All Shoes: Escuela Superior Politécnica Del Litoral

Escuela Superior Politécnica del Litoral
ALL SHOES
09/08/2018
Bazán, Richard – Mero, Geanella – Molina, Ricardo

ALL SHOES
ALL SHOES
Contenido
INTRODUCTION ....................................................................................................................................................4
OUR COMPANY .....................................................................................................................................................4
Vision ................................................................................................................................................................4
Mission .............................................................................................................. Error! Bookmark not defined.
COMPANY’S PERFORMANCE FOR ALL DECISION ROUNDS ..................................................................................5
FINANCIAL AND STRATEGIC PERFORMANCE ........................................................................................................6
Trends in the company’s annual Total Revenues .............................................................................................6
Trends in the company’s annual Earnings Per Share .......................................................................................7
Trends in the company’s annual Return on Equity Investment .......................................................................7
Trends in the company’s annual Credit Rating.................................................................................................8
Trends in the company’s year-end Stock Price ................................................................................................9
Trends in the company’s annual Image Rating ................................................................................................9
Trends in the company’s Global Market Share ..............................................................................................10
THE COMPANY’S PRESENT STRATEGY ................................................................................................................11
OUR COMPETITIVE ADVANTAGE ........................................................................................................................11
KEY FACTORS ......................................................................................................................................................11
DESCRIPTION ......................................................................................................................................................12
Corporate Citizenship Strategy .......................................................................................................................12
Production Strategy ........................................................................................................................................12
Marketing Strategy .........................................................................................................................................13
Internet Strategy ............................................................................................................................................13
Private Label Strategy .....................................................................................................................................13
CLOSEST COMPETITORS .....................................................................................................................................14
Internet Market ..............................................................................................................................................14
Escuela Superior Politécnica del Litoral – Autor: Bazán, Richard – Mero, Geanella
– Molina, Ricardo 2
ALL SHOES
Wholesale Market ..........................................................................................................................................16
Private Label ...................................................................................................................................................18
THE OPPORTUNITY TO CONDUCT A MERGER ....................................................................................................20
PERFORMANCE TARGETS FOR THE NEXT TWO YEAR .........................................................................................21
MOVES TO WIN OUT COMPETITORS ..................................................................................................................21
LESSON LEARNED................................................................................................................................................22
ALL SHOES
INTRODUCTION
The Business Strategy Game, it is a practical virtual game in which as students we learn
to make competitive strategic decisions, in the business world.
We were co-managers of an athletic footwear company, which competes in the global

market with other companies made up of other members of the class. This report
presents in detail the strategies taken and the evolution of the company throughout
the period of the game.
OUR COMPANY
Vision
Be leaders in the production of shoes with the best quality in the market having a
high recognition and presence worldwide, using the most technologically developed
production tools always innovating in order to provide our customers with products
that cover all their needs at the best price, so that they shine, feel and walk always
with AllShoes.
ALL SHOES
COMPANY’S PERFORMANCE FOR ALL DECISION ROUNDS
SCOREBOARD
5
5 4 4 4 4
4 3 3 3 3
3 2
2
1
0
11 12 13 14 15 16 17 18 19 20
Years
This graph show the position of our company during the piriod of the game, in the firs
year our company reached the second place in the scoreboard, for a bad decision we
fell to the fourt place, with a strong competence in the industry, was difficult for our
company to stay in the top positions and to the fourth year we fell to the fifth place in
the scoreboard.
However we had a recovery the following years, remaining in third position in the
scoreboard of the game.
ALL SHOES
FINANCIAL AND STRATEGIC PERFORMANCE

Trends in the company’s annual Total Revenues
TOTAL REVENUES
571.797 591.415
600
448.963 447.937
Millons of Dolars
377.671 376.801
400 312.748
281.314 275.886
242.43
200
0
11 12 13 14 15 16 17 18 19 20
Years
This graph shows the evolution of revenues during the game, we can see a constant
growth, except some years as, the second year in which for a bad decision we lost
revenues, for the fourth year we decrease our revenues because we utilized our
resources for built a new plant in Latin America, and the for the sixth year we lost
revenues because the demand of the game decrease.
ALL SHOES
Trends in the company’s annual Earnings Per Share
Earnings Per Share
6 4.53 4.26
3.68 3.74
2.96 2.98
In Dolars
4 1.81
1.49 1.51 1.54
2
0
11 12 13 14 15 16 17 18 19 20
Years
As we can see in the graphic, the earning per share of our company has a decease
tendency, our best earning per share during the game was the first year $4.53. In the
fourth year we fell at $2.96 but to the next year we increase at $4.26. From the sixth
year we fell and we kept a decrease tendency.
Trends in the company’s annual Return on Equity Investment
Return on Equity Investment
26
30
17.1 14.8
20 13.2
10.3
%
8.3
10 3.9 4.6 4 3.8
0
11 12 13 14 15 16 17 18 19 20
Years
As we can see in the graphic, the return on equity investment of the company has a
decrease tendency, our best percentage during the game was the first year with a 26%
of return, then for the company was difficult hold an increase tendency.
ALL SHOES
Trends in the company’s annual Credit Rating
A+ A A- B+ B B- C+ C C-
Rank
9 8 7 6 5 4 3 2 1
Credit Rating
9 9 9
10 8 8 8 8 8 8
7
8
6
4
2
0
11 12 13 14 15 16 17 18 19 20
Years
The credit rating of our company always kept in a level A, as we see in the chart with
an increase tendency. In the fourth year, we fell to A- rating because we made a loan
for built a new plant in Latino America, but we recuperate and increase, to end with
an A+ rating.
The credit rating of All Shoes always stayed above the expectations of the investors.
ALL SHOES
Trends in the company’s year-end Stock Price
Stock Price
100 81.57
Dollars per Share
47.61 53.36
46.59
50 30.1 32.24
17.43 18.68 16.09 17.1
0
11 12 13 14 15 16 17 18 19 20
Years
As we see on the chart, our stock price was decease with the years with respect to the
industry.
Trends in the company’s annual Image Rating
Image Rating
100 81 82 83 86 85
74 79
65 71
63
50
0
11 12 13 14 15 16 17 18 19 20
Years
The graphic show that our image rating has a positive tendency, the image of the
company always stay above the investment expectation.
ALL SHOES
Trends in the company’s Global Market Share
Global Market Share
20 16.9 16.2 16.9 16.8

15.2 14.3 15.5
13.6
15 11.4
9.9
10
%
5
0
11 12 13 14 15 16 17 18 19 20
Years
As we can see in the graphic, our market share was a positive tendency from the fourth
year. This was due to changes in the determining factors such as, the increase in
capacity, greater investment in advertising, greater investment in quality and
characteristics of our products, better management of distribution, among others.
ALL SHOES
THE COMPANY’S PRESENT STRATEGY

AllShoes is characterized by a strategy of differentiation, we offer high quality
shoemaking compared to the average quality of the market, at an affordable price for
our customers. Our strategy was to increase our quality and characteristics of our shoe
according to the evolution of the years. Due to this increase in quality, our demand
tends to increase so it was necessary to increase our capacity.
Our company participated in the 12 available markets divided into wholesale, internet
sales and private label.
OUR COMPETITIVE ADVANTAGE

We, unlike the rest of the companies, develop our products with the highest quality in
the whole industry, having this comparative advantage year after year, where we
always seek to apply the most recent technological tools, to keep ourselves in constant
innovation and offer the best quality to our customers.
In addition, we also worry about offering a price understanding the needs of our target,
being always at a level close to the average of the market.
KEY FACTORS
During the game period, we handle different factors for our strategies among the most
important ones we have:
Plant Capacity: Undoubtedly, the production capacity was one of the determining
factors within the industry, because this allowed us to generate more production to
gain more market share and reduce costs. Therefore, we can reach our customers with
a high quality product at a comfortable price and on average in the market.
S/Q Rating: Due to our differentiation strategy, another of the determining factors was
the S / Q rating. The quality and characteristics of our shoes played an important role
to win and increase our market share. Every year we try to maintain and improve the
quality of the product that we offer to our demand.
ALL SHOES
Advertising Budget: Our advertising budget was decisive in recent years, because it
represented an increase in our demand, investing in advertising we could reach many
more clients in the last years. Therefore, we tried to make our investment at or above
the market average.
Retail Outlets: The number of retails was decisive each year in the forecast of demand.
in the first years we lost retails, but as we understood the strategy we won retails in
the different markets.
Distribution: It is the last factor but not least, it allowed us to reduce our costs, in order
to reach our customers with a more accessible price according to market conditions.
With three plants our company tried to make an efficient and effective distribution to
complete local demands and meet external demand.
DESCRIPTION
Corporate Citizenship Strategy
For the first years we tried that our corporate citizenship strategy was the best in the
industry, for the first years we tried to maintain it with high expectations, using
recycled boxing and packaging, energy efficiency initiatives of $ 100 per distribution
center and million pairs of plant capacity, we managed a charity contribution of 1% of
operating profit, and we used the training programs and ethics code for all our
employees. But this changed, because the maintenance cost was really high for each
pair of shoes, and we limited ourselves only to the training and enforcement program
of a code of ethics for managers.
Production Strategy
Our production strategy was limited to our three plants, in North America, Latin
America and Asia, of which only two had Assembly Line Upgrade to Reduce Reject Rate
by 50%, North America and Asia. With a total production of 9700 pairs we were the
third company with the highest production capacity. The production of the three
plants was used in more than 100% of the capacity, which covered the demands of all
the markets in which we participated.
ALL SHOES
Marketing Strategy
Our marketing strategy as a company at the beginning was to keep the minimum
cost, so our investment in advertising budget was low and we tried to focus on retail
support, but with the time we changed this approach and as a company we tried to
maintain and overcome the average advertising budget of the industry and lower
costs by reducing the investment in the retails support keeping it at the market
average.
Internet Strategy
In this strategy we try to keep the rules, providing our internet customers with a price
higher than the average price we maintained in wholesale. the first years we gave them
a free shipping incentive, with a waiting time that varied between 2 and 3 weeks. Then
we changed our strategy a bit by removing the incentive of free shipping, because our
close competitors did not use this incentive and in our company it was not working.
However, we maintained the delivery time of the order within the average of the
market between 2 and 3 weeks.
For the first years it was difficult to get a celebrity, because the price offered by our
competition was really high for each contract. For the fourth year we got a contract
with Ace Federar, for 1 year at a cost of $ 750.000. For the following years we decided
to increase our offers by contract, until in the seventh year we managed to win a
contract with José Montaña, for 3 years at a cost of $ 10,000.000. In the eighth year
we obtained the collaboration of Mishell Wii and Tiger Green with contracts of $
25,001,000 each one.
Private Label Strategy

Our strategy in private label was to maintain the quality required by the industry, which
varied from 4 to 5 stars, with a price a little higher than the market average. Trying to
cover with our capacity around 50% of the market the first years. In the last years, this
situation has become more complicated due to the fact that we no longer have
capacity, and we only managed to cover between 25% and 30% of the expected
demand.
ALL SHOES
CLOSEST COMPETITORS
Internet Market
Internet N.A
90
80
E A
C
70 G F B
60
50
Price
D
40
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
Internet A.P
90
80
E A
C
70 F B
G
60
50
Price
D
40
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
ALL SHOES
Internet E.A
90
80
E A
C
70 F B
G
60
50
Price
D
40
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
Internet A.P
90
80
E A
C
70 F
G B
60
50
Price
D
40
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
AS we can see in the charts, our closer competitors in internet market were Bai-Yue
and EDA Company.
ALL SHOES
Wholesale Market
Wolesale N.A
80
70
B
A
60
G C E
50 F
Price
40
D
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
Wolesale E.A
70
60 A
B
E
G F
50
C
40
Price
D
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
ALL SHOES
Wolesale A.P
70
60 B
A
50 G
F C E
40
Price
D
30
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
Wolesale E.A
70
60 A
B
C E
50 G
F
40
Price
30 D
20
10
0
0 2 4 6 8 10 12
S/Q Raiting
We can conclude that our close competence in wholesale market were EDA Company
and Bai-Yue with respect to the price and the S/Q Rating.
ALL SHOES
Private Label
Private Label N.A
60
50
B
40
Price
30
A
C
E
F
20
10
0
4.8 5 5.2 5.4 5.6 5.8 6 6.2
S/Q Raiting
Private Label E.A
60
50
B
40
Price
30
D
CF
A
20
10
0
4.8 5 5.2 5.4 5.6 5.8 6 6.2
S/Q Raiting
ALL SHOES
Private Label L.A
60
50
B
40
Price
30 A
C
E
F
20
10
0
4.8 5 5.2 5.4 5.6 5.8 6 6.2
S/Q Raiting
Private Label A.P
60
50
B
40
Price
30
A
C
D
20 F
10
0
4.8 5 5.2 5.4 5.6 5.8 6 6.2
S/Q Raiting
As we can see not all the companies participate in private label, and we can conclude
that our close competence were CKESPOL Inc. and EDA Company.
ALL SHOES
Resources Similarity
RESOURCES ALLSHOES BAI-YUE EDA Company
PLANT CAPACITY 9700 8200 12300
MODELS OFFERED IN INTERNET 350 350 500
FREE SHIPPING NO NO NO
MODELS OFFERED IN WHOLESALE 350 400 500
ADVERTISING 10000 15000 17500
REBATE OFFER 1 1 2
TOTAL ASSETS 503,518 473,733 669,796
As we can see we have similar resources with our close competition, EDA Company
and Bai-Yue, with which we share the differentiation strategy.
THE OPPORTUNITY TO CONDUCT A MERGER

If we have the incredible opportunity to merge with another company it would be C
KSPOL Inc., because both have similar resources and its one of the best companies in
the industry. The strategy they developed its quite interesting, we can share our ideas
an elaborate an intelligent strategy that may put us in the first place of the industry
and also gain competitive advantage that our competitors couldn’t
One of the principal advantages of the merger is that we can gain more market share
and our costs of factors like advertising, celebrities, quality will decrease.
Also our company will increase its size and will have more capacity of production for
satisfying the demand of the different regions and segments our industry will
participate.
ALL SHOES
PERFORMANCE TARGETS FOR THE NEXT TWO YEAR

PERFORMANCE YEAR 21 YEAR 22
TARGET
Earnings per share $3.00 $5.00
Return on average 6% 10%

Equity
Stock Price 18.00 20.00
Credit Rating A+ A+
Image Rating 83 85
The next two years we will use an aggressive advertising campaign for obtaining more
earnings per share, we will invest more in social responsible with the environment for
a better image rating and we will designate more shoes available in the private label
segments at a competitive prices for increasing the return on average and the others.
MOVES TO WIN OUT COMPETITORS

The strategy we will improve could be “Differentiation” the same we are developing
now because it really works offering products of high quality at competitive price to
the demand. We will focus in increasing our capacity in different regions for saving us
from the costs of transportations of one region to another, also we can satisfy the
demand in segments like the private label.
We would offer more models of shoes and work more with the retailers in order to win
more market share.
Other important factor that we would work on it it’s the image of our company, the
company needs to be social responsible with the environment.
ALL SHOES
In the game we notice that the contract with celebrities help a lot, so we will select
specific celebrities and negotiate with them for making customers feel comfortable
and loyal to the brand.
If we increase our sells we will consider the idea of offering the service of free shipping
in the segment of internet sales.
LESSON LEARNED
Being part of this simulator and working as co – managers have been a great
experience that contributes our knowledge, the formation as professionals and also as
humans because it’s like managing a real company with the same preoccupations, the
adrenaline of competing, the preoccupation of having sells, the fun of gaining market
share and the jealousy of being in second or third place.
We learned the factors that we need to consider in the moment we are elaborating a
strategy, not only the factor of the company, we need to investigate and taste the
factors of the environment.
The competition it’s hard, in this game, in real life so we must be prepare for achieving
goals and also for failure, identify our mistakes and find a solution, opportunities and
be risky.
Thanks to the BSG we are able to identify the strategies that the competitors are
developing and selecting a strategy that can be perfect for our company in order to
achieve above average returns.

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Escuela Superior Politécnica del Litoral

Bazán, Richard – Mero, Geanella – Molina, Ricardo

We were co-managers of an athletic footwear company, which competes in the global

COMPANY’S PERFORMANCE FOR ALL DECISION ROUNDS

FINANCIAL AND STRATEGIC PERFORMANCE

Trends in the company’s annual Return on Equity Investment

Return on Equity Investment

Trends in the company’s annual Image Rating

Global Market Share

20 16.9 16.2 16.9 16.8

THE COMPANY’S PRESENT STRATEGY

OUR COMPETITIVE ADVANTAGE

Private Label Strategy

Private Label N.A

Private Label E.A

Private Label L.A

Private Label A.P

RESOURCES ALLSHOES BAI-YUE EDA Company

PLANT CAPACITY 9700 8200 12300

MODELS OFFERED IN INTERNET 350 350 500

MODELS OFFERED IN WHOLESALE 350 400 500

ADVERTISING 10000 15000 17500

TOTAL ASSETS 503,518 473,733 669,796

THE OPPORTUNITY TO CONDUCT A MERGER

PERFORMANCE TARGETS FOR THE NEXT TWO YEAR

Return on average 6% 10%

MOVES TO WIN OUT COMPETITORS

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