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I need help understanding The Business Strategy Game (BSG). I genuinely don't understand how to do well. I have included screenshots of what each section looks like. What should I change / how do we win this game?

Prior-Year Compensation and Productivity Data Workforce Compensation Base Wages (total $ per year) Incentive Pay Fringe Benefits Total Regular Compensation Compensation and Training of Production Workers Overtime Pay (included incentives) Total Compensation Incentive Pay as a % of Regular Compensation Workforce Productivity (pairs per worker per year) Base Wage (% change from prior year) Incentive Pay ($ per non-rejected pair) Fringe Benefits ($ per year) Total Regular Compensation ($ per year) Overtime Pay (includes incentives) Total Compensation ($ per year) Incentive Pay as % of Regular Comp. Best Practices Training ($ per worker) Materials Cost Impact (from cumulative BP expenditures) Supervisory Staff (ratio of production workers to supervisors) Prior-Year Supervisory Compensation ($/year/supervisor) Supervisory Compensation (% change) Projected Workforce Productivity (pairs per worker in Y15) Number of Workers Employed (given branded production entries) Cost of Labor Associated Production Production Workers Base Wages Per-pair figures not adjusted for rejected pairs. Incentive Pay Fringe Benefits Overtime Pay Total Best Practices Training Expenditures Supervisory Compensation (salary + benefits) Total Cost of Production Labor North America Facility Industry Average Company A 36,158 36,443 4,804 950 41,912 8,393 2,250 47,086 4,318 0 46,230 11.5% 5,064 1.75 North America Facility Minimum Wage = 35,380 +2% V 37,172 8,513 $2250 Std -0.10 17.8% 120 per worker $000s 47,086 17.8% 5,154 5,167 48 1,784 409 108 621 2,922 41 to 1 Staff = 1 Ind. Avg. Co. A 62,312 61,818 Minimum Salary = 62,436 0% V 62,436 58 62 3,042 Sup -0.20 $/pair 2,250 $0 47,935 12,938 60,873 5.95 1.36 0.36 2.07 9.74 Europe-Africa Facility 0.19 0.21 10.14 Industry Average Company A 21,438 4,650 1,500 27,588 0 0 0 0 27,588 16.9% 4,084 Europe-Africa Facility Minimum Wage = 21,228 0% V 0 $ 0.00 $0 V Std 0.00 $000s 0 0 0 0 0 0 0 0 0.0% 0 0 0 0 0 0 0 0 0 0 to 1 Staff = 0 Ind. Avg. Co. A 37,833 0 Minimum Salary = 37,462 0% V 0 0 0.0% per worker Sup 0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Asia-Pacific Facility Industry Average Company A 12,737 12,735 2,067 2,414 750 1,500 15,554 16,649 2,146 0 16,649 17,700 13.3% 4,086 Asia-Pacific Facility Minimum Wage = 12,487 +2% 12,990 $ 0.50 2,429 $150 1,500 16,919 0 16,919 100 V Std -0.10 14.5% 5,437 $000s 10,067 1,882 1,163 0 13,112 14.4% per worker 40 to 1 Staff = 19 Ind. Avg. Co. A 25,964 25,758 Minimum Salary = 26,016 0% V 26,016 5,461 775 775 494 14,381 Sup -0.20 $/pair 2.38 0.44 0.27 0.00 3.10 0.18 0.12 3.40 Latin America Facility Industry Average Company A 12,487 0 1,989 500 14,976 0 14,976 13.3% 6,033 $0.00 $0 V $0 Std 0.00 Latin America Facility Minimum Wage = 12,487 0% V 0 $000s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0% 0 0 0 0 to 1 Staff = 0 Ind. Avg. Co. A 39,025 0 Minimum Salary = 26,016 0% V 0 0 0 0.0% per worker Sup 0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Branded Production Branded Footwear Production Branded Production Materials Specs (see anticipated materials prices at bottom of page) Number of Models / Styles (50 to 500 models) Enhanced Styling / Features ($000s per model) TQM / 6-Sigma Quality Program ($/pr. produced) Projected S/Q Rating (the style/quality rating ranges from 0.5 to 10.0 stars) Projected Reject Rate (percentage of pairs that will fail inspection) Maximum Y15 Production Capability (assuming all unused facility space is filled at the beginning of the year with production equipment) Total Branded Production Needed in Year 15 (to satisfy projected demand in all four regions) Note: Year 15 Production Capability (000s of pairs before rejects) Branded Footwear Production (000s of pairs) Standard Materials % Superior Materials % 12,100 (before rejects) Pairs to be Manufactured in Y15 (000s) Total = 4,530 Costs Associated with the Production of Branded Footwear Anticipated Y15 Materials Prices Anticipated Materals Prices: Production Capability Remaining for Private-Label Cost of Rejected Pairs (in $000s and $ per pair produced) Without Overtime Maximum Overtime Regular-Time Overtime (20% maximum) Total Production Capability Regular-Time Production Overtime Production Rejected Pairs (and reject rate) Net Branded Production North America Facility 50 % Materials Cost Labor Cost (including supervisory costs) Enhanced Styling/Features TQM / 6-Sigma Quality Program Production Run Set-Up Maintenance (of facilities and equipment) Depreciation (of facilities and equipment) Total Branded Production Cost $ 50 350 V 30 % $2.00 v 6.3 6.6% k/model 6,000 pairs 7,200 pairs 300 per pair North America Facility 250 pairs. 50 300 pairs $1,837 $000s 2,719 3,042 10,500 600 4,500 2,798 3,381 27,540 pairs 250 pairs 50 20 (6.6%) 280 0 pairs $6.56 $/pair 9.71 Europe-Africa Facility 100% 10.86 37.50 2.14 16.07 9.99 12.08 98.36 0 50 $ 0 V k/model $ 0.00 V 0.0* 0.0% 1,000 pairs 1,200 pairs This figure is an approximation given beginning inventories, projected reject rates, and entries that currently reside on the Internet and Wholesale Marketing decision pages. The company must schedule production of about this many pairs to satisfy projected demand and inventory requirements. To install production equipment at the beginning of the current year in a facility that currently has unused space, go to the Production Facilities decision entry page (the next item in the decision entries menu). 0 Europe-Africa Facility $0 $000s % 0 0 0 0 0 per pair 80 638 718 0 pairs 0 0 pairs pairs 0 pairs 0 0 (0.0%) 0 0 pairs $0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Asia-Pacific Facility 44% 56 Help % 350 V $ 30 k/model $ 1.50 per pair 5.6 11.0% 7,000 pairs 8,400 pairs Asia-Pacific Facility $11,069 $000s 39,969 14,381 10,500 6,345 9,000 4,896 15,711 100,802 Print 4,250 pairs 850 5,100 pairs 4230 pairs 4,230 pairs 0 465 (11.0%) 3,765 870 pairs $2.94 $/pair Save Decisions 10.62 3.82 2.79 1.69 2.39 1.30 4.17 26.77 Latin America Facility 100% 0 50 $ 0 k/model $ 0.00 per pair 0.0 0.0% 1,000 pairs 1,200 pairs Latin America Facility 0 V $0 $000s 0 0 0 0 0 80 638 718 0 pairs 0 0 pairs pairs 0 pairs 0 0 (0.0%) 0 0 pairs $0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Standard Materials 5.94 per pair Superior Materials 12.4 per pair Beginning figures represent actual materials prices from the prior year. Global materials prices are a function of industry-wide usage of superior versus standard materials and industry-wide utilization of available footwear production capability - see page 4 of the Footwear Industry Report for Year 14. You may enter estimates of Year 15 materials prices above. The more accurate the estimates, the more accurate your projected production costs will be. Production Facilities Equipment for Footwear Production Space Available for Footwear Production Equipment in Y15 Production Equipment in Place at Beginning of Y15 (000s) Purchase of Production New (000s of pairs) Equipment Refurbished (000s of pairs) Sale of Existing Equipment (oldest equipment will be sold first) Total Footwear Production Capability in Y15 (without OT) Percentage of New / Refurbished Production Equipment Production Improvement Options Option Purchase of special equipment to A reduce reject rate by 50% Option Layout revisions to reduce production Brun setup costs by 50% Option Purchase of special equipment to C increase S/Q rating by 1 star Option Robot-assisted production to increase D worker productivity by 50% Capital outlay ($000s) Projected annual cost savings at current reject rate ($000s) Capital Outlays in Year 15 ($000s) Capital outlay ($000s) Projected annual cost savings at current model count ($000s) Capital outlay ($000s) current S/O effort (9000ings at Capital outlay ($000s) Projected annual cost savings at current production / comp. Space for Production Equipment (000s of pairs w/o OT) Equipment Space at the End of Year 14 Construction of Additional Space (initiated in Y14) Space Available for Equipment in Year 15 Construction of New / Additional Space (available in Year 16) Space Available for Production Equipment in Year 16 Purchase of New Equipment Purchase of Refurbished Equipment - Book Value of Equipment Sold Equipment Upgrade Options Energy Efficiency Initiatives New / Additional Facility Space Net Capital Outlays in Year 15 North America Facility 6,000 pairs 250 pairs 0 0 pairs 0 V pairs 250 pairs 100% $625 $856 $400 $2,210 $1,200 $1,894 North America Facility $3,600 $614 pairs $ No V $ 0% Done No North America Facility No 6,000 pairs 0 6,000 pairs 0 pairs 6.000 pairs 0 0 0 0 25 0 25 Europe-Africa Facility 1,000 pairs 0 pairs pairs 0 0 0 0% $0 $0 $0 $0 $0 $0 $0 $0 pairs Europe-Africa Facility pairs $ 0 pairs $ 0% No No No No Europe-Africa Facility 1,000 pairs 0 1,000 pairs 0 pairs 1,000 pairs 0 0 0 0 0 0 0 Asia-Pacific Facility 7,000 pairs 4,250 pairs 0 0 $10,625 $4,472 $6,800 $3,820 $20,400 $5,675 Help 0 pairs 4,250 pairs 6% 94% $61,200 $-1,749 Asia-Pacific Facility 0 pairs $ pairs $ No V No Asia-Pacific Facility 7,000 pairs 0 7,000 pairs pairs 7,000 pairs No v Done 0 0 0 0 Print 425 0 425 Save Decisions Latin America Facility 1,000 pairs 0 pairs 0 0 0 0% $0 $0 $0 $0 $0 $0 $0 $0 pairs pairs $ pairs Latin America Facility $ 0 pairs 0% No V No No V Latin America Facility No 1,000 pairs 0 1,000 pairs 0 pairs 1,000 pairs 0 0 0 0 0 0 0 Distribution & Warehouse Branded Distribution Pairs Available for Shipment (000s produced after rejects) Pairs to be shipped from Facility to (000s of pairs) Remaining Pairs to be Shipped (if left unshipped, will be shipped automatically) Warehouse Operations Inventory Left Over at the End of Year 14 (000s) Inventory Clearance (prior to Year 15 operations) Clearance Statistics North America Warehouse Europe-Africa Warehouse Asia-Pacific Warehouse Latin America Warehouse Beginning Inventory (000s of pairs carried over from Year 14) Incoming Shipments from (see Note 1 below) Discounted Clearance Revenues Direct Cost of Pairs Cleared Margin Over Direct Cost Note 1: Pairs Available for Sale in Year 15 (see Note 2 below) Projected Demand (given branded marketing decision entries) Required Inventory (needed to achieve delivery time) Projected Inventory Surplus (Shortfall) Note 2: North America Facility Europe-Africa Facility Asia-Pacific Facility Latin America Facility Projected Distribution and Warehouse Costs Exchange Rate Cost Adjustment (on incoming shipments) Distribution and Warehouse Costs North America Facility 280 pairs Freight on Footwear Shipments Tariffs on Pairs Imported Inventory Storage (on Y14 inventory) Packaging / Shipping (Net + wholesale) Warehouse Lease / Maintenance Total Dist. and Whse. Costs 2400 1000 330 -3,471 pairs North America Warehouse Pairs Models S/Q 144 350 5.9 0% 0 pairs $000s 0 0 0 $000s 21 Pairs Models S/Q 144 350 5.9 350 6.3 0 0.0 2,400 0 0 0 0 0.0 0 0.0 350 6.1 2,544 2,960 18 (3-week delivery) -434 (minimal) 0 179 0 $/pair 72 0.00 0.00 0.00 3,858 1,000 5,109 $/pair 0.00 0.55 0.00 0.22 11.94 3.10 15.82 Europe-Africa Facility 0 pairs 0 0 pairs 0 % Europe-Africa Warehouse $000s Pairs Models S/Q 91 350 5.6 0 pairs 0 0 0 0 0 0 $000s Pairs Models S/Q 91 350 5.6 1,000 350 6.3 0 0 0.0 350 5.6 0 0 0.0 1,812 350 5.7 3,011 721 51 (3-week delivery) -1,250 (minimal) 482 1,596 4,788 46 7,983 1,000 15,413 $/pair 0.00 0.00 0.00 $/pair 0.54 1.80 5.39 0.05 8.98 1.12 17.34 Asia-Pacific Facility 3,765 pairs 0 9 pairs 721 1500 1535 Asia-Pacific Warehouse $000s Pairs Models S/Q 96 350 5.4 0 % 0 pairs 0 Help 0 0 $000s Pairs Models S/Q 96 350 5.4 330 350 6.3 0 0 0.0 1,500 350 5.6 0 0.0 350 5.6 0 1,926 2,530 93 (3-week delivery) -697 (minimal) 61 1,554 200 $/pair 48 9,901 1.000 12,703 Print 0.00 0.00 0.00 $/pair Save Decisions Latin America Facility 0 pairs 0 0 0 pairs 0 Latin America Warehouse $000s 0.04 0.96 0.12 0.03 6.09 0.62 7.82 These figures include the Pairs to be Shipped figures entered at the top of the page and their associated model availability and S/Q rating attributes. If all of the available pairs at a facility are not shipped then the unshipped pairs will be automatically shipped to regional warehouses in proportion to the shipping decision entries that exist for that facility. 0 Pairs Models S/Q 82 350 5.3 0 % 0 pairs 0 0 0 $000s -3,250 3,082 15,410 41 10,265 1,000 29,798 -1,004 (minimal) $/pair Pairs Models 82 21 S/Q 350 5.3 350 6.3 0 1,535 0 0.0 350 5.6 0 0 0.0 1,638 350 5.6 2,549 93 (3-week delivery) 0.00 0.00 0.00 $/pair -2.00 1.90 9.49 0.03 6.32 0.62 18.36 The number of models and S/Q rating of pairs available in each warehouse is a weighted average of the models and S/Q ratings of pairs in beginning inventory and of pairs shipped in from each plant. The weighted average model availability and weighted average S/Q rating in each region is used to determine the attractiveness of your brand against the brands of rival companies in the industry. Internet Marketing Marketing variables generated by production and marketing decisions in Y15. Internet Marketing Decisions Retail Price ($ per pair sold online) Marketing variables determined by prior-year decisions / outcomes. S/Q Rating (weighted average) Models Available (weighted average) Brand Advertising ($000s) Retail Price Exceeds Wholesale Price by Search Engine Advertising ($000s) Internet Market Share (% of total regional sales volume) Internet Sales Volume (000s of pairs sold to online customers) Competitive Assumptions Free Shipping (from warehouse to buyer) Celebrity Appeal (sum of appeal indices for all celebrities under contract) Brand Reputation (prior-year image rating) Revenue, Cost, and Profit Projections for Year 15 Estimated industry averages for these marketing variables are entered on the Wholesale Marketing decision entry page. Competitive Assumptions Industry averages for these variables determined by prior-year decision entries and outcomes. Gross Internet Revenues + Exchange Rate Adjustments Adjusted Gross Revenues + Shipping Fees (paid by customer) Net Internet Revenues Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses Operating Profit (Loss) Operating Profit Margin S/Q Rating Models Available Brand Advertising ($000s) Retail Price ($ per pair) Search Engine Advertising ($000s) Free Shipping North America Market Year 14 6.2 350 10,000 80.00 1 3,250 No 75 70 Year 14 Actual 16.4% 478 $000s 24,400 0 24,400 3,813 28,213 21,097 4,930 15,073 1,466 -14,353 Year 15 6.1 350 10,000 80.00 60% 3250 No 75 Year 15 Projected 9.4% 305 -50.9% 5.9 339 10,200 70 $/pair $76.41 V $ 5450 Non 98 72 80.00 0.00 80.00 12.50 92.50 69.17 16.16 49.42 4.81 -47.06 Europe-Africa Market Year 14 5.9 350 10,000 85.00 1 3,500 No 80 70 Year 14 Actual 20.3% 489 $000s 45,050 -1,649 43,401 6,625 50,026 22,023 7,367 11,701 2,551 6,384 Year 15 5.7 350 10,000 85.00 70% 3500 No 80 Year 15 Projected 19.7% 530 12.8% 6.1 315 10,000 70 $/pair $ 82.0 V $ 2750 Non 99 72 85.00 -3.11 81.89 12.50 94.39 41.55 13.90 22.08 4.81 12.05 Asia-Pacific Market Year 14 5.7 350 8,000 85.00 1 2,000 No 95 70 Year 14 Actual 18.0% 369 $000s 36,465 -908 35,557 Help 5,363 40,920 12,511 5,720 6,092 2,064 14,533 Year 15 5.6 350 8,000 85.00 70% 2000 No 35.5% Print 95 70 Year 15 Projected 18.1% 429 $/pair 6.0 272 8,500 $77.0 V $ 2250 Non 102 72 85.00 -2.12 82.88 12.50 95.38 29.16 13.33 14.20 4.81 33.88 Save Decisions Latin America Market Year 14 5.6 350 7,500 90.00 1 3,250 No 60 70 Year 14 Actual 19.3% 394 $000s 42,120 2,329 44,449 5,850 50,299 17,266 6,238 7,405 2,252 17,138 Year 15 5.6 350 7,500 90.00 64% 3250 V No Year 15 Projected 19.8% 468 34.1% 5.8 276 7,600 60 70 $/pair $83.21 V $ 2400 V Non 98 72 90.00 4.98 94.98 12.50 107.48 36.89 13.33 15.82 4.81 36.62 Celebrity Appeal Brand Reputation Enter your estimates of the industry average marketing efforts that will prevail in each wholesale segment in Year 15. The more accurate your estimates are, the Wholesale Marketing Marketing variables generated by production and marketing decisions in Y15. Wholesale Marketing Decisions Delivery Time (1 to 4 week delivery) Retailer Support ($0 to $10000 per outlet) Marketing variables determined by prior Retail Outlets (willing to carry your brand) year decisions / outcomes. S/Q Rating (weighted average) Models Available (weighted average) Wholesale Price to Retailers (S/pair) Brand Advertising ($000s) Mail-In Rebate ($3 to $15 per pair) Wholesale Market Share (% of total regional sales volume) Pairs (000s) Celebrity Appeal (sum of appeal indices for all celebrities under contract) Brand Reputation (prior-year image rating) Available for Sale (after filling internet orders) Wholesale Demand for Branded Pairs Required Inventory (needed to achieve delivery time) Surplus (Shortfall) of Branded Pairs Competitive Assumptions Revenue, Cost, and Profit Projections for Year 15 Competitive Assumptions Industry averages for these variables determined by prior-year decision entries and outcomes. Gross Wholesale Revenues + Exchange Rate Adjustments Net Wholesale Revenues Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses Operating Profit (Loss) Operating Profit Margin S/Q Rating Model Availability Wholesale Price ($ per pair) Brand Advertising ($000s) Rebate Offer ($ per pair) Delivery Time (weeks) Retailer Support ($ per outlet) Retail Outlets Celebrity Appeal Brand Reputation North America Market Year 14 6.2 350 50.00 10,000 5.00 3 4,000 1,031 75 70 Year 14 Actual 19.8% 2,045 2,440 144 -539 $000s 0 0 0 0 0 3,584 0 -3,584 Year 15 6.1 350 50.00 10000 5.00 V 3 0.0% V 4000 896 75 70 Year 15 Projected 18.9% 0 2,447 18 -2,655 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 models 5.9 339 $ 52.5 V $ 1020 4.80 V 2.4 weeks $ 3050 V 1,170 outlets 98 72 Europe-Africa Market Year 14 5.9 350 50.00 10,000 5.00 Year 14 Actual 23.3% 1,321 2,513 91 -1,283 $000s 15,400 -564 14,836 12,798 1,662 7,732 1,482 -8,838 Year 15 5.7 350 50.00 10000 V 3 4,000 4000 965 842 80 70 5.00 3 -59.6% V $56.1 $1000 4.80 V Year 15 Projected 21.9% 359 2,481 51 -2,173 80 70 $/pair V 41.55 5.40 25.10 4.81 -28.69 6.1 315 models 2.6 weeks $ 3150 1,346 outlets 99 72 Asia-Pacific Market Year 14 5.7 350 50.00 $000s 50.00 55,150 -1.83 -1,373 48.17 53,777 8,000 5.00 3 2,750 695 95 70 Year 14 Actual 21.6% 1,553 1,958 96 -501 32,168 5,229 9,958 5,307 1,115 Help 6.0 Year 15 5.6 350 50.00 8000 2.1% 5.00 V $ 52.5 V $8500 V 4.60 V Print 3 2750 629 95 70 Year 15 Projected 21.3% >> 1,196 2,101 93 -998 $/pair 50.00 -1.24 48.76 29.16 4.74 9.03 4.81 1.01 272 models 2.6 weeks $ 2050 V 1,053 outlets 102 72 Save Decisions Latin America Market Year 14 5.6 350 55.00 7,500 5.00 3 2,500 610 60 70 Year 14 Actual 21.0% 1,243 1,902 82 -741 $000s 58.410 3,230 61,640 39,180 5,068 8,959 5,111 3,322 Year 15 5.6 350 55.00 7500 V 5.00 V 2500 V 550 60 70 3 Year 15 Projected 21.1% 1,155 2,081 93 -1,019 5.4% $57.51 V $ 7600 4.40 V $/pair 55.00 3.04 58.04 36.89 4.77 8.44 4.81 3.13 5.8 * 276 models 2.6 weeks $2050 V 1,023 outlets 98 72 Enter your estimates of the industry average marketing efforts that will prevail in each wholesale segment in Year 15. The more accurate your estimates are, the more accurate your projected market shares and unit sales will be. Celebrity Endorsements Celebrity Judy Judge Kimmie Jimmel Bud Birkenstock Jose Montana Appeal Indexes N.A. E-A A.P. L-A Currently Signed By 85 65 60 40 C Company B Company B Company E Company E Company E Company A Company 100 70 65 70 100 70 Samuelle Jackson Bronko Mars Steff Caraway Celebrity Endorsements Table Celebrity Judy Judge Kimmie Jimmel Bud Birkenstock Jose Montana 60 50 60 Samuelle Jackson Bronko Mars Steff Caraway 40 85 60 100 Most Recent Contract Offers Table 60 45 100 65 Spending Cap on Year 15 Contracts ($000s) $ 75 80 95 60 75 55 N N N - w 95 Most Recent Contract Offers (letter in parentheses indicated company that made the offer) 1 2 No. of Offers Highest Offer 2 3 3 2 2 0 Contract Amount Terminate Contract ($000s / yr.) Early 1,000 1,505 1,505 1,000 (C) 1,505 (B) 1,505 (B) 1,550 (E) 1,550 (E) 1,550 (E) 1,000 (A) 1,550 1,550 1,550 1,000 2nd Highest 1,000 (A) 1,500 (A) 1,500 (A) 0 1,510 (B) 1,510 (B) 500 (E) 3rd Highest 1,000 (C) 1,000 (C) No V 0 0 Contract Length Available for Offer 2 years NOW 2 years 2 years 2 years 3 years 3 years 3 years When the total annual cost of the company's winning Year 15 contract offers reaches this dollar amount, all remaining lower-priority offers will be withdrawn. NOW NOW Help Year 16 Year 17 Year 17 NOW $ $ Contract Offer ($000s / yr.) 0 $ Print $ 0 0 Save Decisions 0 Offer Priority Sum of Year 15 contract offers: $0 Enter all contract offers in thousands of dollars per year. For example, enter an offer of $2.5 million as 2500. The minimum annual contract offer is $500k (entered as 500). A contract offer entry of $0 for a given celebrity indicates that the celebrity will receive no offer. The maximum annual contract offer is $30 million (entered as 30000). In a given year, offers may be made to as many celebrities as are available, however a company will be awarded no more than 3 celebrity contracts in the same year. When making offers to multiple celebrities in the same year, it is recommended that you prioritize the offers and set a spending cap for the year (to guard against winning more contracts than intended). In a given region, the maximum affective celebrity appeal total is 300. When the sum of the appeal indexes in a given region reaches 300, no additional market impact is gained by signing more celebrities. Corporate Citizenship Below are seven CSRC initiatives that can be used to develop a "social responsibility strategy" for your company. The drop-down selection boxes below offer several optional actions. While undertaking CSRC initiatives is often considered "the right thing to do", one reason to operate in a socially responsible manner is to enhance the company's image. Aggressive and astute pursuit of a social responsibility strategy over 5 years can increase the company's Image Rating by 15 to 20 points. Use of Recycled Boxing/Packaging $ Yes CORPORATE SOCIAL RESPONSIBILITY AND CITIZENSHIP Energy Efficiency Initiatives [10C Charitable Contributions $ 1000 Ethics Training / Enforcement Yes Cafeteria and On-Site Child Care Improved Working Facilities for Plant Employees Conditions Additional Safety Equipment and Improved Lighting / Ventilation Institution of a Supplier Code of Conduct Yes Involves investments at each production facility for each million pairs of production capability to improve energy efficiency and use renewable energy sources. Treated as capital investment depreciated at 10% per year. Facilities Safety/Lighting CSRC INITIATIVES Involves the use of recycled packaging materials to box each pair of athletic footwear at company distribution centers. Increases shoe packaging costs by $0.15 per pair. Thousands of $ $ Per Unit Sold or 0% of pretax profit Involves making tax-deductible donations to charities and charitable causes. Reported on the Income Statement under "Other Expense" (reduces pre-tax profits). Cash Outlays for Corporate Social Responsibility and Citizenship in Year 15 Company CSRC Efforts Recycled Boxing/Packaging Energy Efficiency Initiatives ($000) Charitable Contributions ($000s) Ethics Training / Enforcement Improved Working Conditions Supplier Code of Conduct Total Cash Outlays Company CSRC Efforts Table Involves training for and development / enforcement of a code of ethics for company managers at all levels. Increases corporate administrative expenses by $400k annually. Continue v Year 10 Involves one-time capital investment of $2.5 million and increased administrative costs of $600k annually per facility. Results in a one-time productivity increase of 100 pairs per year at each facility. Involves one-time capital investment of $3.0 million and increased administrative costs of $500k Continue v annually per facility. Results in a one-time productivity increase of 100 pairs per year at each facility. Involves compliance monitoring of supplier employment practices and working conditions to prevent 50+ hour work weeks, substandard wages, use of underage labor, exposure to toxic materials, and lax safety practices. Entails added annual administrative costs of $750k per facility. No 0 0 No No No No 0 Which (if any) of the seven initiatives to pursue and how much to spend is entirely voluntary. There is no pressure to spend anything on these initiatives. The company can perform successfully without undertaking any social responsibility initiatives. In Year 10, prior company management spent no money on any of the seven optional social responsibility initiatives. 0.00 The Help button at the top-right offers further information and guid-ance regarding the seven CSRC initiatives. Year 11 Yes 50 1,000 Yes Yes Yes Yes 16,854 2.02 Help Print Save Decisions Year 12 Year 13 Yes Yes 100 50 1,000 1,000 Yes Yes Yes Yes 5,860 18,659 0.72 2.55 Yes Yes Yes Yes Total Cash Outlays ($000s) $6,250 Year 14 Yes 100 1,000 Yes Yes Yes Yes 7,672 1.03 Thousands of $ Industry 1 CSRC Cash Outlays High Average Low High Average Low Industry 1 CSRC Cash Outlays Table $ Per Unit Sold Per Pair Sold ($ per pair) $1.49 Year 13 18,659 7,888 0 2.55 0.92 0.00 Year 14 10,600 7,081 4,214 1.05 0.74 0.49 Finance & Cash Flow Sources of Additional Cash ($000s) 1-Year Bank Loan (5.20 % interest) 5-Year Bank Loan (5.70% interest) 10-Year Bank Loan (6.20% interest) Stock Issue (000s of shares at $6.75) Max. share issue in Y15 = 5000k Shares of stock outstanding at the beginning of Year 15 Projected Cash Available in Year 15 Beginning Cash Balance (carried over from Year 14) Cash Inflows Receipts from Footwear Sales Bank Loans 1-Year 5-Year 10-Year Stock Issue (0 shares @ $6.75) Sale of Used Production Equipment Interest on Year 14 Cash Balance Loan to Cover Overdraft (1-year loan) Cash Refund (awarded by instructor) Total Cash Available from All Sources Projected Cash Balance at the End of Year 15 ($000s) Other Important Financial Statistics Interest Rate Paid on Overdraft Loans Interest Rate Received on Cash Balances Shareholder Equity (mandated minimum $100 mil.) Last Year 8.2% 1.7% 409.4 mil. $ $ 0 0 0 0 25,000 k 77,898 339,789 0 0 0 0 0 1,324 0 0 419,011 $ +132,615 Year 15 (projected) 7.2% 1.7% 418.0 mil. Uses for Excess Cash ($000s) Cash Outlays Early Repayment of L-T Loans (Balance Sheet Note 8) Dividend ($/share) Year 14 dividend was $0.00 Shares of stock outstanding at the end of Year 15 Stock Repurchase (000s of shares at $6.75) Max. share repurchase in Y15 Ok Payments to Materials Suppliers Production Expenses (excluding depreciation) Distribution and Warehouse Expenses Marketing and Administrative Expenses Capital Outlays Bank Loan Repayment Total Cash Outlays Help Projected Cash Outlays in Year 15 Interest Payments Stock Repurchases (0 shares@ $6.75) Income Tax Payments Dividend Payments to Shareholders Charitable Contributions Cash Fine (assessed by instructor) Print Facility Expansion (new space) Equipment Purchases Equipment Upgrade Options Energy Efficiency Initiatives 1-Year Loans 5-Year Loans 10-Year Loans Bank Loans Y14 Overdraft Performance on Credit Rating Measures Interest Coverage Ratio (operating profit + interest exp.) Debt to Assets Ratio (total debt + total assets) Risk of Default (based on Y15 default risk ratio of 2.92) Save Decisions Last Year 11.42 0.14 Medium None N/A 0.00 0 25,000 k $ 51,227 63,855 63,023 89,460 0 0 0 450 0 0 9,900 3,812 $ 286,396 This positive cash balance could generate interest income of $2.3M in Year 16. 0 0 3,669 0 1,000 0 Year 15 (projected) 6.32 0.11 Medium Prior-Year Compensation and Productivity Data Workforce Compensation Base Wages (total $ per year) Incentive Pay Fringe Benefits Total Regular Compensation Compensation and Training of Production Workers Overtime Pay (included incentives) Total Compensation Incentive Pay as a % of Regular Compensation Workforce Productivity (pairs per worker per year) Base Wage (% change from prior year) Incentive Pay ($ per non-rejected pair) Fringe Benefits ($ per year) Total Regular Compensation ($ per year) Overtime Pay (includes incentives) Total Compensation ($ per year) Incentive Pay as % of Regular Comp. Best Practices Training ($ per worker) Materials Cost Impact (from cumulative BP expenditures) Supervisory Staff (ratio of production workers to supervisors) Prior-Year Supervisory Compensation ($/year/supervisor) Supervisory Compensation (% change) Projected Workforce Productivity (pairs per worker in Y15) Number of Workers Employed (given branded production entries) Cost of Labor Associated Production Production Workers Base Wages Per-pair figures not adjusted for rejected pairs. Incentive Pay Fringe Benefits Overtime Pay Total Best Practices Training Expenditures Supervisory Compensation (salary + benefits) Total Cost of Production Labor North America Facility Industry Average Company A 36,158 36,443 4,804 950 41,912 8,393 2,250 47,086 4,318 0 46,230 11.5% 5,064 1.75 North America Facility Minimum Wage = 35,380 +2% V 37,172 8,513 $2250 Std -0.10 17.8% 120 per worker $000s 47,086 17.8% 5,154 5,167 48 1,784 409 108 621 2,922 41 to 1 Staff = 1 Ind. Avg. Co. A 62,312 61,818 Minimum Salary = 62,436 0% V 62,436 58 62 3,042 Sup -0.20 $/pair 2,250 $0 47,935 12,938 60,873 5.95 1.36 0.36 2.07 9.74 Europe-Africa Facility 0.19 0.21 10.14 Industry Average Company A 21,438 4,650 1,500 27,588 0 0 0 0 27,588 16.9% 4,084 Europe-Africa Facility Minimum Wage = 21,228 0% V 0 $ 0.00 $0 V Std 0.00 $000s 0 0 0 0 0 0 0 0 0.0% 0 0 0 0 0 0 0 0 0 0 to 1 Staff = 0 Ind. Avg. Co. A 37,833 0 Minimum Salary = 37,462 0% V 0 0 0.0% per worker Sup 0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Asia-Pacific Facility Industry Average Company A 12,737 12,735 2,067 2,414 750 1,500 15,554 16,649 2,146 0 16,649 17,700 13.3% 4,086 Asia-Pacific Facility Minimum Wage = 12,487 +2% 12,990 $ 0.50 2,429 $150 1,500 16,919 0 16,919 100 V Std -0.10 14.5% 5,437 $000s 10,067 1,882 1,163 0 13,112 14.4% per worker 40 to 1 Staff = 19 Ind. Avg. Co. A 25,964 25,758 Minimum Salary = 26,016 0% V 26,016 5,461 775 775 494 14,381 Sup -0.20 $/pair 2.38 0.44 0.27 0.00 3.10 0.18 0.12 3.40 Latin America Facility Industry Average Company A 12,487 0 1,989 500 14,976 0 14,976 13.3% 6,033 $0.00 $0 V $0 Std 0.00 Latin America Facility Minimum Wage = 12,487 0% V 0 $000s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0% 0 0 0 0 to 1 Staff = 0 Ind. Avg. Co. A 39,025 0 Minimum Salary = 26,016 0% V 0 0 0 0.0% per worker Sup 0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Branded Production Branded Footwear Production Branded Production Materials Specs (see anticipated materials prices at bottom of page) Number of Models / Styles (50 to 500 models) Enhanced Styling / Features ($000s per model) TQM / 6-Sigma Quality Program ($/pr. produced) Projected S/Q Rating (the style/quality rating ranges from 0.5 to 10.0 stars) Projected Reject Rate (percentage of pairs that will fail inspection) Maximum Y15 Production Capability (assuming all unused facility space is filled at the beginning of the year with production equipment) Total Branded Production Needed in Year 15 (to satisfy projected demand in all four regions) Note: Year 15 Production Capability (000s of pairs before rejects) Branded Footwear Production (000s of pairs) Standard Materials % Superior Materials % 12,100 (before rejects) Pairs to be Manufactured in Y15 (000s) Total = 4,530 Costs Associated with the Production of Branded Footwear Anticipated Y15 Materials Prices Anticipated Materals Prices: Production Capability Remaining for Private-Label Cost of Rejected Pairs (in $000s and $ per pair produced) Without Overtime Maximum Overtime Regular-Time Overtime (20% maximum) Total Production Capability Regular-Time Production Overtime Production Rejected Pairs (and reject rate) Net Branded Production North America Facility 50 % Materials Cost Labor Cost (including supervisory costs) Enhanced Styling/Features TQM / 6-Sigma Quality Program Production Run Set-Up Maintenance (of facilities and equipment) Depreciation (of facilities and equipment) Total Branded Production Cost $ 50 350 V 30 % $2.00 v 6.3 6.6% k/model 6,000 pairs 7,200 pairs 300 per pair North America Facility 250 pairs. 50 300 pairs $1,837 $000s 2,719 3,042 10,500 600 4,500 2,798 3,381 27,540 pairs 250 pairs 50 20 (6.6%) 280 0 pairs $6.56 $/pair 9.71 Europe-Africa Facility 100% 10.86 37.50 2.14 16.07 9.99 12.08 98.36 0 50 $ 0 V k/model $ 0.00 V 0.0* 0.0% 1,000 pairs 1,200 pairs This figure is an approximation given beginning inventories, projected reject rates, and entries that currently reside on the Internet and Wholesale Marketing decision pages. The company must schedule production of about this many pairs to satisfy projected demand and inventory requirements. To install production equipment at the beginning of the current year in a facility that currently has unused space, go to the Production Facilities decision entry page (the next item in the decision entries menu). 0 Europe-Africa Facility $0 $000s % 0 0 0 0 0 per pair 80 638 718 0 pairs 0 0 pairs pairs 0 pairs 0 0 (0.0%) 0 0 pairs $0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Asia-Pacific Facility 44% 56 Help % 350 V $ 30 k/model $ 1.50 per pair 5.6 11.0% 7,000 pairs 8,400 pairs Asia-Pacific Facility $11,069 $000s 39,969 14,381 10,500 6,345 9,000 4,896 15,711 100,802 Print 4,250 pairs 850 5,100 pairs 4230 pairs 4,230 pairs 0 465 (11.0%) 3,765 870 pairs $2.94 $/pair Save Decisions 10.62 3.82 2.79 1.69 2.39 1.30 4.17 26.77 Latin America Facility 100% 0 50 $ 0 k/model $ 0.00 per pair 0.0 0.0% 1,000 pairs 1,200 pairs Latin America Facility 0 V $0 $000s 0 0 0 0 0 80 638 718 0 pairs 0 0 pairs pairs 0 pairs 0 0 (0.0%) 0 0 pairs $0.00 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Standard Materials 5.94 per pair Superior Materials 12.4 per pair Beginning figures represent actual materials prices from the prior year. Global materials prices are a function of industry-wide usage of superior versus standard materials and industry-wide utilization of available footwear production capability - see page 4 of the Footwear Industry Report for Year 14. You may enter estimates of Year 15 materials prices above. The more accurate the estimates, the more accurate your projected production costs will be. Production Facilities Equipment for Footwear Production Space Available for Footwear Production Equipment in Y15 Production Equipment in Place at Beginning of Y15 (000s) Purchase of Production New (000s of pairs) Equipment Refurbished (000s of pairs) Sale of Existing Equipment (oldest equipment will be sold first) Total Footwear Production Capability in Y15 (without OT) Percentage of New / Refurbished Production Equipment Production Improvement Options Option Purchase of special equipment to A reduce reject rate by 50% Option Layout revisions to reduce production Brun setup costs by 50% Option Purchase of special equipment to C increase S/Q rating by 1 star Option Robot-assisted production to increase D worker productivity by 50% Capital outlay ($000s) Projected annual cost savings at current reject rate ($000s) Capital Outlays in Year 15 ($000s) Capital outlay ($000s) Projected annual cost savings at current model count ($000s) Capital outlay ($000s) current S/O effort (9000ings at Capital outlay ($000s) Projected annual cost savings at current production / comp. Space for Production Equipment (000s of pairs w/o OT) Equipment Space at the End of Year 14 Construction of Additional Space (initiated in Y14) Space Available for Equipment in Year 15 Construction of New / Additional Space (available in Year 16) Space Available for Production Equipment in Year 16 Purchase of New Equipment Purchase of Refurbished Equipment - Book Value of Equipment Sold Equipment Upgrade Options Energy Efficiency Initiatives New / Additional Facility Space Net Capital Outlays in Year 15 North America Facility 6,000 pairs 250 pairs 0 0 pairs 0 V pairs 250 pairs 100% $625 $856 $400 $2,210 $1,200 $1,894 North America Facility $3,600 $614 pairs $ No V $ 0% Done No North America Facility No 6,000 pairs 0 6,000 pairs 0 pairs 6.000 pairs 0 0 0 0 25 0 25 Europe-Africa Facility 1,000 pairs 0 pairs pairs 0 0 0 0% $0 $0 $0 $0 $0 $0 $0 $0 pairs Europe-Africa Facility pairs $ 0 pairs $ 0% No No No No Europe-Africa Facility 1,000 pairs 0 1,000 pairs 0 pairs 1,000 pairs 0 0 0 0 0 0 0 Asia-Pacific Facility 7,000 pairs 4,250 pairs 0 0 $10,625 $4,472 $6,800 $3,820 $20,400 $5,675 Help 0 pairs 4,250 pairs 6% 94% $61,200 $-1,749 Asia-Pacific Facility 0 pairs $ pairs $ No V No Asia-Pacific Facility 7,000 pairs 0 7,000 pairs pairs 7,000 pairs No v Done 0 0 0 0 Print 425 0 425 Save Decisions Latin America Facility 1,000 pairs 0 pairs 0 0 0 0% $0 $0 $0 $0 $0 $0 $0 $0 pairs pairs $ pairs Latin America Facility $ 0 pairs 0% No V No No V Latin America Facility No 1,000 pairs 0 1,000 pairs 0 pairs 1,000 pairs 0 0 0 0 0 0 0 Distribution & Warehouse Branded Distribution Pairs Available for Shipment (000s produced after rejects) Pairs to be shipped from Facility to (000s of pairs) Remaining Pairs to be Shipped (if left unshipped, will be shipped automatically) Warehouse Operations Inventory Left Over at the End of Year 14 (000s) Inventory Clearance (prior to Year 15 operations) Clearance Statistics North America Warehouse Europe-Africa Warehouse Asia-Pacific Warehouse Latin America Warehouse Beginning Inventory (000s of pairs carried over from Year 14) Incoming Shipments from (see Note 1 below) Discounted Clearance Revenues Direct Cost of Pairs Cleared Margin Over Direct Cost Note 1: Pairs Available for Sale in Year 15 (see Note 2 below) Projected Demand (given branded marketing decision entries) Required Inventory (needed to achieve delivery time) Projected Inventory Surplus (Shortfall) Note 2: North America Facility Europe-Africa Facility Asia-Pacific Facility Latin America Facility Projected Distribution and Warehouse Costs Exchange Rate Cost Adjustment (on incoming shipments) Distribution and Warehouse Costs North America Facility 280 pairs Freight on Footwear Shipments Tariffs on Pairs Imported Inventory Storage (on Y14 inventory) Packaging / Shipping (Net + wholesale) Warehouse Lease / Maintenance Total Dist. and Whse. Costs 2400 1000 330 -3,471 pairs North America Warehouse Pairs Models S/Q 144 350 5.9 0% 0 pairs $000s 0 0 0 $000s 21 Pairs Models S/Q 144 350 5.9 350 6.3 0 0.0 2,400 0 0 0 0 0.0 0 0.0 350 6.1 2,544 2,960 18 (3-week delivery) -434 (minimal) 0 179 0 $/pair 72 0.00 0.00 0.00 3,858 1,000 5,109 $/pair 0.00 0.55 0.00 0.22 11.94 3.10 15.82 Europe-Africa Facility 0 pairs 0 0 pairs 0 % Europe-Africa Warehouse $000s Pairs Models S/Q 91 350 5.6 0 pairs 0 0 0 0 0 0 $000s Pairs Models S/Q 91 350 5.6 1,000 350 6.3 0 0 0.0 350 5.6 0 0 0.0 1,812 350 5.7 3,011 721 51 (3-week delivery) -1,250 (minimal) 482 1,596 4,788 46 7,983 1,000 15,413 $/pair 0.00 0.00 0.00 $/pair 0.54 1.80 5.39 0.05 8.98 1.12 17.34 Asia-Pacific Facility 3,765 pairs 0 9 pairs 721 1500 1535 Asia-Pacific Warehouse $000s Pairs Models S/Q 96 350 5.4 0 % 0 pairs 0 Help 0 0 $000s Pairs Models S/Q 96 350 5.4 330 350 6.3 0 0 0.0 1,500 350 5.6 0 0.0 350 5.6 0 1,926 2,530 93 (3-week delivery) -697 (minimal) 61 1,554 200 $/pair 48 9,901 1.000 12,703 Print 0.00 0.00 0.00 $/pair Save Decisions Latin America Facility 0 pairs 0 0 0 pairs 0 Latin America Warehouse $000s 0.04 0.96 0.12 0.03 6.09 0.62 7.82 These figures include the Pairs to be Shipped figures entered at the top of the page and their associated model availability and S/Q rating attributes. If all of the available pairs at a facility are not shipped then the unshipped pairs will be automatically shipped to regional warehouses in proportion to the shipping decision entries that exist for that facility. 0 Pairs Models S/Q 82 350 5.3 0 % 0 pairs 0 0 0 $000s -3,250 3,082 15,410 41 10,265 1,000 29,798 -1,004 (minimal) $/pair Pairs Models 82 21 S/Q 350 5.3 350 6.3 0 1,535 0 0.0 350 5.6 0 0 0.0 1,638 350 5.6 2,549 93 (3-week delivery) 0.00 0.00 0.00 $/pair -2.00 1.90 9.49 0.03 6.32 0.62 18.36 The number of models and S/Q rating of pairs available in each warehouse is a weighted average of the models and S/Q ratings of pairs in beginning inventory and of pairs shipped in from each plant. The weighted average model availability and weighted average S/Q rating in each region is used to determine the attractiveness of your brand against the brands of rival companies in the industry. Internet Marketing Marketing variables generated by production and marketing decisions in Y15. Internet Marketing Decisions Retail Price ($ per pair sold online) Marketing variables determined by prior-year decisions / outcomes. S/Q Rating (weighted average) Models Available (weighted average) Brand Advertising ($000s) Retail Price Exceeds Wholesale Price by Search Engine Advertising ($000s) Internet Market Share (% of total regional sales volume) Internet Sales Volume (000s of pairs sold to online customers) Competitive Assumptions Free Shipping (from warehouse to buyer) Celebrity Appeal (sum of appeal indices for all celebrities under contract) Brand Reputation (prior-year image rating) Revenue, Cost, and Profit Projections for Year 15 Estimated industry averages for these marketing variables are entered on the Wholesale Marketing decision entry page. Competitive Assumptions Industry averages for these variables determined by prior-year decision entries and outcomes. Gross Internet Revenues + Exchange Rate Adjustments Adjusted Gross Revenues + Shipping Fees (paid by customer) Net Internet Revenues Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses Operating Profit (Loss) Operating Profit Margin S/Q Rating Models Available Brand Advertising ($000s) Retail Price ($ per pair) Search Engine Advertising ($000s) Free Shipping North America Market Year 14 6.2 350 10,000 80.00 1 3,250 No 75 70 Year 14 Actual 16.4% 478 $000s 24,400 0 24,400 3,813 28,213 21,097 4,930 15,073 1,466 -14,353 Year 15 6.1 350 10,000 80.00 60% 3250 No 75 Year 15 Projected 9.4% 305 -50.9% 5.9 339 10,200 70 $/pair $76.41 V $ 5450 Non 98 72 80.00 0.00 80.00 12.50 92.50 69.17 16.16 49.42 4.81 -47.06 Europe-Africa Market Year 14 5.9 350 10,000 85.00 1 3,500 No 80 70 Year 14 Actual 20.3% 489 $000s 45,050 -1,649 43,401 6,625 50,026 22,023 7,367 11,701 2,551 6,384 Year 15 5.7 350 10,000 85.00 70% 3500 No 80 Year 15 Projected 19.7% 530 12.8% 6.1 315 10,000 70 $/pair $ 82.0 V $ 2750 Non 99 72 85.00 -3.11 81.89 12.50 94.39 41.55 13.90 22.08 4.81 12.05 Asia-Pacific Market Year 14 5.7 350 8,000 85.00 1 2,000 No 95 70 Year 14 Actual 18.0% 369 $000s 36,465 -908 35,557 Help 5,363 40,920 12,511 5,720 6,092 2,064 14,533 Year 15 5.6 350 8,000 85.00 70% 2000 No 35.5% Print 95 70 Year 15 Projected 18.1% 429 $/pair 6.0 272 8,500 $77.0 V $ 2250 Non 102 72 85.00 -2.12 82.88 12.50 95.38 29.16 13.33 14.20 4.81 33.88 Save Decisions Latin America Market Year 14 5.6 350 7,500 90.00 1 3,250 No 60 70 Year 14 Actual 19.3% 394 $000s 42,120 2,329 44,449 5,850 50,299 17,266 6,238 7,405 2,252 17,138 Year 15 5.6 350 7,500 90.00 64% 3250 V No Year 15 Projected 19.8% 468 34.1% 5.8 276 7,600 60 70 $/pair $83.21 V $ 2400 V Non 98 72 90.00 4.98 94.98 12.50 107.48 36.89 13.33 15.82 4.81 36.62 Celebrity Appeal Brand Reputation Enter your estimates of the industry average marketing efforts that will prevail in each wholesale segment in Year 15. The more accurate your estimates are, the Wholesale Marketing Marketing variables generated by production and marketing decisions in Y15. Wholesale Marketing Decisions Delivery Time (1 to 4 week delivery) Retailer Support ($0 to $10000 per outlet) Marketing variables determined by prior Retail Outlets (willing to carry your brand) year decisions / outcomes. S/Q Rating (weighted average) Models Available (weighted average) Wholesale Price to Retailers (S/pair) Brand Advertising ($000s) Mail-In Rebate ($3 to $15 per pair) Wholesale Market Share (% of total regional sales volume) Pairs (000s) Celebrity Appeal (sum of appeal indices for all celebrities under contract) Brand Reputation (prior-year image rating) Available for Sale (after filling internet orders) Wholesale Demand for Branded Pairs Required Inventory (needed to achieve delivery time) Surplus (Shortfall) of Branded Pairs Competitive Assumptions Revenue, Cost, and Profit Projections for Year 15 Competitive Assumptions Industry averages for these variables determined by prior-year decision entries and outcomes. Gross Wholesale Revenues + Exchange Rate Adjustments Net Wholesale Revenues Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses Operating Profit (Loss) Operating Profit Margin S/Q Rating Model Availability Wholesale Price ($ per pair) Brand Advertising ($000s) Rebate Offer ($ per pair) Delivery Time (weeks) Retailer Support ($ per outlet) Retail Outlets Celebrity Appeal Brand Reputation North America Market Year 14 6.2 350 50.00 10,000 5.00 3 4,000 1,031 75 70 Year 14 Actual 19.8% 2,045 2,440 144 -539 $000s 0 0 0 0 0 3,584 0 -3,584 Year 15 6.1 350 50.00 10000 5.00 V 3 0.0% V 4000 896 75 70 Year 15 Projected 18.9% 0 2,447 18 -2,655 $/pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 models 5.9 339 $ 52.5 V $ 1020 4.80 V 2.4 weeks $ 3050 V 1,170 outlets 98 72 Europe-Africa Market Year 14 5.9 350 50.00 10,000 5.00 Year 14 Actual 23.3% 1,321 2,513 91 -1,283 $000s 15,400 -564 14,836 12,798 1,662 7,732 1,482 -8,838 Year 15 5.7 350 50.00 10000 V 3 4,000 4000 965 842 80 70 5.00 3 -59.6% V $56.1 $1000 4.80 V Year 15 Projected 21.9% 359 2,481 51 -2,173 80 70 $/pair V 41.55 5.40 25.10 4.81 -28.69 6.1 315 models 2.6 weeks $ 3150 1,346 outlets 99 72 Asia-Pacific Market Year 14 5.7 350 50.00 $000s 50.00 55,150 -1.83 -1,373 48.17 53,777 8,000 5.00 3 2,750 695 95 70 Year 14 Actual 21.6% 1,553 1,958 96 -501 32,168 5,229 9,958 5,307 1,115 Help 6.0 Year 15 5.6 350 50.00 8000 2.1% 5.00 V $ 52.5 V $8500 V 4.60 V Print 3 2750 629 95 70 Year 15 Projected 21.3% >> 1,196 2,101 93 -998 $/pair 50.00 -1.24 48.76 29.16 4.74 9.03 4.81 1.01 272 models 2.6 weeks $ 2050 V 1,053 outlets 102 72 Save Decisions Latin America Market Year 14 5.6 350 55.00 7,500 5.00 3 2,500 610 60 70 Year 14 Actual 21.0% 1,243 1,902 82 -741 $000s 58.410 3,230 61,640 39,180 5,068 8,959 5,111 3,322 Year 15 5.6 350 55.00 7500 V 5.00 V 2500 V 550 60 70 3 Year 15 Projected 21.1% 1,155 2,081 93 -1,019 5.4% $57.51 V $ 7600 4.40 V $/pair 55.00 3.04 58.04 36.89 4.77 8.44 4.81 3.13 5.8 * 276 models 2.6 weeks $2050 V 1,023 outlets 98 72 Enter your estimates of the industry average marketing efforts that will prevail in each wholesale segment in Year 15. The more accurate your estimates are, the more accurate your projected market shares and unit sales will be. Celebrity Endorsements Celebrity Judy Judge Kimmie Jimmel Bud Birkenstock Jose Montana Appeal Indexes N.A. E-A A.P. L-A Currently Signed By 85 65 60 40 C Company B Company B Company E Company E Company E Company A Company 100 70 65 70 100 70 Samuelle Jackson Bronko Mars Steff Caraway Celebrity Endorsements Table Celebrity Judy Judge Kimmie Jimmel Bud Birkenstock Jose Montana 60 50 60 Samuelle Jackson Bronko Mars Steff Caraway 40 85 60 100 Most Recent Contract Offers Table 60 45 100 65 Spending Cap on Year 15 Contracts ($000s) $ 75 80 95 60 75 55 N N N - w 95 Most Recent Contract Offers (letter in parentheses indicated company that made the offer) 1 2 No. of Offers Highest Offer 2 3 3 2 2 0 Contract Amount Terminate Contract ($000s / yr.) Early 1,000 1,505 1,505 1,000 (C) 1,505 (B) 1,505 (B) 1,550 (E) 1,550 (E) 1,550 (E) 1,000 (A) 1,550 1,550 1,550 1,000 2nd Highest 1,000 (A) 1,500 (A) 1,500 (A) 0 1,510 (B) 1,510 (B) 500 (E) 3rd Highest 1,000 (C) 1,000 (C) No V 0 0 Contract Length Available for Offer 2 years NOW 2 years 2 years 2 years 3 years 3 years 3 years When the total annual cost of the company's winning Year 15 contract offers reaches this dollar amount, all remaining lower-priority offers will be withdrawn. NOW NOW Help Year 16 Year 17 Year 17 NOW $ $ Contract Offer ($000s / yr.) 0 $ Print $ 0 0 Save Decisions 0 Offer Priority Sum of Year 15 contract offers: $0 Enter all contract offers in thousands of dollars per year. For example, enter an offer of $2.5 million as 2500. The minimum annual contract offer is $500k (entered as 500). A contract offer entry of $0 for a given celebrity indicates that the celebrity will receive no offer. The maximum annual contract offer is $30 million (entered as 30000). In a given year, offers may be made to as many celebrities as are available, however a company will be awarded no more than 3 celebrity contracts in the same year. When making offers to multiple celebrities in the same year, it is recommended that you prioritize the offers and set a spending cap for the year (to guard against winning more contracts than intended). In a given region, the maximum affective celebrity appeal total is 300. When the sum of the appeal indexes in a given region reaches 300, no additional market impact is gained by signing more celebrities. Corporate Citizenship Below are seven CSRC initiatives that can be used to develop a "social responsibility strategy" for your company. The drop-down selection boxes below offer several optional actions. While undertaking CSRC initiatives is often considered "the right thing to do", one reason to operate in a socially responsible manner is to enhance the company's image. Aggressive and astute pursuit of a social responsibility strategy over 5 years can increase the company's Image Rating by 15 to 20 points. Use of Recycled Boxing/Packaging $ Yes CORPORATE SOCIAL RESPONSIBILITY AND CITIZENSHIP Energy Efficiency Initiatives [10C Charitable Contributions $ 1000 Ethics Training / Enforcement Yes Cafeteria and On-Site Child Care Improved Working Facilities for Plant Employees Conditions Additional Safety Equipment and Improved Lighting / Ventilation Institution of a Supplier Code of Conduct Yes Involves investments at each production facility for each million pairs of production capability to improve energy efficiency and use renewable energy sources. Treated as capital investment depreciated at 10% per year. Facilities Safety/Lighting CSRC INITIATIVES Involves the use of recycled packaging materials to box each pair of athletic footwear at company distribution centers. Increases shoe packaging costs by $0.15 per pair. Thousands of $ $ Per Unit Sold or 0% of pretax profit Involves making tax-deductible donations to charities and charitable causes. Reported on the Income Statement under "Other Expense" (reduces pre-tax profits). Cash Outlays for Corporate Social Responsibility and Citizenship in Year 15 Company CSRC Efforts Recycled Boxing/Packaging Energy Efficiency Initiatives ($000) Charitable Contributions ($000s) Ethics Training / Enforcement Improved Working Conditions Supplier Code of Conduct Total Cash Outlays Company CSRC Efforts Table Involves training for and development / enforcement of a code of ethics for company managers at all levels. Increases corporate administrative expenses by $400k annually. Continue v Year 10 Involves one-time capital investment of $2.5 million and increased administrative costs of $600k annually per facility. Results in a one-time productivity increase of 100 pairs per year at each facility. Involves one-time capital investment of $3.0 million and increased administrative costs of $500k Continue v annually per facility. Results in a one-time productivity increase of 100 pairs per year at each facility. Involves compliance monitoring of supplier employment practices and working conditions to prevent 50+ hour work weeks, substandard wages, use of underage labor, exposure to toxic materials, and lax safety practices. Entails added annual administrative costs of $750k per facility. No 0 0 No No No No 0 Which (if any) of the seven initiatives to pursue and how much to spend is entirely voluntary. There is no pressure to spend anything on these initiatives. The company can perform successfully without undertaking any social responsibility initiatives. In Year 10, prior company management spent no money on any of the seven optional social responsibility initiatives. 0.00 The Help button at the top-right offers further information and guid-ance regarding the seven CSRC initiatives. Year 11 Yes 50 1,000 Yes Yes Yes Yes 16,854 2.02 Help Print Save Decisions Year 12 Year 13 Yes Yes 100 50 1,000 1,000 Yes Yes Yes Yes 5,860 18,659 0.72 2.55 Yes Yes Yes Yes Total Cash Outlays ($000s) $6,250 Year 14 Yes 100 1,000 Yes Yes Yes Yes 7,672 1.03 Thousands of $ Industry 1 CSRC Cash Outlays High Average Low High Average Low Industry 1 CSRC Cash Outlays Table $ Per Unit Sold Per Pair Sold ($ per pair) $1.49 Year 13 18,659 7,888 0 2.55 0.92 0.00 Year 14 10,600 7,081 4,214 1.05 0.74 0.49 Finance & Cash Flow Sources of Additional Cash ($000s) 1-Year Bank Loan (5.20 % interest) 5-Year Bank Loan (5.70% interest) 10-Year Bank Loan (6.20% interest) Stock Issue (000s of shares at $6.75) Max. share issue in Y15 = 5000k Shares of stock outstanding at the beginning of Year 15 Projected Cash Available in Year 15 Beginning Cash Balance (carried over from Year 14) Cash Inflows Receipts from Footwear Sales Bank Loans 1-Year 5-Year 10-Year Stock Issue (0 shares @ $6.75) Sale of Used Production Equipment Interest on Year 14 Cash Balance Loan to Cover Overdraft (1-year loan) Cash Refund (awarded by instructor) Total Cash Available from All Sources Projected Cash Balance at the End of Year 15 ($000s) Other Important Financial Statistics Interest Rate Paid on Overdraft Loans Interest Rate Received on Cash Balances Shareholder Equity (mandated minimum $100 mil.) Last Year 8.2% 1.7% 409.4 mil. $ $ 0 0 0 0 25,000 k 77,898 339,789 0 0 0 0 0 1,324 0 0 419,011 $ +132,615 Year 15 (projected) 7.2% 1.7% 418.0 mil. Uses for Excess Cash ($000s) Cash Outlays Early Repayment of L-T Loans (Balance Sheet Note 8) Dividend ($/share) Year 14 dividend was $0.00 Shares of stock outstanding at the end of Year 15 Stock Repurchase (000s of shares at $6.75) Max. share repurchase in Y15 Ok Payments to Materials Suppliers Production Expenses (excluding depreciation) Distribution and Warehouse Expenses Marketing and Administrative Expenses Capital Outlays Bank Loan Repayment Total Cash Outlays Help Projected Cash Outlays in Year 15 Interest Payments Stock Repurchases (0 shares@ $6.75) Income Tax Payments Dividend Payments to Shareholders Charitable Contributions Cash Fine (assessed by instructor) Print Facility Expansion (new space) Equipment Purchases Equipment Upgrade Options Energy Efficiency Initiatives 1-Year Loans 5-Year Loans 10-Year Loans Bank Loans Y14 Overdraft Performance on Credit Rating Measures Interest Coverage Ratio (operating profit + interest exp.) Debt to Assets Ratio (total debt + total assets) Risk of Default (based on Y15 default risk ratio of 2.92) Save Decisions Last Year 11.42 0.14 Medium None N/A 0.00 0 25,000 k $ 51,227 63,855 63,023 89,460 0 0 0 450 0 0 9,900 3,812 $ 286,396 This positive cash balance could generate interest income of $2.3M in Year 16. 0 0 3,669 0 1,000 0 Year 15 (projected) 6.32 0.11 Medium