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Sports Ethics is committed to the principle that our products should be made with safe and ethically sourced materials and that the people who make them are treated with dignity and respect. To this end, we as a company endeavor to work with sports equipment suppliers throughout the world who share our commitment.

Nov 2018

Team report on simulation game Birkbeck University of London Strategic Management

CONTENTS EXECUTIVE SUMMARY........................................................................................ INTRODUCTION.................................................................................................... STRATEGIC DECISIONS...................................................................................... Week One – Period 2:.......................................................................................... Decisions Made.................................................................................................. Week Two – Period 3:........................................................................................... Decisions Made.................................................................................................. Week Three – Period 4:........................................................................................ Decisions Made.................................................................................................. Week Four – Period 5:.......................................................................................... Decisions Made.................................................................................................. Week Five – Period 6:.......................................................................................... Decisions Made.................................................................................................. CONCLUSIONS:.................................................................................................. REFERENCE AND BIBLIOGRAPHY:.................................................................

Sports Ethics

Sports Ethics TEA M R EPOR T ON SIMU LATION GA ME

EXECUTIVE SUMMARY Our company, Sports Ethics, is one of the competitors in the sale of sports equipment in the ‘Strategy Simulation Game.’ ‘Sports Ethics’, because we hold strongly to the belief that our valued customers should be provided with quality authentic products from suppliers who share in our views and values of being ethical in all phases of business. An organisation’s future is set by the strategies it undertakes. “Strategy is the long-term direction of an organisation” [ CITATION Joh17 \l 1033 ]. This report assesses and evaluates the current and past strategic position of our company, Sports Ethics, in the ‘Strategy Simulation Game’, against the performance of other competitive organisations. It outlines the company’s mission, vision, goals, and the various strategic tools, such as SWOT analysis, Ansoff’s Growth Strategies, and Porter’s Five Forces analysis, used by the organisation in its decision processes in running an ethically successful business, where we aim to position ourselves at a sustaining competitive advantage in the industry while increasing profitability. Also, the week by week outcomes of the organisation’s strategic decisions will be highlighted. The objective of the organisation is to be the market leader in the sale of sports equipment which are sourced ethically and adhering to the company’s corporate social responsibilities. Finally, the report will talk about the lessons learnt in building and sustaining a competitive advantage in the strategy simulation game, as well as the game’s impact on each team member view of their decision-making abilities.

Sports Ethics

INTRODUCTION This reflective report will provide an overview of a business simulation game, which our group have participated in over the last few weeks. Our company is called Sports Ethics, and was created by four members. The report will cover decisions made by the company directors week by week, based on internal and external analysis and our overall strategy, decided at the beginning of this simulation game. Each week our decisions would be analysed and compared to that of our competitors. The results achieved, would help us to reflect back and see how well we performed or what we could do better in the following week. Sometimes based on our results, it would mean that the team would have to change our business strategy, marketing campaign, existing suppliers or even our sales managers, to help the business to achieve company desired goals. Also, we would discuss the importance of ethics within the company, dignity and respect towards our staff and suppliers, as well as social responsibility, which is key to our business. Further on, we would critically discuss complexities which can arise while running a business, and how these can help to gain competitive advantage. The mission of Sports Ethics company is to produce products which are being made with safe and ethically sourced materials, and that the people who make them are treated with dignity and respect. To this end, we as a company endeavours to work with sports equipment suppliers throughout the world who share our commitment. Ultimately, our goal is to produce good quality products at affordable prices, and to gain healthy profits. The vision is consistent with being the industry’s leading sports retail company, fuelled by social responsibility, as well as inspiring society to pursue a healthy lifestyle and wellbeing. Finally, we would reflect on the main key learning points from the business simulation game and experience gained during this module.

Sports Ethics

STRATEGIC DECISIONS Week One – Period 2: Decisions Made

Marketing Purchasing Distribution HRM R&D Financials Market Research

Social media and instituted sufficient checks on all products Switch supplier to Kansas Ltd. Importing products directly to factory Hired Mr. Harry Leggman Re-apportion some of the budget to processes Keep spending at minimum and not take out new loans Buy competitors prices, market analysis, market size

The new board of directors took over the company. The first order of business was to evaluate all the resources available and identify the different constraints facing the company. With the limited resources, the board decided to keep spending at a minimum at this stage. MARKETING: The board decided to utilize the popularity of social media to directly target its market, as it is relatively cheaper than the other marketing channels, and it has the capability to target more of its target market. With a combination of different marketing mix, the board aimed to promote their products as quality sports equipment at reasonable prices, and kept the current pricing level at this stage, and waited to see what the competitors would do. PURCHASING: The board’s analysis shows that Kansas Inc. has all the characteristic the company is looking for in a supplier. This supplier is highly dependable, flexible enough to deliver at reasonable time, good product quality, and value for money. While keeping stock levels at minimum, the board introduced sufficient levels of checks on all company products to maintain product quality. DISTRIBUTION: The board opted to use the existing distribution channel, which imports its products directly from the factory to keep the initial outlay of cost down. HRM:

The board hired Mr. Harry Leggman, as the new sales manager, whom we trusted to lead the sales team and cultivate relationships, based on his proven track record, and up for a challenge attitude. Also, the board set the budget for staff training, and improved staff working conditions to average, with the intention of improving the company KPI’s.

Sports Ethics

R&D:

At this stage the board decided to re-allocate funding, as far as research and development is concerned. We rounded down the numbers to the nearest thousands on all the product development budget, and re-allocated the funds to processes. The aim of this strategy was to improve staff efficiency while keeping the cost at the same level. FINANCIALS: It was too early in the game at this stage for the company to take out a loan. MARKET RESEARCH: The board purchased a few marketing researches with the aim developing the company’s strategy, and in our decision-making.

Week Two – Period 3: Decisions Made

Marketing Purchasing Distribution HRM R&D Financials Market Research

Kept the existing marketing strategy Increase stock level by 50% more Kept existing arrangement Increase budget on staff training and improving staff condition Kept same level of budget Continued with the existing budget Buy competitors prices, market analysis

MARKETING: The existing marketing campaign resulted in an increase in sales and market share, as a result the company’s market share had gone up by 1.65% overall. PURCHASING: As a result of the increase in market share and sales, the board decided to increase stock level by 50% in anticipation of a growth and to meet demands. DISTRIBUTION: Due to the high cost of the initial outlay in changing the distribution channel, the board did not feel that it was worth spending the money at this stage. HRM: The increase in budget made it possible to improve staff training, which have a direct positive impact on staff educational level and loyalty.

Sports Ethics

R&D: With the continuing and sustainable Research and Development budget, the company was able to improve its processes, encourages innovation, and foster growth. This was evident in the improvement of the company’s KPI’s at this stage. FINANCIALS: The board felt that the existing financial arrangement were being met. MARKET RESEARCH: With the result of the marketing research, the board was able to plan and anticipate the changes in the market for the next period.

Week Three – Period 4: Decisions Made

Marketing Purchasing Distribution HRM

R&D Financials Market Research

Increase budget by 25% Price changes Stock level was maintained at same level except for tennis rockets Change into regional centre Increase budget on staff training and improving staff condition on average of 45% Increase the number of sales force by 25% Increase budget on average of 25% Load repaid Buy competitors prices, market analysis, quality experience, market size, segment size

MARKETING: At this stage, we injected additional funding on the marketing budget, by increasing the budget by 25% and adjusting the pricing structure to align with that of competitors. This resulted in an increase in sales by 10.78% from the previous period. PURCHASING: With the slow growth in the market, the board decided to keep the stock level at a minimum, and proceeded to increase tennis rocket stocks to meet demand, as the was an indication of market growth.

Sports Ethics

DISTRIBUTION: At this stage, the company had at least 2000 units of products in inventory, hence, the board decided to switch distribution to the regional center, in order to save the company £8,000.00 per period on distribution cost. HRM: With the average increase of 45% on funding for staff training and education, we had surpassed the minimum expectation as per balance scorecard. R&D: The board increased funding on Research and Development by 25% to boost innovation, processes, and research and development, as it had not shown any improvement in the last period. FINANCIALS: The company paid the £50,000 loan from the bank using existing funds. MARKET RESEARCH: At this stage the board invested more money on market research to get a better picture of what was happening in the market, and also to gain insight into buyer behavior and opinions on the company’s products.

Week Four – Period 5: Decisions Made

Marketing Purchasing Distribution HRM R&D Financials Market Research

Same level of funding from the last period Reduce price by 5% Reduce inventory level Kept existing arrangement into regional center Kept existing budget from previous period Carried existing budget from previous period No changes Buy competitors prices, market analysis, quality experience

MARKETING: The board continued with the existing marketing strategy, and reduced prices by 5% to help boost sales, resulting in an increase in sale by 13.31%. PURCHASING: With increasing cost of sales, resulting from increased number of unsold items, the board decided to reduce inventory coupled with the 5% reduction in price.

Sports Ethics

DISTRIBUTION: The board collectively decided to keep the distribution channel in the regional center, which resulted in an increase in operating profit by 15.62%. HRM: With a stable budget, staff loyalty and educational level has increase on average by 2%. R&D: With the stable and sustainable funding at this stage, we started paying dividends. It can be seen that Research and Development reflects an improvement on the average by 15%. FINANCIALS: The board failed to consider the loan repayment due in this period. This had a dramatic effect on the company’s financial and ranking. MARKET RESEARCH: With the current financial situation of the company, the board decided to limit buying market research to only market analysis, competitors’ prices and quality experience.

Week Five – Period 6: Decisions Made

Marketing Purchasing Distribution HRM R&D Financials Market Research

Same Reduce inventory level Kept existing arrangement into regional center Increase to excellent Same Loan 200K market analysis

MARKETING: Realizing the benefit of maintaining the same strategy we decided to continue without making any changes. PURCHASING: The company’s aim is to keep reducing inventory level to increase profit growth. DISTRIBUTION: Company progressed with the same arrangements as in previous period. R&D: The board carried over the same budget as previously.

Sports Ethics

FINANCIALS: Due to an oversight from previous period of not taking into account the repayment due, the organization has decided to take out a loan of 200K with payback period of 12 years with 10% interest to pay off existing debt. MARKET RESEARCH: Regarding market research for this period the board decided to only invest in market analysis.

Swot Analysis

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Strengths Ethical and socially responsible company Quality products at affordable prices Opportunities Market expansion product innovation increase productivity invest more in market research

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Weaknesses Limited product line Limited market data and analysis done Threats market inflation competitors

The company has decided to use SWOT analysis as one of the strategic planning tools to evaluate above objectives. (Businessballs.com, 2018) The main strength of the organisation is being an industry’s leading sports retailer, who can provide good quality products at affordable prices while being ethical and socially responsible. Sports Ethics weaknesses lay in its limited product line and market analysis, and this could pose threats with regards to having well-informed competitors who have long been established in the industry. However, with more investments in market research, the company could not only gain market share from competitors, but it could innovate new products which could expand its market and increase productivity.

Sports Ethics

Porter’s Five Forces Analysis

The Five Forces Framework[ CITATION Rho11 \l 1033 ]

BARGAINING OF SUPPLIERS  Medium  Few Suppliers  Reasonably powerful THREAT OF NEW ENTRANTS  Low to Medium  Barriers to entry in terms of costs, brand loyalty, government regulations COMPETITIVE RIVALRY  Medium to High  Low differentiation  Many competitors

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BARGAINING OF BUYERS Medium to High Many sellers in industry Buyers can easily switch THREAT OF SUBSTITUTES Low Few substitutes High switching costs

The sports retail industry is very competitive thus a close survey of the markets is necessary to be abreast with the dynamic economic conditions and customers’ preferences. Porter’s five forces analysis, on Bargaining power of Buyer and Supplier, Threat of New Entrants and Substitutes, and Rivalry among competitors, helps an organisation to be awareness of the effectiveness of the industry in which it operates, and environmental forces that impacts its ability to gain and remain at a competitive advantage. Sports Ethics, in the course of our many strategic decisions, carried out this analysis, which helped us to know the opportunities available to us and the threats which needs to be tackled, in order for us to be able to understand our industry better, offer top notch customer service and remain profitable. Above is a table summarising the five forces and their relative strength. Based on the results of the

Sports Ethics

analysis, Sports Ethics can be at an advantage through price cuts and high impact marketing campaigns. Also, with few substitutes available we can be assured that our industry is profitable, hence, our profit is sustained. Buyers can easily switch to our competitors, but Sports Ethics is involved in selling quality ethically sourced products, so that gives us an edge over our competitors, depending on customers’ values.

Ansoff’s Growth Strategies

Market Penetration: We selected Market penetration, which comprises of existing markets and existing products, in order to increase purchase with existing customers, win customers from competitors, convert non-users and increase the rate of consumption. The other Growth Strategies could not be selected for our simulation game due to the following reasons; Market Development: This strategy targets new markets and existing products. The simulation restricts us to the market offered. Product Development: This involves existing markets and new products. We are restricted to only four products in the simulation, and as such did not see a way of developing new products Diversification: This gives the opportunity for companies to develop new markets and new products which is ideal in real life to generate profits, but once again we are unable to take advantage of that due to what we are restricted to in the game.

CONCLUSIONS: In conclusion, the group decided on a main strategy and decided to follow this strategy throughout the business simulation game. All decisions made were centered around our

Sports Ethics

mission, vision and values. We believed that if we focused our decisions and business strategies on the big picture that the organization aims to achieve, and also instill their importance in our staff, we would be more effective, efficient and profitable. Also, the team faced some challenges in the course of the game, as same tasks were repeated by different members that could have been avoided, had we communicated properly. We could have divided tasks more efficiently to facilitate and make our decision processes easier. Each team member learned a lot lessons from the simulation game and working together. We had an effective leader who motivated the team to work in harmony and with enthusiasm. The organizer and facilitator of our team, ensured that we met deadlines and submitted researched work on time and properly organized. Regarding the strategic decision-making process, we learned that decisions made on a daily or weekly basis, needs to be aligned with the overall strategy of the company to preserve the integrity of the strategy, and see the merit of it. We have also learned to utilize the different decision-making tools, that is, SWOT analysis, Ansoff’s growth strategy, and Porters 5 Forces to aid in our decision-making process. The biggest learning curved the group must overcome as a business, is anticipating o...