Monthly Archives: October 2016

New Zealand landscape with a question "When is the best time in the simulation to offer dividends?"

Dividends: When is the best time?

New Zealand landscape with a question "When is the best time in the simulation to offer dividends?"


If you were to walk into a computer lab with students playing MikesBikes, one of the questions or topics of interest that will be discussed is ‘Dividends’. Specifically, when is the best time to pay it and is it worth it?

This article, besides showing off the beautiful New Zealand landscape, will allow you to come to your own conclusion by bringing up factors you should be considering.

Within MikesBikes-Introduction, you need to wait a few rounds before you are even presented with the financial decisions but with MikesBikes-Advanced it is available straight away.

To answer this question quickly, there’s not really a ‘best’ time to offer dividends, but often a firm will establish a habit of paying out a certain proportion of the previous period’s earnings as a dividend, while retaining the remainder to invest in increasing the firm’s future earnings. The proportion of earnings retained for investment will depend on the firm’s growth prospects. A mature firm in a mature industry will often return a very high proportion of its earnings as a dividend because there are few growth opportunities. While these are vast generalizations, you need to figure out if distributing dividends is right for your firm. 

The main purpose of issuing dividends within MikesBikes is increasing your firm’s Shareholder Value (in the real world you are providing a return on your Shareholder’s investment in your firm). Before you begin thinking about how much dividends to issue, you NEED to ask yourself the following questions:

  1. Are you Financially Strong?
  2. Is there something else you can do with the profits?

In answering the question “Are you financially strong” review your Cashflow and Income Statements. Look to see how much cash you have at the end of your previous rollover; how much cash do you currently have? Do you have enough for the amount of dividends you are thinking of issuing? How stable is your Income? Might you need that cash for future expenses?

So you have decided that you have some spare cash. You can do quite a lot with that which might yield a higher return on your firm’s Shareholder Value than issuing dividends. While this article won’t go into complete analysis on how to evaluate these different options, we are simply bringing up alternative options for this cash:

  • Investing further in your firm by expanding into new markets
  • Purchasing another company (MikesBikes-Advanced only)
  • Pay off your firm’s debt to lower the interest payments (Note: it is expected that your firm has at least some debt)
  • Ramping up your marketing decisions to take a larger market share

While evaluating these options be sure to think about how Shareholder Value is calculated within MikesBikes. Typically, Shareholder Value is a measure of the current Share Price (which is based upon your firm’s Profitability, Earnings per Share, and the Debt to Equity ratio) plus the value of all past dividends paid, including interest.

If none of these options make sense, then you might decide to return some of these profits to shareholders through a dividends payment.

Be sure to check out our Facebook page and tutorial videos for further assistance on playing the simulation.

Professor Darl Kolb

How Business Simulations Solve Problems with the Modern Classroom

Traditional methods of teaching via pure theory have dominated the educational landscape for generations, but technological advancements have disrupted not just how we do things, but also how we process information and learn. That is, there are now significant drawbacks of traditional teaching methods negatively affecting students’ learning.

Identifiable limitations of traditional/theory based education include:

1. Lack of theory connecting to real world application;
2. Dry nature of theory disengaging the fast-paced learner of today;
3. Lessons being viewed as an object to be passed on;
4. Little opportunity to experiment with theory;
5. Limited ability to reflect, observe and act.

Business scholars have long contended that the acquisition of theory by students is not a sufficient learning outcome. Rather, it is the application of this theory through direct experience that leads to the development of crucial management competencies such as interpersonal skills; critical thinking, workplace readiness and professional confidence. Methods in which direct experience is gained has evolved with the rise of technology and web 2.0. Today we use technology and the internet to entertain ourselves, as well as improving productivity. It is posited that as the current generation joins the workforce, the demand for e-learning will continue to increase as managers are increasingly referring to technology for solutions.

It can be argued that today’s business is very complex, requiring sophisticated skills; and that experience based learning is very productive in teaching business students. The Association to Advance Collegiate Schools of Business (AACSB International) founded in 1916, has long identified the value of experiential learning.

Why is experiential learning considered a huge leap forward in engaging the students of today? Experiential learning is described as an “outward-facing curricula and experiential education can create the critical intersection between classroom and business learning that keeps faculty and students connected to rapidly changing business models” . More than just informing students, their ability to critically and actively engage in research must be triggered through experience. This will lead to students using personal skills and tacit skills for their own knowledge creation.

While theory is necessary to create a base of knowledge, practical application is required to test a student’s understanding and experience these concepts at a deeper level while facilitating learning outcomes which they can take into the workplace.

Importantly, the Control-Value theory suggests that achievement emotions affect cognitive abilities, learning strategies, motivation, and self-regulation. Positive emotions allow students to enjoy themselves while learning, and peak their interest in developing professionally. Achieving positive emotions associated to learning can be difficult in traditional teaching methods. In stark contrast to positive emotions, the negative counterpart hinder the learning experience. Emotional responses like anxiety, frustration, shame or anger stunt desires to learn. However, it can also be argued that experiencing negative emotions can actually motivate students to perform better. Self-policing a controlled response to negative outcomes and emotions, students can accept that failure while difficult, is an opportunity to update tactics and strategies, to ultimately achieve success.

Experiential learning tools like business simulations give students the opportunity to experience the relevance of their learnt subject matter first-hand. Giving students more control and responsibility for their own learning can enhance their ability to learn from past experience. This is where simulation based learning become essential. Experiential Learning focuses on the learning process for the individual, through observation and interaction with the subject they are learning about rather than the traditional process of learning from a textbook. This also somewhat releases individuals from the burden of winning at the end of the game, to instead experience adaptive decision making as is often required in real-life situations. Simulations have flexible learning environments – different things can be learnt from the same game, and different participants can learn different things.

A good business simulation will allow students to:

1. Apply theory in a real-world setting. Allowing them to bridge the gap between learning and decision-making.
2. Engage in a challenging environment. To survive and succeed, they need to adapt and improve to changing conditions relating to their products, the competition, and the market as a whole.
3. Retain knowledge and develop skills. Absorb the lessons learnt to identify the actual consequences of decisions in the real world.

Business simulations bring practical reality and excitement to the classroom. Students obtain a vicarious exposure to the problems faced by real management teams. They gain immediate, concrete experiences, providing a base for their own observations and reflections in an environment that fosters positive attitudes toward learning.

– By Danny Master, Ian McPherson and Brook McFarlane



Ettinger, A., Holton, V., & Blass, E. (2006). E-learner experiences: what is the future for e-learning? Industrial and Commercial Training, 38(4), 208 – 212.

Finch, D., Peacock, M., Lazdowski, D., & Hwang, M., (2014). Managing emotions: A case study exploring the relationship between experiential learning, emotions, and student performance. The International Journal of Management Education, 13, 23 – 36.

Haro, S., & Turgut, G., (2012). Expanded strategy simulations: Developing better managers.  Journal of Management Development, 31(3), 209 – 220.

Kolb, A., Kolb, D., (2005). Learning Styles and Learning Spaces: Enhancing Experiential Learning in Higher Education. Academy of Management Learning and Education, 4(2), 193 – 212.

Image displaying the question "How do i maximize my total marketing contribution?"

Music2Go Tip: Improving Total Marketing Contribution

Image displaying the question "How do i maximize my total marketing contribution?"Landing on this page means you have come searching for answers to the question: “How do I maximize my total marketing contribution?” 

To answer this we first need to establish an understanding of what Total Marketing Contribution is and why it is important.

What is Total Marketing Contribution? Why is it important? 

Total Marketing Contribution is typically how you are graded or compared to your peers within your course (there are other indicators but instructors typically opt to grade you on this). While your marketing contribution is calculated as…

Marketing Contribution = Sales Revenue – Cost of Goods Sold (CoGS) – Marketing Expenses.

To get your Total Marketing Contribution you just sum up all the marketing contribution your firm has generated for the duration of your simulation (so far).

How do I maximize my Total Marketing Contribution? 

There are essentially four methods you can use here:

  1. Increase Sales Revenue while CoGS and Marketing Expenses remain constant
  2. Reduce your CoGS while Sales Revenue and Marketing Expenses remain constant
  3. Reduce your Marketing Expenses while Sales Revenue and CoGS remain constant
  4. Increase Sales Revenue while reducing your CoGS and Marketing Expenses.

Typically, you will want to aim for the fourth method used above.

To increase your Sales Revenue while reducing (or at the very least maintaining) your marketing expenses you need to ensure your Marketing Budget is spent as efficiently as it possibly can be.

How do I spend my Marketing Budget efficiently? 

Make sure you are reaching your customers through the most effective methods and appealing to their desires/wants/needs. Check the market information report, check to see what the market segment you are marketing to has the highest sensitivity to (higher sensitivity means higher change in sales volume). Check the Media Viewing Habits of the market segments, and take into account the media reach of the different media types.

When you have sales promotion available to you (after the first rollover), check the how old your product is within the Distribution Cover and Sales promotion report and see how to target your sales promotion based on your product’s lifecycle within the Market Information report.

When evaluating your decisions from the previous period you can look to reports like:

  • Some Product Details (or All Product Details)
  • Product Awareness Increase By Media
  • Distribution Cover and Sales Promotion (once Sales Promotion comes available to you)

(Note that market research reports will come out of your marketing budget so purchase these reports wisely). 

How do I reduce my Cost of Goods Sold? 

The best method for reducing your Cost of Goods Sold is conducting product development to reduce the cost of your product you’re selling. Consider the following critical points:

  • “Is the Research and Development cost worth the reduction in the production costs?”
  • “This will reduce my production costs but I need to reduce my price to remain competitive, thus reducing my gross margin per unit. Is it worth it? If I reduce my price and the production costs to maintain my gross margin per unit, will this increase my Sales Revenue anyway?  Is this market segment sensitive to changes in price?”

When evaluating your firm to see if you need to further reduce your firm’s production cost through product development, you can review the following reports:

  • Product Contribution
  • Pricing Overview


While there is no ‘one-way’ to win any of our simulations; be sure to check out our tutorial videos and the player’s manual for advice on how to best implement a strategy your team has chosen.

If you have any questions about the simulation feel free to get in touch with us at or fill out a contact us form.