Mgt 578 Simulation Reflection Paper

Simulation Reflection Paper

Schiobhan Hopkins

MGT 578 - Strategy Formulation and Implementation

Rodney Klein

February 14, 2006

Thinking Strategically

According to the Thinking Strategically simulation, "Strategy, in business, is the combination of foresight, planning, and decision-making that prepares an enterprise to achieve long-term goals and manage the consequences of contemporary decisions." A lesson learned was that one needs to properly construct long-term objectives to be able to align to the company's strategic goals. This helped in some development of my strategic plan.

For example, if the CEO of a company wants to establish a strong competitive position and cares less about profits in the short-term, then a possible strategy would be to keep prices low in order to establish the company within the market. In order to arrive at an objective, one must analyze the internal and external environments. External analysis is done at a higher cost because information needs to be gathered and analyzed. Also, external data is not readily available and it may take time to obtain. Internal environmental analysis can be obtained at a fraction of the cost and is usually readily available. One of the most common techniques of internal environmental analysis is a SWOT analysis. Once both environments have been analyzed, one could select objectives that align with the firm's strategies.

The CEO of BJ's wanted to lead the industry in profitability, which would mean increasing profitability from the current 28% level to 38%. In addition, the CEO wants to reduce the manufacturing costs of bikes to under $100.00. The first decision is to decide how much internal and external information is needed to finalize the long-term objective. A good decision would be to get a mixture of consumer and industry research reports. The U.S. Specialty Bicycle Consumers Study is a good choice because it will give information about our customer. Another purchase was the National Specialty Bicycles Retailing Industry Report which will give the industry information as needed.

The next decision is the long-term objective for BJ. BJ's objective should be to become the industry leader in revenue over the next five years. This is a good choice because of the small number of retail chains within the industry. If BJ's can become the number one seller, they can establish themselves as the industry leader in bicycle production.

Next, a SWOT analysis was performed to analyze the external environment of BJ's. SWOT also helped with looking at strengths, weaknesses, opportunities, and threats in my strategic plan. The strengths identified within the company are their cash position, the AntiGravity bike brand, and their in-store advisory. Their weaknesses were their "male-oriented" retailer image, low brand recall, and their lack of retail stores in the high growth areas. Opportunities that are present in the industry include the extreme sports market, market for women consumers, and the increase in government spending on physical education programs. Finally, threats were the low-cost imports from overseas, lack of interests among the younger generation, and the maturity in the bicycle industry which would hamper large future profitability.

Developing Grand Strategies

Grand strategies are often called master or business strategies and provide a basic direction for strategic action. More criteria of a grand strategy are that they provide a time period over which long-range objectives are to be completed and it is a comprehensive approach that guides a firm's major actions. It is also important to formulate strategies because this will allow for a more organized approach. Careful strategy formulation helped in developing my strategic plan.

In the simulation, the overall market for Oz's Toy Store was chosen. They were in the first quadrant because they held a strong competitive position and the market was rapidly growing. A strategy was selected that would strengthen Oz's competitive position. The strategy to acquire a resin company to control volume, quality, and price of plastic was best fit. This strategy will allow Oz to remain in quadrant I and consolidate its equity.

After implementing the previous strategy, Oz learned the firm ranked fourth in the US toy industry added an online toys channel that may boost them ahead. After the aggressive move, the industry was in rapid growth and now held a weak competitive position because there currently is not an online toy channel. The strategy was to start an online sales channel and acquire a digital toys and game company. This will allow Oz to maintain their competitive position within the industry.

The next decision Oz faces is what to do about one of their more popular toys, Buggs. It has been determined the toy has small parts that have choked little children. This story has pushed Oz to quadrant III, a weak competitive position and slow market growth. The next move would be to sell a portion of the retail chain assets, and continue to focus on current product lines. This