Viral Pandya Viral PandyaVP North America Team C, Coll KicksFootwear IndustryMGMT 468, Sec-10 2011-2016 VP of North America ReportViral PandyaI. Business Level Strategy Introduction The business level strategy has two-part, Porter’s Model and Miles Snow Model. Both business level strategy plays most important part on your decision-making process every year. Based on strategy that you used will influence your decision- making process on that year geographic region. Different VP on Different region will choose strategy that suited for their business need at that time.
Business level strategy helps us to predict demand, so we can create our goal and vision, also, gives us the direction on which path to choose. Without any strategy it is very difficult to predict the goal and also very hard to move in one direction. In Coll Kicks Footwear Industry, we have six departments, VP of North America, Europe-Africa, Asia-Pacific, Latin America, Internet of North America, and Internet of Asia-pacific. All VP have chosen strategy based on vision of the company and get maximum profit out of that region.
I will explain which business level strategy I choose, reason for my choice and result of that choice as Vice President of North America from year 11 to 16.DESCRIPTION OF CONCEPTSTo competitive in footwear industry Business-level strategy are most critical part of decision-making, also, most important part of Vice Precedent job. Business-level strategy is a strategy designed for division of the firm that competes within a single business. To have detail understanding, I will explain both business level strategy in more detail by breaking down in separate part by concept and terminology.Porter StrategyPorter Strategy has three genetics strategy to have batter Sustaining a Competitive Advantage the market: Overall Cost Leadership, Cost Focused Leader, Overall Differentiator, Differentiator Focused. Cost leadership allow price flexibility & higher profitability by cost reductions, tight cost & overhead control, and cost minimization in all activities in the firm’s value chain, such as R&D, service, sales force, & advertising. A focus strategy is based on the choice of a narrow competitive opportunity within an industry A focus strategy has two variants: Cost focus, creates a cost advantage in its target segment, and differentiation focuses, differentiates itself in its target market exploits the special needs of buyers A firm achieves competitive advantages by premium pricing.Miles and Snow StrategicMiles and Snow Strategic has four-part reactor, defender, analyzer, Prospector. Defender has Limited Product Line their focus on efficiency of existing operations. Reactor has various product- market areas in response to high dynamic environment. They always invested in various market area. Analyzer has At least two products market areas one stable and one dynamic. They always maintain their market share and then focused on innovation. They are newer first mover they always enter to the proven market. Prospector Focus on product innovation. They constantly seek out for new opportunity by creating new product and taking first mover advantage.ANALYSISPorter StrategyFor Porter analysis (Exhibit #1), I chose the cost Focus strategy for year 11, I Stared Reducing cost material cost for branded footwear and private label footwear where $11.02 and $8.20 was lower than average industree cost but not lowest, but fail to reduce the price of shoes. We had higher than average composition for our worker, but we have highest productivity so labor cost per pair produce was lowest. Moving forward year 12 -16 I change my strategy to Cost Leadership my goal was to reduce the price to lowest in the industry while keeping the same quality. Cost per pair war lowest because we have installed many up- grated equipment, so our reject rate went down make cost to went down.North American market was most competitive market, to gain advantage we must sell at lowest price possible while keeping same quality. Cost Leadership strategy helps us reduce the cost, so we can provide product at lowest cost. As result we reduce price from $56.00 on year 11 to $ 50.00 on year 16. While S/Q Rating from 4 in year 11 to 6 in year 16 as showed in Exhibit #2. Only weakness that we had was higher advertisements cost. We ware unable to reduce cost because of the nature of the market. Miles Snow modelIn with Miles Snow model, exhibit #2, I selected defender strategy because I wanted study growth while maintaining high market share. As my strategy my thinking was cost is most important part of purchasing decision, so we decreased the price. We also know that second most important factor after price is quality, so we improved our S/Q rating from 4 to a 6 as showed on exhibit #3. As result of price reduction and improved S/Q ratting we manage to increase our market shar of North America from 11.3% in year 12 to 29.90% in year 16, that’s 162% increase of market share as showed in exhibit #4.CONCLUSIONIn conclusion, North America was successful to choose right strategy for study growth and success the company. In the start of the simulation I was confident with my strategy and result conform this. As we closely follow both business strategy as long-term goal without taking any significant risk we were able to maintain top position in industry. Because of increase of market share we were on position of sort of demand. Our future challenge was to produce more so we can fill all demand that we have.II. Ethical IssuesINTRODUCTIONAs vice president of North America, I have faced some issue while making decision. In the BSG simulation I head to make decision that either ethical or being profitable. Ethical issue is most important part of the business because its separate right and wrong doing, not only economical but also ethical and environmental. Without ethics there is not any difference between right and wrong, we would not have fair market, even more crime will happen. Company with good ethics will have good reputation, while market and shareholder will not truest the company that leek on ethics. Every ethical decision will bring future benefits to the company and strengthen corporate governance.DESCRIPTION OF CONCEPTSEthics system is moral values and considered as the values and principles that individual use to make decision. In an organization they will have set of guidelines that all members of that organized used call ethics standards. Under SOX all publicly traded company require to establish the code of ethics as organization standard and if not then they must publicly disclose reason behind not establishing ethical standard. True company ethics is not only making profits but also take care of environment and society. In North America Ethical issues played a huge role on every decision that I must make diction such as, celebrity appeals, use ethics training to all employee including manager, use of green footwear materials, and change in price. ANALYSISDividends PolicyWe did not pay dividend most of our competitor were paying quarterly dividends to their shareholders, that makes them happy. Instead of paying dividend we used extra earning in year 14 to repurchase share because we knew that our share price treading lower that what it should have been. Also, repurchase own share will give the market a good sign regard company expected earnings. Lastly earning per share goes up because of the share repurchase. In year 15 We did not pay any dividends also we sell more share because we need more money to build new plant in Latina America and upgraded all equipment with new technology. In year 16 we repurchase more stock because we have excess cash flow for that year. In result our share price increases every year.Corporate Social Responsibility and CitizenshipGreen material is not free its always cost extra amount of money to the company. The cost to use green material is $.50 for standard material and $1.00 for Superior material. North America was most important market, my goal was to keep the cost minimal and sell at lowest price. As VP of North America, I must make decision rather to use green material or save the cost of production and create shareholder wealth. At the end we made decision to use green material for all the year. Also, we have invested Energy Efficiency Initiatives for $ 200000 year that involves investments to improve energy efficiency and using renewable energy sources. We have also Invested in charitable donation that Involves making pre-tax donations to charities for good cause. We had increased our charitable donation ever year as you can see on Exhibit # 5 We had paid $668,000 in year 12 increase that to $1,115,000 in year 16.We also ware involved in ethical training development of our all employees. The cost we have had to pay was high as $250,000 for managers and $150,000 for plant worker but benefits outwait the cost. We were also involved in Workforce Diversity Program that Involves initiatives to achieve and maintain workforce diversity concerning age, sex, ethnicity, and other factors. The cost was about $500,000 for training and hiring. Only one thing we did not do well is spend on recycles material as we spend most of our expense on other things. As result is excess spending we have received have received Corporate Social Responsibility award for year 16 Exhibit # 6. CONCLUSIONIn conclusion, I believe Cool Kicks was most ethical company in industries. They were some decision that we made where war questionable because investor does not like wasting their money bet at the end we made right choice. In year 16 we could have invested more in recycles metrical and have donated more as we had good amount of cash available. We could also have paid bonuses to employee, but we had kept the bonuses to minimal. We also did not hire more employees instead we force our staff to work overtime. In sort we had lots of room to improve but we choose not to do so.III. Results relative to GoalsINTRODUCTIONOne of the tasks as VP of North America was to make goals and compare with actual result and continue to improve in goal making process. At beginning year in simulation, we stared without any goal so when result come it’s hard to compare. By seating goal, we can estimate demand of our footwear we and estimate the cost of product and advertisement. If we setup the goal than its easier to compare with actual number and that way, we can measure manager performance. Manager are always pay bonuses based on their performance and goal VS its result play big part on measurement. DESCRIPTION OF CONCEPTSTo have batter understanding we must understand goal making process and their benefits. Goal making is one of the hardest tasks for anyone who is setting up the goal. Whenever you make goal you have to apply SMARYT Goal mean all goal should be specific, measurable, Attainable, Relevant, and Timely. We also must make sure goals are clearly specify time frame like, short turn or long turn. Also, goal should be realistic so by hard work it can be archivable. ANALYSISYear 14 Performance Goal Vs Actual result and Deviation We stared seating our goal from beginning of year 14. As you see Exhibit # 6 To test our goal strategy, I have started reducing price for wholesale from $58.00 in year 13 to $52.00 in year 14, reduction of $6.00 per shoes. For S/Q rating I have chosen to flow the market and keep at 5. I started year 14 with only 150 model offer with free shipping and $3.00 rebate. My budget for advertisement for year 14 was only 6,500,000 was significant lower then my competition. My goal for order demanded was 1,115,000 and pair sold was 1,150,000. Because we are just testing price vs benefits, I only expected some growth for market share, so my goal for market share was at 12 percentage Our actual result for price, S/Q rating and model offered was same as we predict in our goal. We spent same amount for our advertising expanse as we predicated. Our demand for shoes was only 1,075,000, pair sold was 1,124,000, and market share was 12.20 % We did not have any deviation for price, S/Q rating, model offered, and advisement expense. Deviation we had was, demand of shoes, we were negative 75,000 pair on predicting demand. Also, pair sold was negative compare to our goal. We did good job in predicting market share as dictation was only .20% Year 15 Performance Goal Vs Actual result and Deviation Based on year 14 result as show on Exhibit # 7 we started reducing price even more for wholesale from $52.00 in year 14 to $45.00 in year 15, reduction of $6.00 per shoes. We also have maintained same S/Q rating as year 14. In year 16 we started increasing model offer from 150 model offer with free shipping and $3.00 rebate to 185 model offers. I have also increase advertisement for year 15 to 10,000,000 from 6,500,000 was significant increase from previous year. My goal for order demanded and pair sold was 1,200,000. Lastly, my goal for market share was at 12.5 percentage Our actual result for price, S/Q rating and model offered was same as we predict in our goal and spent same amount for our advertising expanse as we predicated. Our demand for shoes was 2,605,000 pair sold was 2,711,000 significant higher then what we estimated. Finally, our actual market share was 27.80 % double then what we had expected in our goal.We did not have any deviation for price, S/Q rating, model offered, and advisement expense. Deviation we had was, demand of shoes, pair sold, and market share. Reduction in price, increasing advisement expanse and increasing model offer increases our demand and awareness for our product. The result was increasing our demand by 140%, pair sold by 125% and market share by 123%. We never expected huge amount of growth but newer the less we ware leader of North America market. Year 16 Performance Goal Vs Actual result and Deviation In year my goal was to increases price because competitor price was no ware near main. I increase my wholesale from $45.00 in year 14 to $46.50 in year 16, We also have increases S/Q rating to 6 In year 16, we started increasing model offer from 226 model offer without free shipping and $3.00 rebate offers. I have also increase advertisement for year 16 to 12,000,000 from 10,500,000 was significant increase from previous year. My goal for order demanded and pair sold was 3,000,000. Lastly, my goal for market share was at 28% percentage so goal look realistic when we compare to our result. Our actual result for price, S/Q rating and model offered was same as we predict in our goal and spent same amount for our advertising expanse as we predicated. Our demand for shoes was 3,031,000 pair sold was 3,031,000, our actual market share was 29.90 %, higher that what we estimated.We did not have any deviation for price, S/Q rating, model offered, and advisement expense. Deviation we had was, demand of shoes, pair sold, and market share. But we were stable on growth and achieved the highest position in the industries. CONCLUSIONGoing forward we will have good understanding of goal making process. We continue to provide stable price with higher quality of product. Also, reduces expanse in advertisement and use that saving for plant expansion. lastly, we will continue to lead market as market leader. Exhibit # 7 Exhibit # 8 Exhibit # 9 Exhibit # 10