It is a huge milestone for Belmont Abbey College as this is their first time to win the MikesBikes World Champs title! The winning duo from Belmont Abbey College, Jake Rybarski and Timothy Gosnell of Abbey Bikes share their experience and the lessons they have learnt in the World Champs.
What is your decision-making process within the simulation?
Before decisions are made, we like to look at what everyone else is doing and mainly go for sure thing sales as opposed to compete on the advertising and PR, although these are important and maintaining an average rating on them is a must to avoid slipping behind.
For every period we had a general idea of what we wanted certain ratios to be such as the gross margin percent and the operating margin. For every period we looked through essentially every report and collected information to look at trends. After a lot of practice with the simulation in class this semester, you begin to sort of develop a decent intuition about how high some expenses should be. The advertising and PR budgets were prorated based on the viewership for the target audience which is given in the reports. The internet section involves more analysis and that section as it usually sees one of the quicker upticks in the budget and the fastest cutoffs, at least for our decisions which are based on the viewership reach based on spending graph that is given in the reports.
What was your strategy going into the simulation?
Our main strategy was mainly competing on the variables with high sensitivities in their respective industries. For instance, we competed with prices in the kids and commuter bike markets, for adventurers, it was a bit of everything, but mainly price and later in the simulation, product specs, and for racers we tried to ensure product spec accuracy was high and maintain rising quality levels with every rollover. We found both in the qualifying rounds and the final rounds that teams like to charge a little more than us or less, but quickly lower or raise prices to our levels. This resulted in our team gaining more sales after the first rollover than we compete for with advertising and quality. We also watched teams that spent a lot on advertising and PR and focused on gaining more of a market share for our team in these segments in order to make their cost of sales even more detrimental to their bottom line. Usually, this can be done through a simple price adjustment because several segments will respond more acutely to price than an increase in advertising awareness. After this happens, Teams then lower their prices in a sort of panic mode. Though, they keep advertising expenditures high, so their strategy of selling for a higher price but more awareness doesn’t work if you have a team that focuses on these things. We instead maintained our price levels and we observed in every game we played teams would adjust their prices closest to ours and in a sense, we maintained the industry standard. If you can get in the lead, this phenomenon will only become more pronounced as the teams that lag behind will begin to copy the front leader as a strategy to catch up. In the spirit of Napoleon, we did not “interrupt our enemy [competition]” when they were making a mistake by raising our prices in panic mode.
It’s tempting for teams to close the gap between worker SCU and plant SCU early in the simulation to maximize the work gained from a single factory worker. However, A large increase early on makes maintaining quality levels extremely expensive. We observed several teams fall into this in the first rollover by doubling their plant sizes and their quality levels in future rollovers were quick to fall. Our goal then was to slowly increase plant size, and in fact never closed the gap between factory and employee SCU, as this is not actually strictly needed and provides the ability to gain higher quality for less cost. With virtually every team entering every market, the sales one team can gain in an economic way never truly reaches a point where massive amounts of plant size are needed.
In summary, the strategy was to compete in “high” sensitivity areas so that our firm could go for the “sure thing” sales to better predict outcomes and maintain stricter control over costs.
What challenges did you face? How did you overcome these?
A challenge we had in the qualifying round was buying more plant one the first rollover than we would usually do since we thought this would give us a slight advantage in the subsequent rollover. Instead, it made cost projections more difficult and quality levels suffered as we entered the high margin market of the racer segment. We had good control over the gross margin percentage increases for all the rounds except one, though we quickly adjusted with more careful planning and being more exact in data trends.
Was there anything, in particular, you did that you think helped to prepare yourself?
Practicing in single player, in class this semester, and paying very close attention and maintaining detailed records to identify trends with the closest accuracy possible.
What do you think of the business simulation?
Jake: I really enjoyed the business simulation, and we think the results showed. It was always a fun and competitive challenge which had our team striving to do better every round.
Timothy: really like the simulation because I like constructing models, analyzing data, and making that data tell me something that isn’t explicitly contained within it. The business simulation gives me a lot of data and information to use and makes it so that my work in excel and have actual results that can be tested against the predictions I made.
Comments on your experience in your course simulation and with the MikesBikes World Champs
I really like the business simulation and think it’s a must for any student studying a business related major. It gives you the opportunity to see how well you perform based on how much work you put into it. I think we put a lot of work into winning the World Champs. The mikes bikes champs were also fun, challenging, and just a bit stressful, but only because we really wanted to do well.
Advice to future students
The most important thing is to make sure you read every single report before every round. The more information you can correlate, the better. The operations report and marketing report are going to be the most important. Also, keep a close eye on the manufacturing quality report. You’ll want to make sure the quality index is slowly increasing. What will be the biggest road block to increasing it steadily will be purchasing too much plant in the first round. Purchase some, but in manageable amounts so as to prevent the quality systems index from having to receive a massive infusion of cash to maintain current quality levels.
If you find yourself behind the other teams, evaluate your cost of sales. This issue seemed to be common in our game as we observed several teams spending a lot on advertising and PR and the benefit was much less than the cost. It will take some time to find the balance, especially while competing, which is why we think the best strategy is to focus on those areas where target audience has a “high” preference for something, as outlined in the reports.