Business Report on Diablo Footwear Company (Case Study Sample)

DIABLO'S REPORT ON BUSINESS STRATEGY GAME
Executive Summary
This report is an individual reflection of the business game simulation of Diablo Footwear Company. The game aimed to help simulate real-world issues that influence competition in the footwear market, thereby giving managers experience and decision-making skills to help the company thrive despite competition. BSG focuses on several areas that increase revenues, such as advertising, market share, return on equity, image rating, credit rating, and investor expectation score. Diablo performed fairly well in the game, and the managers acquired skills that they can combine with what they learned in class to make better decisions to solve real-world problems in the future. The ultimate aim of business strategy game was to simulate the cause and effect of competition in the footwear industry. Players grasped the idea that competition is multifaceted and should be analysed by putting all facts and possibilities on the table. The report recommended that before investing in a certain market, Dioaflo should first study then political, economic, social, technological, and legal factors that would affect both business and the industry environment. Further, the report also recommended that Diablo should focus on its strengths and opportunities, and minimise the threats and weaknesses by investing in emerging technologies such as artificial intelligence, robotics, 3 dimension (3D) modelling, product lifecycle management (PLM) among others.
Keywords: BSG, Footwear, competition, decision-making
 
Introduction
The purpose of this report is to provide an individual reflective strategy assessment of the progression and outcome of the business strategy game simulation of Diablo Footwear Company. The game provided a simulated experience similar to real-world scenarios of the globally competitive footwear industry (Shih et al., 2020).
Mission
To exceed customer demand, aspiration, and expectations with staff members that are truly motivated and fully engaged in giving a great customer experience leading to significant, long-term results.
Vision
To be a respected, trusted, and well-positioned brand in the footwear industry.
Values
Diablo upholds the following core values that act as guiding principles to ensure that the company is on the right track in fulfilling its goals and mission.
* Pioneering spirit: Doing everything with the ambition of seeking new challenges, not being afraid to be flexible, and adapt to the changing needs of business.
* Honesty and Integrity: Acting with integrity in all the company says and dooes. This shows that the firm is sincere in upholding its core values. Integrity ensures that the company does the right thing.
* Respect: Treating and esteeming others highly. Showing respect to colleagues, suppliers, customers and stakeholders is paramount.
* Environmental Care: All company business is conducted in an ethical and socially responsible manner. The company aims to protect the environment and benefit the communities it serves.
Corporate Objectives
1 To build new manufacturing plants in Europe and Latin America by the end of Year 15.
2 Increase the S/Q rating of our shoes from 4.0 in Year 10 to 6.5 in Year 15
3 Achieve a 10% stock price annually through the Y10 and maintain a 5% increase annually for the next five years.
4 Increase the number of models available in each region from 200 in Year 10 to 500 in 2 years
Diablo’s Performance in BSG
Year 11
Better decision-making and teamwork at Diablo contributed to increased financial performance in Year 11. Based on the performance data, Diablo had an EPS of $2.29, a credit rating of B+, and image rating of 6. While the stock prices reduced from $30 to $27.63, the net revenue increased from $432,646,000 in Year 10 to $ 477,085,000 in Year 11. The increase in net revenue could have been attributed to the significant market share in the internet, private-label, and wholesale segments. Additionally, there was considerable brand advertising in all segments. The company invested about $10,417,000 in both internet and wholesale segments in the Europe Africa region. Other companies were doing free shipping and delivery for internet sales within four weeks while Diablo successfully shipped and delivered online sales within two weeks. Such a strategy promoted Diablo's sales and revenues accordingly.
Year 12
In Year 12, Diablo almost achieved the objective to increase the number of models available in each region (both internet and wholesale segments) from 200 in Year 10 to 500 in 2 years. While Diablo did not reach the 500 models within the first two years in Europe and Africa (there were at least 250 models for the internet, and wholesale segments in that region), the number of models reached 500 in Asia pacific regions. Diablo's goal was to achieve at least 60% growth in every region, but the ultimate objective was to have 500 models worldwide. In Year 12, the company managers decided to observe the S/Q ratings in all the geographical areas and get reliable feedback to inform better decision making, especially concerning corporate social responsibility. The company aimed to maintain an S/Q rating of 4.0 and possibly increase it to 6.5 by Year 15. Diablo appreciated that apart from advertising and creating brand awareness, corporate social responsibility is another action that can improve global brand recognition.
Figure SEQ Figure \* ARABIC 1: Internet and wholesale sales in Asia-Pacific region
Year 13
One of Diablo's objectives from the beginning was to increase the company market share in both segments (Internet and Wholesale) by 5% in each region by the end of Year 13, in comparison to Year 10. By Year 13, Diablo's market share had increased (in both internet and wholesale segments) from 8.3% in Year 10 to 16.7%. The performance highlights reveal that the company maintained a market share of 16.7% all along up to Year 16. Moreover, the company decided to invest cautiously in the private labels, and in Year 13, there were zero pairs sold in all regions.
Year 14
The company had improved significantly with an average market share of 14.9 % and an S/Q rating of about 6.3. The company's significant growth was attributed to its decision to upgrade all the existing plants and establish more facilities to enable Diablo to meet the global demand as projected in Year 10. While maintaining low overhead costs, Diablo had a clear advertising strategy to improve its EPS performance and acquire more market share. In Year 14, the managers realised that their investment in advertising and creating global brand awareness was working (Ridwan Hidayat and Bagus Sriwarno, 2015). While the credit rating of Diablo was C plain in Year 14, the performance highlights results of the same Year 14 revealed that net revenue had increased from $494,241,000 in Year 13 to $678,641,000.
Figure SEQ Figure \* ARABIC 2: Diablo’s Historical Operation Performance
Year 15
At the beginning of Year 15, team Diablo decided to apply the best-cost strategy to give customers more value to their money. The strategy was to improve the product quality while reducing costs. Consequently, the Company improved its market share in Asia-Pacific to 16.3% and 16.5% in internet and wholesale segments, respectively. Diablo decide to add more features to the shoes to attract more customers and keep up with the competition in terms of designs and aesthetics. However, the managers realised that it was becoming expensive to communicate the importance of new features to the customers. Indeed, product development and advertising can be costly.
Year 16
The team also decided to apply the cost-strategy in Year 16 to reduce costs as much as possible and provide quality products at lower prices (retail price of $95.20 and $68.20 per unit in internet and wholesale segments, respectively). Consequently, the managers realised that the strategy worked because the net revenue had almost doubled in Year 16, amounting to $823,493,000. 
Business Environment Analysis
Macro-environmental PESTEL Analysis
Political Factors
Diablo Footwear Company analysed the following factors during the BSG: A country's political stability, level of corruption and existing regulations especially in costumer sector, anti-trust laws, price regulation, intellectual property, taxation, that is, tax rates and available tax incentives, the legal frame as it pertains to contract enforcement, bureaucracy and industrial safety regulations. Understanding these factors enabled Diablo to develop well-informed marketing strategies.
Economic Factors
Some of the macro environment factors that Diablo considered included the level of inflation, tax regime, exchange rates, stability of a country's currency, demand levels as well as labour costs. Other factors such as competition affected Diablo's competitive advantage. However, Diablo also analysed a host country's growth rate and footwear industry economic indicators like consumer spending to predict the company's growth trajectory.
Social Factors
Social issues within a community affect how companies do business. Culture, beliefs, and attitude of a community impact the organisation's culture in an environment. Accordingly, marketers of Diablo studied the customers of each market to help design a marketing message accordingly. Social factors that Diablo considered before investing in certain market include class structure, the level of education, p...