BSG Final PresentationCheap Shoes

Strategic Vision

Cheap Shoes aspires to provide high quality shoes to a global market at the lowest price while satisfying the needs of our customers.

Vision did not change throughout the 10 years

Performance Summary

Net Revenues Continuously Increasing

EPS normally above IE

ROE was average compared to IE

Stock Price steadily improved from Y15 on

Default Risk was medium to low

Image Rating was above IE from Y15 on

Competitive Strategy: Branded Footwear

Year 10: 5 Star Shoe

(No superior materials/no enhanced styling features)

Our beginning strategy was to offer the lowest priced shoe with a 5 star rating

Year 15: Turning Point

Decided to pivot based on competition

New Strategy: Global best-cost or "more value for the money" strategy

(e.g., providing 7-star footwear at lower prices than other 7-star brands)

Incorporated appealing attributes (styling/quality/selection) at a lower cost than rivals

Consistent across all regions and in both the retail and internet markets

Competitive Strategy: Private Label

Our strategy was a low-cost strategy that was adjusted by region each decision round.

Adjustments were made based on competitors allocations in the previous years

Production and Workforce Strategy

We spent money on upgrading our plant so that we could minimize the rejection rate

Ethics Training/Enforcement was mandatory for all employees since Y10

Workforce Diversity Program was a given!

Finance Strategy

Bought back stock every year possible to increase EPS

Never paid dividends

2 long term loans

$100,000,000

$150,000,000

Financed production capacity

Default risk ranged from low to medium

Y20: Debt-to-Asset Ratio-0.39

Y20: Interest Coverage Ratio-6.06

Y20: Default Risk Ratio-2.58

Strongest, Closest Competitors

Branded: Rationale: Happy Feet

Market Share, models offered and advertising

Internet: Rationale: Happy Feet

Market Share, models offered and advertising

Private Label: Efficiency Footwear and Deez Sneaks

They were the hardest to predict and took large market share

Higher S/Q Rating of 8 in later years

Large offerings and low prices

Action Plan

1. Continue Growth

2. Stay as a low-cost provider

3. Increase production capacity

4. Take on more corporate social responsibility and implement corporate citizenship plan

Happy Feet

Lessons Learned: Do’s and Dont’s

Crafting Strategy:

Low-cost provider can be powerful in Private Label (more sales)

Do not rely on Private Label for competitive advantage although PL is important and a good source of revenue

Use a sufficient amount of superior materials

Executing strategy to be financially and competitively successful against high quality rivals

Buy back stock as much as possible

More capacity = revenue

If low-cost provider, do not overlook S/Q rating

Invest in social responsibility & corporate citizenship

Lessons Learned

BSG Payoff

Corporate Responsibility is important

If we had paid more attention to CR, we would have had a better chance of coming in first

If a company doesn’t have a corporate responsibility plan, it’s just greedy

Spending money on advertising is worth it

Advertising and celebrity endorsements are a good way to have a higher demand and increase revenue

Low-Cost strategies are key

Lessons Learned - Quotes from Executives

BSG Payoff

Nick - “The biggest thing that I learned was that life is an adventure and to always have fun!”

Shanley - “You can come back from coming in 7th in the practice rounds..”

Andy - “Don’t put all your eggs in one basket” (Private Label)

Ben - “You only get to play the BSG once, but if you play it right.. Once is enough.”