Year 11 Business Strategy Game

Chapter 4

YEAR 11 BUSINESS STRATEGY GAME: CHAPTER 4 Chapter 4 Exercise: Using the formulas in Table 4.1 and the data in your company's financial statements for the most recent year available, calculate the following measures of financial performance for your company: A. Price-earnings ratio B. Operating profit margin C. Return on total assets D. Working capital E. Long-term debt-to-capital ratio F. Current ratio 2. Based on your company's latest financial statements and all of the other available data regarding its performance that appear in the most recent Footwear Industry Report, list the three measures of financial performance on which your company did "best" and the three measures on which your company's financial performance was "worst." 3. What hard evidence can you cite that indicates your company's strategy is working fairly well (or perhaps not working so well, if your company's performance is lagging behind that of rival companies)? 4. What resource strengths and resource weaknesses does your company have? What external market opportunities for growth and increased profitability exist for your company? What external threats to your company's future well-being and profitability do you and your co- managers see? What do the four SWOT lists indicate about your athletic footwear company's present situation and future prospects? Where on a scale of 1 to 10, where 10 = "exceptionally strong" and 1 = "alarmingly weak" does the attractiveness of your company's situation rank? Resource Strengths and Competitive Assets Resource Weaknesses and Competitive Liabilities External Market Opportunities External Threats 5. Does your company have any core competencies? If so, what are they? 6. What are the key elements of your company's value chain? Refer to Figure 4.3 in developing your answer. 7. How favorably do your company's costs compare on the benchmarking data provided in the most recent year's Footwear Industry Report? On how many of the benchmarking measures were your company's costs below the footwear industry average? On how many of the benchmarking measures were your company's costs above the industry average? Based on the benchmarkingdata, how strong on a scale of l to 10 (where l = very weak and 10 = very strong), is your company's cost competitiveness? Are there any areas where you and your co-managers should take action to lower costs and improve your company's relative cost position? 8. Using the methodology presented in Table 4.3, do a weighted competitive strength assessment for your company and two other companies that you and your co-managers consider to be very close competitors