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BUSINESS STRATEGY GAME (BSG) ALL EXAMS QUESTIONS AND CORRECT ANSWERS, ACTUAL EXAM 2025 R, Exams of Business Strategy

American University (AU)Business Strategy

BUSINESS STRATEGY GAME (BSG) ALL EXAMS QUESTIONS AND CORRECT ANSWERS, ACTUAL EXAM 2025 REVISED LATEST UPDATE VERSION PASSED ALREADY GRADED A+.pdf

Typology: Exams

2024/2025

Available from 07/03/2025

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BUSINESS STRATEGY GAME (BSG) ALL EXAMS
QUESTIONS AND CORRECT ANSWERS, ACTUAL EXAM
2025 REVISED LATEST UPDATE VERSION PASSED
ALREADY GRADED A+.pdf
1. What is the primary goal of the Business Strategy Game?
Maximize the company’s total earnings per share (EPS) and stock
price appreciation
A high EPS and stock price reflect strong financial performance, which
is the main metric used to rank teams in BSG.
2. Which factor has the biggest impact on your company’s image rating?
CSR initiatives and product quality
Both corporate social responsibility (CSR) and high quality improve
customer perception, boosting your image rating.
3. What is the main driver of competitive advantage in the BSG?
Low cost or differentiation strategy
Companies must choose between competing on price (cost
leadership) or offering superior features (differentiation).
4. Which region typically has the highest demand for branded footwear?
North America
North America usually generates the highest sales volume, so it’s
crucial to remain competitive there.
5. What happens if your delivery times are longer than rivals’?
Your market share may decrease
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Download BUSINESS STRATEGY GAME (BSG) ALL EXAMS QUESTIONS AND CORRECT ANSWERS, ACTUAL EXAM 2025 R and more Exams Business Strategy in PDF only on Docsity!

BUSINESS STRATEGY GAME (BSG) ALL EXAMS

QUESTIONS AND CORRECT ANSWERS, ACTUAL EXAM

2025 REVISED LATEST UPDATE VERSION PASSED

ALREADY GRADED A+.pdf

  1. What is the primary goal of the Business Strategy Game? Maximize the company’s total earnings per share (EPS) and stock price appreciation A high EPS and stock price reflect strong financial performance, which is the main metric used to rank teams in BSG.
  2. Which factor has the biggest impact on your company’s image rating? CSR initiatives and product quality Both corporate social responsibility (CSR) and high quality improve customer perception, boosting your image rating.
  3. What is the main driver of competitive advantage in the BSG? Low cost or differentiation strategy Companies must choose between competing on price (cost leadership) or offering superior features (differentiation).
  4. Which region typically has the highest demand for branded footwear? North America North America usually generates the highest sales volume, so it’s crucial to remain competitive there.
  5. What happens if your delivery times are longer than rivals’? Your market share may decrease

Slow delivery increases buyer dissatisfaction, which can hurt sales compared to faster competitors.

  1. How often can you adjust your company’s strategy in the BSG? Once per year The simulation is turn-based with one decision round per year.
  2. What is the best way to increase internet sales? Offer free shipping and high S/Q ratings Free shipping and high quality ratings attract more online customers.
  3. What does S/Q rating stand for? Style/Quality rating This indicates how customers perceive the quality and style of your shoes.
  4. Which option increases production capacity? Building new plants or expanding existing ones You must invest in physical facilities to increase annual production.
  5. What is the effect of outsourcing production to contract manufacturers? Reduces production costs but lowers control Contracting lowers labor costs but you lose direct oversight of quality.
  6. Which financial measure is used to determine credit rating? Debt-to-equity ratio A lower debt-to-equity ratio means lower financial risk, improving credit rating.
  7. How does advertising spending affect demand? Higher advertising increases demand up to a point
  1. How can you improve your company’s credit rating? Reduce long-term debt and increase equity Lower debt and stronger equity improve your debt-to-equity ratio, raising your rating.
  2. What is the effect of high warranty claims? Increases costs and lowers image rating High warranty claims signal poor quality, damaging brand reputation and increasing expenses.
  3. Why is it important to monitor competitors’ strategies? To respond quickly to price and quality changes Competitor moves affect your market share, so you must adjust to stay competitive.
  4. Which action will increase your company’s stock price? Sustained profit growth and dividend payments Strong profits and shareholder returns drive stock price up.
  5. What does the annual bonus pay to company managers depend on? Meeting or exceeding performance targets Bonuses reward management for achieving goals like EPS, ROE, and image rating.
  6. What is the role of plant utilization rate? Measures how much capacity you’re using Higher utilization means you’re producing closer to maximum capacity, improving efficiency.
  7. How do exchange rates impact your costs? Currency fluctuations affect import/export costs

A stronger domestic currency lowers import costs but can hurt exports.

  1. How does warranty coverage affect demand? More generous warranty can increase sales Better warranty coverage gives customers more confidence in product quality.
  2. Which factor most affects net profit margin? Production cost per pair Lower costs increase your profit margin per unit sold.
  3. What does the Return on Equity (ROE) measure? Profitability relative to shareholder equity ROE shows how efficiently you’re using equity to generate profit.
  4. What does a high inventory turnover indicate? Efficient sales and inventory management High turnover means you’re selling inventory quickly, reducing holding costs.
  5. Why is it risky to overexpand capacity? Underutilized plants increase fixed costs Excess capacity adds costs without enough sales to cover them.
  6. How can you increase market share in the private-label segment? Offer lower prices than competitors Private-label buyers choose mainly based on price.
  7. What happens if you set prices too low? May erode profit margins Deep discounts can increase sales but hurt profitability.
  1. How can you reduce environmental impact? Increase green energy use and recycling Sustainable practices lower emissions and waste, improving image.
  2. Why is it important to meet all production orders? To avoid lost sales and penalties Unfulfilled orders mean missed revenue and possible fines.
  3. What factor affects delivery reliability? Plant capacity and inventory levels Adequate inventory and capacity ensure timely shipping.
  4. Why are quarterly results important in BSG? Show short-term trends and guide decisions Quarterly data helps track if you’re on pace to hit annual targets.
  5. Which department sets wholesale prices? Marketing Marketing determines price points to balance volume and profit.
  6. What does a high debt ratio indicate? Greater financial risk More debt means higher interest obligations and risk of default.
  7. What happens if you overproduce shoes? Increases storage costs and markdowns Excess inventory costs money and may need to be discounted.
  8. Which decision increases product appeal? Adding new features and improving S/Q Enhanced features differentiate your brand, driving demand.
  1. What does the equity issue option allow? Raise capital by selling more shares Issuing shares brings in funds but dilutes ownership.
  2. What is the best practice when expanding globally? Adapt strategy for each region’s demand and costs Regional adjustments optimize profitability across markets.
  3. What is the advantage of operating multiple plants? Lower shipping costs to regional markets Locating plants closer to demand centers reduces shipping expenses and delivery times.
  4. What should you do if demand exceeds capacity? Expand capacity or outsource production Meeting demand is critical to maximize sales and avoid lost market share.
  5. How can you increase internet market share? Boost website advertising and offer free shipping Online buyers are influenced by convenience and perks like free delivery.
  6. Which metric measures total shareholder return? Stock price appreciation plus dividends Shareholder return combines stock price gains and cash dividends paid out.

TQM initiatives focus on producing high-quality products with fewer defects.

  1. What is the benefit of paying down debt? Reduces interest expense Less debt means less money spent on interest payments, boosting net profit.
  2. Which region is usually most cost-effective for production? Asia-Pacific Lower labor costs make Asia-Pacific attractive for manufacturing.
  3. What does a low price elasticity of demand mean? Customers are less sensitive to price changes When elasticity is low, you can raise prices without losing many sales.
  4. What is the role of plant upgrade investments? Improve efficiency and reduce costs Modernized equipment lowers variable costs and boosts productivity.
  5. What is the effect of higher advertising in weak regions? Can increase brand awareness and sales Spending more on promotion helps you gain market share in underperforming regions.
  6. How does the number of models offered affect costs? More models increase production complexity Offering many versions raises costs due to smaller production runs and complexity.
  7. Which strategy is best for private-label contracts? Offer the lowest possible bid price

Retailers choose suppliers mainly based on price in private-label segments.

  1. What happens if your quality rating drops? Decreases demand and market share Poor quality reduces customer satisfaction, hurting your brand’s appeal.
  2. Which financial statement shows your profit? Income statement The income statement shows revenue, expenses, and profit or loss for a period.
  3. Which factor impacts your Return on Assets (ROA)? Net income and total assets ROA measures how well you use assets to generate profit.
  4. What is the main purpose of benchmarking reports? Compare your performance to competitors Benchmarking helps you see where you stand in the industry.
  5. How do you fund capital expenditures? Retained earnings, new equity, or long-term debt You can use internal funds or external financing to pay for big investments.
  6. What is the benefit of geographic diversification? Spreads risk across multiple markets If one region underperforms, others can offset losses.
  1. Which performance metric measures financial risk? Debt-to-equity ratio This ratio shows how leveraged your company is.
  2. Why do companies offer rebates or discounts? To stimulate sales during slow periods Temporary price reductions can boost demand.
  3. How can you use excess cash wisely? Pay down debt or repurchase shares Both options increase shareholder value.
  4. What does a higher production run size do? Lowers unit costs Larger runs spread fixed costs over more units, reducing per-unit expenses.
  5. Which expense is fixed regardless of output? Plant depreciation Depreciation is a fixed cost that does not change with production volume.
  6. How does local sourcing help? Reduces shipping time and costs Producing closer to customers improves delivery and lowers freight expenses.
  7. What does stock issue dilution mean? Reduces ownership percentage per share Issuing new shares spreads profits over more shares, diluting EPS.
  1. What is the key driver of private-label profitability? Low production cost You must produce at the lowest cost to profit from thin margins.
  2. How do you gain loyalty in branded markets? High quality and strong advertising Brand loyalty grows with trust in quality and marketing.
  3. What is the benefit of paying employees above market wages? Higher productivity and retention Better pay can reduce turnover and attract skilled workers.
  4. What is the danger of aggressive expansion? Overleveraging and low capacity utilization Expanding too fast may lead to unused capacity and high debt.
  5. What happens if your bid for private-label is too high? You may lose the contract Retailers choose the lowest qualified bidder.
  6. Which budget line is most flexible each year? Advertising and promotions Marketing spend can be adjusted annually based on needs.
  7. What is the best use of profit surpluses? Balance dividends, reinvestment, and debt reduction Diversified use supports growth and shareholder returns.
  8. How can you improve working capital? Increase receivables collection and manage inventory Faster collections and leaner inventory free up cash flow.
  1. What is the effect of high capacity utilization? Lower per-unit fixed costs Efficient use of capacity spreads fixed costs over more units.
  2. Which region is often used for low-cost production? Asia-Pacific Lower labor and materials costs make it ideal for cost leadership.
  3. What happens if you fail to meet demand? Lost sales and customer dissatisfaction Stockouts mean missed revenue opportunities.
  4. Why do companies upgrade plants? To reduce costs and improve efficiency Upgrades lower production costs and improve output quality.
  5. What does dividend yield measure? Dividend paid as a percentage of stock price It shows investors how much return they get in cash dividends.
  6. What does the income statement not show? Cash flow timing The income statement shows profit but not actual cash movement.
  7. What is the benefit of high image rating? Increases customer loyalty and sales Strong reputation attracts and retains buyers.
  8. Which region tends to be most competitive? North America Higher demand and more rivals make this market tough.
  1. Why adjust prices each year? To respond to market and competitor moves Staying competitive means monitoring and adjusting prices regularly.
  2. What can raise your company’s stock price? Consistent earnings growth and dividends Investors reward profitable, stable companies.
  3. What does a high labor cost per pair mean? Inefficient production or excessive overtime Indicates a need to improve productivity or capacity planning.
  4. Which expense can be reduced with better forecasting? Inventory carrying costs Accurate demand forecasts help minimize excess stock.
  5. What is the effect of frequent plant expansions? Higher capital costs and potential underutilization Expanding too much can result in unused capacity and higher debt.
  6. How does the global economy impact BSG? Currency rates, labor costs, and demand shifts Global factors affect costs and competitive conditions.
  7. Why is it important to have a clear strategy? Guides decisions and aligns actions A defined strategy keeps operations focused and competitive.
  8. Which option improves branded shoe demand? High S/Q rating and strong marketing Customers are willing to pay more for perceived quality and style.
  1. What happens if you overbid for celebrity endorsements? Higher costs with diminishing returns Too much spending on endorsements may not bring equal sales gains.
  2. How do you improve your company’s ROE? Increase net income or reduce equity Higher profit or efficient capital use raises ROE.
  3. What does high earnings retention mean? Profits are reinvested instead of paid as dividends Retained earnings fund growth projects or debt repayment.
  4. Why watch your competitors’ plant locations? To adjust your shipping costs and delivery times You may lose out if rivals have plants closer to key markets.
  5. What is a benefit of stock buybacks? Increase EPS by reducing shares outstanding Buying back shares means profits are spread over fewer shares.
  6. How can you gain an edge in private-label bidding? Lower your production costs below competitors’ Competitive bids depend on how low you can profitably go.
  7. What is the effect of high warranty claims? Increases costs and lowers image Poor quality hurts both expenses and reputation.
  8. What happens if your delivery times are unreliable? Lose trust and contracts Retailers prefer dependable suppliers.
  1. Which factor affects your company’s credit rating? Debt ratio and interest coverage Better ratios signal lower financial risk.
  2. What does production run efficiency mean? Producing large batches with minimal waste Efficient runs reduce per-unit costs.
  3. How can you boost EPS? Increase net profit and control costs Higher earnings with lean operations raise EPS.
  4. What is the risk of ignoring environmental initiatives? Lower image rating and potential penalties CSR and sustainability matter to customers and regulators.
  5. Why consider local labor conditions? Impacts wages, productivity, and turnover Poor conditions can hurt morale and efficiency.
  6. What does “economies of scale” mean? Lower per-unit costs with higher production volume Spreading fixed costs reduces average costs.
  7. Why diversify product models? Appeal to different customer segments More choices can expand market share.
  8. Which factor helps maximize private-label profits? Strict cost control and efficiency Margins are slim, so efficiency is key.