Saturday, June 25, 2005

Business Policy Game - Day 2

It is Saturday morning. Day two of our business simulation is underway. We started with the news that a Tornado has hit area three and destroyed some of our distribution and sales facilities. We are partially covered, the losses will be significant.

I'll post our position soon...

Y5Q3 update @ 8:30
Stock price increased to $2 per share
We are firmly in 4th place and closing on 3rd
Team 1 continued its slide and may be going out of business

Noon update
We are going to loose - badly

3:00 update - Game over man
oh god, the stars....
stock price $1.83 (down from a high of $2.30)
our competitors:
  • $9.79
  • $46.43 <-- The winner (Team 4)
  • $32.76
  • $8.50
Market share: 6%

  • What did I learn? don't ever let Pete, Mike, Joe or Cesar run a business.
  • When you think you've hit bottom, look again, because you've just bounced.
  • I think we suck (at the game)

Thank god this is over, I go now to embrace by "C" for taking last place. Scotch to follow....

Group meeting at 3:30 - at least the teachers did not rub it in - I leave frustrated and tired.

Update: 10:00 p.m. After a nap nap – a slice of pie and a few games of AoE.

I have to ask myself. Was this fun? Did I learn anything? Did it help me understand how to build a business?

No, it was not fun. It was incredibly stressful and frustrating. I’ve spent nearly every waking moment available to me over the last three week getting ready for the test only to find ALL OF THE WORK was useless. Nothing in our strategy plan worked, it was a failure.

I learned that logic and reason have no place in the Business policy game – let me explain. We were selling single use disposable cameras at the highest quality level and with the most options. For one or two quarters we made some money, then our main competitor moved out of our competitive zone by offering a camera with high quality but low options. They priced it higher than our model and took our entire market share. We were left with almost no market to work with. We thought – how is it possible that a higher priced model with fewer options could outsell us, that does not make sense, right? Of course the instructors just waved their hands and send we were not aligned with them market. On the next round we changed our strategy to match our key competitor – this time with a new model, high quality, and less features, and for a lower price. We lost whatever market share we had left. It did not make sense.

In the end I had to go to the teachers and tell them we were almost out of business and did not know how to dig ourselves out the of the hole we were in. They “found some cash” which is instructor talk for a massive bail out, and had us adjust our variables a little bit. On the next go around – we made money. The thing is, we had almost identical numbers in the last go around and were massively cutting expenses when the instructor came in to advise us to spend more in certain areas. In other words – they threw some money and market share at us just so we could not fail out of the simulation. It was so frustrating.

Did this help me understand how to build a business? – Well no, not really. I spent two very frustrating games digging a hole deeper and deeper. Our instructors encouraged us to stay the course on our strategy, which just made things worse. I do not get along with the Strategy course instructor who lead the simulation, he does not like to hear contrary points of views; I am often contrary. It is kind of like arguing with a liberal – it can be very frustrating. Anyway – my pet theory is that my team did quite a bit to screw things up on our own and was helped along on the path to failure by a teacher with an anti Mojoey point of view.

Parting thought – I have four papers to write for this class tomorrow, and then I hit the road on a business trip. I need a full week to get over my anger and frustration at the “learning” experience I was just subjected too. I mean really, I already know how to fail; I was hoping to learn how to win or at least understand how to win. Christ - all I really learned is that I can depend on my teammates through thick and thin. Thanks for a good run Pete, Cesar and Mike!


Anonymous said...

It's like a CNN Ticker, Good then bad, then ok the Bad then Terrible.. I am rivited.

brad said...

I have tears in my eyes. I feel for you BUT unless I tell someone (LOL) no one will ever know.
In other words, your screwed.

Johnny Crow said...

Now that I see the full post I have a lot to say.

There should be something you learned. Specifically what NOT to do when starting a business. Besides 90% of buisiness that are startup do not have an IPO or stock. I mean by the time you know your market and your closest competitiors that is when those things come into play.

Why did a camera with less option and higher price sell. Becuase when buying often times if something is slighltly higher people often think the quality is better even with fewer bells and whistles. You should have targeted a little less priced camera, with just enough extras that people see you are quality they will more likely buy from you. Not to mention advertising. There are a few different types such as Direct Marketing, then there is Word of Mouth and then there is The standard bloated market package. All in all you should have expanded your market base and instead of changing to meet your competitior, you should have kept you high end one and then ran a low end one or med. so that you offer more options.

Of course I could have no Idea what I am talking about.

Anonymous said...

I have been through the game twice, with various results - making some of what seem to be the smae mistakes. Some comments:

- I notice you didn't mention costs. A lot of people don't figure out their full per unit costs, so end up losing money even with higher prices, because the costs get out of control

- I also notice you don't mention the customer preference survey. We made this mistake for a while, doing the high feature / high quality (3/3) route. We found there were relatively few customers there, more in the 2/3 and 3/2 areas. It's possible you were simply trying to sell to people that weren't there.

- Yet another area not mentioned: advertising. The game really expects you to reach out to customers - having stuff on the shelves is not enough. Likewise, low pay for the sales people will kill you too.

It is unfortunate when faculty don't explain this during or after, but there is logic to the Game, it's just that there are a lot of moving parts to watch.

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Anonymous said...

I am about to go through the game for the second time. I notice that there is nearly zero information on the net for this game.

Does anyone know any good resources to help manage/play better?

Ryan Rotariu said...

The game is very challenging. I have competed within the business competition that uses this game. Without a clear strategy you are likely to see average results at best.

Unknown said...

hi would you mind telling me what was the strategy of winning group? our group just added new plant in sereno looks like we r going down. need some advice

Ana Levre said...

Yes man we also really need the strategy of the winning group. Do you have any recommendations for that?
any respond will be appreciated!