Strategic management in a global context. Analysis of the practicability of the various decisions and their impact on the final outcomes

Term Paper , 2020 , 27 Pages

Business economics - Company formation, Business Plans

This report is mainly concerned with the identification of the reasons standing behind the decision entries of the business strategy game. Critical focus is placed on how the combination of the various decisions put into practice impacted the final outcomes of the game. Data was provided for the period between year 11 and year 16.

Within the first four chapters of the report, the mission, vision, corporate objectives, situational and internal analysis were performed. By utilizing the Handy model of organizational culture and Belbin’s team roles this paper investigated the way decisions were taken within the course of the game. The role and implementation of the marketing strategy of the organization were examined in chapter 5 of the study, while the next two chapters referred to the performance analysis and corporate social responsibility of the company.

Table of contents

Executive summary

Table of contents

List of tables

1. Mission, vision and values
1.1 Mission
1.2. Vision
1.3. Values

2. Corporate objectives

3. Year-by-year evaluation
3.1. Year 11
3.2. Year 12
3.3. Year 13
3.4. Year 14
3.5. Year 15
3.6. Year 16

4. Business environment analysis
4.1. Macro-environment
4.2. Meso-environment
4.3. Micro-environment

5. SWOT/Telescopic Observations

6. Functional strategies
6.1 Marketing
6.2 Operations
6.3 Supply chain and logistics
6.4 Corporate social responsibility
6.5 Finance

7. Overall performance review against investor expectations

8 Recommendations for future strategy

References

Executive summary

This report is mainly concerned with the identification of the reasons standing behind the decision entries of the business strategy game. Critical focus is placed on how the combination of the various decisions put into practice impacted the final outcomes of the game. Data was provided for the period between year 11 and year 16. Within the first four chapters of the report, the mission, vision, corporate objectives, situational and internal analysis were performed. By utilizing the Handy model of organizational culture and Belbin’s team roles this paper investigated the way decisions were taken within the course of the game. The role and implementation of the marketing strategy of the organization were examined in chapter 5 of the study, while the next two chapters referred to the performance analysis and corporate social responsibility of ABC.

Findings from the final chapter eight point to the high degree of inconsistency between the team members decisions, that ultimately led to the result of the business strategy game.

List of figures

Figure 1. Porter’s Five Forces, Diamond Foot Company

Figure 2. Timeline DIAMOND FOOT

Figure 3. DIAMOND FOOT YEAR 11

Figure 4. DIAMOND FOOT Scoreboard year 12

Figure 5. DIAMOND FOOT EPS, ROE, STOCK PRICE YEAR 13

Figure 6. Tuckman model of team development

Figure 7. DIAMOND FOOT Scoreboard year 16

Figure 8. DIAMOND FOOT Scoreboard year 16

Figure 8. Roles

Figure 9. Porter Value Chain

Figure 10. Schein’s model of organizational culture

Figure 11. SWOT Analysis of Diamond Foot company in year 13 and 14

Figure 12. EPS performance review against investor expectations

Figure 13. ROE performance review against investor expectations

Figure 14. Stock price performance review against investor expectations

List of tables

Table 1. PESTEL analysis ABC

1. Mission, vision and values

1.1 Mission

“At ABC, we strive for excellence whilst dealing with our stakeholders in an honest, credulous and polite manner”.

1.2. Vision

“To provide shoes whose quality exceeds our customers’ expectations”.

1.3. Values

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2. Corporate objectives

Porter’s Five Forces

The market based strategic model of Porter will be used to study the industry through the appraisal of five forces.

The pricing strategy of ABC was formed by the utilization of this model. Started in year 11, the company chose to utilize differentiation strategy, characterized by adding value to the products (Porter, 1980). It is with that kind of strategy that the company intends to provide value to customers by unique attributes and characteristics (Porter, 1980). Nonetheless, in year 14, 15 and 16 the company altered that pricing strategy as its leaders considered it would supply them with price advantage against rivals.

Nevertheless, with the help of the differentiation strategy, the company earned a Global Top 100 ranking on the 5th best Overall Score of 109.0 in year 14 (Mc Graw-Hill Education Inc, 2020). Therefore, the formation of a product different from the one of their competitors in terms of quality, at the same time sold at elevated prices appeared to be efficient, as it brought brand image that was appreciated by consumers (Porter, 1980).

Besides, the threat of new entrants in the industry was regarded as a medium as a result of the high capital requirements demanded for joining it (Porter, 1980). Moreover, the substitute products threat is low, as the company is aiming to manufacture shoes with an S/Q rating above 8.0 stars. The Porter’s Five Forces in regard to ABC is presented in figure 1.

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Figure 1. Porter’s Five Forces, ABC Company. Source: (Mc Graw-Hill Education Inc, 2020; Porter, 1980)

SMART objectives

Achieve by year 14 an EPS level of not less than $ 12.00.

Achieve by year 14 an increased share of the market of not less than 13% in the wholesale segment of North America.

Achieve by year 15 improvement of the working conditions by implementing facilities such as cafeteria and on-site child care.

3. Year-by-year evaluation

The most important KPIs of all the rounds are presented in the timeline of ABC below. The pilot rounds were particularly important, as they actually formed our team approach to the game and the latter is evident by the highest level of utilization of the company’s assets in order to create profits. Simply put for the year 11, 12 and 13 the return on equity coefficient starts from 34.1% and terminates at 42.9%, a ratio considered significant by investors.

For copyright reasons, this figure is not part of the publication.

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Figure 2. Timeline ABC. Source: (Mc Graw-Hill Education Inc, 2020)

3.1. Year 11

As stated in the lines above, year 11 was the first was regarded by most of the players as a test one, however, in it, the team decided to adopt the differentiation strategy and to offer high-quality shoes at high prices, as well as to reach an S/Q rating of 8.0 for the branded production, offered at the region of North America. Apart from the original tensions in the team ABC came in first place with an average score of 107 (Mc Graw-Hill Education Inc, 2020). Moreover, despite the disagreements, the role culture in the company comprised in members of the team that were aware of what they do best and each of the members contributed to the problem-solving in the most innovative way (Handy, 2007). In summary, the strategic objectives of the company were helped by the decisions we took.

For copyright reasons, this figure is not part of the publication.

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Figure 3. ABC YEAR 11. Scoreboard. Source: (Mc Graw-Hill Education Inc, 2020)

3.2. Year 12

In the next decision entry round, the team of ABC maintained the chosen strategy of differentiation; namely, the S/Q ratings in all the world regions were above the investors’ expectations (Mc Graw-Hill Inc, 2020). In my team role of a CCO Operational officer, I aimed to persuade my team members that the chosen strategy will ensure our company the synchronicity of various products, or in our specific case figure of models manufactured, possessing various characteristics and qualities. Again in the year 12, ABC was at 1st place, with a change in the weighted average score from year 11 of +1 (Mc Graw Hill Inc, 2020).

For copyright reasons, this figure is not part of the publication.

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Figure 4 . ABC Scoreboard year 12. Source: (Mc Graw-Hill Education Inc, 2020)

3.3. Year 13

In year 13, ABC team decided to invest in additional facility space in Europe-Africa and Latin-America region, as well as in the purchase of additional new equipment in both of the regions (Mc Graw-Hill Inc, 2020). As a result, the production equipment available in year 13 in these regions augmented to 2,000 pairs each. Moreover, the S/Q rating of the pairs produced in the North American region boosted to 8.7 for the branded production and 6.2 for the p-label (Mc Graw-Hill Inc, 2020). It was the decisions taken in this round that made the company score 12.51 EPS against investor expectations of 3.50, the return of equity of 42.9% and stock price of $ 363.01 per share, as opposed to the investor prospects of $ 65 (Mc Graw-Hill Inc, 2020).

Figure 5 . ABC EPS, ROE, STOCK PRICE YEAR 13. Source: (Mc Graw-Hill Education Inc, 2019)

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For copyright reasons, this figure is not part of the publication.

3.4. Year 14

In year 14, ABC initiated its inventory clearance with 387 000 pairs in North America region, 469 000 pairs in Europe-Africa, 280 000 pairs in Asia-Pacific and 478 000 in Latin America. Moreover, the company enlarged its investment in CSRC initiatives, placing a huge value on ethics training and enforcement (Mc Graw-Hill Education Inc, 2020). Also, ABC began gross investment in facility space in Europe-Africa and Latin America region (Mc Graw-Hill Education Inc, 2020). It was the abovementioned decisions that were not taken in accordance with the opinion of the whole team. Nevertheless, due to previous years successful strategy implementation the internet revenues of the company increased at $ 291,606, the credit rating remained at A+, while KPIs such as EPS, ROE and stock price diminished.

3.5. Year 15

At the initial stages of the game, the image rating of ABC was 70, and for two consecutive years, namely year 13 and year 14, it had reached levels of 100. However, the shortage of marketing expenses in the internet segment and in the workforce compensation led to image rating of 95 and internet revenues of $ 188,432. Also, the bank loans taken by the company made the credit rating fall from A+ to A- (Mc Graw-Hill Education, 2020). It was not the whole team that was to be accountable for this deviation in the strategy and for the lack of consistency in it. Besides, that type of decisions was in complete contrast with the SMART objectives of the company.

3.6. Year 16

During the last year of the game, ABC registered a decrease of -11 scores as compared to year 15. The latter was a result of the decisions taken by my teammates in the previous decision entry round; namely, diminishing base salaries, cutting fringe benefits, initiation of private label venture and withdrawing three different types of loans (Mc Graw-Hill Education Inc. 2020). Talking about that type of decisions I will also refer to the Tuckman model; namely, the latter accentuates on the fact that every team moves along specifically defined stages of development – forming, storming, norming and performing. As is evident from the abovementioned the team of ABC has not yet passed through the face of storming, characterized by power struggles and conflicts (Tuckman, 1965).

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Figure 6. Tuckman model of team development. Source: (Tuckman, 1965)

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Figure 7.ABC Scoreboard year 16. Source: (Mc Graw-Hill Education Inc, 2020)

For copyright reasons, this figure is not part of the publication.

Handy (2007) model of organizational culture

In regard to better evaluating the decision-making process, I will initially refer to the Charles Handy (2007) theory and ultimately to Belbin’s (1969) nine team roles. As stated by Handy (2007) organizations might choose to abide by four types of culture; namely power, task culture, person culture and role culture. Within the specific case of ABC, the company followed the role and task culture.

Simply put, the task culture comprises in the team formation in order to attain specific targets, or to cope with crisis circumstances (Handy, 2007). ABC team comprises of four people, each of whom tried to add to the problem-solving process in the most inventive way. Moreover, the role culture in the company was exhibited in the fact that every one of its four members knew their strengths and weaknesses and was responsible for a certain part of the decisions. As asserted by Handy (2007) it is the power that brings responsibility with it in ABC.

ABC team in terms of Belbin’s nine team roles

As claimed by Belbin (1969) it is the most effective teams that comprise in a differing mix of behaviors.

Figure 8. Belbin’s Nine Team Roles. Source: (Belbin, 2019)

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In fact, the team members of ABC were a mixture of Belbin’s team roles. The resource investigator and team worker in the face of myself Veselka focused on performing research so as to investigate the various decision-making outcomes. Nonetheless, at times I was over-optimistic. Yet, I tried to listen and be diplomatic in my relations with the rest of the team members. However, it was my mistake done in order to avoid the confrontation that I let my team members decrease the quality of the products and diminish advertising expenses at the final round of the game, that actually cost us the leader position.

The co-ordinators, represented by Victoria and Editte centered on the objectives of the company and aimed to delegate part of the work to the rest of the team members. In fact, they were supposed to present clear team goals. On the contrary, they were seeking to over-delegate, leaving themselves insignificant work to do. In essence, that was the rationale standing behind the diminished salaries and fringe benefits in year 16, as well as for the start of producing private label. Despite their co-ordinators role, they actually haven’t consulted me and Monica about this abrupt strategy change.

The monitor evaluator, presented by Monica always supplied us with unbiased judgement regarding the options of the team. What is more, she always acted in a thoughtful, premeditated and astute way in discerning all the possibilities (Belbin, 2019). A proof of the above-mentioned is the 1st place of the company in year 12.

I would like to highlight that our team leader Editte was a Sharper; however, she failed in supplying the needed stimulus so as to ensure that the team is moving in the correct direction and its members are dedicated to the company’s objectives. Besides, it was difficult for her to flourish on pressure and she does not have the courage to cope with business challenges. This is obvious in the performance highlights from year 15 onward and in the decision for the quality decrease.

Finally, our achievement in the business strategy game was a result of our inability to work as a team and to think beyond our differences. Still, me Veselka and Monica acted in the capacity of completer finishers, surveying the teamwork and ultimately being accused of taking our perfectionism to extremes (Belbin, 2019).

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• Author: Kostadin Ruychev (Author)
• Publication Year: 2020
• Pages: 27
• Catalog Number: V958026
• ISBN (PDF): 9783346568328
• Language: English
• Tags: strategic, analysis