesale prices in North America, your EPS will go up or down. If you did BSG hack #2
correctly, you will be well on your way to win BSG.

*Caution* This hack can be tricky! You have to make sure that some things are in place before
going all out on supercharging your EPS, ROE, Stock Price, Credit Score, and Image Rating.

For example, you will want to first make sure you have an ample amount of surplus in the
geographic location that you are working on. This will allow you to mess with wholesale price,
internet price, search engine advertising, brand advertising, delivery time, and other decision
entries to find the best combinations.

These three BSG tips can go a long way if you utilize them properly in your business simulation
game.

Appendix #2:

You can win BSG by making solid long-term decisions early to build a strong production strategy
that will allow you to produce some of the cheapest shoes against your competition. Now,
instead of lowering your prices to try and obtain that extra market share, I suggest maintaining
an above average wholesale price to improve your net profit margin.

Profit is king in BSG and if done properly, you can create a firm that will have some of the lowest
production costs while having the highest quality shoes on the market. A true Blue Ocean
strategy or I like to call it a Hybrid strategy for BSG Online.
How to increase EPS on BSG

Increasing your Earnings Per Share (EPS) on the simulation is probably one of the easier
scores to do as long as you are focused on net profit and buying back stocks. Below you can
see the equation used in the Business Strategy Game to calculate EPS. So, as long as you are
increasing your net profits while reducing outstanding shares, EPS will rise!

How to calc EPS in BSG:

Earnings Per Share = Net Income / Outstanding Shares.

How to increase ROE in BSG.

Understanding how to raise ROE in BSG is crucial to getting a good overall score. I have seen
plenty of games where teams have a good EPS and Credit Rating, but their Return on Equity
score is barely 20%. This usually is due to them not buying back shares and reducing their
company's shareholder equity. So, to improve your ROE, buyback shares and increase net
income.

How is ROE calculated in BSG.

Return on Equity = Net Income / Average of Total Shareholder's Equity at the beginning of the
year and the end of the year on the company's balance sheet.

How to increase Stock Price in BSG Game:

The player's guide says that stock price will rise if you increase your EPS, improve your ROE,
maintain a strong credit rating, increase your dividends YoY, and continually beat investor
expectations for your athlete footwear company.

How to increase Credit Rating in BSG:

Improving your credit score is one of the quickest ways to improve your overall Game to Date
score (GTD). This can usually be done by focusing your cash flow on reducing your debt to
asset ratio on your company's balance sheet.

Credit rating is calculated by three different metrics: Interest Coverage Ratio, Debt to Asset
Ratio, and Risk of Default Ratio.

Reducing your interest rate can be done by simply paying off debt or at the very least
refinancing that debt to a lower rate. D/A ratio can be reduced by increasing assets and
lowering debts. The risk of default ratio can be improved by reducing your total interest
expenses.
How to increase Image Rating in BSG:

Your company can increase image rating by improving your quality S/Q rating and using a
strong branded styling quality strategy. Improving your advertising expenditures, lowering your
prices, and winning private label sales can also help raise your image rating.

Although getting a high image rating is important to get a perfect score of 110 (plus bonus
points), I don't believe this should be the main focus. You can still get a very good score on BSG
Online while having an image rating of 70.

Now, this is not ideal, but I have seen time and time again when students get overly contentious
about their image rating score. If your firm is able to maintain strong EPS, ROE, stock price, and
credit rating, you should probably have a fairly good image rating. Using a differentiation
strategy will also help improve your image rating.

Appendix 3:

Strategic Deliberations for Teams:

Global Customization vs. Standardization: Understand local preferences and evaluate the
economies of scale from standardization.

Singular Global Strategy vs. Local Adaptations: Gauge if a universally applied strategy provides
more value than tailoring strategies to individual market idiosyncrasies.

Geographical Resource Allocation: Determine the optimal production, warehousing, and

distribution locations. Utilize geopolitical analytics to avoid potential business disruptions.

Embracing Corporate Social Responsibility (CSR):

CSR is not a mere accessory to your business; it's integral to brand perception and stakeholder
trust. While the simulation does impose a cost to CSR, a long-term vision will understand that
responsible and ethical operations yield sustainable benefits and bolster brand equity.

Adopting the Best-Cost Strategy:

Rather than vying on price alone, amalgamate quality with affordability. This blend allows you to
carve a market niche and builds brand loyalty.

Optimizing Image Rating: Strive for a balanced market presence. A diversified geographical
portfolio enhances the overall brand image. Be the pioneer in CSR, but always assess ROI.

Boosting Financial Metrics: Prioritize revenue growth but balance with operational efficiency.
Use stock repurchases judiciously. Avoid excessive dividends during aggressive growth phases.

Mastering Cost Leadership: Beyond mere cost-cutting, delve deep into your operations.
Efficient Advertising: Analyze the optimal advertising spend, ensuring brand reach without
wastage.

Production Optimization: Periodically review production combinations for cost-efficiency,

especially as material costs fluctuate.

Invest in Upgrades: Early technological and process upgrades yield long-term savings.

Financial Decisions: Use loans strategically, understanding their impact on credit ratings.

Blue Ocean Strategy:

Instead of fighting in a saturated market, create new spaces or "Blue Oceans" where
competition is irrelevant. Differentiate on product quality, unique features, or unparalleled
service.

Navigating Common Pitfalls:

Over reliance on Single Metrics: Avoid fixating on singular metrics like advertising spend.
Comprehensive analysis is pivotal.

Late Investments: Any investment, be it in CSR or production upgrades, needs ample time to
yield dividends.

Tunnel Vision: Adhering to a single strategy due to initial success can be detrimental. Flexibility
in approach is vital.

Harnessing Reports for Insights:

Footwear Industry Report: Understand market dynamics, competitor actions, and consumer
preferences.

Company Intelligence: Gauge the internal strengths and weaknesses, always benchmarked
against competition.

Appendix 4:

Most Commonly Asked Q&As For The Business Strategy Game:

Q: "Any tips on the last year or so of the game?"

A: "Some things to consider would be improved working conditions, TQM and Best Practices to
zero if you haven’t already (be sure to get your S/Q rating back to where you want it), you can
drop retailer support to zero if it greatly helps EPS. Try to get an A+ credit rating and focus on
EPS and ROE over image rating to improve stock price."
Q: "Would you be able to give us a brief idea what is the difference between branded shoes &
private label shoes?

A: "Branded shoes are your company's shoes while Private-Label are shoes that have another
company's "brand" but you are producing them with access capacity."

Q: "When I try to adjust my Search Engine Advertising and Brand Advertising the way you show
in your videos it only works for NA and EP (toggle up/down to find the Net Profit sweet spot),
but with LA and AP, there seems to be no sweet spot (basically I need to turn it down to 0 to
optimize net profit). Why is that?"

A: "There are times when zero advertising can be the most profitable. This is especially true in
internet marketing, where I find that zero ads is best until you build your image rating and have
at least 3+ celebs. Each area will have a different "sweet spot" for ads."

Q: "We cannot seem to get our EPS and ROE above the investor expectation. Also all of our
competitors including ourself are on the extreme right hand side of the graph (all with the
maximum of models), is it stupid to completely turnaround and reduce our models drastically?"

A: "Probably not a good idea, but if you are very early in the game, maybe. If you are struggling
on the right side of the chart, I would consider going to low S/Q and focusing on profit versus
image rating."

Q: "How are you able to scan through/ hover over the numbers and see the potential changes/
effects they would make without actually having to click?"

A: "Using arrow keys! You most likely have to click a number now and then use arrow keys if
you are playing the new version."

Q"...you know how Private-Label works? I mean, does it start by buying all the shoes offered by
the cheapest company (regardless of whether they exceed market limitations) and work its way
up to the most expensive... or is it solely guided by market limitations (for example, each
company has a 15% market share and that's it)."

A: "Private label always sells to the cheapest first as long as they are at or above the global
minimum SQ rating. You do not need more than the global minimum SQ rating though. The
market cap is to prevent one company from selling all private label just because they are the
cheapest. It is possible to sell more than the market cap and for very high prices if there aren't
enough shoes being sold to satisfy.

Q: "How do you boost image rating?? Or how is image rating calculated?"

A: "Image rating can be boosted by increasing S/Q, lowering prices, increasing CSR spending,
increasing advertising, and there are some other little things that can help boost Image Rating."
Q: "How do you increase your credit rating? For some reason my groups just keeps going down
each year..."

A: "Most likely, you have too much in loans. Keep in mind that it is not necessarily bad to have a
low credit rating early on if you are expanding (especially LA and AP). You will get max points as
long as you have it up to an A or A+ by your final year."

Q: "I got confused on Wholesale Marketing surplus/shortfall. Should I try to keep them positive
or negative? And why?"

A: "Surplus should be around +50 in each area. If it's too high then you will have a bunch of
leftover shoes most likely. If too low, you will not have enough shoes to sell and then you are
missing out on profit."

Q: "I'm also having issues with shortfall numbers in warehouse operations. Any suggestions?"

A: "You can either produce more shoes if you have the ability to do so, or you will have to
reduce demand by raising price, lower advertising, decrease models of shoes produced, etc."

Q: "We have so much debts made in the beginning that we don't know how to solve"

A: "Some ideas:

1) Increase sales to bring in more revenue & profits

2) Sell equipment
3) Sell shares, but I don't usually recommend because it hurts your EPS, but if you have a high
stock price, it might be good.
4) Clearance leftover inventory."

Appendix 5:
Tips on How to Win the Business Strategy Game (BSG)

The following are a few tips and tricks that will deliver you a win in your BSG game. By following
these tips, you can be sure to win your upcoming BSG online game.

Pick a Strategy:

For easy winning of your BSG game, you need a high quality/low model or a
mid-quality/high-model strategy. With this strategy, you will be sure to make profits, which is the
key to this online game. Contrary, if you pay attention to revenues or ending either cash or
market share, you are bound to lose. Therefore, pick your winning strategy – profits and stick to
it.
Corporate Citizenship:

Even though corporate citizenship is associated with wastage of money, you can still increase
your image rating if you pick some of the options therein. Go for the strategies that best optimize
your image ratings, and the best would be the Ethics Training. Put on “All Employees” as well as
the workforce Diversity program. These are the ideal options to increase your image rating.
Going further can lead to more spending and consequently putting pressure on your revenue
while decreasing your profits. This scenario will eventually lead to a loss.

Plant Capacity:

Thoughtfully, decide your plan for setting up a plant capacity. We recommend only building onto
the existing plants. This way, you will increase your learning curve while the shoes cost less. It
will be disastrous to sell your capacity as you will need it at some point. This scenario will be,
especially when you will want to upgrade the S/Q if you will need a high-quality strategy or
upgrade the Production Setup Reduction if you go with a low-quality strategy.

Branded Production:

When it comes to branded productions, you will have to toggle the materials, features and TQM
to get the right S/Q. With the best practices training of about $5000, you will get the best S/Q
rating for your lowest. We guarantee it will pay itself and more. When toggling the materials,
features and TQM, let the features remain at $50K. As for the TQM, the best will be between
$0.70 and $0.80. Just play with the numbers and be sure to get the combination that will deliver
you the highest profits.

When it comes to wages, try reducing their pay first so that you may increase the profits.
Contrary, you can increase the employees’ wages in percentages at a time. Toggle between 6%
and 8% or up to 14% to maximize profits across the regions.

It can be daunting to figure out the branded pairs you need in every region. However, you can
play with numbers to arrive at a particular quantity. If you get a high surplus of shoes, be sure to
lower the percentage of shoes the following year.

Branded Distribution:

When it comes to the distribution of branded shoes, make sure you have typed or labelled the
number of boxes you want to distribute to each region. More importantly, ensure that you are
shipping them from the right plant. This way, you will cut operating costs while building capacity
where and when necessary.

Bids for Celebrities:

When bidding on celebrities, don’t bid too high. Just put in a low to medium bid of between
$3000 and $6000. This range can be worth the price of a celebrity. Nonetheless, you can decide
what is best for you.

Private Label:

The private label market can be a good estimator of what each team is up to. It also offers the
opportunity to produce the most affordable shoe. This undertaking will, in turn, offer you a great
opportunity of being profitable. If you have remaining production capacity, put it in the provable
label market. You can allocate the amount to the markets you deem necessary. Evaluate the
margin over direct costs to determine whether the market will be profitable based on the amount
you are charging.

Once you allocate the shoes to a region, buckle the superior materials and stylish features to
make sure the price indicated for production cost
is the lowest. Also, ensure that you’re meeting the S/Q rating for the round. Besides, you can
price your shoes at least $5 below the average wholesale price in the industry for the region.
Above this price, you may not sell one shoe.

Some useful tips on Private Label

If there is no one else engaged in the private label market, price your shoes high. If the private
label market is competitive, price your shoes under everyone. Take the entire market share in
every region or your selected region by simply under-pricing everyone else.

Financial and Cash Flow:

Pay off your outstanding debt, issue stock, repurchase stock and give bonuses to shareholders.
This way, you increase your net income, therefore increasing the ROE, EPS and stock prices.
No matter how small it starts, always give a dividend and increase the rate as the game moves
on. This way is how you increase ROE in BSG, even with a small margin. Should the need to
buy capacity arise, always consider issuing stock as opposed to taking loans but it's alright to
take loans so long as it's paid off in the later rounds. If you have a low stock price, repurchasing
stock is a better option for increasing ROE and EPS.

Now, you know how to win the BSG online. Opting for the high-quality strategy allows you to
charge more per shoes to increase your profit margins, thus winning your game. Equally, you
can opt for the low price strategies, but you will have to sell tons of shoes to accrue enough
revenues to increase profitability. Whichever way you choose, the end (winning) will justify the
means!
 Appendix 6:

Choosing a Strategy:
We are managing factories, producing athletic shoes in 4 continents, in order to win, we can
follow the strategy of High Quality, Large Capacity, Low Price, High Models, Strong Advertising
and so on. The more popular winning strategies are High Quality and also High Capacity,
Medium Prices.

Focus on Net Profit, ROE (very important), Credit Rating, Image Rating is quite easy to control
and also Stock Prices. Do not focus too much on Ending Cash, but keep focusing on Net Profit,
try to increase that over each year.

So where to look at this thing, as soon as you start the BSG Online Game.

First, have a look at Market Snapshot, 2 strategies can to go Top of the Game is G and H.

G Company follows the High Quality strategy with low number of models.
H Company follows the Medium High Quality strategy with Large Number of models.
Also, see the Results from Report Page 1-2-3-4.

We can see that both strategies can go to Top (high S/Q), just a little difference (model count).
Depends on how G and H can optimize to get better than the other to go to Number 1. So, this
example illustrates that we can follow any strategy to win the Game.

The key is to apply and make right decisions to support our selected strategy.
We will look at Market Snapshot again, to see Decisions in detail.

G applies the strategy of 150 models in year 15, started from 50-100-150 over the years, with
S/Q increasing from 6-7-8 stars over the years. H also follows a large number of Models and
High Quality over the years to compete.
We can see that H increased the number of Models over the Years, from 200 - 350 - 350 - 350 -
350 - 500 (Year 15) with S/Q from 5-5-6-6-6-8 stars in Year 15.
Also, we see that G company start with lower number of models, and Higher S/Q.
G applies a lower number of models, 200-50-50-100-150 and 200 in Year 15.
Also, G follows higher S/Q with 5-5-6-7-7-8 stars in Year 15.
So, in conclusion, when we start BSG Online, from Year 11, we can think of what strategy to
follow. Two most popular options are High S/Q or Large number of models.

https://www.beatbsg.com/content/choosing-a-strategy

https://clicks.aweber.com/y/ct/?l=Wxsrrn&m=kVYB5hOh8YMWVdm&b=abtTh8TKTlM4vO_kbcu
c4g
https://drive.google.com/file/d/1u12YThXXN1l4E_liOZHhBVVZvXiUJDsH/view?usp=drivesdk

https://drive.google.com/file/d/1u0LgSzQ7H-PNlOs_KGxV-5z7Pb3pqL03/view?usp=drivesdk

There are many available guides and tips to help you do well with these resources down below:

https://bsgtips.com/code656411877/
Password: Semester2020

Appendix 7:

https://drive.google.com/file/d/1w-9dVawVuoAFBUN3-13q2jYfaeEgxXu5/view?usp=drivesdk

https://drive.google.com/file/d/1w7_-RGcEbPT1jkYZIvHzcD5nW9HdbzdH/view?usp=drivesdk

https://drive.google.com/file/d/1w8uQpjsY_48nyan265p1mfzkIQ2io-xh/view?usp=drivesdk

https://drive.google.com/file/d/1wAFhaTanh8gl6g9aa0Os3qB4qhW4XRql/view?usp=drivesdk

https://docs.google.com/spreadsheets/d/1wBbpbVrAzDztjzYKvtdjThKF8YPrexCV/edit?

https://drive.google.com/file/d/1wFLRdcZivbQucHKYsAz4YaSR7PyOGX-v/view?usp=drivesdk

https://drive.google.com/file/d/1wFdQGoXm5_ATgeWPVXkm4hVS0S20ETPR/view?usp=drives
dk

https://drive.google.com/file/d/1wNMvJvb8_Wx8RYBZ1sjQ3wgZoQLRmc_X/view?usp=drivesdk

https://drive.google.com/file/d/1wNaCe1pReLX3SGbpgXYq0VMWHVbxVSuQ/view?usp=drivesd
k

https://drive.google.com/file/d/1wO8f6N8KkvQVhyNp6XbaX_tAwRjuDX4A/view?usp=drivesdk
 Appendix 8:

https://youtu.be/4xzxcwtNzwM?si=Z_dfK2oGOKCyByY_

https://youtu.be/a9b-y0AFWc4?si=NcGJxErodtBVk9ZZ

https://youtu.be/Gts_aG3jtm0?si=uROxlMM123RqM09-

https://youtu.be/eP9_Aaitiug

https://youtu.be/a9b-y0AFWc4?si=ZOTqu-EGqor0BJ1-

https://youtu.be/ZV03AtfcURc?si=RAqG0YtvAP9hMmDa

https://youtu.be/Uej533cW6do

https://youtu.be/dKMYmg2TXaw?si=NhqbTasRqX0URW7U

https://youtu.be/dbYsdwirhcE

https://youtu.be/q-5p8MlN-l0?si=RQHEW6Di7pmz70jn

https://www.youtube.com/@bsg_master/videos