Wednesday, July 28, 2010

The Globus Business Strategy

Is there a strategy to win?

Almost any professor would say that there is no secret to win this game; it all depends on the decisions made by the companies competing in the game. Well, that is 90% true, the remaining 10% is the fact that it is a game which means that as with any other computer game, it is a program, a program that responds to the user's inputs. Having said that you have to keep in mind that any decisions made by you will be entered as input for the different algorithms in the program, these algorithms make comparisons among the other companies and choose what the program considers to be the best. The point is, even if your decisions are the best according to your strategy, it won be, if all the other companies are making decisions that don't even make sense to you but does make sense for the program.

Read the manual, you might be tested on it. The manual is helpful is some ways but do not rely on it 100%. My co-managers and I read it and implemented our strategy based on the manual. IT DID NOT WORK!

The industry I played on was selling digital cameras.

We started by creating a strategy that focused on quality, meaning our products would be the best in the industry but also the most expensive ones. According to the manual, it said that consumers looking for high-end products did not mind paying higher prices. As it turned out, that was not the case. In the end it made sense, the program did not know our strategy which is the purpose of the game; however, the price was important factor as we later learned (our prices were way too high for the program, even though our strategy was to have high prices).

We run the company for 15 years; in the first 8 years we tried all kinds of decisions to maintain our strategy. We created the best products, Increased P/Q ratings; increased advertising, increased customer support, increased promotions, increased wages and compensations for workers but nothing seemed to work.

See our sixth place for FotoFun on year 8, also note how we lost 56 points in comparison with the previous year, meaning our strategy for quality was not working.

From year 9 till the end we reversed our strategy/decisions.

We manufactured the cheapest possible products, and also sold at the cheapest price. That meant, lowest P/Q rating ½ start, lowest advertising, lowest customer support, reduced salaries and compensation by 15 % in comparison with the industry.

Yes! That was the key, price is an important factor in this game, remember it is a software looking at numbers only not your strategy.

So, how to win the game? Simple!

Start by manufacturing at the lowest price possible and sell it at the lowest price possible in all regions, by doing this you will be increasing your market share which is good because even though you will selling your products at a lower price, you will make profits because of volume.

Having a huge market share means manufacturing more products, which means hiring more workers, DO NOT HIRE FULL TIME WORKERS, HIRE ONLY TEMPORARY WORKERS, the reason is, if you have to fire full time workers you will be incurring in enormous costs (Read the manual).

Your overall performance will be measured based on other factors such as;

Earnings Per Share, to increase EPS start buying back shares as soon as possible, this is key, less outstanding shares means higher EPS.

Stock Price, you will increase your stock price by increasing EPS.

Return on Equity, this will be increased by higher sales and higher profits.

Image Rating, this is a bit tricky because P/Q ratings affect image ratings, and because you will be manufacturing the cheapest products your image rating will go down, however, there are ways to bring it up. Once your company starts making profits, donate money to the different charities, improve the workers working conditions (read the manual about how to increase Image rating besides with product quality), keep in mind that any donations and any workers related improvement won make a difference right away, it usually takes two to three years, so start as early as possible.

My company FotoFun ended up in first place by year 15.

Good luck.



3 comments:

  1. hey man great stuff! we in the testweek and we got some great results thanks to your post! we had the same idea but were not sure how to approach it and thanks to your post we had the balls to do it afterall!

    would u mind updating us on how u did in the long-run? we are unsure on how to strengthen our position in the market and how to evolve this tactic in general in the long run. any pointer? u would be a cool guy to give us some advice!

    Reply and let me know if ur up to it! thousand thanks again for this short guide! got us kick-started like hell!

    ReplyDelete
  2. I found this topic very interested when it comes to winning the bsg strategy game, I found a similar site that exactly look like this. They offer great help and stunning ideas to beat the game. I think I found it here http://www.winbsgonline.com/glo-bus-simulation-br/

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