More Than Just Fun and Games

Resource Description

The Business Strategy Game: Competing in a Global Marketplace (BSG; Thompson, Stappenbeck, Reidenbach, Thrasher, & Harms, 2013a) and Glo-Bus: Developing Winning Competitive Strategies (Thompson, Stappenbeck, Reidenbach, Thrasher, & Harms, 2013b) are online simulations in which student teams compete with each other in international athletic footwear and digital camera industries, respectively. They are designed for use in business courses and, specifically, in undergraduate business administration and MBA capstone strategic management courses. In these classes where both crafting and executing strategy are emphasized, these simulations are enacted to provide students with “experience” that goes beyond the hypothetical, moving them from an outside, recommendation mode to one of ongoing senior management level responsibility for company outcomes.

The BSG and Glo-Bus simulate existing global industries by providing online platforms that support the essential managerial decisions needed to operate competitive firms. Thus, while nothing is actually produced, marketed, or distributed, the online environment creates the sophisticated illusion that students are, indeed, participating in global market competition. They collaborate to make and enter decisions in the simulation programs regarding production, quality, compensation, prices, finances, customer support, and a number of other elements essential to a comprehensive operation.

The BSG and Glo-Bus simulations are nearly identical in appearance, competitive intelligence reports and resources, and in the required decision categories used to apply textbook principles. The only essential difference between the simulations is in the industries they represent (athletic shoes and cameras, respectively) and, to a lesser extent, in the number of years the fictitious companies have been in operation and in how many production facilities they operate. In the BSG, student-controlled companies sell branded and private label footwear made in one of two production facilities (one in North America, one in Asia-Pacific) to customers in four geographic regions (North America, Latin America, Asia-Pacific, and Europe-Africa). The simulation has participants taking over a manufacturing company that has been in operation for 10 years. Competition begins in Year 11 and runs for 4 to 10 decision years, scheduled in advance at the professor’s discretion. In Glo-Bus, companies begin with Year 6 of company operations and produce entry-level and multifeatured digital cameras at a single production facility in Taiwan. The same four geographic regions utilized in the BSG provide markets for the Glo-Bus cameras, for a total of eight potential market segments (e.g., in Glo-Bus, two camera levels × four regions = eight segments; in the BSG, two levels of shoes × four regions = eight segments). In both games, teams begin on equal footing in terms of overall sales revenue and net earnings, and interest rate and exchange rate fluctuations follow real market variations.

Students operate their companies through a series of decision rounds, each of which equates to 1 year of company operations, entered into the sophisticated spreadsheet that underlies the industry templates. Co-managers are given the liberty to alter their product offerings, primarily as regard research and development; product quality, features, and number of models; and the quantities of each level of product released to the respective geographic markets. Marketing decisions include pricing and distribution channel differentiation. Other decisions involve corporate social responsibility and citizenship. Co-managers must also address several aspects of financing company operations, including issuing and/or repurchasing stock and careful management of the company’s credit rating. The games differ slightly in that, in the BSG, co-managers make decisions regarding the plants where the shoes are manufactured. Plant capacity can be bought, sold, or constructed, and students may choose to continue to utilize the original plants or to build new production facilities in Europe-Africa and/or Latin America. Co-managers also have the option to bid on a number of celebrity endorsements in an effort to boost their market share. In Glo-Bus, co-managers make labor and compensation decisions, including worker pay, benefits, training and development investments, and incentives for attendance and defect-free production. They also must make staffing and workforce decisions on whether to utilize permanent or temporary employees and/or to outsource labor to meet production demands.

Company performance is scored each year of the game based on five equally weighted metrics: earnings per share, return on equity, stock price, credit rating, and image rating (i.e., quality and market share). Teams receive a score for each of the five metrics based on how each performance indicator compares to (a) the stated investor expectations and (b) the best rating among those of their industry competitors. The IE (investor expectation) and BII (best-in-industry) scores are then averaged for an overall game-to-date score each year. Thus, the simulation tracks a company performance score that includes not only the current year but also all decision rounds to date. The final game-to-date score for the last round of decision entries may be used as the team’s performance grade for the simulation exercise, or as a component of individual grades for the simulation.

Use in the Classroom

In our courses, we use the text by the simulations’ authors. As the title, Crafting and Executing Strategy: The Quest for Competitive Advantage (Thompson, Peteraf, Gamble, & Strickland, 2014) indicates, a capstone course is only partly about crafting strategy; another significant component concerns its effective implementation. Textbook principles and case analyses meet the pedagogical “crafting” needs well; with regard to implementation, however, these tools relegate students to armchair quarterback roles. By contrast, simulations like the BSG and Glo-Bus allow students the opportunity to practice their integrated, strategic management skills in a relatively risk-free environment or “live case.”

Students form teams and compete in a “local” industry (their class) and with student teams from other institutions throughout the world. Professors have the flexibility to set up local industries consisting of 4 to 12 teams, and multiple local industries are permitted. Each student must register for the simulation and pay a fee, the amount of which is determined by the professor’s selection of stand-alone or packaged options. Each student is then referred to as a “company co-manager.”

Both simulations provide great latitude and flexibility for instructors to use in meeting student and course learning goals. The professor has discretion over the number and timing of decision rounds. Professors can choose from 4 to 10 decision rounds, and the semester calendar is the only time constraint in terms of scheduling. This flexibility allows for a meaningful student experience regardless of the time constraints. For example, Professor A may prefer 10 decision rounds that run once a week beginning very early in the semester, while Professor B desires to run two rounds per week during the last 4 weeks of the semester (eight total). In our sections, we prefer to progress through the text materials we see as essential to well-informed analyses and strategic decision making (e.g., practice with external environment analyses, understanding of the advantages and pitfalls of the generic competitive strategies, etc.) before handing over the company reins. In addition, the simulations may be customized by the instructor’s election (or not) of several options, which may be tailored to student learning needs. We use the individual quizzes (one regarding the parameters of the simulation itself and the other regarding the numbers and financial calculations) to ensure students have a clear understanding of game operations; postgame self- and peer evaluations to provide feedback on the quality of each student’s contributions; and company End of Chapter (EOC) planning and reflection prompts to ensure teams are thoughtful and intentional in their implementation efforts.

Since we use the Thompson et al. (2014) text, the common authorship allows us to tie the principles and tools closely to the student’s simulation experience. For example, a look at the Competitive Intelligence simulation screen reveals several strategic group maps, based on product and geographic segments. This offers us an opportunity to reinforce this external analytical tool from the text by encouraging the students to interpret the maps and use these data in their reactive management efforts. We have found that having such close pedagogical ties keeps us from slipping over the edge from education to mere “training.” We can also apply business tenets differentially, based on the game we use. One of us has an accounting background and prefers to use the BSG to reinforce the revenue-cost-profit economics of the various production and capacity options. Similarly, one of us has an organizational behavior background and tends to specialize in Glo-Bus, as it reinforces lessons about cost-effective investments in human assets (e.g., superior returns for defect-free work rather than rewards for mere attendance).

Constructive Analysis and Comparison

A primary beneficial feature of these simulations is that they model the real-world athletic footwear and digital camera industries closely. We find that this aspect heightens student interest and involvement in several areas of the course. As one of the cases found in the accompanying text is the Kodak case, its concurrent use with Glo-Bus allows students to apply sound business principles to a specific industry in both abstract and concrete ways; similarly, case studies of UnderArmour, Nike, and lululemon athletica complement the BSG. Furthermore, and unlike other simulations, the BSG and Glo-Bus are rather straightforward in their application of principles; they are dynamic and are not devised to force students toward one “correct” strategic implementation.

In practice, people lament that calling a typical help desk prompts the common response, “Did you turn it off and turn it back on?” without more in-depth, true assistance. This has not been our experience with Glo-Bus and the BSG. Customer support is quite responsive and truly helpful. Similarly, the help screens within the simulations are exemplary. They are filled with pertinent information and describe effective tactics and maneuvers that can be used to apply sound business principles to company operations. This feature allows us to act as coaches, who through application of such a “playbook,” can encourage students to learn to use reference tools effectively, ad hoc, as they will need to do in their eventual careers.

The features and benefits of the BSG and Glo-Bus are many, but these games do have room for improvement. They carry a significant learning curve, one that may be heightened by the very real-world complexity that makes them so useful. Students often find the integrative and comprehensive nature of the BSG and Glo-Bus quite daunting, and unfortunately, a few of them later reflect on the simulation experience as “just a guessing game.” While clearly refutable, that claim may be exacerbated by the unavoidable fact that the first decision round is not informed by the market (hence, the equal footing). We have found that utilization of the two practice rounds is helpful in alleviating some of the inevitable student angst. The challenge for instructors lies in convincing students that the learning pay-off is worth the significant investment of their time.

Despite their relatively successful attempts at realism, the BSG and Glo-Bus fall slightly short in mirroring their respective global industries. The geographic regions are not demographically representative. This is a source of great frustration, particularly for the marketing majors! The BSG addresses this concern by providing for celebrity endorsements that have predictable effects based on their popularity in the regions; but Glo-Bus simply relies on business principles without regard to demographic influences. When using the latter game, we like to fend off this irritation by informing students in advance that they should think of the geographic regions as “Dopey, Sleepy, Sneezy, and Doc” for all the [lack of] marketing data they provide.

Ultimately, if the BSG and Glo-Bus have an Achilles heel, it is this: Both simulations are manufacturing in orientation, but we are attempting to prepare students for life and work in a service economy. Career Builder’s Annual College Graduate Job Forecast for 2013 shows that only 22% of graduates will be hired for “production” jobs (Career Builder, 2013). The straightforward and relatively predictable components of the BSG and Glo-Bus are still acceptable for getting basic principles ingrained in students’ thinking, but the lack of a service industry option constrains their usefulness.

Even with their limitations, however, the flexibility, alignment with the text, and customer help of the BSG and Glo-Bus stand up well to competition from other strategic management simulations. Notable rivals (see the appendix) include Corporation (Deighan, Smith, & Golden, 2013), a multiple business unit simulation based on a company that provides products and services in the information systems industry; Capstone (Capsim Management Simulations, Inc., 2012), the most popular simulation in the Capsim portfolio that challenges students to turn around a poorly performing $100 million company with five average products in vastly different markets; and finally, Marketplace Live’s Strategic Management (Cadotte, 2013), which allows students to compete against peers and test their knowledge of marketing fundamentals, profit analysis, accounting and finance fundamentals, financial ratios, human resource management, business partner negotiations, and e-commerce.

Inherent in the growing popularity of simulations is the understanding that students are more interested in concepts and tools that are applicable and important to their understanding of how to run a company successfully. As professors, we especially appreciate the objective feedback the algorithms in the simulations provide our students. Because of their sound designs and intimacy with the principles of strategic management, the BSG and Glo-Bus provide unique and particularly rich contexts for student application of capstone constructs through complex, yet enjoyable, competitive frameworks.