Business Strategy Game: Individual Reflective Report
Bliss Footwear Company
Executive Summary
Bliss Footwear is in the spotlight in the global footwear industry. The company has the potential to find a way to expand in different markets. However, a prominent strategic intent is needed to meet objectives. The vision, mission and corporate objectives of the company have been presented. After this elaboration, the macroeconomic analysis and industry analysis is conducted. These comprehensive pieces of content helped to derive several insights regarding a global business environment in the footwear industry. The implementation strategy of the company looks unique as compared to other due separate strategies for each element. In the internal business environment, the company has set financial benchmarks regarding EPS growth, return on investment, credit rating, image rating, and stock price gains. Finally, some key recommendations regarding change and corporate social responsibility are presented at the end.
1. Introduction:
Bliss Footwear is a company that manufactures footwear globally. The company has its manufacturing plants and regions segmented into North America, Asia Pacific, Europe, Africa, and Latin America. The company is generating revenue via its internet, Private Label and Wholesale products.
2. Vision and Mission Statements plus Corporate Objectives:
The vision of the company is to become a high-quality based footwear company. The mission of the company is to give the best quality product to its clients. This mission and vision are then translated into the strategies, which are implemented by choosing the right decision alternatives. The simulation is going to provide the decisions, opportunities and alternatives on which the company’s performance will depend. The simulation has been for 6 years.
- General Objectives
The decision that has been made on year-on-year basis shows the corporate objectives of the firm. These include
- Reduce the rejection rate by 50%
- Increase the quality of the products
- Increase the demand for the products
- Improve market share and operating profit margin
- Increase EPS, ROE, and Stock price
- Specific Corporate Objective
Specific corporate objectives in terms of staff, finance, operations, and customers are as follows
Year to Year Bliss Footwear Company Decisions
3. Situational Analysis
3.1 Macroeconomic analysis
The macroeconomic analysis of the footwear industry makes the foundation of the situation analysis that is part of the Bliss Footwear. The company’s market is global, including North America, Asia Pacific, Europe, Africa, and Latin America. It makes the company a global footwear brand that has to consider PESTEL for macroeconomic analysis of the environment.
PESTLE Analysis
PESTEL has a range of factors and the majority of them go in favour of the footwear industry globally. It is a pleasing factor for Bliss factor. Simultaneously, it has to consider factors that are less attractive to its business.
Political:
The political system seems stable, as the company can also gain political support to evolve and grow with time. A stable political position in the country seems imperative. Unprecedented tensions in global politics may create an impact on business.
Economical
In the United States or other operating countries, the buying power of people is high due to an adequate income level. The company has to operate in markets where the growth rate high, as it can help to target customers
Social:
People in the market have become health conscious, as they are integrating with modern health trends. Thus, Bliss footwear must integrate with this incredible shift of people, like targeting, sales and positioning can be enhanced.
Technological
People in developed countries like the United States have become tech-savvy, and it has also driven the buying behaviour. People always intend to integrate with digital channels to buy products and services.
Legal
Legal complications in the United States over intellectual property rights, human rights and employees act are increasing corporations. However, the firm has to shape a code of conduct, which can be easily aligned with rules and regulations.
Environmental
Many companies in the United States and many other operating countries have taken environmental sustainability initiatives. It is a great opportunity to integrate with environmental responsibility to be relevant and lucrative.
3.2 Industry and Sector Analysis
The global footwear industry has a mix of factors, so far as industry and sector analysis is concerned. Porter’s five forces are standard analyses for this head. Bliss Footwear has been performing well over the years, and it has set objectives to enable it to continue this performance in the future as well.
Five Forces Analysis
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Threats of New Entrants
It has not been easy for new entrants into the industry because of the substantial investment required in the areas of technology, style, and brand development. Bliss Footwear has achieved this milestone that is a pleasing point for it (Dobbs, 2014).
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Competitive Rivalry
Due to the complexity of the business, the number of competitors is low. It does not mean that rivalry is not intense. Existing brands in the footwear industry have had solid ground, and they may challenge any new entrants. It is tough to challenge them to gain a place in the industry.
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Buyer Power
Buyer power is moderate because the strong brand can charge a high price of their products. However, buyers from the Asia Pacific and emerging markets may demand low priced footwear because of a slightly lower purchasing power in those areas (Sutherland, 2014).
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Supplier Power
The supplier power is moderate, and there are plenty of suppliers in the industry, Bliss Footwear has to be careful to choose suppliers, although they are abundant. China and other emerging markets have emerged as outsourcing destinations giving an ample choice for companies to get their products done (Dobbs, 2014).
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Threat of Substitutes
The threat of substitutes is high because people may switch between products in the footwear industry. High quality attracts customers, and Bliss Footwear has objectives to get high-quality products for its customers.
Exchange rate:
Manufacturing locations
George Panagiotou’s Telescopic Observation
George Panagiotou’s Telescopic Observation is an effective tool, which can help to enhance intelligence gathering and improve marketing planning. Thus, the main intention of this observation was to examine the situational analysis to derive insights regarding the current position or situation. The evaluation of finding is also a part of the observation, which open new ways to make some changes. Making smart strategies and evaluating some changes are critical stages or phases, which justified continuous situational monitoring
4. Internal Analysis
4.1a: Mckinsey 7’s
Bliss Footwear has established a culture where high quality is at the centre. All objectives lead the company to serve one purpose, and that is quality. McKinsey 7’s have elements to analyse the company to know its internal operations, functions, and values.
The company has set its strategy on financial gains through a system fostered by technology and quality. The shared value is what is the foundation of the systems and structure of the company. Without quality, no footwear company may not dream of existing. The company has given freedom and an environment of collaboration. Staff and skills have a direct link with each other, where staff adopts desired skills for success in the industry. Working on styles for leadership and business conduct has to reflect on the style of products. The company has worked over these elements of the tool, and as a result, it is going to become a quality intensive company in the global footwear market (Kirschenboim, 2018).
The structure of such a company as Bliss Footwear demands increased independence and collaboration at all levels. More delegation of authority leads to innovation, and more innovation is inevitable in the footwear industry globally. Internal analysis of Bliss Footwear has revealed these attributes for the company (Kalan, 2016).
Before going towards SWOT analysis in the internal analysis, elements of McKinsey 7’s show that the company has prepared to compete with large competitors effectively. It has ensured that it can come up with high-quality standards in the market. However, there are still some areas to work on because there is always room for improvement.
4.1b: Handy’s Organisational Culture
4.2 SWOT Analysis
The internal analysis in the previous section may help to draw a SWOT analysis.
Strengths
The company’s focus on financial performance and quality consciousness are its strengths. McKinsey’s seven points show that the company has been working well in the internal structure and strategy. The focus on quality and seeking financial gains may lead the company on top of the industry that has high brand development costs. Focus on quality and cannot deprive any company of his high position in the industry.
Weaknesses
However, weaknesses of the company have a link with the industry situation where large competitors have their market share. They have loyal customers and a fan base that is hard to mobilise. The price-conscious segment in the market is present, but that may lead to a compromise on the quality and standard of products. Therefore, Bliss Footwear has to make a balance so that it can work well between quality and price equilibrium (Pablos and Patricia, 2012).
Opportunities
Opportunities in the global footwear market are abundant, and Bliss Footwear has sustained performance to prove this fact. It opens ways to exploit opportunities in the industry where a large number of customers are eager to buy footwear. The footwear industry has customers of multiple origins and preferences, but the top of the reason for which Bliss Footwear is marketing is to be athletic footwear (Thompson and Strickland, 2003).
Threats
Threats may link with high brand development and infrastructure cost involved because large players have already shaped the industry in their favour. Therefore, Bliss Footwear has to work in this area so that it can compete well to achieve its business objectives.
5. Implementation of the Marketing Strategy
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4 P’s
Product
Product is one of the prominent elements of the marketing mix strategy. Bliss footwear manufacturing has to come up with a good marketing product strategy, which can help to make a difference in the market. For Instance, an appropriate product strategy is differentiation. Currently, the company is dealing with a good service portfolio. However, in the presence of rivals in the global market, it seems imperative to make the product inimitable. It is a value-driven product strategy, which can help to gain and sustain the competitive advantage over competitors. Product strategy is always in the limelight due to its impact on both customers and competitors. Making the product more appealing as compared to substitutes in the market is a kind of strategic priority.
Price
The pricing strategy of the company can be different from its rivals. For Instance, it has been mentioned or revealed that low-cost structure suits this business in several markets, as it is directly associated with the brand image of the company. Now, in the contemporary business era, it seems imperative to connect the low-cost structure with the pricing strategy. The management of the company aims to come up with the penetration pricing strategy to come up with low prices for customers. High-quality footwear at low prices is always appealing to the target audience, and it can increase both sales and revenues. The company plans to introduce new products, related to footwear, and sell at low prices compared to competitors. However, after gaining and sustaining the growth in the competitive landscape, the company can improvise with the pricing strategy to get favourable profit margins. Price is not the only factor, as by integrating with low to moderate-income people, it can also justify its social responsibility.
Place
The company has to streamline an effective distribution strategy. Direct distribution is a suitable business strategy, as it can also contribute to the low-cost structure of the business. The company is looking to optimise both Brick & Mortar and E-Commerce platforms for the customer to grab the immense range. Targeting strategies can be different by using these two business models. For Instance, the company can increase customer traffic (Youth) of digital or e-commerce platform.
Promotion
The trend of social media marketing and promotion is in the limelight. However, the management of the company will use both traditional and modern media channels. The strategic marketing focus is on social media channels, as video campaigns, content marketing, and celebrity endorsements will be used to create the hype of different social media channels. Social media marketing is quite cheaper than the traditional market, and the company is going to take advantage of it.
6. Performance analysis: financing of company operations
Evaluation of the projected financial benchmarks:
The performance of the company can be measured in three different ways. It can either be compared to the standards set at the start of the period, or it could be compared with the performance of the company in past years or else it can be compared to the competitor’s performance in the same year. The following performance analysis is conducted by analysing the performance against the set standards in terms of the financing of the company operations (Pablos and Patricia, 2012).
6.1: EPS growth:
The EPS or Earnings per share of the company are needed to grow by at least 7% annually in the years 11 to 15 and by 5% after that. Looking at the performance of the Bliss Footwear Company, it is evident that the company had EPS of 3.09 in Year 11 which is as per its projected EPS. In year 12, it has increased to 4.07, showing an increment of 31%. In year 13, EPS increased by 20%; in year 14, by 33%; in year 15, by 66.9%. Thus, the company has performed tremendously well in terms of the set standards (Ura and Karma, 2014).
6.2: Return on Average Equity Investment:
The Return on Equity shows how efficiently the equity financing has been utilised to yield returns. The standard is to remain at 15% or above on an annual basis. In year 11, the company is showing a ROE of 26.7%, which is well above the standard. Similarly, in year 12, ROE is 31.3%, in year 13, reported ROE has declined to 25.3%, but it is still above 15%. In year 14, ROE is at 27.4% and at 40.1% in the year 15, showing tremendous growth in the returns yielded from the equity.
6.3: Credit Rating:
The credit rating shows how the finances consider the company in terms of its ability to pay back its loans. The standard for acceptable performance in terms of credit ratings is B+ or higher. The Bliss Footwear company credit ratings show A rating in Year 11, which improved to A+ in year 12, then remained A+ in year 13, year 14 and in the year 15 as well. Thus, this shows that with time the company has to build the reputation of being able to generate positive cash flows enough to pay back its short- and long-term liabilities.
6.4: Image Rating:
The image rating shows the best cost strategy for the company. The lower price often increases the image rating of the company. Other than this, the corporate social responsibility activities also aid in boosting the image ratings of the company. The acceptable image rating is above 70. In terms of the Bliss footwear company, the company image rating in year 11 is at 73, which is just crossing the mark. However, in year 12, the image rating of Bliss has improved by 83 points. In year 13, it is at 95 points, and in year 14, it is at 100 which are the maximum possible points for this measure. The company has maintained its 100 points in image rating in year 15 as well. This shows that the company has not only achieved being the lowest priced among its competitors but also has worked tremendously on its CSR contributions (Thompson and Strickland, 2003).
6.5: Stock Price Gains:
The stock price gains are one of the vital performance indicators. The company has to improve its stock price by 7% annually in the first 5 years and by 5% annually in the years ahead. The stock price gains are achieved with the improvement in the revenues and net profits of the company. Other than this, expansion and stock repurchase also aid in stock price gains. Looking at Bliss Footwear Company, it can be seen that the company stock price has been at 57.37 in year 11. The stock price then increased to 116.20 in year 12, which shows growth of 102%. In year 13, the stock has grown by 23.3%. In year 14, the stock moved to 182.33 showing growth of 27%. In year 15, the stock of bliss footwear has grown by 91%. Thus, overall, the company financials show aggressive growth in the stock price over the years.
6.6: Balanced Scorecard:
The company is ranked number 2 in the balanced scorecard among the 12 companies. The company has a weighted average score of 104 out of 120 in year 11. This shows that the company is doing tremendously well in terms of its performance in the eyes of the board of directors and also in terms of the industry comparison. This score improved to 107 and increased by 3 points in the year12. The company has declined its performance by 5 points in year 13 and went back to rank 2. In year 14, the position became stable again by gaining 3 points. Finally, in year 5, the company moved to rank 1 with the addition of 5 points. Therefore, it can be said that the company has come true to the expectations of the investors and has also competed superbly well against the competitors.
7. Corporate Social Responsibility and Citizenship
7.1: CSR, Worker Compensation and Training:
The company has the obligation to act as a responsible corporate citizen and contribute its fair share in the promotion of wellbeing in society. However, there needs to be a balance between profitability and spending on CSR activities. In terms of Bliss Footwear, the company has spent money on energy efficiency initiatives. However, this spending has declined as compared to the first year. Other than this, the company has worked on spending on the ethics enforcement and training of its employees, increasing improvement in the working conditions by working on lighting, safety, childcare and cafeteria building in the plants. Moreover, the company has also established and fulfilled the requirement of the supplier code of conduct.
8. Recommendations for Future Strategy-Milestones and leadership
8.1 Change Management Approach
It is recommended that the company must make the difference by changing the strategy in the business environment. For Instance, the appropriate future strategy in contemporary business is to expand in different countries and build the financial capability to acquire firms. This particular strategic intent seems effective, as it can help to improve the market share and revenue growth. The change management approach can create urgency by streamlining the vision and mission. Internal and external stakeholders must be aware of the change, and it can help to produce some good results.
8.2 Company Culture/Leadership
Despite the innovative culture in the company, it is imperative for the company to portray the leadership approach (Singh and Srivastava, 2018). In this corporation, the company may intend to shape the culture of togetherness. Employee-management relations must be maintained. The leadership team has to exhibit a democratic approach to engage almost every stakeholder, including employees. The company culture will be open and brainstorming of ideas and active participation of employees in the decision-making process can enhance the visibility of business outcomes. It is a kind of improvement in the internal business process, and the company can sustain the brand image.
8.3 Corporate Social Responsibility and stakeholder theory
In the future, the company needs to integrate with the stakeholder theory. Instead of just focusing on shareholder value, the company management can also create value for stakeholders such as employees, suppliers, customers, local communities, creditors, and others. Thus, the best CSR strategy for the internal business environment is to practice work-life balance, as employees must be given opportunities to keep the balance. A code of conduct is to be developed for employees as well. For external stakeholders, especially communities and customers, it seems a god to be fair and accountable in several advertising campaigns. Several environmental sustainability initiates are to be shaped or taken to contribute to the sustainable environment effectively.
9.0: Reference List:
Dobbs, M.E. (2014) ‘Guidelines for applying Porter’s five forces framework: a set of industry analysis templates’, Competitiveness Review, vol. 24, no. 1, pp. 32-45.
Kalan, M. (2016) ‘Triangulacija teorij o odlicnosti poslovnega modela McKinsey 7S’, RUO. Revija za Univerzalno Odlicnost, vol. 5, no. 4, pp. 360-373.
Kirschenboim, Y. (2018) ‘Rabbi Hirsch values and principles and McKinsey 7 S model. Past and Future in Israeli School Management’, Revista de Management Comparat International, vol. 19, no. 3, pp. 306-312.
Lianto, B., Wahyudi, R.D., Rinawiyanti, E.D. and Herninda, A. (2015) ‘Assesment of Innovation Process Capability-Based on Innovation Value Chain Model in East Java Footwear Industry’, The Asian Journal of Technology Management, vol. 8, no. 2, pp. 132-150.
Pablos, O.d. and Patricia (2012) Business, Technology, and Knowledge Management in Asia: Trends and Innovations: Trends and Innovations, IGI Global.
Singh, S. and Srivastava, S. (2018) ‘External Factors Affecting Indian Hand loom Industry: A Paradigm Shift’, International Journal of Business Insights and Transformation, vol. 12, no. 1, pp. 33-41.
Sutherland, E. (2014) ‘Lobbying and litigation in telecommunications markets – reapplying Porter’s five forces’, Info : the Journal of Policy, Regulation and Strategy for Telecommunications, Information and Media, vol. 16, no. 5, pp. 1-18.
Thompson, A.A. and Strickland, A.J. (2003) Strategic management: concepts and cases, McGraw-Hill/Irwin.
Ura and Karma, D. (2014) Asian Business and Management Practices: Trends and Global Considerations: Trends and Global Considerations, IGI Global.
