Business Strategy Home Assignment

Course: Msc in Human Resource Management

Seminar Leader: Éva Radvány
Team: Day and Night
Word count: 2030
Date: 10.06.2011
Strategy through the Business Simulation Game - DEEPER THEORY APPLICATION
WOULD BE REQUIRED
According to Whittington (2010) ‘Strategy is the direction and scope of an organisation over
the long term, which achieves advantage in a changing environment through its configuration
of resources and competences with the aim of fulfilling stakeholder expectations.’
While forming our strategy, our team has took into consideration seriously Whittington’s
strategy definition, and that is why the main strategy of Day and Night Company it was
described in the following vision statement and slogan:

’To be a premium shoes producer, with highest quality and number of models offered on the
global market. We believe that our people are the most important asset in our company, and
we are constantly investing their trainings and development. In order to reach the highest
number of customers, we invest a lot in marketing and celebrities. We are trying to satisfy our
shareholders with good financial performance and responsible attitude towards the
community in which we operate.’ Our target group was those customers who are willing to
pay a relatively higher price for the best quality. Our aim was to build up a unique clear
business strategy, which is easy to recognize, differentiate from the competitors and bring us
competitive advantage. That is why we chose the focused differentiation strategy for our
company. Our slogan also communicates the applied strategy:
‘Day and Night, Just be what you are!’

(Rácz, 2011)

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Our strategy in practice was realized in relatively high price than the competitors, very high
level of S/Q rating, highest number of models offered, and maximum utilization of capacity at
each plants, effective inventory management and aggressive celebrity appeal. Furthermore,
we tried to focus on each market segment and to be the leader of it. For example: Internet
segment, then Wholesale segment and finally in the private label segment. Our tactic was to
smoothly become a leader at each market segment and pay attention highly on competitor’s
activities. The reason why, of our unique strategy is that we did not want to participate in the
competitors ‘price war’, we sticked to our strong differentiated strategy even those times
when from the second best position we fall down to the last. Most of the companies’ strategy
was to maintain low price, focus on gaining market share, celebrity appeal and less expenses
at each market segment, without specialization.

Addition to this, one of our tactics was to find out the market nieche from year to year at each
market segment and make investments where nobody does. Thanks that we were strict to our
strategy with endurance we were able to reach the following results in Y18:

It is important to mention here considering strategy and tactics, that in Y15, Y16 we did
concentrate only on Wholesale of Branded Footwear. We thought that it is enough to focus on
only one market segment. However, it turned out that we have to invest in private label to
generate enough sales figures and stay competitive on the market. It was a mistake that we
didn’t focus parallel on private label and check carefully competitor’s activities, because our
position has fall from the second best to the last. It is obvious in the following chart when did
we have to change tactics, such as investing in private label again in Y17 with overtime
production.

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Furthermore, what was remarkable change considering our performance of the last two years.
In the last two years, we repaid the all the loan, increase EPS, Image Rating, celebrity appeal,
CSR, ROE, Cash and we opened a new plant to increase sales. That is why; we could take the
risk to repurchase our shares and offer a dividend price 1$, which helped the team to become
first leading position.

Addition to this, during our strategy we were continuously invest in S/Q rating at each year,
always 2stars higher then the competitors and number of models offered. At the beginning we
had some problems with default risk in year12 was 0.68 which is high and the following years
we were focusing on this and we reached finally a low ranking, with an A+ credit ranking.

Key learning points related to strategy:

The main learning points for me concerning our strategy, tactics and decision – making was
that it is very good to have a strong unique strategy; a focused differentiated strategy from the
competitors, because it could gain competitive advantage for the company.
However, besides a unique strategy it is highly recommended to check carefully all the
competitors activities, monitor the market changes and adapt in a way. It was a mistake that in
Y15 & Y16, we did not care about at all the market changes related to private label, and the
result was that the company has almost went bankrupt. We were mainly focus on the activities
of BFIT, who were our greatest competitors, and did not care about the rest companies. This
was also a mistake, because C-shoes were growing so fast and has managed to possess huge
market share in whole sale segment.

Furthermore, positive learning points are that having a strong unique business strategy is not
always guarantee for success and it is never too late to change tactics and bear risk. That is

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why, the cognition of Porter’s Five forces is highly recommended if we would like to maintain
our competitive advantage on the market.

(Rácz, 2011)
According to Porter’s model, it is clear for me that we missed some of the factors in the
beginning and in Y15 & Y16. In the first two years we had shortage in our inventory in
branded footwear in AP, NA and LA. We were not able to match correctly the customer
demand (bargaining power of buyers) and support, number of retail outlets (bargaining power
of suppliers) and we did not consider serious the new competitors (threat of new entrants).
Our strategy also can be described by Porter (1979) ‘Competitive strategy is about being
different. It means deliberately choosing to perform activities differently or to perform
different activities than rivals to deliver a unique mix of value.’

Functional Strategies
Considering functional strategies, Day and Night has put great emphasize on defining a clear
mission, vision statement and setting (SMART) goals and objectives. Definitely, our goal was
to reach higher results then the average, competitors, with a strong focus on CSR. We set our
initial steps according to Thompson (2007) were these phases are the base of strategy making
and execution. This way we were able to realize the future directions, the necessary changes
in product-technology- customer demand and current market position of the company.

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 (Thompson, 2007)

My responsibility was the Operations and HR part in the company that is why HR was
implemented in a holistic way, as a full business partner in our strategy. Taking into account
Day and Night’s strategies, we tried to use a mix of crafting and executing strategies. As I
realized, we tried to build up a strategy-supportive business culture with continuous
improvement and core competencies. Such as: greater proficiency in product development,
faster response to changing customer needs, capacity to speed new products to market,
superior inventory management systems, better marketing and merchandising skills. As in the
company’s vision statement, we made huge investments into HR especially CSR fields. . ‘We
believe that our people are the most important asset in our company, and we are constantly
investing their trainings and development.’ We used tools such as benchmarking, best
practices, TQM, and Six Sigma to focus attention on continuous improvement and invest a lot
in job security and safety issues. Furthermore, we used green footwear materials, recycled
packaging, energy efficiency initiatives, charitable contributions, ethics & training and
implemented workforce diversity program.

Thanks to all the above mentioned investments Day and Night company managed to receive a
Gold Star Award for Corporate Citizenship in Y15 & Y16 and a second place in Y18. I think it
was really worth to implement huge amount of money to the above mentioned activities,
because it had a direct effect on the increase of image rating. My responsibility in operations
and HR contributed directly to the company’s results and performance. I can say that all the
concepts, methods that I learnt in HR Planning and Performance Management modules were
directly related and contributed to the company’s overall strategy. For example, I have
managed to experience an HR business simulation game in the second thinking block. Thanks
to this experience, I was able to deal with financial data and implement HR in a holistic
approach, to become a full business partner in decision-making.

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 (Schneider, 2011)
Group Dynamics
Concerning group dynamics, there were synergy and harmony in our group during teamwork.
Before decision making, each of the team members shared their ideas, opinion, than with a
common agreement we finalized the decision online. An example of the synergy in our group
for example: If somebody in the team did not understand facts or figures in the financial
reports, we helped each other and explained it well. We moved to the next problem, when
each of the team members fully understands all the figures in the reports, balance sheet and
the role of decisions.

The reason why, we were so efficient, that we could make decisions quickly and at the
beginning we set the rules and agreed in the company’s vision and mission statement. We
measured and tailored all the decisions relating to it. We did not have conflicts during the
teamwork and cultural differences did not affect the outcome, because most of the team
members finished the Bachelor in IBS. So, we already know each other, the different
personalities were not a problem. There were no silent voices, or ideas unspoken, because
each of the team members is a very open-minded personality and believe in equality.
My role was in the game, the responsibility of Operations and HR fields. There were no
problem about dividing the roles between the team, because we already know each other’s
skills, abilities and background knowledge. That is why; it was easy to agree who take each
responsibility. Moreover, the pressure and excitement during decision-making helped us to
focus more on the other team member’s opinion on the particular field and quicker decision-
making. Addition to this, the stress has brought the team members more closer and resulted
concerning operational activities like a well-working family business.

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I faced only difficulties during the team work, when the others could not participate in class
and we had to finalize decisions through online. Thanks to the narrowed communication
channels, we could talk only through chat was not as efficient. That is why, in that year we
could agree that not make big changes in our decisions, just follow the last year’s strategy. It
was little bit frustrating, because I was worried that maybe we miss some factors by decision-
making or make a mistake.

Key learning points:

For me, the key learning points during the BSG, is that synergy and setting rules are very
important at the beginning of team work and the appropriate division of tasks and
responsibilities. Furthermore, the knowledge of the team member’s skills, abilities,
personality and background experience also plays a huge role in the outcome. The cognition
of all the above mentioned factors, lead us to put one’s best leg foremost and mutual respect.
However, there is a need to improve the communication channels between the group, to avoid
frustration among team members in similar situation. I found this game a very useful
experience, because it helped me how to handle bearing responsibility and taking risk in my
field and an operating company. Furthermore, I managed to understand all the connections
between financial reports, inventory management and balance sheet in real, which is very
useful for my future professional career. Addition to this, I realized that all the risky decisions
and suggestions have a great and immediate affect on the performance of the team and the
outcome, and it is worth to take it.

References:

Rácz, M. (2011) Business Strategy Lectures

Schneider, H. (2011) Business Strategy Lectures

Thompson, A.A., Strickland, A.J. & Gamble, J.E. (2005) Crafting and Executing Strategy:
Text and Readings. 14th ed. McGraw-Hill/Irwin.