Business Strategy Archives

Student Success Stories: Peter Johnson from Des Moines Area Community College

Meet Peter Johnson, an Intro to Business student from Des Moines Area Community College. He managed to land the Top 7 spot in the MikesBikes Introduction Hall of Fame last Fall.

We interviewed Peter to learn about his decision-making, strategy and what resources he used to help him succeed in the simulation.

What is your decision-making process within the simulation?

My decision-making process always began with reading the business reports to base my decisions off of.  When looking over the reports, I would also take notice of what my competition was doing.  Analyzing this information was very helpful in every new decision I made especially when expanding my product line.  I would then adjust my numbers for production and available units for sale.  Next, I would tend to my advertising in each market.  I spent quite a bit of money on advertising, but it worked well for me.  In addition, I invested in many company and product improvements such as efficiency and quality.  When able, I would pay dividends and repurchase equity as well.  For the most part, this decision-making process remained routine for me through each simulation rollover.

What was your strategy going into the simulation?

My strategy for the simulation was to increase shareholder value by boosting sales and maximizing profits.  To do so, I wanted to grow my company by expanding the product line and by investing more money in advertising to grow my brand and gain a competitive edge.  I knew I wanted to separate myself from the competition and an increase in advertising was my first step in accomplishing that.

How did you begin implementing that strategy?

I implemented that strategy by immediately increasing the money I spent on advertising.  I paid attention to the market reports to allocate my advertising expenses effectively for each market.  I also looked for ways to improve the products and company along the way.  For example, I invested in efficiency and quality when given the opportunity to do so.  Also, market reports helped me make tailor made product improvements according to the expectations of each corresponding market.

How did you familiarize yourself with the simulation?

I watched the instructional videos and looked through the various reports available.  I took advantage of my practice time with the simulation.  During this time, I was able to make decisions according to information I read in the reports and see how the results of my decisions would play out in the simulation.  Seeing how these decisions would positively or negatively affect my business was very helpful.

How would you describe the competition?

I would describe the competition as a high priority.  In my opinion, it is equally important to pay attention to what your competition is doing as much as it is to pay attention to what your own company is doing.  You can definitely create competitive advantages for your business depending on what your competition is doing or not doing.

What resources did you pull on to develop your winning strategy which led you to the top of your course and then top in the Hall of Fame?

Utilizing the reports made available to me in this simulation was crucial in developing a winning strategy.  The information they provide allowed me to refine my decisions along the way and improve the accuracy of those decisions.  Also, keeping an eye on my competition proved to be more valuable than I had originally anticipated.

What challenges did you face? How did you overcome these?

Lost sales became a challenge for me on more than one occasion.  Every time I expanded my product line, I incurred lost sales in each of the new markets.  To correct this, I increased the number of units available for sale in each of those markets.  Occasionally, I would have to buy more SCU to produce more units.  Paying attention to my market share and future market demand helped me eliminate lost sales.

Was there anything in particular you did that you think helped to prepare yourself?

I think taking advantage of the practice time to learn about the simulation really helped me.  Getting to know the reports available and the information they contain are advantageous in making solid decisions and taking informed calculated risks.

How has participating within a course which uses a business simulation to supplement their teaching materials helped you? What do you think of the business simulation?

I think it helped me in learning about and understanding how to read various business reports.  It is important to know what information to look for when making any decision for your company.  The interactive platform is a great way to experience making decisions for a business and seeing the outcome of those decisions.

Comments on your experience with the simulation itself

I really enjoyed my experience with the Mike’s Bikes simulation.  Engaging in the simulation is an interesting and fun way to learn.   It provided me with valuable tools and experience when addressing a company’s business decision making process.  Being that every Mike’s Bikes experience is unique to that user, it is a simulation I would participate in again.

MikesBikes Intro Hall of Fame

Music2Go Marketing Factory

Question of the Week: Why did I receive a different number of units from what I ordered? | Music2Go Marketing Business Simulation

In Music2Go you make decisions for an entire year, but your factory has a limited ability to adjust the number of units produced to try to meet actual demand during the year. This is called Demand Responsiveness.

Demand Responsiveness allows the actual number of units ordered to increase or decrease by up to 20% to meet the actual demand for your product.

For instance, if you ordered 1 million units of a product, then the actual number of units delivered could vary between 800,000 units and 1.2 million units depending on actual demand.

Product Contribution Report in Music2Go Marketing

In our example above, we ordered 1.9 million units of our Sonic product, but the Actual Units ordered was less than this at 1.5 million because the demand for our products was less than what we anticipated to sell.

Note: Most worlds have 20% Demand Responsiveness enabled, although your instructor may request this to be modified or disabled for your Multi-Player. 

Related Articles
MikesBikes Intro Hall of Famer, Joe Powell

Interview with the Top Hall of Fame Student: Joe Powell

Joe Powell from Des Moines Area Community College (DMACC) managed to land the #1 spot in the MikesBikes Introduction Hall of Fame!

Joe took the Introduction to Business course taught by Professor Josh Daines over at DMACC. He’s a 41 year old student and a father of 4 returning for a degree in Business Administration. He just graduated a degree in General Studies and got to share the experience of receiving his diploma alongside his wife and daughter in the same ceremony (see photo above). He is now currently working on his second degree.

He never won anything, except for an English contest when he was in 4th grade and a Renaissance Festival tickets last year, but now he managed to successfully land the Top position in the MikesBikes Intro Hall of Fame. This is such an incredible achievement!

We have interviewed Joe to learn about his journey on how he managed to achieve the top spot in the Hall of Fame, his experience and advice to future students.

Smartsims: What is your decision making process within the simulation?

Joe: This is actually the toughest question, I think, that you could ask. My decision making process started out simple, but as the rollovers continued, other factors began influencing my decisions. The first couple rollovers were straightforward: based on the advertising arc, which investments paid off the best? Then the additional product lines, how would the competition respond, what was the best allocation of funds outside of the advertising arc, etc.

Smartsims: What was your strategy going into the simulation?

Joe: I wanted to jump out to an early advantage, allocating funds where they would make the highest return. I wanted to maintain high revenues, high cash-on-hand, and minimize lost sales. I also figured the other firms would implement similar strategies, so I needed to be flexible yet maintain consistent growth. Once I began doubling my SHV every rollover, I focused more on my firm’s progress projections and less on the competition.

Smartsims: How did you begin implementing that strategy?

Joe: I knew the minimum SHV numbers that I wanted to hit at each rollover. I would run practice sim after practice sim until I found the right combination to get to that number. Once I did, I ran more sims to see if I could improve on it. Sometimes it worked, sometimes I made myself frustrated.

Smartsims: How did you familiarize yourself with the simulation?

Joe: I started by opening it up and trying everything. At the beginning of the semester, I did single-player simulations and failed spectacularly. I learned a little here and there, and with the help of some professors at DMACC, I was able to get a grasp on the program.

Smartsims: How would you describe the competition?

Joe: The competition was fun, above all else. The other firms made strategy implementation vital because I just didn’t know what they would do. It was a lot more fun with real people playing instead of just a computer with predictable moves.

Smartsims: What resources did you pull on to develop your winning strategy which led you to be a part of the MikesBikes Introduction Hall of Fame?

Joe: I utilized the Single-Player format first. After about a dozen practices, I had a solid opening strategy. I also talked to MikesBikes guru, DMACC’s own Professor Zarr as well as my Business teacher, Professor Daines, and asked a few questions. Without pointers from them, I wouldn’t have reached the numbers I did. I studied the interviews of previous winners, played around with different strategies, even ran rollovers where all I did was change a few dollars here or there to learn where the benchmarks were. I created my own spreadsheet that helped keep track of money allocations, allowing me to look back on what worked and what didn’t.

Smartsims: What challenges did you face? How did you overcome these?

Joe: At first, my numbers were right where I wanted them. Then, I started getting lost sales and I couldn’t figure out why. My numbers were exactly where I wanted them, and the results should have been predictable. I turned to the offline mode, and it was a life-saver. I strongly suggest anyone in multi-player competitions use the offline mode. It will not predict your opponents’ moves, but it will help you figure out your own.

Smartsims: Was there anything in particular you did that you think helped to prepare yourself?

Joe: I obsessed over this simulation. It wasn’t healthy. I talked about it, I played it, I thought of new strategies while walking around Disney World. My kids rolled their eyes when I would bring it up.

Smartsims: How has participating within a course which uses a business simulation to supplement their teaching materials helped you? What do you think of the business simulation?

Joe: I really liked the sim as part of the curriculum. I mentioned that to the professor during the class review. Learning about the Advertising Mix as well as the Promotion Mix helped understand the importance of allocating funds to specific areas within the sim. Studying it, then putting it into direct action was really a cool experience. I really enjoyed having Mike’s Bikes as part of the class.

Stack of money.

External Funding Options in MikesBikes: Debt or Equity?

In MikesBikes, funding large investment options such as purchasing additional plant capacity and development projects may require additional capital. Raising Debt or Equity are ways companies can raise additional funds to finance these large projects or investments. In deciding whether to increase Debt, issue Shares or a combination of both; companies should assess their current situation and the impact of each financial decision. Continue reading External Funding Options in MikesBikes: Debt or Equity?

economic value created

What is Economic Value Created (EVA)?

financial results for all firms

An increasingly popular way of measuring the financial performance of a firm is by looking at the Economic Value Created (often called EVA*) over a specified time span. See the Financial Reports section of the All Reports Menu for the firm’s current Economic Value Created report.

In essence, this measure views the business as an investment which must produce a certain return on the capital invested in it. If it produces more than the required return, then the difference is the economic value created or added (EVA).

The “actual return” is calculated by adjusting the net operating profit after tax to exclude the effects of interest.

The “required return” (or cost of capital) is calculated by adding together the interest charges on debt with the return required by the shareholders. The return required by the shareholders will vary according your firm’s level of risk and will be composed of required dividends and/or increases in share price.

If the actual return is higher than the cost of capital, then the difference is the economic value created. From an economic viewpoint this extra return must be due to some competitive advantage. The question is: How long can this competitive advantage be maintained before competitors come along and copy it?

An example of a simple EVA report is below:

EVA Report in MikesBikes

Notes:

*EVA is a registered Trademark of Stern, Stewart & Co.

Distribution in MikesBikes

Question of the Week: How do we get more stores to stock our products?

MikesBikes Distribution Decision

Distributors look at the total dollar amount of margin earned from stocking each firm’s products last year. Based on that, each Distribution Channel will decide how many stores will stock products from each firm.

The total amount of margin a Distributor receives is affected by your:

  • Retail Price
  • Retail Margin and;
  • Volume of Sales

So all other things being equal, if you sell more products, or increase your Retailer margin then more Distributors will be willing to stock your products and your distribution indexes will increase.

The number of each type of distributor willing to stock your products is then combined with the shopping habits of each segment to give a segment level distribution index. This is why you see different distribution indexes in the Market Summary / All Product Details report.

Have a Question of the Week suggestion? Send this to us here or message us on Facebook.

Student Looking at Advertising and PR Reach Curve, MikesBikes

Question of the Week: How does the Advertising and PR Reach by Media Curve Work?

Advertising and PR Reach by Media Curve

The reach curves and media viewing habits reflect what proportion of the population you can reach with a given Advertising or Public Relations (PR) mix.  These are the same for both Advertising and PR partly because it is reasonable that the advertising reach and viewing habits should be similar for both product advertising and PR.

The sensitivity to Advertising and PR reflects how much each market segment is influenced by any Advertising or PR they are exposed to.  If a segment has low sensitivity to PR, then even if they are exposed to a lot of it, there will be a much smaller influence than if they are highly sensitive to PR.

If a segment is highly sensitive to Advertising, then there is probably going to be a reasonable market share difference, but if there was low sensitivity to PR then you would probably only see a small market share difference (ie. you are probably wasting a lot of your PR spend and you should look at more effective ways of using that money).

The market segments have different sensitivities, so you need to find balance between Advertising Awareness and PR in each market.

2017 MikesBikes World Champs Winning Team

Interview with the 2017 MikesBikes World Champs Winner: Exodus

The 2017 MikesBikes World Championship winners Siyi Tang , William Setiawan , Jiedong Chen, Jayca Y. Siddayao, Mingchang Liang and Robbi A. Harnass of Exodus from the University of Auckland have joined the MikesBikes Wall of Champions with their impressive performance in the competition!

Team Exodus competed against the best teams from around the globe and have achieved a Shareholder Value of $327.81.

To wrap up the 2017 MikesBikes World Champs, we have interviewed the team and ask them about their experience in the competition and what they thought about the simulation.

What is your decision making process within the simulation?

First, we analysed the market scenario then we looked at trends in pricing, marketing, financial performance and so on. We then compared these trends with our previous decisions and results.

Finally, we were able to determine whether we would have an offensive or defensive strategy. The most important thing for us is that the final decisions entered have been approved by all team members.

What was your strategy going into the simulation?

Our strategy was focused on developing low prime cost bikes. This strategy did not require a high investment in plant or workforce.

We then focused on our marketing campaign. We developed a marketing mix suitable for our strategy.

Knowing how to calculate the optimum marketing mix, we were able to reach more customers than if we just allocated a high expenditure on every media channel.

Finally, with regards to our financial decisions, we made sure to repurchase shares as soon as we had the additional funds and no profitable use for our extra cash. We were also able to pay out dividends to shareholders.

What challenges did you face? How did you overcome these?

Our competitors undoubtedly did their best to compete. They presented us with fearsome competition during the Championship. Our team also felt that some of the firms just gave up along the way and purposefully destroyed the market by dumping their prices. Pity moves indeed. But then again, it was one of the “unexpected” things that you would not expect to happen, especially during a fierce competition such as this.

Was there anything, in particular, you did that you think helped to prepare yourself?

One of the things that helped us win the world championship was the opportunity to compete with our fellow classmates. In a way, we were used to playing in such a competitive environment, with fearless competitors. However, even with such experience, there were moments during the world championships that we felt very overwhelmed by our competitors’ moves. Thus, once again, kudos to all who fought until the end.

What do you think of the business simulation?

We think MikesBikes simulation is a great way to teach people who want to learn Business Management. It has both practical and theoretical application that gives us real world experience that we would never get from attending traditional lectures and doing written tests.

For example, when we were looking to enter a more competitive market, we were intrigued to find more detailed information. Reports such as the Income Statement, Cash-Flow Statement, Balance Sheet, and Equity Movements Statements were extremely helpful. We made sure to analyze these reports every rollover.

Comments on your experience with the simulation itself

We had a great experience with the simulation. We are glad that we have used this simulation, especially for those of us who have never worked in the industry. By competing in the course competition at the University of Auckland and entering the MikesBikes 2017 World Championship, we learned so many new things, such as:

  • How to allocated our Marketing Expenditure in more attractive media channels
  • How to turn a significant investment in project development into something more profitable in the long run
  • How to calculate the cause and effect of the decision of repurchasing shares and dividends.

Nevertheless, we are honored to be called the winners of MikesBikes 2017 World Championship. There are many decisions that we made, which definitely could be further improved. We hope that newcomers will join the next world competition of MikesBikes, to stand beside us, and the rest of the MikesBikes World Champ Winners.

 

Check out the 2017 Competition Results here and the previous winners here.

MikesBikes World Champs Smartsims

2017 MikesBikes World Championship Competition Results

“Success is not final, failure is not fatal: it is the courage to continue that counts.” – Winston Churchill

The 2017 MikesBikes World Championship has finished with a bang! Team Exodus from The University of Auckland has secured the top position as 2017’s MikesBikes Champs and have joined the MikesBikes Wall of Champions. Team GOFAST, also from The University of Auckland, came in close second with an impressive performance! These top two teams certainly had the will to succeed and win the competition.

These two teams were neck-and-neck in the last few rounds of the competition battling for first place. Both teams constantly putting pressure on each other to adapt to their market and make growth-orientated decisions.

Our MikesBikes World Champs winning team, Exodus had the following to say:

2017 MikesBikes World Champs Winners
Siyi Tang , William Setiawan , Jiedong Chen, Jayca Y. Siddayao, Mingchang Liang. Robbi A. Harnass of Exodus from The University of Auckland

Our experience with the simulation has been unimaginable. We are glad that we have done the simulation, most especially since none of us have worked in the business industry. By doing the course competition at the University of Auckland, and entering the 2017 MikesBikes World Championship, we learnt so many new things. Such as, how to wisely allocate our marketing budget, how to turn a significant investment in project development into something more profitable in the long run, how to calculate the cause and effect between the decision of repurchasing shares and dividend, and many more. Nevertheless, as much as we are honoured to be called the winner of the 2017 MikesBikes World Championship, let us restate the fact that we are far from perfect. There are many things that we’ve done, which can be further improved. We hope that newcomers will aim to enter the next MikesBikes World Champs and to stand beside us, and the rest of the winners.

A huge congratulations to all the teams who have participated in the 2017 MikesBikes World Champs!

Here are the Final Round’s Rollover Results:

Position
Firm
SHV
Team Members
Institution
1
Exodus $327.81 Siyi Tang | William Setiawan | Jiedong Chen | Jayca Y. Siddayao | Mingchang Liang | Robbi A. Harnass University of Auckland
2
GOFAST $313.41 Harriet Zhang | Golf Tantulaphongse | Xu Wang University of Auckland
3
Infinity $152.80 Sunil Ravindran | Thi Thu Vu | Manfei Cheng | Zhaonan Liu University of Auckland
4
Pedal to the Medal $88.06 Peter Bojsza Drexel University
5
Scooty Puff Legends $86.79 Jamison stewart | Zachary Khan | Nathan Jarrad Linn Benton Community College
6
Square Tires $2.80 Chris Mitchell | Nick Dawson | Darrell Davis Indiana University Southeast
7
Apex Bikes Co. $0.01 Zachary Abel Des Moines Area Community College
8
K2K $0.01 Kimberly Dowe Linn Benton Community College
9
SB Corp. $0.01 Kaushik Shah Midwestern State University
10
Van der Zwan AJ Inc. $0.01 AJ van der Zwan Ithaca College

You can view the current and past winners here.

how to create a great company name image

How to Create the Best Company Name for your Business

Naming your company is one of the most important decisions when establishing a new business. It forms the foundation of your company’s brand and is key to a lasting first impression. However, coming up a name for your business is often as challenging as it is important.

So what are the best ways to pick a creative, meaningful or impacting company name?

Here are the Top 5 Methods for Creating the Perfect Name for Your Business:

How to Name Your Company - Personal Identity

Many company names are inspired by the founder’s own name. For example Bayer (Friedrich Bayer was the founder of the company), Boeing (after William E Boeing) and John Deere.

An amalgamation or acronym of the founder’s names could be used. Ben & Jerry’s for example (Ben Cohen and Jerry Greenfield are the founders of this global ice cream empire), 3M (Minnesota Mining and Manufacturing Co) and DHL (Adrian Dalsey, Larry Hillblom and Robert Lynn).

Alternatively, an acronym which combines your name with your location. For example, DKNY (Donna Karan, New York) or IKEA (from the founder’s name, Ingvar Kamprad, and his hometown, Elmtaryd Agunnaryd).

Naming Your Company - Using Language

Take a word that’s symbolic for your company and invent a new word through a mash-up, alternate spelling or misspelling. This can give your company an internationally unique identity.

Mozilla, the internet browser, is a word mash-up, being Mozaic and Godzilla. Reebok is an alternate spelling of “rhebok”, the African antelope. Famous misspellings are Flickr and Tumblr, where the founders simply dropped the last vowel of the word.

Using a foreign word can also provide a unique flavor outside of the country of origin. For example, Acer is the Latin word for “sharp and able”.

Naming Your Company - Use of Humor

If you wish to be bold you can use humor to create an immediate reaction from consumers. A successful funny company name will provide a lasting first impression and encourage customers to tell their friends about you.

For example, in the highly competitive frozen yogurt market, the company name Spoon Me, was quirky and funny enough to catch people’s attention that consumers now proudly don the company’s t-shirts, bumper stickers and other merchandise.

Also, names that are a play-on-words or that utilize puns can be a fun way for a company to create its own distinct image. Everyone remembers the coffee shop in the New York-based sitcom Friends, Central Perk. And our local seafood restaurant is named The Codfather.

Naming Your Company - Making it Descriptive

Descriptive business names are upfront about the kind of products and services they offer. Their strength is they immediately communicate a key message describing what your company offers. This could be your company’s story, an inherent company value or a particular quality linked to your products.

For example, Freeset (a fair trade business whose goal to is set locals free from slavery and poverty), Best Buy and Staples.

More creative options are Greyhound (to convey speed), the Ford Mustang (evokes the emotion of power and freedom) and Nike (the winged goddess of victory).

Alternatively, you can combine two descriptive words to create a new meaningful word. For example Smartsims (smart & business simulations), Evernote (forever & note) and Groupon (group & coupon).

Naming Your Company - Keep it Simple

Sometimes the best company names come from simple ideas and concepts.

These include choosing a word from the dictionary (like Twitter), picking an inanimate object (Steve Jobs chose Apple for its friendly appeal and common usage) or even a geographical location (like Amazon or Fuji).

Alternatively, take a word that has special meaning for your business, but just use a portion of the word, like Cisco (from San Francisco where the company was founded).

Do you know of a Clever, Unique or Funny Company Name?

Have you come across a particularly meaningful, creative or humorous company name? This article is now posted on our Facebook page. Click on the link below and comment to share these with us:

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