So I've found out a few more tricks and refined some of the tricks that will teach you how to win your BSG strategy game. Some of the things are still the same as my previous post on BSG tips, but with some new insights. In this post, I'd actually like to walk you through the process that I go through in order to win.
Choose a Strategy
Like I said in the former post, in order to win you need to either have a high quality/low model or mid quality/high model strategy. I have seen the most success with high quality/low model strategies. This is because you can more easily make profits, which is the key of the game! If you focus on revenues or ending cash or market share, you'll lose. If you focus on profits, you'll win. Once you choose your strategy, stick with it. It will help you in the long run.
Corporate Citizenship
The first screen in on the decision page is corporate citizenship. It's mostly a waste of money. They give the Gold Star Award, but it doesn't do anything for you, except make you feel all warm and fuzzy inside. However, you can increase your Image Rating with some of the options. The key, as with the rest of game is to optimize. The choices that will best optimize your image rating are the Ethics Training, which you'll put on 'All Employees', and Workforce Diversity Program, which you'll put on 'Yes'. If you go any further than that, you're spending too much money and your costs will erode your revenues, thus decreasing your profits, which lowers your ROE, EPS, possibly your credit rating, and your stock price. If it lowers 3/5 of your grading criteria, how can you possibly win?
Playing the Game
The key to the game is optimization. In order to optimize, you need to toggle everything and see how it affects the percentage profit increase/decrease. You also need to know what your competition is going to do, mainly with what price they are going to charge. This is easy to do after the 3rd or 4th year. You can easily keep track of their price on an Excel Spreadsheet. A useful tool is the 'Adjust Competitive Intensity' button. If you click on that button in each market, you will see that in the center is an option to change the competitive rate. If you keep it at +2%, you will usually get optimal results. The most it will be is probably +4%. If you're keeping track of price changes, you can evaluate what percentage the following year will be by finding the percent increase/decrease in overall prices. Next, make sure you have the industry S/Q rating accurate. If it's wrong it will skew your optimization. Next, toggle everything. I always start with NA Price and work my way down the column. Your S/Q rating should be known, so you don't need to toggle that. If you're going for the high quality strategy, set you models sold to 50. Then, toggle advertising, rebate, retailer support (by 100s only), and set delivery time at 3 weeks.
After you've done that for each market, estimate the industry internet price. Models offered will probably be close enough to the actual number that you don't need to mess with that. Then, toggle your own internet price, set your models offered to 50, and No free shipping, unless it boosts your profits, which is highly unlikely. If you have inventory left from the prior year, see if clearing it will boost your profits. You'll have to toggle each percentage for each market. When that's done, write down your regional sales volume for internet and wholesale for each market. You'll use this later.
Plant Capacity
Decide your strategy for building plant capacity. My recommendation is to only build onto existing plants. This increases your learning curve and shoes cost less. Never sell your capacity. This is really stupid. You're always going to want the capacity that you have. Eventually, you'll want the S/Q upgrade if you're going with a high quality strategy or the Production Run Setup Reduction upgrade if you're going with a low quality strategy.
Branded Production
Here, you'll need to toggle the materials, features and TQM until you get the S/Q that you want. First, put best practices training to $5000. This gets you the best S/Q rating for your buck. It pays for itself and more. When toggling the materials, features, and TQM, it's usually the best to have your features maxed out at $50K. Play with the numbers, but that's usually the case. TQM will usually be best around $0.70 or $0.80. Again, play with the numbers. Find the combination that gets you the highest profit. When toggling the wages, always try reducing their pay first. Sometimes they're alright with it and you can increase profits. If not, increase their wage a percent at a time. Sometimes if you go up between 6 and 8, and sometimes up to 14 percent, you'll maximize profits. Do it for each region.
Figuring out the branded pairs needed is a complicated process. The numbers that you wrote down from the other screen are now needed. First, you multiply the wholesale expected demand by an increased percent, so by 1.15 -1.25. To start off, I recommend multiplying by 1.2. If you end up with a huge surplus of shoes, lower it a couple percent the next year. The projected demand that the computer shoots out is always wrong, except for internet demand, so do it this way. You'll then add the internet and new wholesale expected demand together for each region. That's going to be about how many shoes you sell in that region. Type that amount into the boxes for each region and then add the reject rate that it shows to that number. If you have to use overtime to achieve the number you got, do it. However, if you're having to use overtime, you'll want to increase your plant capacity the next year. You need those shoes for private label.
Branded Distribution
You'll want to ship all shoes going to NA and LA from your NA plant. That's because shipping from NA to LA does not have any tariffs due to NAFTA. You'll want to ship shoes going to EA and AP from your AP plant. If you are having to ship shoes from your AP plant to either NA or LA, you'll want to build plant capacity in NA. Type in the number that you wrote for each region on your paper into the boxes provided. Maker sure your shipping from the right plant.
Bids for Celebrities
This can be quite ridiculous. From the times that I have bid on celebrities other teams usually bid way too high. Some teams will get a ton of celebrities at ridiculous prices. I recommend putting in a low to medium bid, which is between $3,000 and $6,000. The most I would do is probably $8,000. Any more than that and I don't think it's worth the price of a celebrity. You can decide what's best for you though.
Private Label
This market is definitely one that you want to be involved in, unless you are the low price provider selling a ton of shoes. In that instance it may not be a money-maker. The most important thing here is to be a good estimator of what every other team is going to do, but also to produce the lowest cost shoe. This gives you a much better chance of being profitable. I recommend using all the remaining production capacity that you have to place in the private label market. So if you've got regular and overtime production available, use it. Then, allocate the amount to whichever markets you want. Look at the margin over direct costs in order to determine if that market will be profitable based on the price you are charging.
After allocating the shoes to a region, toggle the superior materials and styling features so that the price shown for production costs is the lowest it can possibly be. MAKE SURE YOU ARE MEETING THE S/Q RATING FOR THAT ROUND! If the required S/Q is 4, then you need to have a 4 S/Q. If you have a 3 S/Q, you won't sell one shoe. Another note is to price your shoes at least 5 dollars below the industry average wholesale price for the region. If it's above that price, you won't sell one shoe.
Some useful strategies are the following: 1) If no one is involved in the private label market, price your shoes as high as you can ($5 below the wholesale industry average). I usually put the price $6 below what I estimate the industry average will be to play it safe. 2) If the private label market is competitive, under-price everyone else. It will discourage others from entering because profits will be low. Obviously don't let your margin over direct costs go into the negative. Make sure you pay attention to tariffs and which regions will bring in the most profits. 3) Take all of the market share in each region or selected regions. This is done by under-pricing everyone else and maxing out the demand in a region. This can hurt other teams, discourage entry, and boost your profits.
Finance & Cash Flow
This is a great screen. Here you can pay off your outstanding debt, issue stock, repurchase stock, and give dividends to investors. Whenever I have enough cash, I like to pay off the debt. This increases your net income, thus increasing ROE, EPS, and stock price. I always issue a dividend, regardless of how small it starts out. I try to increase it as the game goes on. This will slightly raise your EPS and ROE. If you need money to purchase capacity, you can issue stock instead of taking out loans. If you have a low stock price, repurchasing stock is always good for raising EPS and ROE.
There you go! That's how I win BSG online. I'd appreciate any comments or other strategies that you've used that have been successful, as I'm sure there are many other strategies. I really like the high quality strategy because you can charge so much more per shoe and increase your profit margins, which is how you win the game. I suppose you could do the same thing for low price strategies, but you'd definitely have to sell a ton of shoes to get enough revenues to increase your profitability.
Good tips, I start in January. I'll let you know how I do.
ReplyDeleteGood info. I'm owning my Industry market share and have 2.5 times the capacity than my closest competitor. I own all the celebrities and nobody in the private label can touch me. I see my competitors spending millions in CSR which makes them feel good, but it isn't reflected in their bottom line.
ReplyDeleteThat's awesome! I'm glad that the information could help you!
DeleteMy market share is dropping in year 15. I dont know what to do?
DeleteIt's hard to tell what the cause of your market share dropping is without seeing the actual numbers of the competition. Usually it has to do with price, but could deal with factors like advertising or celebrity appeal. That being said, decreasing market share is not necessarily a bad thing. Your real focus is profits. As long as you are hitting your goals and being more profitable, you've got no worries. If your market share and profits are decreasing proportionately, then you have a problem that needs to be fixed. Correctly estimating what others will do next year and tweaking your numbers to maximize profits is the real solution. Feel free to e-mail me your yearly reports and I'll see what's going on. bsgtips@gmail.com
DeleteHow to increase ROE?
ReplyDeleteThe best way to increase your ROE is to increase your profits. Everything is based off of profits. Another way that you can increase ROE though is to repurchase stock that has been issued. The reason is that ROE = net income / shareholder equity. So if you increase your profits, then the number on top (net income) increases. As long as the shareholder's interest stayed the same the ROE will increase. If your net income doesn't go up, but you repurchase stock from shareholders, the lower number will decrease. This also increases ROE.
DeleteHi,
DeleteWhat do you mean under the branded production section " The numbers that you wrote down from the other screen are now needed." Which numbers are we referencing to?
The numbers referenced to are the numbers you should have written down from the screen that you multiplied your expected units sold by 1.1 or 1.15.
DeleteYou are a genius! We are currently playing BSG as a niche item with a low cost/higher than average price tag. Each week we have a mock analyst presentation in which we can decently explain our decisions, but our actual number are terrible (low EPS, over production, etc) Yr13 decisions are due Saturday! SOS!
ReplyDeleteGood luck to you! Let me know if you need any tips.
DeleteThanks for the heads up! In round 2, will see if it works. Looks like the private label is the gold mine!
ReplyDeleteHow do you raise your S/Q rating, especially when bidding in the Private Label market?
ReplyDeleteIn the Private Label tab you will see that there is an area where you can select how much superior material or features you have. By increasing or decreasing those you can raise or lower your S/Q.
DeleteThis is a great area to maximize your profits! Usually you'll have either more materials or more features to get the lowest production cost for the right S/Q rating.
how can you raise the stock price?
ReplyDeleteThe stock price is really a reflection of how well you achieve the investor expectation. If you are consistently hitting the investor expectation for each category, your stock price is going to go up. The best way to reach your investor expectation is by increasing your net profit and lowering your cost to produce shoes.
DeleteWhat do you usually try and get your S/Q at?
ReplyDeleteI usually try and get my S/Q up as high as I can. It needs to at least meet the investor expectation, but for more points you also want to have the highest S/Q out of all of the other teams. Since I went for High Quality shoes, it wasn't tough for me. By the last few years my S/Q was up to 10. A great way to get an S/Q boost is to buy the upgrade for it. Other than that, it's going to be in materials and SIGMA 6 type stuff.
DeleteI have mine as high as possible. I noticed that get the most profit at that. Right now its a 9. I put Best practices, superior materials, and styles all maxed out. But something between 7 and 9 is good for this strategy I think.
DeleteIf your S/Q is up to 9, I'd leave it there. It's a good thing to have consistency. You'll end up being able to charge more if people know you're going to consistently have a high S/Q. Make sure too that you're the lowest cost producer of shoes. It can be done even if you've got a high S/Q. If you can do it, your profit margins will scream through the roof!
DeleteI have tried to use your strategy for first year i made more cash or net profit because i won at private label market. Now i try to make decision on secound year that i can't make more money than first because private label price is very low. What do you think? How can i win?
DeleteThanks
You should still be able to win even without private label. There were years I didn't get private label right and lost a bunch of money. If all of the markets are low priced and demand is completely filled, then drop your price. You can beat anyone out because using all of the strategies I teach, you can become the low cost manufacturer. If you can be the low cost manufacturer with the highest S/Q, and the highest price, you'll win.
DeleteYou have to toggle everything until net profit is completely maximized. There are no shortcuts or secret tricks. It is a system that works if you spend the time to do it and do it right. It requires a little bit of knowledge, but most of it is working the system.
Thank you for your advice.
DeleteYou meant some years i do not sell anything at private lable even i have a surplus that can sell just enjoy profit with wholesale and internet market?
DeleteSo you take your best guess as to which markets your competitors are going to enter, if demand will be met, and what price they'll sell for. It's hard to do, but you can also spread it across all 4 regions. Most of the time you will sell your inventory, especially if you can underprice them. If demand is not met though, you'll want to price it higher so that you'll still sell, but make more money. Even if you don't sell any shoes you should be profitable, just not as profitable as would have been.
DeleteIt's a lot of guesswork and trying to understand what others are going to do. They have all of the same information as you do, so what do you think they'll do based on that information? Good luck!
When should I build more Capacity on my plants? Whats the best way to finance that?
ReplyDeleteI like building capacity every other year. I switch it between increasing my S/Q rating and building 1,000 units. If there's ever anything for sale, I'll grab that too. I never financed my building. It costs too much to do. I always had plenty of cash on hand to buy it out right. If you focus on getting the highest net profit, you'll have plenty of cash on hand.
DeleteThank you so much. Helps me out a lot. I am in Y12 and had to use overtime production on my NA for branded market. Should I build capacity this year?
DeleteIf you're having to use overtime for your regular sales, then I would definitely build capacity there. The goal is to have so much capacity that you can fulfill your regular sales and throw a boat load of shoes into private label. The more you can manufacture without overtime, the cheaper your shoes are.
DeleteHi thank you for your strategy that make me clear everythnik. However after i tried to use your strategy some teams will build more plant or capacity that useful for economy of scale than me especially how i could do if they use more capacity to fight me at private lable that might their cost less than me. What i can do?
ReplyDeleteThe economies of scale does make a difference, but not much. The area that truly separates you from your competition is optimizing the best practices, wages, and materials you use in your shoes. Plus, if you have an S/Q upgrade, you'll automatically get 1 S/Q increase. Most people don't try too hard to optimize those three areas. You should be able to undercut anyone when you optimize everything. If not, then you need to toggle some more or ship it from the right locations. If you still can't undercut them, then guess which markets won't meet demand and sell at a higher price.
DeleteHow much higher should my internet price be compared to my highest wholesale price?
ReplyDeleteThat's a great question. So there are a couple of things to consider with regards to internet price. 1) If you cut it down so that your price is in competition with retailers, they won't sell as much to you. 2) Optimizing Profits.
DeleteUsually I tell people to just toggle until profits are optimized, but in this case I think you listen to the 40% guideline. You want retailers to like you, so that they'll sell you more. It's more of a long term strategy. Example: Your wholesale price is $50 (40% is $20); 50+20= $70. That's the number you wouldn't want to go under. Sure you'll lose more online sales, but they are limited anyway. You'll gain in the end by keeping retailers happy.
We started by loaning 250 million and building a plant in latin america.
ReplyDeleteWe are in last place, but now we can produce 8000 units. We also increased quality to 6 stars in the first years, but the results were not like we wanted them
Any tips?
I would never buy capacity with debt because it kills your net profit and credit rating. Since you have the capacity now, keep it. Raising your quality to 6 stars may not make much of a difference if everyone else is a 5 star. You need to cut costs, pay off debt, and optimize your net profit. If you're going to be producing at a 5 or 6 star quality, then you'll probably need to be one of the lowest prices to even compete. If you raise your S/Q, which requires lots of toggling of materials vs. styling, then you have a better chance at higher profits and selling more. Only ship shoes from NA to LA and LA to NA so you don't have to pay any tariffs. With 8,000 units in LA though, you may need to make an exception. See whether NA or LA is cheaper to ship to other regions and use that region to ship. Go over the blog posts again and do everything step by step. Good luck!
ReplyDeleteWhat should i do with my excess capacity? is it any ways to fully utilize it ?
ReplyDeleteYes, if you aren't using it all in the wholesale section (which is good), then you should be using it in the private label segment. If you follow all of the blog posts to the tee, you should have the lowest cost shoes and be able to undercut anyone in private label if there's a lot of competition. If there isn't a lot of competition, then you should have higher prices and will make a fortune.
DeleteIf you have excess capacity it's because you aren't aggressive enough on price, SQ, or rebate. SELL THOSE SHOES.
DeleteThe cost penalty of not running your plants at 120% is enormous.
I have been following your strategy for the first 5 years. A lot of them teams have decided to also follow the high SQ low models. This increased competition is causing price of materials to go up. They following strategy exactly, but just have a higher SQ and low models. Should I stick with it?
ReplyDeleteThat is a tough decision to make. Where you have established yourself as a higher S/Q provider, it makes it a little tough. Also, I always beat the team that went lower S/Q (like 4 or 5) high models. You could certainly give it a try. It would make your shoes cheaper to make.
DeleteYou would probably get up to the second place at least depending on if other teams switched or not. If other teams also switch to lower S/Q then you'll wish you stayed in the high S/Q area.
It's a tough decision because it involves other people and what they are going to do. If you all stay at high S/Q, then you're all sharing the profits and not coming out too much ahead. If you switch and no one else does, then you'll reap rewards.
Thank you this does help. Happens to be exactly what I was thinking. I went to 0% superior materials and just left everything else the same. This Lowered my SQ to a 6. I now am getting so much more forecasted profit. I am still following everything else in the post just with a lower SQ and upped my models to 100. Thanks again.
DeleteI can't seem to participate in private label. The option is not available. What do I need to do to change this?
ReplyDeleteThis only usually happens for a couple of reasons. The first is that you don't have enough stock to participate. If you know that you do, then it's going to be because your not producing 100% of your shoes from your factory so the program thinks that you don't have shoes left. If you make a change to make sure that you are producing all of your shoes, it will give you the option to participate in Private Label.
DeleteI have followed all the tips except the plant capacity. It moved me a few spots up the game but now entering year 18 my profits are negative and I can't seem to increase it.
ReplyDeleteI'm sorry it's not going well for you. I'd love to help. It's really hard to know where the problem lies without any numbers to look at though.
DeleteHello! I wanted to thank you for your precious help!
ReplyDeleteAlso i have a couple of questions:
- does it sounds likely to you that the advertising amount that max my profit is just 100? (I am in the second year and last year the amount was 6900 for NA/Europe and 3300 for Asia/LA)
-I calculated the projected demand following your tips but the projected surplus according to the game is pretty high (around 120-130 each region), is it nromal?
thank you very much in advance, your help is really appreciated!
The advertising really depends. Sometimes it's best to have it at 100. Other times it's best to have it at 13,000, or somewhere in between. That's why I say toggle everything. That's the only way to really see.
DeleteOne thing to consider doing though, is to test it at 100 vs. 10,000 and see what brings in higher profits just to make sure.
The surplus should always be around the numbers you mentioned. I never wanted my surplus to be below 100. Mine was usually upwards of 200-300.
hello, my name is Samuel.
ReplyDeleteI was top three after the first year, however, my numbers (broad statement, I know) have decreased dramatically to the point where I am now three away from last out of ten people. I know that one of the main reasons though is because there were regions where there was not one pair of shoe sold. Could I potentially give you a market snapshot to review ?
If not I totally understand. Have a good rest of your day!
Best,
Samuel
Samuel,
DeleteYou can definitely drop a snapshot to me. Just e-mail it to bsgtips@gmail.com and I'll look over it.
Do you have any advice on things to do in the final year? (i.e. pay high dividend, lower internet price below the 40% mark)
ReplyDeleteSome of the best things to do are going to be focusing on the ratios. Paying off debt is good if you have any left. Repurchasing stocks is also another good thing to do. It increases ROE. Boosting your image rating is good. Pretty much anything that is going to increase the scoring. dividends don't make hardly any difference. Internet price is such a small percentage of profit, it doesn't make much difference. Keep doing the basics for sure. Those will get you the furthest.
DeleteYou say selling capacity is stupid..... I completely disagree. We are a high price, high quality shoe and in order to cut production costs dramatically we sold capacity in NA after building in LA. Once we did this our costs were significantly lower increasing, profits and ROE etc.. and was 1st place for the whole game with no one able to catch us, or get near our profit margins.. which was at 40% across the board. Many forums also agree this is a great route to go!
ReplyDeleteIt all depends on your strategy. If you're going to go for only wholesale then yeah, it makes sense to just produce the amount of shoes that you need. That may include cutting capacity. I said it was stupid to cut capacity because I play hard in the Private Label market. That can boost your profits a ton! There are many strategies that you can use. It's not a one size fits all. This is just the strategy that I've used and been able to duplicate coming in first each time.
DeleteSo I'm glad that you were able to succeed using a slightly different strategy. Congratulations!
Good explanation ! The focus in this post more on High SQ and Low Model. I would like to ask what if i going to attack Low SQ and High Model market since the 1st year ? will it works ?
ReplyDeleteIs it means i need to set the lower price in the branded market?
what things do i need to take consideration for this strategy ?
The method is still going to be the same. You will end up having a lower price and the price per pair will be a little higher because more models costs more. The first time I did BSG the team that got 2nd place did low SQ and high models. We switched back and forth for a couple of years, so yes it could definitely work. It's not a bad strategy.
DeleteI just finished the most recent BSG round as well. Your 40% margins came from the -19.xx% cost when shipping from LA --> to anywhere else and seemed almost constant, all but 1 or 2 years.
ReplyDeleteNo way to write general tips for a specific situation.
What if the next BSG round occurs when the Real is strong compared to the dollar? LA --> NA Cost +19.88%, how would you maintain a 40% margin then??
I feel a little bit confused for determining the price of each area.I choose high quality-low model, and I just concentrate on NA and AP. Thus, I set the low price, more advertising, high quality of training in both areas. About the rest, I set high price, and others factors are lower than in LA, AP. How do you think about it. Please help me!
ReplyDeleteI also don'nt understand about bid for private lable. Is it random after I joining to bid with others. I lose a lot of money and don't sell shoes.
The thing that you want to focus on is your net profit. It can be seen in the lower left hand side of the screen. Whenever you change a price, it will either go up or down. You want it as high as possible. So when you are setting the price, you need to look at net profit and see which price gets it the highest. You do the same thing for advertising and all of the other categories.
DeletePrivate label can be a bit tricky. If nobody is doing private label then you can have a fairly high price and make a lot of money. If there is a lot of competition in the private label, then you may need to undercut the price of others to get the profits, unless it forecasts you losing money. One thing to look at for private label is how much demand is there and how much of it was fulfilled. That will tell you the competition.
Thanks for your help :)
DeleteIf I choose high quality-low model strategy, what is the percentage for superior I should set? I chose 60%, but I don't know how it affects on the number of pairs that I sold, compared with others. What happens with 50%, or 70% superior materials. Does customers know my branded shoe have high superior materials.
Thanks!
The main thing that the computer looks at is S/Q rating of the shoe. Your main focus needs to be to pay the lowest price to get the desired S/Q rating. Usually maxing out the enhancements is going to do that. Then you just add whatever superior materials is needed to get the S/Q you want. That's not a hard and fast rule, so you'll have to toggle to see which is cheaper.
DeleteFor example, put 100% on superior materials and then keep raising enhancements until you get the S/Q you want. Then put 100% on enhancements and increase the superior materials until you get to the S/Q you want. Each time look at the Net Profit. Whichever one gives you a higher net profit, that's the one that you want to go with. Sometimes it's a mix between the two, so you can try that out too.
I also want to receive your support that "Should I expand my plant? because there are some years that I have to set very high price compared to others. Thus, it makes me lose market share and doesn't get profit"
DeleteIt really depends on what your objectives are. If you are going to play hard in the private label market, then you should expand plant capacity at a systematic rate. That's because demand is always going up. If you don't want to participate in private label, then it may not make sense to purchase additional capacity.
Deletei ald follow ur instruct to do my bsg d and i also getting a good result. So, hw to ply the 2nd round nw??
ReplyDeleteOnce you get the hang of toggling everything to get the highest net profit, there are two things to do. 1) Try to guess what everyone else is going to do (Most people usually only tweak their price if sales aren't going well, so adjust accordingly) 2) Rinse and repeat!
Deletemy internet and wholesales marketing had been dropped but private label had increase compare to the past.
ReplyDeletei d choose 8star superior material and low price selling.
ReplyDeletehow do you raise the SQ rating? We just started this game and I am still pretty confused on how it runs.
ReplyDeleteThere are a couple of ways to raise the S/Q rating in the game. The most important one is going to be by increasing the amount of superior materials and/or features used in production.
DeleteThe other method is a one time thing. There is an upgrade that will allow you to increase your S/Q by 1, so it will lower your cost to produce shoes because you don't use as much superior materials or features.
hey:) may i ask something that my EPS,ROE,IR,CR is higher than invest.expected, and net profit,revenue is positive, only ending cash is negative 300++ in third year. But I confuse about that my ranking is drop to 8 from 4 and GTD score is 98 drop to 70+. I sold almost 2000pair and lost 800 in PL. Is that the problem i earning fast cash in PL?
ReplyDeleteWholesale area so far so good, only LA stockout 700+
All area is better than last year, seriously I can't realise that what happenning to cause GTD drop.
That's quite a drop! I'd have to see your financial statements and other forms to see what's really going on. Losing 800 pairs in Private Label is a huge hit. That's enough to drop your cash pretty fast. If you lost that much it could also have greatly impacted the rest of your scores. But like I said, I'd have to see the information to see what's wrong.
DeleteIn private lable, how do you think about "Margin Over Direct Costs"?. I usually set $0.1/per in Margin Over Direct Costs as I'm scared that I will lose all shoes if I don't win in bid.
ReplyDeleteThus, in your opinion, what number I should put in to get profit as much as I can?
Thank you so much!
I usually shoot for somewhere in the neighborhood of $1 net profit per pair or more. Depending on where you ship it from can make a huge difference in the price due to exchange rates and tariffs.
DeleteHi, what could be causing a negative profit margin?
ReplyDeleteCan I show you some captures so you can help me?
THANKS
There's a lot of things that could cause a negative profit margin. You can e-mail me your screen shots at bsgtips@gmail.com
DeleteHi, I am currently at Year 13 and having a slightly turn down on ROE and revenue. My ROE began to reduce since year 12, and the condition getting worst on year 13. Will it be alright if I send you some screenshot and get some advise from you?
ReplyDeleteThank you.
Yes, you can send a screenshot to bsgtips@gmail.com. Sorry for the late response.
DeleteThis comment has been removed by a blog administrator.
ReplyDeleteCame across this blog and was wondering i could get help. My team and another team have been trading places at the top but now in yr 16 we found out none of our projections met investor expections. Infact we constantly ended up have negatives. This is so weird considering how well we had been doing. We are a low sq and high model team.
ReplyDeleteAny suggestions? I could provide screen shots but please let me know the screens you need exactly.
Thanks,
Adam
Adam, sorry for the late response. I'm guessing you're already done with the game. If not, send me some shots of your financials and market analysis. bsgtips@gmail.com
DeleteHi
ReplyDeleteCurrently I'm playing the game the first round I was number 1, however for the second round my Image rating dropped from 79 to 71. Please help???
If your image rating dropped like that then you either lowered your shoe's S/Q rating or turned off the SIGMA 6 and other training. It's difficult to determine what exactly it is without seeing information, but that's a good place to start. Your image rating is going to directly correlate with your S/Q rating.
DeleteI implemented your strategy of high quality/low quantity and am currently in first. However now the revenues generated in LA (US per R) have risen all the way to -19.22% and no matter how i formulate i cant seem to turn a profit. Its only the second year so i have 2000 cap in NA and 4000 in AP still. What would be your suggestion?
ReplyDeleteThe only thing that would affect the price so dramatically would be an exchange rate, assuming you've optimized the production of the shoes. I would make sure that you are shipping the shoes from NA, as there is no tariff, unless the exchange rate is having a huge impact due to the dollar's increase in strength. Then it might be a good idea to ship from AP. It's hard to know for sure what's going on without the information in front of me, but that would be my guess.
DeleteWe want to continue to expand our capacity. We are building at max for our allowance (1000 for each asia and also LA). We also purchase capacity, how can we build more???
ReplyDeleteALso, how can we expand market share even more. We are at 18%, 15%, 13%, 14% (NA,EA,AP,LA). We advertise at 11k, 11k, 8k, 8k. We sell cheap and have rev of 450k and want to continue to dominate. How do we increase market share to somewhere around 20+ per.
We dominate Private label too. We want to build more and more and we can sell them all as well. How do we do that?
You can't buy more capacity than the limit, but look for sale of capacity right after the game runs for the round and you may be able to get more. To dominate, you'll just need to keep on toggling everything to maximize net profit. Increasing your capacity will allow you to sell more in Private label as well. Overtime is always good to do if you are making a hefty profit from Private label. Sounds like you're doing well. Good luck!
Deleteissuing dividends in early rounds seems like a waste of money. Any company that is still in the growing stage won't be issuing dividends. The money could be better spent buying back stock, upgrading your plants, or even building a new plant
ReplyDeleteThat's definitely true. For the little benefit that comes from issuing dividends, the money is better spent in the areas you mentioned.
DeleteIn our Company Analysis, our Private-Label Sales droped to 0%, could you help me with that? :(
ReplyDeleteEither you got outbid and the demand was met before your shoes sold or you priced them too high. There is a cap on how high you can price your shoes in private label.
Deletehow can I raise the ending cash? I have -361 mil in there, and it really awful. will that ending cash effect my score after all?
ReplyDeleteplease reply me
The only real way to raise ending cash is to sell more shoes for a profit. If you have a negative balance in your account, you will end up having to take an overdraft loan at 2%. So it could easily affect your score mainly in the areas of credit worthiness, but also reflects that something is seriously wrong with your business model and needs to change. If you keep getting into negative cash, your score will naturally go down because you're most likely not meeting investor expectation on other criteria. So figure out why you're not making a good profit on your shoes and ending cash will go up.
DeleteAny tips on what to do with an excess of ending cash? As well as share of stock outstanding at 9,625k...
ReplyDeleteWhenever you have excess ending cash, it's always a good idea to think about building capacity, adding upgrades, or in your case where you've got stock outstanding to buy back stock. Buying back stock will help increase your ROE.
DeleteThis comment has been removed by a blog administrator.
ReplyDeleteMy team will start from year 11- 18. Please, what are the most important thing to focus on in winning the game?
ReplyDeleteThank you.
The most important thing to focus on is net profit. If your net profit is forecasted to be high, assuming you've toggled all of the numbers and made good estimates as to what competitors will do, you'll be sitting beautifully in the game. Good luck!
DeleteHi there! My team is in the last two years. We have performed consistently each week (top 3). However, we feel that we are in a volatile market. Many companies are changing strategies frequently and it is making it very difficult to accurately forecast. In Y17, we dropped to 4th after two teams with high SQ ratings (low models) lowered their pricing to almost unimaginable levels (well under the 40% ratio). We are a 4 SQ rating with 500 models. Our Best Practices are maxed out. We have invested in Ethics Training for all employees and Workforce Diversity, but our image rating has plummeted. Increasing our SQ rating did not help. We are sitting at a 66. We aren't sure if this will be OK considering we are low price/high model.
ReplyDeleteWe have not yet been able to snag celebrities because people are paying well over $10-15 million for them. We don't see this as being a sound investment. We pulled out of the Private label market after teams were bidding at $10-ish per pair in each market. This was not conducive to profitability for us. We are really frustrated because we always maximize all of our projections, but never hit the mark. As I said, it has been extremely difficult to accurately forecast. Which makes us believe that maybe we don't understand forecasting at all. :/
We have 8 teams total and 6 of the 8 have G-T-D scores of 106-99. It's very close for most of the teams and it's been really hard to pull out all the stops and make a large play.
Do you have any suggestions on what we might be able to do to make a power play in these last two weeks? Or how we can just increase in general.
ps - we have also purchased all the available shares of our stock each year, paid off all loans and refinanced one loan we took out as the interest rate decreases year after year.
thank you!
It's definitely difficult to predict the upcoming years when people are doing irrational things like you mentioned. Forecasting can't take that into consideration. In highly competitive markets it's difficult to do anything drastic to increase profits. Your best bet is to continue winning market share and making your forecasts reflect greater competition.
DeleteI'm starting the real round for BSG. Can you please tell me if my SQ rating is 7 then how much should the retail price be? I did go for the high quality mid model strategy at the practice round and managed to get first but for the second round i had to drop my SQ and increase model for the numbers to be positive.
ReplyDeleteIt's really difficult to tell you the exact price that you need to have your shoes at without seeing what the other teams are doing. If all of the other teams have really low prices, it'll be more competitive and you'll have to have a lower price as well. The opposite is also true. Feel free to shoot over screenshots if you want some recommendations.
DeleteHey, awesome post. We're just beginning and my team is somewhat lost. We're still doing practice rounds but next week we start for real. I have read some very drastic recommendations online which suggest maximizing 10 year loans in the first round and using all of the surplus cash to add capacity. Our team is fairly certain that we want to adopt the low-cost strategy. Can you give us an idea of how to set things up at the beginning to ensure long term success over the next "6 years"? Thanks in advance for your help.
ReplyDeleteThanks! I'm glad you liked it. The low cost strategy is a good one. Typically what I've seen with it are high models sold. That being said, look into fewer models as well and see if it increases profits. Buying an upgrade one of the years like increasing S/Q level in a plant are really good for lowering costs, giving you an edge on your competition. Also make sure to have lots of capacity. Typically low S/Q strategies sell tons of shoes. Good luck!
Deletehello there. one question. why does high SQ, high price high model combination won't work?
ReplyDeleteIt could very well work. But the reason that I don't do it is because it costs more money to produce more models. So if you want to maximize profit, you get lean by cutting the number of models.
Deletepursuing a high sq strategy, will it be wise to upgrade option A?
ReplyDeleteMy favorite upgrade option is the increase S/Q rating in the plant when you're using the high S/Q strategy. I can't remember if that's option A or not.
DeleteHi, thanks for your tips! My company is definitely benefitting from them. We are now in first place going into year 15. We had been in second place the last two years and finally jumped into first by dominating the private label market and underbidding other companies who were counting on entering private label. However, profits are extremely tight going into year 15, and I know other companies expanded again last year, so they may still have to put them in private label. Also, we have high private label capacity at about 75% each in two regions and 100% in the other two. So, I am not sure how to handle this situation. Should we max our price at $44 and hope not many enter, or try to underbid to push others out, but make very little profit? Any suggestions you have would be greatly appreciated. Also, is it okay to send you any particular screen shots? Thanks in advance.
ReplyDeleteWhen it comes to private label there are a couple of major factors. If you think that there will be increased competition, which it sounds like then I would try to underbid everyone. That way, they get $0 profit from it and lose a ton of money while you make a little bit. You could gamble and max out your price, but it usually backfires. If you can discourage people from entering then it's better that way. If you think they'll back off in the future then raise your price. Usually you end up having to undercut them each year afterward to win private label.
DeleteHi, we are currently at our final year decision, our market share had been releatively small, and we bid 2 celebrities last year and now we are at a tough position with a very high marketing cost but we couldn't really increase the selling price as others were pretty low. Can we cut the retailer support by more than half?
ReplyDeleteI would recommended toggling all of the variables like price, retailer support, and advertising, etc. The real key is to accurately predict what the competition is going to be the following year and their relative prices to yours. I will usually predict competition at an increased 2% minimum. Usually I put 4% in. This way, you can change the prices and costs of everything to see what your projected net profit is. If lowering retailer support is beneficial to net profit, then do it. Sometimes increasing it is better. Sometimes lowering advertising is better. You have to work the numbers. It's great that you are running it like a business, but it's a computer system and is programmed with various equations. So if you forecast your competition's prices correctly, you know that the outcome displayed will happen.
DeleteI need some serious help with my company, but i dont even know where to begin.
ReplyDeleteCan you help me out?
I'd be happy to help you out. Just shoot me an e-mail over to bsgtips@gmail.com.
Deleteactually i can write to you here! (:
Deleteare your tips for a high quality/low model? And the choices you suggest are for both North America and Asia Pacific?
and for branded production, what is the % of superior materials you would use?
The specific strategy that I feel works best is High Quality/ Low Model. That's what the blog posts are using, but the concepts behind everything is the same whether you have low quality or high models. I just always noticed that it was cheaper to have fewer models. I also made higher margins by going high S/Q.
DeleteThe percent of superior materials used varies each year. It's all about toggling the numbers. I usually start with 100% superior materials vs. 100% features. That way, you can see which one costs more. The one that costs less will be the one with a higher percentage going toward it. You toggle it until you get the highest net profit for the S/Q you want.
Can you explain margin over direct cost for Private Label? Is a positive number good or bad?
ReplyDeleteAnd also for the exchange rate adjustment for gross private label revenue and production cost, do you want a positive or negative number here?
The margin is how much you have left after the expenses of making the shoe, so a positive number is good. If it's negative, don't do it.
DeleteThe exchange rate adjustment is a hard thing cause it's going to happen regardless and year to year you never know if it will be up or down the next year. It's best if it's positive. It will add to your margin. I never paid attention to it when I played. My focus was always on making the cheapest pair of shoes and charging a good amount so that my margin was high.
Hi, you wrote "Whenever I have enough cash, I like to pay off the debt."
ReplyDeleteI was wondering how and where do you go to pay off debt?
It's under the finance and cashflow section. You'll see an option to pay off a long term obligation or debt.
DeleteHi..can you help me to read the exchange rate in corporate lobby? And overall my performance always meet the investor expectation but how can i boost the image rating except bidding celeb? thanks
ReplyDeleteIf you can send me a screen shot of the exchange rate, I can help you with that. Methods to raise your image rating are mainly done through increasing your S/Q rating for your shoes. You can increase it a little by doing corporate citizenship as well. A great way to increase it is to add the S/Q upgrade that will boost your S/Q by 1 in the respective warehouse.
DeleteWhat is the best way to optimize plant upgrade options?
ReplyDeleteWhen it comes to plant upgrades, it really depends on what your objectives are. For example, I always went after High S/Q, so the upgrade I would do is the +1 S/Q upgrade. I would usually do this in the 3rd or 4th week of the game. As I mentioned in my post, I like to alternate between increasing capacity and doing things like upgrades or paying of debt or buying back stock.
Deletehow many strategy i can choose except high quality/low model and mid quality/high model? based on your blog, what stategy do you choose? i found difficulties after i play this game. now i feel a little understanding after refering to your blog
ReplyDeleteThere are really an endless amount of strategies that you could choose, but usually there are 4 of them. The 2 that I would consider are High S/Q with low models and Low S/Q with high models. The one that I use with this blog and have had repeated success with is the High S/Q with low models.
DeleteHi,
ReplyDeleteI am in my second week of the game and we are in first place by a long shot with implementing high sq low model approach. The question I have is that we have a surplus of over 1,000 shoes in NA and 350 in LA. Europe and Asia are at around 15. I was wondering how we go about lowering that number to a reasonable 200 in NA and LA.
Thanks!
I sell as many shoes as I possibly can in Private Label. That usually takes care of the surplus. If you still have a surplus after that, then you see if it is beneficial to sell them as clearance shoes. Usually it helps your profit if you sell 50%, sometimes it gets you more profit if you sell more or even less. It's something you have to click on and see what it does to net profit.
DeleteHi. We are in year 15 and have been leading but now it seems I can't get positive profits. Models are at 250 and SQ at 7. Most of the competitors have a similar SQ or slightly lower with only one company having higher models. Is it smart to change strategy at this point? What should I do?
ReplyDeleteI always try to separate myself from the pack. If you all are very similar in S/Q, Price, and models produced, you're not going to do any better than the rest. I would find a way to separate yourself. Increasing S/Q is always good to do. Look at who's in the lead and what they're doing and copy it to some extent.
Deletehow do you estimate the industry average? for example when i set industry average estimate at $80 and set my selling price at $ 50 it does show me a high net profit projection. problem is the actual estimate average is around 35. so if i were to key in an average which is far off from the average ,that would mean lower net profit? (im in my second year and still very confused.
ReplyDeleteIt will automatically populate all of the fields with all of the averages from the last round. There is a button to alter that though. It says Adjust Competitive Intensity. Just adjust it to increase 2 or 4 percent and it will automatically adjust all of the numbers for you.
DeleteWhat would be your recommended S/Q rating for branded production? We've stayed at 8 since the beginning and have been in the top 4 every year so far. Should we raise our S/Q?
ReplyDeleteMy typical strategy is to start at S/Q of 7 and increase it every other week until it hits 10. I will always use the S/Q upgrade, so I don't have to pay for one of them. At the same time, if it is working for you then don't change it. I usually did it to separate myself more from the competition because I can manufacture shoes cheaper than any other group.
ReplyDeleteDo you need to change Competitive Intensity each round or does it carry over? I increased it 2% across the board last round.
ReplyDeleteYes, you'll need to change it each round.
DeleteI have been following your tips, they are amazing! However, for year 14 all of my numbers are positive except net revenue is at -.7%. Should I be worried about this?
ReplyDeleteNet profit is the one that you really want to focus on. Although, you do want all of the numbers to be positive. The reason your net profit is more important though is because several of your grading criteria like ROE and EPS use it as part of the formula. So the better it is, the higher your ratios. I would see if you can optimize it even more though to see if you can improve it.
DeleteI need some help, my team is the worst of 6, now is the year 16 of 20. We have only 4 decisions to improve it.
ReplyDeleteThe overall GTD score is 44
Wow, that's a rough score. If you want help please e-mail me with what you want help with. I can help you either by you sending me screenshots of reports and tell you what I see, or I can log in for you and change some things to help. The latter requires payment. Let me know what you'd like help with.
DeleteI was wondering if you think I should issue a dividend this year? Every year in the past I have issued a dividend and i am in year 18. last year my dividend was at 1.15.I am in first in the industry. I dont want to issue one this year becasue i want to use the cash somewhere else. Will it hurt me? what do you think?
ReplyDeleteI have never noticed any significant effect for not issuing a dividend. The only thing that would be affected is the stock price. Even then, I don't think it will be a significant difference.
DeleteHi mr ningziqi would you mind to help me with my bsg? Im at the last plc in year 14. Possible for you to personally help me?
ReplyDeleteYes, I can help you. You can either email me some screen shots of your reports and I can give you some basic advice or I can tutor you in it for $20 per hour.
Deletehi there,
ReplyDeletei was wondering if u could help me with the bsg game online. i am very confused with everything and we've just begun with it (need to do the pratice round for year 11 and it is due tomorrow, your help woule be appreciated. please advise if i can contact u personally, i'm willing to pay. thanks
Yes, I can help you with the game. Contact me at bsgtips@gmail.com. We can work out details there. Thanks!
DeleteWhat do u mean by "then, toggle advertising, rebate, retailer support (by 100s only)"
ReplyDeleteDo i have to set them exactly as 100
You have to increase and decrease the numbers in order to find the number that will maximize net profit. You move the retailer support number by 100s, not thousands like the rest. You do not necessarily want everything at 100, although some of it may end up being that way.
DeleteHi there
ReplyDeleteI just complete the year 11, and have some questions?
For private label, can I assume that the NA market is like a high end market where they will care a lot for goods with high S/Q rating
Moreover, for private label, why I have a high S/Q rating (7 stars) than my competitors (4 or 5 stars)but could not sold a lot goods than them (FYI, they have lower bid price than me)
A lot of it is determined by price. The key to a High S/Q strategy is to make profit margin as large as possible and sell as many shoes as possible. In private label you only want to do the S/Q rating that it shows. It makes no difference if the S/Q rating is higher than someone else. This is just a company ordering shoes from you with their brand on it. They don't care about quality in this game, just what's displayed. Private label has a limited quantity that you can sell and you have to have the bid accepted in order to sell any shoes.
DeleteSo u means that we dont have to apply the High S/Q strategy in private label market, we only apply the High S/Q strategy in branded shoes ?
DeleteThat's correct. Only apply high S/Q strategy in the branded market and make the shoes in Private label market with the minimum S/Q listed.
DeleteHello,
DeleteMy team is currently in Year 14 of BSG and we have adopted a high S/Q low model strategy. This year I chose to decrease our marketing expense considerably and it projected an increase in profits. Current industry average is at $10,000 yet dropping ours to $500 increased profits. I assume this is an optimal move. In addition, the S/Q rating upgrade for our AP plant has a cost savings of -620. Should we forego this upgrade?
Sometimes decreasing marketing will help increase net profits, which is the key. It will most likely not be universal from region to region, so you need to test and see if a decrease in marketing is in fact better in each region.
DeleteAs for the S/Q upgrade, I have never seen it not return. You'll spend way less money in the long run on materials for your shoes if you have it. It also allows you to increase the S/Q without any additional cost of materials.
Hello,
ReplyDeleteWe are currently in Year 14 of BSG and have adopted a high s/q low model strategy. For this year our group has decreased advertising considerably which has resulted in loss of market share but an increase in profits. Is this the right move? This has led to us cutting back on branded production due to the loss of market share and putting the inventory into the private label market. In addition, the S/Q upgrade for AP currently returns -620 in annual savings for us. Should we disregard the upgrade?
Thanks
Sometimes decreasing marketing will help increase net profits, which is the key. It will most likely not be universal from region to region, so you need to test and see if a decrease in marketing is in fact better in each region.
DeleteAs for the S/Q upgrade, I have never seen it not return. You'll spend way less money in the long run on materials for your shoes if you have it. It also allows you to increase the S/Q without any additional cost of materials.
Thank you. Currently all my S/Q ratings are 9. I assume this will upgrade AP to a 10. But if I wanted to drop back to a 9 rating will it require less resources than if I had not chosen the upgrade?
DeleteIf you do want to drop it back to 9 it will just use less materials to get there than before.
DeleteHi Ning,
ReplyDeleteWe are in year 14 and its a very competitive industry. All be 2 companies went negative on the scoreboard. I cannot seem to get our numbers positive unless I put A LOT of production towards private label and assume the bid will be accepted. If I were to send you the snapshot and reports could you give me some advice as to what I can do? I have 2 weeks before the next decision is due.
Thank you.
You can send me snapshots, I prefer pdf reports. I'll take a quick glance at it and tell you what I see. My recommendation is to do a walkthrough with me so that you know exactly how to do your numbers in the future. Contact me for more details on that, bsgtips@gmail.com.
DeleteHello,
ReplyDeleteI'm currently implementing High SQ/low model strategy and came out on top in the first year. My main challenge in this strategy is finding the right price and increasing demand while increasing profit. There wasn't any specifics on your article for the prices and the demand. Do you have any recommendations for the prices for this strategy?
Also, we have a direct competitor with the same SQ but they beat us all with model/advertising and they price lower. It ended up hurting our demand and we have left over inventories. Although we beat them in the first year, I think they will come out on top eventually.
PS. We only came out on top because of private labels. But I don't think it would be consistent after the first year because of low prices. You mentioned you won the game without private labels one time. How did you use your extra capacity? did you increase your demand? how so?
The whole key to this game is to increase net profit. That's the reason you beat this other team; your net profit was higher than their net profit. I don't give direction on pricing because it's different for each team. In general though, a high S/Q strategy will be at a price higher than industry average anywhere from $2-$4. The key is to guess what the industry averages are going to be, by adjusting the competitive intensity to the correct percentage, and finding the price that will increase net profit the most. So you just move the prices around until you get the price that gives you the highest net profit.
DeleteI always use private label. I know how to cut costs to beat anyone at it. You just have to know what the competition is going to do. I always use extra capacity for it.
If you want to increase demand for your shoes, you just have to advertise more and increase your retailer demand. A warning though, it will most likely not optimize your net profit.
I can give you a walkthrough online exactly how I do it if you'd like. It costs $30. Just let me know via e-mail and I'll get you more details. bsgtips@gmail.com
Hi There,
DeleteAnother question, do you think building another capacity to latin america is worth it? I know my demand is already extremely low so It would end up in private label only, is that worth it?
It could be worth it. The one problem with building new capacity in LA is that you can't build as much at once. For example, if you initially built 1,000 units of capacity, the next year you could only increase it by 500. Other plants you can increase more. As you have greater amounts of capacity in LA though, your price per shoe will be lower. I've seen people do it both ways and it doesn't seem to make much difference. It is slightly cheaper to produce shoes in LA though.
DeleteThank you for the response. You are correct, we had the highest net profit. I'm sure a lot of people here were confuse about the prices as well for the high sq strategy. My initial thoughts were way above $2-$4 higher than industry average and ended up pricing it $7-$8 above. That's probably the reason I had a lot of left over inventory.
ReplyDeleteI agree, increasing demand through advertising will not optimize my net profit. I was thinking there was some other way to increase demand while also "increasing net profit." If for some reason people beat us in private label, we would go from number one to last. That's the only reason I asked about increasing demand, to lessen the risk.
Anyways, I'll shoot you an email if I do horribly wrong in the next decision.
Thanks for making this article!
Celebrity appeal will also increase demand, although you don't want to spend too much on it or it actually eats away at net profits.
DeleteWhat exactly do you input for the celebrity appeal? Is it the index number for existing celebrity + the celebrity you would like to bid on that year?
ReplyDeleteSecond, our company's S/Q rating was 8 last year but net profits were low and we did not met any investor's expectation. If we reduce our S/Q rating to 7 to maximize the profits and lower the costs, would it affect our sales and net profits?
For celebrity appeal, you will just enter in how much you want to bid for them off to the right. There is also a priority ranking box that you can use to say if you prefer one over the other. I never used it. I would always just fill in a number between 3,000 and 6,000. Any higher and it gets really pricey to pay for celebrities.
DeleteAs for lowering your S/Q, it will ultimately help you decrease the cost of shoes. The real problem, however, lies in not changing all of the numbers to an optimal value on the rest of the screens. That's really how you get the lowest cost shoe. That means making sure the materials and features are set to be the best for net profit, the labor to maximize net profit, along with everything else. In any given year, for example, materials will probably be more expensive than features, so you maximize features and then see what you need from materials to get the S/Q you want.
Hello,
ReplyDeleteI am currently in the BSG game where we focus on a high quality low model offering with S/Q = 10. In an attempt to optimize profits the simulation is projecting significant increase in my shoe price. However my market share is decreasing across the board. In addition, I am unable to hit the minimum target goals for investors without engaging in Private Label. Its almost as if I have to disengage from the branded production market to earn higher profits in private label. But I want to be able to earn minimum profits even before I engage in the Private Label market. Any suggestions?
An S/Q of 10 always increases costs a lot. It helps if you have the S/Q Upgrade to lower the cost a little, but honestly, you'll want to be in private label. That's where you can make a lot of money. If you want to increase market share, you'll either have to lower your price or increase marketing. There are usually two points where profits are maximized, one at a lower price and one at a higher price. The lower price point will increase market share, but it will also use more shoes causing you to have fewer available in private label. With High Quality startegies it's tough to really capture market share when prices are higher. If you want some more guidance, I can do a walk through for you online. Send me an e-mail for details.
DeleteI have a question regarding Private Label. It sounds like it can be quite profitable to engage in that market. Once you establish an advantage in that market (like achieve 100% of the demand capacity) what is the best way to maintain that advantage to avoid someone undercutting your price?
ReplyDeleteIf you were to gain 100% in each area of private label at a low price most people wouldn't challenge it because they won't be able to make it profitable. There aren't any sure ways to prevent someone from undercutting your price. All you can do is to monitor what people have done in the past and what you think they'll do in the future. One way to see if they'll be jumping into private label is if they build capacity of 1,000 or more. Then it's a potential that they'll send some to private label.
DeleteOther than that, you need to make sure that you have the lowest cost shoes in private label. Getting the lowest cost consists of using materials or features to get the bare minimum S/Q rating for that year. Usually features is cheaper, so only do features if it gives more profit than using materials.
Also, if you can manufacture shoes from one plant it will keep the cost per shoe lower than if you manufacture and ship from lots of different plants.
Hello, we are in our final year of the bsg game and our company has been at the top for the past 5 years of the game. After year 18 one of the companies we are competing against managed to catch up to us very close and they were just one point behind us. We have been implementing the high S/Q strategy and in year 18 we repurchased stock for the first time. We believed that the company behind us we able to acquire more stock that us which is why the game is so close. What tips do you think would help us to guarantee our position at the top. The top team in our class gets an automatic A and doesn't have to do the final paper and we really want to be the top team to reap these benefits.
ReplyDeleteI'd say that you're doing a good job. The most important thing is to increase net profit. However, you could also buy stock back to increase your ROE. It's better if you do this throughout the game so that you don't have to keep getting higher and higher net profit each year to increase ROE.
DeleteHey, can I send you some screenshots to your email? We are still in year 12 and we desperately need your help. Thank you.
ReplyDeleteYes, feel free to send me some screenshots. You can e-mail them to bsgtips@gmail.com. I can also give you a walkthrough. I can explain the details in the e-mail.
DeleteI have sent you the screenshot and cannot wait for your answer. Our deadline is Wednesday night so we are under a lot of pressure, thank you for any help you can provide us already.
DeleteHello, we are in our year 15. we tried our strategy high SQ but unfortunately, we are always last one.I have sent you the email, could you please help us??
ReplyDeleteDD
I will be starting this next week and will be following, all of this is a lot of info and kinda overwhelming. I'm glad I found your page!
ReplyDeleteNice, informative post, thankyou!
ReplyDeleteI have 2 competitors offering a SQ 8 shoe, with 350+ quantity, for $55.... I can't compete.
ReplyDeleteYou can definitely compete. You just have to have a higher net profit than them. This usually entails getting your cost per pair as low as possible. I can do a walkthrough with you if you'd like. Just contact me for details. bsgtips@gmail.com
ReplyDeleteHi, congratulations on your blog. Any specific tips on what to do in the very first year? Is it a good idea to pay off the existing debts or to bid celebrities in year 11?
ReplyDeleteIn your first year I would just use the same process as described in the blog. I would bid on celebrities. Choose a strategy and start with it.
DeleteHi! Thank you for all the great tips. We are destroying our competition, but I have a question. A lot of demand goes unfilled in our industry, especially in LA. We add 15% to our demand projections for our settings and price, and we always sell out. So far, we have not tried to increase our prices far over the average (we are actually under many competitors, though we have the best S/Q rating). If there will not be enough branded production to meet demand, how much more than the average can we charge before the wholesalers will stop buying?
ReplyDeleteI'm glad to hear you're doing well. The best price is going to be the price that makes net profit the highest. If your S/Q rating is higher than everyone else, your price will likely be $4-$5 higher than the average industry price. You'll capture less of the market share, but make more profit. That's what your grades are based on as well. If you don't want to increase it that much, then add 20% to your demand projections.
DeleteAs a note, if you increase your price that much, your market share will decrease. That means fewer overall shoe sales, but higher net profit. If you do that, you'll only want to increase your demand projections by 10% - 15%. Good luck!