Running head: BEEROK 1

BeeRok: Company Strategy and Analysis

Angela Deaton and Geff Garcia

MGMT585 – Strategic Management

February 15, 2014

Dr. Michael Corriere

Southwestern College Professional Studies

BEEROK

Abstract

BeeRok has executed several actions to develop core competencies and competitive capabilities.

These actions contribute to good strategy execution and competitive advantage. Throughout the

simulation, BeeRok used strategic execution to stay ahead of the competition. Many of these

strategies have been copied by rival companies; however, by staying ahead of the competition,

BeeRok enjoyed the successes of the strategies earlier in the simulation. Ideally, the CEOs want

BeeRok to be seen as a green company utilizing efficient methodologies and green packaging

materials. This was achieved while growing the company over eight years. As an executed goal,

BeeRok was known throughout the market for efficiency in methods and processes. The CEOs

envisioned a market standing of best in the industry. BeeRok made decisions that drove first and

second place rankings among the other companies. A ranking at this level requires a high market

share as well as a substantial profit increase year over year. This paper describes in detail the

methodology behind execution of the mission and vision of the company as well as actual and

forecasted financial analysis. In the end, BeeRok proved successful and earned recognitions in

three different weeks at national levels.

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BeeRok: Company Strategy and Analysis

BeeRok, also known as Company B, produces footwear at two plants. One is a two

million-pair plant in North America and the other is a four million-pair plant in Asia. Both plants

can utilize overtime to boost annual capacity by 20%, thus giving the company an initial capacity

of 7,200,000 pairs. Sales volume in Year 10 equaled 5.2 million pairs. In Year 10, the company

sold 4.5 million pairs of branded shoes to retailers and individuals, and it bid successfully for

contracts to supply 740,000 pairs of private label shoes to large multi-outlet retailers of athletic

footwear. The company's stock price rose from $11.00 in Year 6, when the company went

public, to $30 at the end of Year 10 (Thompson, Stappenbeck, & Reidenbach, 2014). The new

CEO’s, Angie and Geff, took over the company at this stage.

Strategic Vision

“At BeeRok, our vision is to be the best-cost athletic shoe company that provides high-

quality athletic shoes at a competitive price to serve the needs of customers around the world.”

“The company will employ a global differentiation strategy that sets the company’s footwear

apart from rival brands based on more models/styles, more advertising, greater celebrity appeal,

and a bigger network of retail outlets carrying the company’s brand.”

BeeRok CEO’s wanted to ensure prosperity for the company as a whole, the employees,

and the customers. Improvement of the customer satisfaction rating (CSR) and overall quality of

the shoes, including raw material and processes are required for long-term financial health. In

order to meet the strategic vision of the company, BeeRok CEO’s made commitments to enhance

its sales volume and standing in the marketplace via attractive pricing, advertising, contracting

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with celebrities to endorse its brand, convincing footwear retailers dealers to carry its brand, and

promotion of online purchases.

BeeRok CEOs wanted the company to be known for quality and service at a level of

excellence that exceeds consumer expectations. Customer satisfaction rating is a metric that was

extremely important to management and will be monitored closely. Ideally, the CEOs want

BeeRok to be seen as a green company utilizing efficient methodologies and green packaging

materials, thereby increasing BeeRok’s customer satisfaction rating (CSR). Another way that

BeeRok increased the CSR, was to increase the quality of the shoes. Quality plays a major role

in consumer satisfaction and assisted in driving additional demand. Higher quality products will

allowed higher shoe prices overall. Quality and consumer expectations were monitored and

pricing was updated to accommodate new consumer satisfaction rating (CSR) and quality

initiatives.

Branded Footwear Analysis

BeeRok’s executive team approached the branded footwear market by implementing and

monitoring two key components of BeeRok’s strategy. The first component was to run an

efficient production and distribution channel that provided a high quality product that garnered a

high profit margin compared to competitors. The second component that BeeRok examined for

the branded footwear market was how to market and sell the product to consumers that would

create an effective market share that matched production targets.

The first strategic component, consisting of creating an efficient production and

distribution chain, encountered the most change during the simulation. The initial priority was to

increase the S/Q rating and evenly distribute the product evenly to each geographic region.

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BeeRok did not pay much attention to the exchange rates or the operating profit margins when

shipping to each region. BeeRok also made a critical mistake in being far too conservative in

building capacity during the early years of the simulation. Executives were expecting a market

recession to hit that would slow growth and they did not want to be affected by not “right sizing”

the company. As the simulation played out, the game was built on growth and this proved to be

critical mistake compared to the competition. BeeRok consistently had to change its production

capacity strategies to try to accommodate demand and this proved to be a reactive strategy, rather

than a proactive strategy. This is crucial because of its direct relation to pricing. According to

studies, market leaders with proactive strategies tend to rarely fight on price. In contrast, market

followers with reactive strategies must adopt a price fighting strategy (Shanker, 2006).

As the simulation continued, BeeRok had to change its strategy when it came to

operating profit margin in the branded footwear segment. In order to lower costs, BeeRok chose

upgrade option D to both the North America plant and the Asia Pacific plant. The reason behind

this was to effectively increase the productivity of existing workers by creating efficiency in the

production line. This would lower costs by doing more with less workers. The second strategic

upgrade was made to the Asia Pacific plant with upgrade option A. Since Asia Pacific was

producing the largest number of shoes between the two plants, the reject rate was causing one of

the highest cost drivers in the simulation. By addressing this issue with upgrade option A,

BeeRok invested in a value chain that paid high dividends throughout the simulation.

The second key strategic component was the sales and marketing aspect of the

simulation. Since BeeRok’s overall strategic vision was built on creating a high quality, high

profit margin product, executives knew that a strong brand image was important to help carry the

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required margins. From the outset of the competition, BeeRok was committed to creating a

brand image built on consumer appeal through celebrity advertising and corporate social

responsibility. From the very start of the game, BeeRok invested in corporate social

responsibility by investing in energy initiatives, ethical training, and by giving back to the

community through donating a percentage of profits. The second aspect of this strategy was to

maintain a high celebrity appeal in each of the four geographic regions. Between these two

strategic initiatives, BeeRok was able to use this competitive advantage to maintain a

comparatively strong market share, even though retail and wholesale prices were far above the

competition’s. Ultimately, this strategy had to be adjusted as other competitors were able to

bring up their S/Q rating and continued to offer a low price. BeeRok felt that its market share

was diminishing and they had to be more competitive from a lower price point.

Private Label Analysis

Compared to the branded footwear strategy, BeeRok’s private label strategy endured a

different evolution during the course of the simulation. During the first couple of years during

the competition, BeeRok took the approach in the private label segment of being a low cost

provider. The private label segment was going to be used as a low margin liquidation center for

extra shoes that we could not sell in the branded footwear segment. In order to achieve this

strategy, BeeRok purposely offered shoes at a low price and accepted the low margins to

discourage other competitors from participating in this arena. BeeRok also used this strategy to

keep inventory turnover strong and create a high image rating in the market.

This early strategy proved effective because Company A and Company D were quick to

move out of the private label segment. By enjoying this increased market share, BeeRok was

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able to adapt its pricing strategy for every region during Year 13 to increase profit margin in this

segment. With this new focus on enjoying a higher profit margin in the private label area,

BeeRok executives also began to invest in the long-term strategy of this segment. By increasing

the quality of materials in private label, BeeRok began to try to position its product at a higher

S/Q rating than Company C, the lone competitor left in private label. This moved the plan from

a low-cost provider to a best-cost provider strategy. By increasing the S/Q rating and only

competing against one company, BeeRok could raise prices while still maintaining a large

market share.

During the latter years of the game, Years 16 and 17, Company D and Company A began

to enter themselves back into the private label conversation. During this time period, BeeRok

also had to focus on exchange rates and tariffs and their affect on the profit margin available.

Since the exchange rates were not always beneficial in markets like Europe-Africa and Latin

America, BeeRok’s distribution plan reflected this by moving shoes into markets that had higher

bottom line profits margins. Similar to the branded footwear segment, BeeRok struggled with

meeting the market demand due to a lack of shoes available. In Year 17, BeeRok experienced its

first setback in the private label, not selling all shoes of offered in the Asia Pacific region.

BeeRok executives believe this was due to the re-entry of competition from Company A, which

stole vital market share. Despite this setback in the final year, BeeRok feels that their strategy in

the Private Label was executed effectively.

Production and Work Force Analysis

BeeRok’s production strategy was created such that supply never exceeded demand.

BeeRok focused production in two plants- one in North America and the other in Asia. BeeRok

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utilized overtime at both plants, boosting production by 20%. In order to keep pace with

demand, BeeRok added capacity in Years 15 and 16. In Year 15, 400,000 pairs were added to

the Asia plant. In Year 16, 400,000 pairs where added to the North America plant. The addition

of capacity allowed BeeRok to offer a more shoes worldwide.

BeeRok employs export strategies to pursue international sales. The amount of capital

needed to begin exporting is minimal and existing capacity is mostly sufficient to make goods

for export (Thompson, 2014). Utilizing this strategy, BeeRok limited its involvement in foreign

markets by contracting with foreign wholesalers experienced in importing to handle the

distribution to target markets. BeeRok uses these wholesalers to minimize its direct investments

in foreign countries. This method proved effective in the simulation.

Another decision that was made to aid with increased production numbers was employee

training. BeeRok decided to incorporate training for all employees in Six Sigma and ethical

behavior. Although this cost the company each year, it also decreased the number of rejects at

each plant, therefore allowing additional shoes offered to the market. The benefit of revenue

outweighed the cost of the training, making this decision effective. The ethical training portion

was beneficial to a higher image rating by employees.

BeeRok’s work force compensation strategy was to compensate employees based on

level of quality in the production of the shoes. This compensation was calculated on a per-shoe

basis. The higher the quality in the shoe, the more the employee was compensated as a bonus.

This bonus was in addition to the hourly wage established by the company. In Year 17, the

employees were compensated at 19 per hour and 18 per shoe bonus.

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Lean production activities, ordering structure, and shipping techniques were utilized to

drive an increase in image ratings as well as employee satisfaction. The CEOs will maintain

elevated levels of customer satisfaction ratings by maintaining a high level of ethics, training in

all areas of the company, and company charitable contributions.

Financial Strategy (ANGIE)

BeeRok’s strategy has been to maintain a highly efficient company in every aspect of the

organization’s operations. While the current expenditures per pair are far below the industry

average for corporate citizenship, BeeRok has an enjoyed an industry leading image rating.

BeeRok executives feel that this is because the company utilized its resources in the most

efficient way possible. If the company were to sustain a setback in the overall image rating of

the company, then initiatives would be implemented to address the shortfall.

In order to run efficiently, BeeRok’s strategy included execution of all finances to an A-

or better credit rating. A credit rating at an A-, A, or A+ rating provided for lower interest rates

on loans to lower risk of investment. BeeRok decided to pay dividends when an increase in ROE

was needed. The first payout of dividends was in Year 17 at $2.30 per share. BeeRok was shy

in the beginning to using debt as a means to build capacity. In two of the years, BeeRok decided

to add capacity in both plants, however only utilized 20% of the payment as credit. BeeRok

eventually changed strategy and in future years will increase use of credit to add capacity to meet

demand and to build equity. In Year 17, BeeRok bought stock as a repurchase strategy to

decrease the amount of owner’s equity outstanding. Since Return on Equity was one of the key

financial performance targets, BeeRok knew they could not significantly increase net income

without more shoes. The easiest way to accomplish this was to decrease owner’s equity.

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Some financial decisions were based on external influences. BeeRok monitored

exchange rates in every region that it operated. The exchange rates affected the decisions of

BeeRok executives and decisions had to be made to capitalize on favorable exchange rates and

minimize the adverse impact of unfavorable exchange rates. For example, during Year 13

simulation, BeeRok noticed a less than favorable exchange rate from the US Dollar to the

Brazilian Real. This caused a strategic decision to place less units for sale in the branded

distribution screen to be available for sale in Latin America. While this decision gave up

considerable market share, BeeRok’s decision paid off by capitalizing on the high margin

regions of Asia-Pacific, Europe-Africa, and North America regions. Another example came

during the Year 14 simulation. BeeRok executives noticed a favorable exchange rate between

Asia-Pacific and Europe-Africa. This decreased overall cost per pair to send units into EA from

AP. This increased margin and market share in the region by putting additional units into this

region from the unfavorable exchange rate region of Latin America.

BeeRok’s executive team has had to adapt the company’s strategy to take into account

the differences in import tariffs for Latin America and Europe-Africa. While the tariffs for

Europe-Africa are similar from a cost per pair perspective, the branded footwear draws a higher

wholesale price per pair. Therefore, this increases the profit margin in Europe-Africa. Latin

America does not enjoy this higher wholesale price per pair so it minimizes profit margin per

pair. Taking this into consideration, along with the unfavorable exchange rate, BeeRok has

elected to not allocate as many pairs for sale in the Latin America region in some years.

Financial Data

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Below are charts that BeeRok CEO’s established during the simulation. Narratives are

included with each chart to explain the significance of the analyses. It was important for

BeeRok’s CEOs to review the historical data of BeeRok’s performance, as well as the historical

and current performance values of BeeRok’s competitors. The charts show trends in BeeRok’s

annual total revenues, trends in annual earnings per share (EPS), trends in annual return on

equity investment (ROE), trends in BeeRok’s annual credit rating, trends in the year-end stock

price, trends in the annual image rating, trends in global unit sales (both branded and private-

label footwear), and trends in BeeRok’s global market share.

(BSG online, 2014)

According to the Company Operating Report Corporate Social Responsibility and Citizen Effort

expenditure represented a small portion of total net revenues in Year 15:

BeeRok Year 15 Total NET Revenues = $381,728,000

BeeRok Year 15 CSRExpenditure (chart above): = $12,226,000

Percentage of revenues corporate citizenship expenditures represented =

$12,226,000 / $381,728,000 = .0320 = 3.2%

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According to the Company Operating Reports, Corporate Social Responsibility and Citizen

Effort expenditure represented a larger portion of pretax profits in Year 15:

BeeRok Year 15 Total PreTax Profits = $78,613,000

BeeRok Year 15 CSR Expenditure (chart above) = $12,226,000

Percentage of pretax profits corporate citizenship expenditures represented =

$12,226,000 / $78,613,000 = .1555 = 15.6%

BeeRok is below the industry average level for corporate citizenship expenditure based on total

dollars spent.

Industry Average for Corporate Citizenship Expenditures: $13,563,000

BeeRok Year 15 Social Responsibility Expenditures: $12,226,000

BeeRok is below the industry average level for corporate citizenship expenditure based on a per

pair basis.

Industry Average for Corporate Citizenship Expenditures per pair: $1.85

BeeRok Year 15 Social Responsibility Expenditures per pair: $1.56

The chart below was filled out by the BeeRok CEOs in order to determine areas of

potential differentiation from the offerings of rivals. The columns in the chart include the

specific areas that could be differ between company’s, BeeRok’s differentiation efforts in Year

14, the industry average in Year 14, and the last column is the amount that BeeRok is above or

below the Year 14 industry average. From the chart, it is evident that BeeRok performed better

than the industry average in the number of models offered, advertising budget, celebrity appeal,

and in rebate offer. Areas for improvement included the number of retail outlets utilized. The

results are illustrated below.

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(Thompson, 2014)

Simulation Forecasting – Estimated versus Actual

Performance targets were set in the three year plan. The three year plan was created to

set performance targets for Years 15, 16 and 17. The forecasting effort was conducted by

BeeRok’s CEOs at the end of Year 14. BeeRok utilized historical data to create the forecasted

values as well data from the competitor’s financial performance ratings. This forecasting effort

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focused the CEO’s concentration on evaluation of past and current strategies in an attempt to

create a competitive and realistic forward-looking analysis.

(Thompson, 2014)

(Thompson, 2014)

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(Thompson, 2014)

(Thompson, 2014)

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(Thompson, 2014)

So, how well did BeeRok forecast the financial values? BeeRok expected that the image

rating would continue to rise, however soon realized that this proved difficult in an attempt to

keep the other variables high, including ROE and EPS. Excerpts from the plan for projected and

actual values are depicted in the chart below:

BeeRok

Performance

Measures

Year 15 Year 16 Year 17

Target Actual Score Target Actual Score Target Actual Score

EPS $5.00 $5.50 16 $5.10 $6.92 16 $5.20 $9.58 16

ROE 16% 16% 16 16% 17% 16 16% 22% 16

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Credit

Rating A+ A+ 20 A+ A+ 20 A+ A+ 20

Image Rating 78 83 18 80 83 18 81 80 18

Stock Price $70.00 $77.03 16 $72.00 $97.16 16 $73.00 $192.31 16

Total Annual

Score 86 86 86

(Thompson, 2014)

Financial Performance Outcome - End of Simulation

BeeRok came out in second place relative to the other teams in the simulation. Buying

back stock in Years 16 and 17 helped to raise EPS. Selling shoes at higher prices without

overpricing relative to the competition allowed BeeRok to increase gross revenues. From the

income statement below, the profitability and payout for Years 16 and 17 can be seen. In Year

16, no dividends were paid. This is the same for all previous years as well. However, in Year

17, $2.30 in dividends per share was paid out. This decision was made because to target a

decrease in owner’s equity.

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(Thompson, 2014)

The following chart shows the revenue-cost-profit performance in the wholesale and

internet segments for BeeRok in Year 16 and 17, the last two years. The internet market

operated at an operating profit margin of 28.6% in Year 16 and 30.1% in Year 17 for North

America. The internet market operated at an operating profit margin of 21.0% in Year 16 and

29.3% in Year 17 for Europe-Africa. The internet market operated at an operating profit margin

of 37.2% in Year 16 and 40.3% in Year 17 for Asia-Pacific. The internet market operated at an

operating profit margin of 30.6% in Year 16 and 29.2% in Year 17 for Latin America. Overall,

BeeRok ended with an operating profit margin of 32.0% in Year 17 among all regions in the

internet market. This was a significant milestone in the company strategic plan and one of the

main reasons behind the success of the company. Similar results can be found in the wholesale

segment as indicated in the chart below.

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(Thompson, 2014)

Future Performance Expectations – Post Simulation

BeeRok

Performance Measures

Year 16

(completed)

Year 17

(completed)

Year 18 / 19 / 20

(forecast)

Target Actual Target Actual Target Target Target

EPS$5.10 $6.92 $5.20 $9.58 $9.75 $10.00 $10.25

ROE16% 17% 16% 22% 23% 25% 26%

Credit A+ A+ A+ A+ A+ A+ A+

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Rating

Image Rating80 83 81 80 80 79 79

Stock Price$72.00 $97.16 $73.00 $192.31 $200. $225. $250.

Global Market Share (Internet)

N/A 22.6% N/A 24.2% 24.6% 25% 25.5%

Global Market Share (Wholesale)

N/A 23.3% N/A 24.5% 25% 25.5% 26%

DividendN/A 0 N/A $2.30 $2.25 $2.25 $2.25

Competition Analysis

BeeRok had two main competitors in the branded footwear market. The first and largest

of the two competitors was Company D. Their late surge in years 16 and 17 provided them with

enough momentum to be considered the best in industry and garner the highest score. Their

overall strategy was a best-cost provider strategy. According to our textbook, the five basic

competitive strategies are: a low-cost provider strategy, a broad differentiation strategy, a

focused low-cost strategy, a focused differentiation strategy, and a best-cost provider strategy.

These strategies help a company determine if their market target is too broad or too narrow and

whether the company is pursuing a competitive advantage linked to lower costs or

differentiation. This is especially important in order to ensure higher profits (Thompson, 2014).

In contrast, Company A was the low cost provider that BeeRok had to compete with during the

simulation’s latter years. A low-cost provider strategy is a strategy in which companies focus to

provide a product or service at lower overall costs than rivals and then using the low-cost

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advantage to attract a broad spectrum of buyers with a lower-priced product offering (Thompson,

2014). BeeRok had established themselves as best-cost providers from the outset of the

competition and its success was evident through the first part of the simulation. One of the

primary downfalls of BeeRok versus Company D, was the amount of shoes available for

production. In order to compete in years 18 and 19, BeeRok would have needed to address this

long-term growth structure.

For the majority of the simulation, Company C was BeeRok’s only competitor in the race

for the private label segment. BeeRok’s initial strategy was to be a low cost provider and operate

at low margins in order to drive others out of the private label segment. After doing this,

Company C was the only rival left until the final years. Company C’s competitive strategy was a

best-cost provider in the private label segment. During the final years of the simulation,

Company D reasserted itself into the conversation as a best-cost provider. In order to adapt and

continue to compete with Company D, BeeRok would have needed to change from a low-cost

strategy to a best-cost strategy and use its strong market share to beat rival competitors.

The strongest of the five competitive forces for BeeRok is the market maneuvering for

buyer patronage that goes on among rival sellers in the athletic footwear industry. BeeRok is

constantly competing for market share in the four geographic regions against similar athletic

footwear companies. The “weapon of competition” that BeeRok’s footwear rivals can use to gain

sales and market share is innovating to improve product performance and quality, using

advertising to enhance a company’s brand name and image, delivering better customer-service,

and providing quicker or cheaper delivery (Thompson, A. A., 2014).

Supplemental Strategies

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BeeRok utilizes the “think global, act local” strategic approach to compete successfully

in the four geographic regions comprising the global athletic footwear market. Using this

approach, BeeRok can tailor the company’s product offering in each country based on buyer

expectations while employing the same basic competitive strategy in all country markets, best-

cost. BeeRok was able to differentiate their products based on region. The elements that

characterize BeeRok’s strategic approach to competing in North America are:

Utilize a best-cost competitive approach

Build a global brand name; focusing on global brand image and reputation

Focus on high quality products utilizing energy efficient production methods a

Focus on high quality products utilizing six sigma training

The elements that characterize BeeRok’s strategic approach to competing in Latin America are:

Make adjustments in production, distribution, and marketing strategies to be

responsive to local market conditions (specifically related to export fees)

Incorporate variations in product attributes to address buyer’s expectations

Utilize a best-cost competitive approach

Elements that characterize BeeRok’s strategic approach to competing in the Asia-Pacific region:

Utilize a best-cost competitive approach (high quality)

Make adjustments in production, distribution, and marketing strategies to be

responsive to local market conditions

Focus on high quality products utilizing energy efficient production methods

Focus on high quality products utilizing six sigma training

Elements that characterize BeeRok’s strategic approach to competing in Europe-Africa:

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Utilize a best-cost competitive approach (high quality)

Make adjustments in production, distribution, and marketing strategies to be

responsive to local market conditions

Lessons Learned

The old adage that hindsight sees 20/20 always comes into play when discussing

strategies in business. While BeeRok enjoyed sustained growth and financial success throughout

the competition, they ultimately took second place versus rival company D. There were two

crucial lessons learned during the simulation that BeeRok executives can take away for future

endeavors.

The first of these lessons was the importance of using debt to leverage to build capacity

and fund capital improvements instead of solely relying on cash. Once BeeRok executives

realized that they were not producing enough product to meet demand, they were using cash to

fund and purchase additional capacity. The company enjoyed a sustained A+ credit rating for

most of the simulation, but this positive company attribute was not used efficiently. BeeRok also

used cash instead of leveraging debt to fund the plant upgrades in Asia Pacific and North

American plants. Had they used the cash instead to decrease owner’s equity earlier in the

simulation, they would have not been playing catch-up at the end to improve the return on equity

for the company.

The second lesson learned during the simulation was the importance of corporate social

responsibility to building a strong brand image for the company. While other groups felt that the

CSR aspect did not carry a strong business case during the simulation, BeeRok executives feel

that it directly added to the bottom line of the company. Business leaders must demonstrate an

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ethical approach by example as this will show that middle and junior managers will be rewarded

for taking an ethical stance and create the appropriate organizational culture (Incorporating ethics

into strategy, 2010). Taking an ethical stance in business is more than just watching the bottom

line. Customers and people in the surrounding community take notice when a company becomes

socially responsible. For example, if a company takes a stance on becoming more green and

energy efficient, people may react more fondly of the products that that company offers.

Ultimately, this can increase company image and as a follow-on effect, profits.

Corporate social responsibility (CSR) strengths are perceived as value-creating by

analysts, and as such, they are rewarded with more favorable recommendations which means that

analysts are more likely to recommend a stock “buy” for CSR-strong firms (Ioannou & Serafeim,

2011). This realization would indicate that companies should take interest in increasing their

corporate social responsibility focus. I agree with you that companies can do this by modifying

their product line to be increasingly more favorable with customers and also by leaning

production and operations by incorporating efforts that are pleasing to the social norms (i.e.

greener material). This is especially true for firms that are consistently in the public eye.

According to Ioannou and Serafeim, higher visibility firms are more likely to receive favorable

recommendations when implementing CSR strategies, suggesting that positive CSR strategies

are more likely to be perceived as value-creating for higher visibility firms.

BeeRok exercised social corporate responsibility and good corporate citizenship in

multiple ways. First, BeeRok used recycled boxing and packaging. This involved the use of

recycled packaging materials to box each pair of athletic footwear at company distribution

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centers. Although this action increased shoe packaging costs by $0.02 per pair, it increased

BeeRok’s investment in corporate responsibility to protect the environment.

Second, BeeRok invested in energy efficiency initiatives. BeeRok contributed $500k per

distribution center and million pairs of plant capacity. This action invested money to improve

energy efficiency and the use of renewable energy sources. Third, BeeRok invested 5% of

operating profit to charities. This action allowed BeeRok to invest in charitable causes in the

community, thereby increasing BeeRok’s social responsibility. Fourth, BeeRok invested in

ethics training and enforcement for all employees to provide training and development, including

enforcement of, a code of ethics. The importance of these actions proved critical in allowing

BeeRok to maintain a strong position in every industry standard throughout the simulation.

Summary

BeeRok has executed several actions to develop core competencies and competitive

capabilities. These actions contribute to good strategy execution and competitive advantage.

Throughout the simulation, BeeRok used it strategic execution to stay ahead of the competition.

Many of these strategies have been copied by rival companies due to their success. However, by

staying ahead of the competition, BeeRok has enjoyed the successes of the strategies for a longer

period of time. One prime example is that many of the rival companies cut prices quickly to try

to gain market share from other companies. However, BeeRok was able to maintain a high

margin, high demand execution strategy through its efficient value chain activities.

BeeRok employed a variety of value chain activities in an attempt to better execution of

the company strategy. The most crucial activities are effective marketing through strong brand

recognition and controlling market share in the Private-Label operations. By using high quality,

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superior materials BeeRok was able to develop a shoe that was highly regarded for its quality.

Then, BeeRok used a marketing campaign that included celebrity endorsements that spread the

brand name throughout the geographic regions. By investing capital expenditures on this value

chain, BeeRok was able to demand a higher price in the competitive market, which led to higher

profit margins.

The Business Strategy Game involved a battle of strategies in a competitive marketplace,

where the key to success is watching rivals' actions closely, anticipating their next moves, and

then making competitivemoves and decisions that hold good prospects for delivering good

results (Thompson, Stappenbeck, & Reidenbach, 2014).

BeeRok earned world-wide ranking in three of the six weeks:

1. Congratulations for achieving Global Top 100 performance on the following performance

criteria during the week of 3-Feb-14 through 9-Feb-14.

o Earnings Per Share - Your EPS of $9.58 was the 56th best EPS performance of

the week, worldwide!

o Stock Price - Your Stock Price of $192.31 was the 38th best Stock Price

performance of the week, worldwide!

2. Congratulations for achieving a Global Top 100 performance on Overall Game-To-Date

Score during the week of 27-Jan-14 through 2-Feb-14.

o Your Overall Score of 107.5 tied for the 37th best Overall Score performance of

the week, worldwide! Your instructor has also been sent an e-mail message

acknowledging your Top 100 Overall Game-To-Date Score performance.

26

BEEROK

3. Congratulations for achieving a Global Top 50 performance on Overall Game-To-Date

Score during the week of 20-Jan-14 through 26-Jan-14.

o Your Overall Score of 106.5 tied for the 50th best Overall Score performance of

the week, worldwide! Your instructor has also been sent an e-mail message

acknowledging your Top 50 Overall Game-To-Date Score performance.

27

BEEROK

References

Incorporating ethics into strategy: developing sustainable business models.(2010). Chartered

institute of management accountants. Retrieved from: http://www.cimaglobal.com/

Documents/Professional %20ethics%20docs/IncorporatingethicsintoIncorporati1.pdf.

Ioannou, I & Serafeim, G. (2011). Harvard Business School. Retrieved from: http://www.hbs.

edu/faculty/Publication%20Files/11-017.pdf.

Shankar, V. (n.d). Proactive and Reactive Product Line Strategies: Asymmetries Between Market

Leaders and Followers. vol. 52, no. 2 (Feb 2006), p. 276-292. Retrieved from:

http://search.proquest.com.ezproxy.sckans.edu/docview/213261940/fulltextPDF?

source=fedsrch&accountid=13979

Thompson, A. A. (2014). Strategy: Core concepts and analytical approaches. Retrieved from:

http://www.bsg-online.com.

Thompson, A., Stappenbeck, G., Reidenbach, M. (2014) Player’s guide. Retrieved from:

https://www.bsg-online.com/users/PlayersGuide.pdf

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