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THE COMPANYS PRESENT STRATEGY AND HOW IT HAS

EVOLVED. WHICH IS THE COMPETITIVE ADVANTAGE OF YOUR


COMPANY
CUTE Shoes Company started and finished the BSG as an Integrated Cost
Leadership/Differentiation Strategy. At the beginning was a little difficult to choose the right
strategy for our company, we were indecisive and confused at the same time because we did
not know very well how the game worked.
Finally we opted for the integrated strategy because we thought it was the more appropriate
to a variety of models and keep a good quality in our shoes, since we never wanted that our
product had little scope and nor that it is sold at a high price either.
In year 11 CUTE Shoes Company offered shoes with a quality lower than the industry (S/Q 4)
and also lower prices both in whole sale segment as in the Internet market, however this year
we were the second company that sold more in the whole sale segment and the first in the
internet market and the happened in the private label in each of the four regions. Due to the
great response we had, demand exceeded supply, so we lost about 250 pairs to sell that year.
Year 12 for CUTE Shoes went through several changes, we started to increase the quality (S/Q
6) and price both in the internet market as in the whole sale segment out because we realized
that we were not doing work our strategy from the beginning. At the end of the year we got
second place in market share in internet and we increase the market share in each of the
regions and this time we only lost 20 pairs to sell in Latin America. And we only sold privatelabel segment in Asia Pacific. These changes got good results because our level of sales
increased and improved our credit rating and image rating.
In year 13 we bought a plant capacity for Latin America region due to the demand for shoes
that we had there. We decreased the price on internet market in $0, 50 in every region and
we kept the same price in whole sale segment for this year. We also kept in the same quality
and increase the numbers of models. At the end of the year we realized that we were the third
company that sold more in market share both in internet market as in whole segment.
Another important bounding was that year we lost about 80 pairs to sell maybe because we
just bought the plant and we had to wait a little longer for results, and we only sold private
label in North America and Asia.
In the year 14 CUTE Shoes decided to analyze how the Latin American market with the new
plant. We increased a little bit the price in the two markets and with the same quality as the
previous year (S/Q 6). This year we decided to reduce drastically the models of shoes from 300
to 100 because we had high demand and at the end of the year many shoes were left in
inventory. As a result our demand of shoes decreased at internet market but this year we had
no losses in Latin American market conversely we were the company that sold more in Latin
America and we got 4, 7 points than previous year.
The year 15 was maintained with slight changes in prices with a slight increase of the models
in both segments (Internet and Wholesale) after the decline of models previous years. We also
increase the quality one point more than previous year. We should emphasized that this year
we were the second place in market share in Europe region and we were one of the two

companies that had not losses this year in Latin America, with 22.5% market share, actually we
were the company that sold more in that region.
In the year 16 there was an increase of the quality to 8 stars in all regions, also we increase the
price and the numbers of models. As a results we got the 17.9% of the market share in Europe
and the same result for in Latin America, we were the most we sold in those regions. In
addition we got private label in every single region.
Year 17 was not good for us because we got a lot of sales losses which made us fall to 4 place
in the We increase the price and maintained the quality and the numbers of models. We got
the lowest percentage of market share in almost all regions at internet market segment. We
also got sales losses in all regions at whole sale segment except in North America due to out of
stock conditions. However we sold private label in all regions and as a result we got the 63.2%
of market share at least something good in all of these losses.
The year 18 was maintained with the same prices, quality and numbers of models in both
segments (Internet and Wholesale). This year we only got a sale loss in Europe region. We also
sold in private label for all the regions about 46% of market share, which kept us in fourth
place in the scoreboard. The same thing happened in the next year (19) we kept the prices,
quality and numbers of models in both segments but this year we lost of sell about one
hundred pairs of shoes in Latin America region and we also reduce the percentage in private
label to 16%.
For the last year (20) we decided to reduce the price in internet market from $83 to $80 and
we increase $0.50 in every single region of the whole sale segment keeping the quality and the
numbers of models. As a results we got too many sales losses in every region due to the huge
demand we had. We also loss market power in private label with an average about 10% in all
regions. Is necessary to say that we never hire a celebrity because every year we wanted to
hire one, other company did it from there we never made the attempt again. Finally we went
up a place in the scoreboard, ranking third among all industries.
We can conclude that CUTE Shoes Company kept its marketing strategy from the beginning
which was our competitive advantage and it was able to win its place, capturing the loyalty of
the customers and offering a good quality in the market. In addition we can say that one of
our advantage was bought the plant capacity in Latin America region which helped us with the
demand and we always did a free shipping in every single year and we also can say that we
kept a good image and credit rating than the others companies.

DESCRIPTION OF:
1. CORPORATE CITIZENSHIP STRATEGY

CUTE Shoes has always being green oriented and we have constantly supported charities and
the environment. In year 19 we won first place of the Gold Star Award for Corporate
Citizenship and others years like 15, 16 and 20 we got the second place. We have given special
emphasis to the use of recycled boxing, energy efficiency initiatives, ethics
training/enforcement and workforce diversity.

2. PRODUCTION STRATEGY

Our production strategy is related to different factors taking into consideration that our
strategy is integrated cost leadership/differentiation.
a.

Percentage of Superior Materials: since the first year we have increased the usage of
superior materials, over 60% in the Asian Pacific plant and the same amount for the
North America plant. The reason behind the increase was for raising the quality and
reaching 8 stars. Also because we realized it was cheaper to offer higher quality

b.

c.

d.

e.

f.

g.

through superior materials that any other factor, so for that reason in the last year we
got 80% for North America plant, 90% for Asia Pacific plant and 94% for Latin America
plant with an S/Q rating of branded pairs produced of 8 stars.
Number of Models: we initially started offering 200 shoes, we increased that number
to 300 until year 13 in which we reduced the amount to 100 due to got too many
demand in the market, later on in year 16 we started to increase the models to 150 in
North and Latin America region keeping Asia region with 100 different models until
the end of the game.
Enhanced Styling features: since we already use a lot of superior materials, we
managed to reduce this factor since it is the most expensive one, in this way we could
reduce the cost of each pair.
TQM/Six Sigma Quality Program: we are currently spending $0.50 in North America,
$1.40 in Asia Pacific and $1.4 in Latin America region per shoe; we have had to
continuously spend each year a bit more in order to increase the quality of our shoes.
S/Q Rating of Branded Pairs Produced: we started with a low-regular quality of 4
stars; we have worked our way to 8, an improvement of 50% always following what
our strategy was, no much models no much expensive with a good quality.
Compensation and Training: Training our workers has been a good investment that
has help us reduce the number of rejects, we have kept on spending in best practices
training and incentives, since it has truly shown to be a way of reducing the cost.
Number of pairs to be manufactured: We have increased the number of
manufactured shoes; we initiated a construction in the plant of Latin America region in
year 12 and 13 to sell 1000 more shoes. The reason of constructing in the same plant
and not going to a different region was to use economies of scale, in this way we
reduced costs and the demand.

3. MARKETING STRATEGY (INCLUDING CELEBRITIES)

Our marketing strategy was to be above the average of the industry being truthful to our
integrated cost leadership/differentiation strategy. As we mentioned before we increase the
S/Q rating of our shoes reaching an 8 stars, the augmentation was done in a slow way in order
to test the market.
a. Celebrities: We always wanted to sign a contract with a celebrity to help us with the
sales level but we never could get them, perhaps because we never did a good

b.

c.

d.

e.

f.

proposal of bid or something like that, instead of that, we invested so much in


advertisement every year from $7000 to $18000.
Wholesale Price to Retailers: Our process of taking price related decisions was always
taking in consideration the Competitive Intelligence Report, specifically the market
snapshot. Since we realize it was better to do reports each year to better control the
competitor decisions. Our objective was to be above the industry average, but at the
same time controlling the gap with the prices of competitors.
Advertising Budget: Our advertising strategy was also done studying the reports and
trying to be above the average, we did emphasis where we needed to sell more shoes.
We invested so much in advertisement every year from $7000 to $18000.
Rebate offer: Our rebate offer was a constant of $3 because this boosted our image,
except in year 15 we increased it due to the offer of the competitors. We also were
taking price related decisions was always taking in consideration the Competitive
Intelligence Reports.
Retailer Support: Our retailer support was distributed as follows: in North America
and Europe region at the beginning we got $400 but then in year 15 we increased it to
$800, in Asia pacific region we were from $400 to $600 and finally for the Latin
America region we got at the beginning $400 and in year 15 we change it to $500
since we had extra shoes that we needed to sell.
Delivery to Retailers: from year 11 to year 15 we maintained a 2 weeks policy because
we thought it was important for customers to find our shoes available when they
wanted it, but due to the competition we changed it to only one week since year 16 to
the end of the game.

4. WHOLESALE STRATEGY

We had an integrated cost leadership/differentiation strategy so we tried to achieve global


efficiency having no much models being no much expensive and always keeping a good quality
at the beginning we only got two plants one in North America and another one in Asia Pacific
and then we caught the Latin American market building a new plant and managing it with
almost 22% of the market, at the same time we wanted to be able to respond locally, we were
able to respond to changing environments specially when the currency change affected the
industry, in this situations we were able to adapt and increase our sales.

The integrated strategy allows adapt quickly to environment changes and effectively leverage
its core competencies while competing against its rivals and that was what we did first we
managed having to focus in only two plants then the new one in Latin America, second we did
it offering different type of advertising and prices depending on each region.
Our integrated strategy has proven to be quite successful; we have invested in quality and
keep above the competition in all the different indicators like price, S/Q rating, advertisement,
etc. Each year we studied the reports we learned more about the competitors, we got to know
the market and took the decisions. Weve been able to reduce costs thanks to the distribution
that was done considering the exchange rate cost adjustments for each year and also the
tariffs on pairs imported.

5. INTERNET STRATEGY

Our internet strategy was trying to keep the prices a little below the competition and also we
didnt sell too many models, since this market wasnt a main concern for us. But in general we
increased about $5 in the price in the whole years of the game also the quality from 5 to 8
stars, we always had a free shipping and with the same amount of advertisement from
wholesale segment. At the end we realized that we increased our level of online orders about
60%.

6. PRIVATE LABEL STRATEGY

We did private label in every single region but in different ways mainly we adapted it to the
changes of the industry and the market. For North America region we did private label in all
years except in year 12, with an average sales of $31.55 and our position of the market share
was about 25%. In Europa region we did private label in year 16 to year 20 with an average
sales of $36 and our position of the market share was about 43%, this was the best region in
private label. For Asia Pacific region we did private label in all years with an average sales of
$35 and 32% of market share. Finally for Latin America region we did private label from year

14 to the end of the game and we got an average sales of $35 with about 22% of market share,
this region got the least involvement on the market.

PERFORMANCE TARGETS FOR THE NEXT YEAR OR TWO,


ASSUMING THE SIMULATION CONTINUED ON.
PERFORMANCE TARGETS

Year 21

Year 22

Earnings Per Share (EPS)


Return On Equity (ROE)
Stock Price
Credit Rating
Image Rating

$4,30
7,6%
$46
A+
77

$4,58
8,3%
$47
A+
79

These targets are based on the market situation considering also any problems within the
industry like the exchange rates situation since we did a strategic plan so we put those
knowledge already got in this situation and we hope to maintain our marks or improve them,
we considered the results of year 20 and we also played to see what would happen with our
new decisions.

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