Strategy Choice of strategic alternatives Mercury’s mission statement requires strategies that will push for innovation, so as to get desired results. The product leadership strategy has led to a reduction in the product development time. Therefore, new products will be quickly available in the market before competitors have time to react, and this might lead to a sizeable increase in the company’s market share. Cost savings can also be achieved from this process, as well as from a reduction in overheads, and thereby be utilized in research and development. The team therefore has a directional strategy, given by the Mercury Shoes’ overall orientation towards growth and stability. Main challenges facing Mercury at the beginning of the SIM Cost variances in various geographical regions affect manufacturing patterns, whereby companies will seek to move their production facilities to areas that offer cheaper alternatives. Subsequently, it becomes difficult to measure and compare performance in the different areas. Mercury has not invested substantially in research and development (R&D) and marketing initiatives. The market will therefore be unaware of its products, and the company may lose potential revenue to market leaders. Bad debts increased in the period prior to the simulation, from $ 2.79 million in 2007, to $ 3.37 million in 2009 for the whole company. Bad debts, if not well managed, will have a negative impact on the company’s balance sheet and profitability. This could be a signal that procedures on debt collection are not effective. Investments in R&D are not optimal, which may force Mercury Shoes to be a follower in the market, instead of an innovator. The sub-optimal investments in R&D could be an indicator as to why the stock prices have been stagnant in the same period (figure 1). The company is largely reactive in its strategies, rather than being proactive, because there is evidence that after-sale service processes are not adequate. The company’s overall view towards its products cannot be said to be ambitious, since there was no plan on developing new products. Mercury Shoes had a limited product line, which states that the company was using a defensive strategy. Such a strategy aims on improving the efficiency and effectiveness of existing operations, which makes the company in an unlikely position to innovate and exploit new areas. Assessment of the strategic choices In the first round of the simulation, the team focused on investing in research and development, in alignment with Mercury’s mission statement, which illustrates the importance of innovation. The team strived to establish solutions that could help save money for use in R&D purposes. The supply chain strategy, while effective, failed to deliver a broader range of materials that could be used for the production of various products. As a result, the company failed to meet demand of non-specialized products, thereby incurring an opportunity cost. The team also set high prices so as to satisfy margins, a strategy that failed given the fact that competitors would offer lower prices for similar products. Non-the-less, the team achieved an increase in Mercury’s market share due to the R&D initiative, which also led to a decline in the product development time. The