INDIVIDUAL PAGE-Wei Gu

1.  Answer either Part A or B of this question:

A.   Your company vision lists two or three reasons why sim customers should buy your product instead of buying your competitors’ products.  If you had your way, would you add a reason to this list, delete a reason from this list, or modify a reason on this list?  Explain your reasoning.

I’d like to add a reason: High rebate offer. Aspectrum is one of the leading companies who provide a high rebate. Comparing with our competitors, up until now, we provide 16%-62% higher rebate than industry average. We had the highest rebate on Europe-Africa market in Year 12. So customers should buy our products to take the advantage of high rebate we provided.

2.  Assume Dr. Young gave you $10million (in BSG money; without any change in debt or shares outstanding) to spend in the current year of your sim Company in any way you personally think best.  Answer either Part A or B of this question:

A.  In your personal opinion, what are the best decisions you can make in the sim using this extra $10million that would cause customers to buy your product instead of buying your competitors’ products?  Explain your reasoning.

I regard to increase the number of model from 350 (Year 14) to 500 (Year 15) the best decision to cause customers to buy our product. During the past years, number of model offered has always been one of our competitive weaknesses that obstructed the market share growth. Our level of models offered was lower than industry average by from 15.7% to 35.6% during past years. We had the least number of model offered in the Year 12, 13 and 14, and the second least in the Year 11. Model offered definitely is our biggest competitive weakness. So to pump up the number of model offered is something we need to do in the Year 15. Being aware that more models may result in higher production costs, the rest of $10million ($3.5million out of $10million will be used to increase the model from 350 to 500) will be invest in worker compensation, best practices training, annual base pay increase, etc. to reduce the overall production cost.

3. If you could change one or two decisions your team made in the sim in prior years, which DECISIONS in which YEARS would they be?  Explain why you think your company would be better if you made the change.

I’d like to change the decision that we increased our both internet and wholesale price in Year 12 which caused us a significant drop in market share. The Asia-Pacific internet market share decreased by 2.8%, 39% of the market share of Year 11. We mistakenly anticipated that our competitors would increase the price. The price became our big competitive weakness in Year 12. If we didn’t increase the price, we would not lose our market share or even win some market share because other aspects were same even better than our competitors.

4. What are the one or two best decisions your team made in the sim in prior years?  Explain your reasoning.

We had ever been struggling whether we maintain a high S/Q rating shoe or not. Finally we decided that we should comply with our vision to continue the fashionable-styling and high-quality strategy, which is one of the best decisions. Aspectrum has been investing a lot to maintain or increase the percentage of superior materials usage, expenditures for enhanced styling and features, and expenditures for TQM/Six Sigma programs. We are very proud and confident that we have a higher S/Q rating comparing to our competitors. Since Year 11 we’ve been one or two stars higher S/Q rating than the industry average either in internet or wholesale segment, which offset the disadvantages of higher price and less model offered.

5. List one or two suggestions for the success of College of Management students whose teams will begin simulation Year 11 in the second half of this semester.  Explain why your suggestions will contribute to a successful team experience in the sim.  Your suggestions should focus on the team dynamics of managing a sim company rather than on any particular decision on a sim screen.

To manage a sim company you should spend time on balancing between every factor that drives market share. Because market share is undoubtedly the vital aspect that makes your company win in this game. Moreover, you need to pay close attention to what your competitors are doing which means a lot to industry average performance. Don’t fall below the industry average performance.

Answers to the Questionaire

Listed below are my responses to the questionaire distributed by Dr. Young at the end of Year 13

1.B ) Vision Statement for Investors

The new vision statement declares the management’s intentions to repurchase our own stock at current levels.  If it were left to me I would personally like to change the way the same message is conveyed.  In its current description it more portrays an image that an investor should invest in ASpectrum stock since our stock repurchase would lead to an immediate increase in the stock price. This is a very good strategy to lure in short term traders who are looking for some quick money.

I feel there is a difference between an Investor and a Short Term trader and such a quick profit rationales would work best for a trader and not an Investor. I would want to disclose the same message in a subtle way such that it displays that management team is confident in the company and its operations and sees a profitable growing future ahead. In a way to show that the management team is putting their money where their mouth is. After a bit disappointing Year 13, I want to strengthen our investors believes in the company values and policies trust in us as an ethical management team.

2.A ) Use of $10 Million generously donated by Dr. Young to make sure customers prefer our products.

Right from the start our company has believed in use of eco-friendly materials and latest technology to produce our products. We understand this as our responsibility and intend to abide by it, however this has led to complications in deciding on the final pricing and quality of the products that we deliver. Over these recent years we have observed that the customers are more sensitive to the price of the products rather than the type of footware it is. We understand that each customer tries his best to give back to nature but is limited in his prowess and spending capabilities. I would personally like to spend the extra $10 Million to further reduce the costs of our products. That is effectively sell more expensive product at lower price. So that our customers have a chance to pamper themselves the best in industry green products without pushing their budgets to the limit. Am sure given a choice between two similarly priced products customers would definitely opt for more green products.

3) Below are the two decisions that I would want to change which were taken in the prior years by my team.

Decision 1: Not increasing the no. of models from 150 in Year 12.

Right from Year 11 ASpectrum as a team was trying to gain an image of a premium footware company. We wanted to specialize in what we sold and hence going in Year 11 we reduced the no. of models we offered from 200 (Year 10) to 150. This did have the desired effect in the year 11 and we saw an increase in our share across markets. However we failed to secure that market share going ahead in Year 12 by not increasing the no. of products models. Had we increased the products in steps from Year 12 itself, it would have helped us to hold on the decent market share and given our customers more option to show loyalty and continue their business with us.

Decision 2: 10 Year Loan amount in year 13.

After we were forced on having an overdraft loan in Year 12, the team felt there was a need to gain some spending power. After weighing in couple of options we decided to go for a 10 year loan. The loan was a perfect tool, it didn’t have a huge impact on our credit rating, since we still were decently placed in the industry and had the capacity to pay back the loan in time. However what we miscalculated is the amount of loan we needed to take. We calculated the amount to $10 million  weighing the impacted and worst case scenario of our decision, however we missed to include two major impact variable, competitors and market directions. Had we taken a bigger amount loan in Year 13, it would have given us more muscle power to withhold the low price products flooded by competitors in the market and still walk out of year 13 with only a few scars. However the failure had a bigger impact since it forced one more overdraft loan onto us. Even though we aren’t leading the industry in amounts of open debts but this set back has cost us a position in the industry ranking and lost the opportunity to quickly reach the top of the industry by year 14 or year 15.

4) Best Decision

 I believe even while other things have acted out of our strategic comfort the decision in the Year 11 to gain a high image rating and consistent attempts at maintain it with respect to others in the industry is one of the best decision we have taken as a team.  Right from the start we saw ourselves as a socially responsible company who delivered what they promised.  After 3 years in the industry and despite certain set back we are still placed in the top two in the industry in terms of average Image ratings. This is a huge achievement for us.  I agree these decisions didn’t directly lead to increase in revenue or net profit, but this was something we had decided right at the onset as an acceptable cost to achieving a clean image and recognition in the industry, hence the immense pride at consistently achieving what we had set out for.

5) Suggestions for students participating in this game in future.

  • Know the Rules of BSG: Take extra time if one needs but make sure one has read thru the guide and knows the 5 factors based on which the scoring is done in BSG and degree by which each action affects those factors.
  • Form a strategy and be patient: Don’t get stuck to the numbers forecasted while decision making. They can be both good and bad indicators of where you are headed depending upon where the competitors are moving. There have been times when the numbers at least indicated a correct direction but there have also been times where they were just ridiculously wrong. One needs to trust their strategy and accept the fact that it won’t always show immediate results.

–Kaushal Doshi

Individual Management Decisions:Marcus Rountree

 

1. Your company vision lists two or three reasons why sim customers should buy your product instead of buying your competitor’s products. If you had your way, would you add a reason to this list, delete a reason from this list, or modify a reason on this list? Explain your reasoning.

B. I would add that our workers are among the best trained in the industry and well compensated for their efforts. Consumers should purchase our products because they are designed with the best practices in the industry, by people who have bought into the vision at Aspectrum of delivering a premium shoe with a sustainable focus.

2. Assume  Dr. Young gave you $10 million( in BSG money; without any change in debt or shares outstanding) to spend in the current year of your sim Company in any way you personally think best.

B. In your personal opinion, what are the best decisions you can make in the sim using the extra $10million, other than giving it out as dividends, that would cause investors to prefer to buy shares in your company’s stock instead of buying your competitor’s shares? Explain your reasoning.

One of the best decisions I would personal make with the extra $10million would be to aggressively buy back shares of stock. We currently have a relatively low stock price, purchasing outstanding shares will increase our ROE and also increase the value of current stock holders ownership(less outstanding stock). In addition to repurchasing stock, I would also give more to charity and increase our use of green technologies to improve our image rating. Lastly, I would  increase the pay of our workers and best practices training. An increase in these two areas will decrease reject rates, increase productivity and overall plant efficiency, which will lead to greater profitability.

3. If you could change one or two decisions your team made in the sim in prior years, which DECISIONS in which YEARS would they be? Explain why you think your company would be better if you made the change.

I would change the decisions we made in year 12 involving price and strategy. I feel that during year 12 we lost our identity as a company. Our focus the prior year was to be  the most profitable company with the highest quality shoe possible, in year 12 we shifted our focus to gaining market share and going head-to-head with other firms. We did not “stay in our lane”, we changed our prices( much higher than the year before), and relied heavily on private label. This resulted in a negative outcome requiring a overdraft loan to cover our losses.

4. What are one or two best decisions your team made in the sim in prior years? Explain your reasoning

The best decision we made as a team was focusing on having the highest quality shoe in the market and sustainability. We began the sim as the leader in quality and image, that strategy proved to be very profitable in year 11.

5. List one or two suggestions for the success of College of Management students whose teams will begin simulation Year 11 in he second semester. Explain why suggestions will contribute to a successful team experience in the sim. Your suggestions should focus on the team dynamics of managing a sim company rather than on any particular decision on a sim screen.

My number one suggestion for future sim managers is to be true to yourself as a company. During your first team meeting, DECIDE WHO YOU ARE as a company and stick to it! Make adjustments along the way, but your company identity should not change every year.

Individual Page: Michael Donahoe

Recently members of the ASpectrum Management Team were given a questionnaire designed to provide insight into the management decision making process.  Here are the answers from Co-Manager Michael Donahoe.

1)    Your company vision lists reasons shy customers should buy your product instead of buying your compeitiors’ products.  If you had your way, would you add a reason to this list, delete a reason from this list, or modify a reason on this list?

I think it is important to be able to provide consumers with the lowest cost possible.  The Athletic Foot-ware Industry has proven to be very price competitive, and that is the most important factor that consumers look at when making their purchasing decisions.  We want to maintain our place as a premium brand within the industry but also be able to compete on price.  Going forward, our management team will be looking at operating options that can help us limit our production costs so we can continue to provide our shoes at an affordable price.

2)    In your personal opinion, what are the best decisions you can make in the sim using this extra $10 million that would cuase customers to buy your product instead of buying your competitors’ products?

Currently the $10 million provided by Dr. Young could be best used in marketing and other demand generating expenditures.  I believe that we currently offer a very competitive shoe (high SQ rating compared to the industry average, as well as reasonable production costs).  However, we tend to lag behind the industry when it comes to advertising and other administrative expenditures.  I feel that placing additional money into ads and retailer support could help generate much needed demand for our product.

3)     If you could change one or two decisions your team made in the prior years, which decisions in which years would they be?

There are two decisions I would change if given the chance.  First, I would have changed the upgrade option purchased in Year 11 from Option B to Option C.  Option C on the whole is a cheaper upgrade and a better fit with the quality-based strategy we intended to pursue.  While we did see some benefit from the lover overhead costs that Option B provided, that upgrade is more geared towards companies who are attempting to be a cost-leader and using a large number of available models to help generate demand.  Only now is our company beginning to increase the number of models available and as a result, Option B has not been as effective as it potentially could have been.

Second, I would have elected to change our strategy at the first sign of trouble in Year 2.  As soon as we saw that our demand was low and that we were not generating profits, we should have elected to drop out of at least 1 geographic market and redistributed those resources to generating demand in the other three regions.

4)     What are the one or two best decisions your team made in the prior years?

Purchasing a celebrity in Year 2 was an excellent decision.  Not only does this give us a boost to demand in all four geographic regions, but it also prevents one of our competitors from experiencing that same benefit.  Also, deciding to invest in image-enhancing corporate citizenship decisions I feel has also benefited our company.  While our image rating has been down due to our low profitability, I think it is important that we have stuck with being a good corporate citizen, which has been one of our goals from the beginning of the simulation.

5)    List one or two suggestions for the success of College of Management sutdents whose teams will begin simulation Year 11 in the second half of this semester.

There are two major elements I think that teams should keep in mind going forward.  First, is that it is very easy to let one or two members of the team dominate the decision making process.  While it is quick and easy to let one person input all of the year’s decisions, I would advise against it.  Letting everyone on the team have a chance to at least toy around with the numbers allows more people to understand the mechanics of the simulation and hopefully generates new and diverse ideas from all members of the group.  My second piece of advice is to sit back and enjoy the simulation.  While competition is an important factor in the simulation, you don’t have to let it run your decision making process.  If your team has a very specific vision for your company, build the company you want rather than the company you think the simulation will reward.  Business is not a zero-sum game, and you can find profitability in a number of different ways.  Even if you aren’t the best in industry, you are still free to define your own success (i.e. you always made the highest quality show, or you always paid your employees the best wages).

Review Year 13

If the results of Year 12 were shocking and tricky, Year 13 turned out to be highly disappointing. I must admit we as a team failed to sense our competitor’s moves.   We now face challenges from two fronts, companies how are strongly placed and those who are headed downward and might risk the balance of the entire industry.

This year has thrown the reality right on to our faces and helped us realize the exact situation in the market. Having more time to think about decisions for year 14, the management has come up with various ways in which the current financial situation can be handled. We are currently assessing the pros and cons of each of these and hope to resolve this small glitch and optimize the return for our investors. Footware industry today is evolving at a very rapid pace and only selected few who adapt quickly will be able to walk out victorious from the current “Change Wave”.

The consumers are only to benefit from the current changes as more and more quality products will be available to them at the most competitive prices. ASpectrum is all geared up to adapt to these changes and deliver what the consumer wants.

Here’s hoping for a prospective year 14.

Kaushal Doshi.

New Image of Alpha

For years, Aspectrum has been striving for providing premium athletic footware with affordable price to our customers, which leads us to an example of high image in footware industry. Every model is considered classic and chased by Alpha fans. Our company vision and our compliance with the vision make us full of confidence and pride.

To let more and more people know our brand “Alpha” we decided to infuse new concept into “Alpha”. Consequently, in Year 13 we won Tiger Green as the representative of Alpha.

What’s more exciting, in Year 14, we will provide more models to satisfy the divers demand of customers. We regard this strategy in-time and constructive, which will change Alpha to more energetic and diversified image and will bring us a big increase in demand as well as market share.

There will be more great news. Come to Aspectrum blog and stay with us, you will be surprised!

Brand Production-Year 13

As the market continues to evolve, we at Aspectrum will do the same. Our analysis identified the need to offer more models to our customers with the same excellent quality and style. We are confident that this new approach will increase revenue while maintaining brand loyalty.

 MR