Task 1 B
Daily Durable Shoes uses a broad differentiation strategy. This particular strategy is concentrated on a more broad section of the complete market. Daily Durable serves a market that is defined by upscale people who enjoy fancy but durable shoes. Daily durable has made the company known for training efforts and meeting customer’s needs with free shipping to anywhere in 1 week or less. Daily Durable shoes is also known for the quality of their shoes using green materials and recycled boxes. By allowing free shipping with a one week delivery time, made competing for delivery and shipping difficult. Daily durable shoes holds a competitive advantage and financial success by offering free shipping in 1 week with competitive market prices. Customers also buy more from Daily Durable because we use recycled and green products to keep from harming the environment with pollution and wastes.
Daily Durable focused on corporate social responsibility with ethics training for all employees, energy efficient initiatives, workforce diversity programs, as well as donated 10% of their profits to charity. When customers see the organization cares about their employees as well as the community, the company is rewarded with more customers purchasing shoes. Broad differentiation was used so that Daily Durable could focus on social responsibility while having a higher price for better quality shoes. Daily durable market is large enough to offer many different styles of shoes and expand upon growth in the future.
The effectiveness of my strategy, I believe worked out exactly how it was planned to focus on corporate social responsibility and offer high quality shoes in several markets. I was able to offer a higher prices for shoes due to customers wanting better quality. My market share fluctuated by was higher during a few years. With my customer base I was able to increase pay each year to help the employees and entice them to stay with the company. My strategy also helped me achieve an A+ credit rating to pay back loans at a cheap interest rate.
Task 1 C
I quickly identified my competitor’s strategies because most of my competitors seemed to be using the low cost strategy to keep their prices down in order to gain customers in all regions. Two of my competitors showed to be using differentiation method like myself and focusing on social responsibility. As far as identifying my competitors strengths and weakness, that was difficult in each round because some weren’t really focusing on anything but price. Price was the biggest strength that was easy to identify among some of my competitors. S/Q ratings was the biggest weakness that was easiest to identify. Models offered was not easily identified as each company offered different numbers each year to improve their customer base and S/Q rating.
I was not very successful at predicting my competitor’s next moves as most of them changed different areas each year. I thought that each company would lower their prices each year but instead they raised their prices or kept them the same. I also thought once they all saw I was focusing on social responsibility they would do the same, but only companies C, and E followed suit as I expected.
Task 1 D
Company E’s biggest strength and competitive advantage is their retail price throughout the industry. Company E kept their prices low to attract customers of all backgrounds and income levels. Company E sustained their strategy by having the highest market share in North America ranging from 0% the first couple years to 45.9% on year 18. Company E also had great wholesale prices and quick delivery times. Company E dominated the social responsibility area for years 14-18 by winning a 1st place award for the best corporate social responsibility. Company B was shown to use the focus differentiation strategy. This strategy helped Company B dominate the entire industry. With this strategy Company B focused on the long term future goals.
Company B sustained their strategy by having the highest market share for North America ranging from 27.3% to 41.1% for the internet segment. Company B was also dominated with their strategy for best in industry score of 99 with average earnings per share of 9.31 with highest EPS being year 18 at 14.39. Company B stock price was also the best at year 18 at 230.46 as well as the highest net profit at $142,942. This is the most dominant competitive advantage used in the industry. Company C dominated the image ratings with a rating of 79 for years 14-18.
Task 1 E
The fit test is where a good strategy is matched well with the company’s internal and external situations, as well as the company’s abilities and goals. My strategy of broad differentiation meshes well with the company’s goal of great social responsibility and earning customers through quality and price. It also goes well with Daily Durable’s ability to gain these customers. The competitive advantage test is where a good strategy will lead to maintainable competitive advantage. The bigger the competition, the more effective and powerful the strategy is. My strategy of broad differentiation shows to maintain corporate social responsibility as well as good prices for high quality shoes for customers all around the world. The performance test is where a good strategy will boost the company’s performance. There are two versions of performance improvements that make a difference: profit gains and competition position and long-term business strengths. Daily Durable didn’t do very well in performance test like other companies. My broad differentiation strategy here focused more on corporate social responsibility and price rather than competing with others.
Task 1 F
“Value chain analysis is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation (Value chain analysis)”. Throughout the simulation, I was always thinking about what the primary goal is. Primary goal was to reduce costs and provide a good image rating to the community and nations Daily Durable was serving. The way Daily Durable added value was by focusing mainly on corporate social responsibility. The company donated to charities yearly as well as using green materials and using recycled boxes. Training was provided to all for diversity. Daily Durable donated to charities for children in need to not only improve image ratings but add value to the company. Training was provided each year to offer more opportunities within the company as well as for each employee’s current position to help them succeed.
Once customers see they donate to children each year, they feel they are also donating each year as well. Using recycled boxes cut down on purchasing new boxes for shipping each time they shipped out footwear to wholesalers and plants. Therefore saves money in the short and long run. Green shoes are made from earth friendly materials like recycled plastic or rubber, bamboo, or hemp. By using these green materials for producing shoes it will improve the longevity of the shoes and reduces wastes while manufacturing them. All the above adds value to the company to succeed in the short term and long term. The final value of the product was good and customers were still purchasing.
Task 1 G
3 important issues Daily durable faced: Low S/Q ratings, no cash balance a couple years, and too many shoe rejects in other nations. The low S/Q ratings stayed low throughout all 4 nations except North America in Year 17. Daily durable chose to upgrade and improve S/Q ratings at the end of year 16 to improve for the rest of the time. The other regions S/Q ratings stayed low because other company’s focused more on those than North America. The S/Q ratings did not affect Daily Durable too much so customers kept buying because of image ratings. The no cash balance for a couples worried the company at first because they were afraid of going in the negative on loans. As image ratings continued to increase, so did sales. With sales climbing, there started to be a cash balance in case of emergency or if anyone needed extra training. Too many rejects for all regions dipped too much into the company’s profits. Once Daily durable opted to upgrade the machines to produce less rejects, profits started gaining. Throughout the years there was always a lot of rejects from all regions except North America. With the small reject list from North America, this made up for the other regions to keep increasing profits.
Value chain analysis Reference from, http://www.strategicmanagementinsight.com/tools/value-chain-analysis.html,