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Student Success Stories: Sajjad Arastu from The University of Auckland

April 30, 2019Student Advice, Experiential Education, Business Simulator, Experiential Learning, Business Simulation, NewsCamille Canuto

Meet Sajjad Husain Arastu, a Master’s student in International Business from The University of Auckland. He is currently sitting in first place in the Top 20 MikesBikes Advanced Hall of Fame. His $1,014.11 Shareholder Value has been unbeatable for two consecutive years now. Since then, he has been consistently trying to beat his own record. This reminds us of a saying from a Canadian based philosopher and entrepreneur, Matshona Dhliwayo:

“To be a champion, compete; to be a great champion, compete with the best; but to be the greatest champion, compete with yourself.”

The article below is written by Sajjad. Let’s get to know him more as he shares his MikesBikes Experience with us.

The beginning of my journey

I’m Sajjad Husain Arastu. I’m from India. I came from an engineering background specializing in Marine Engineering. I was fortunate to get an education in top universities in three different countries namely: India, Malaysia and New Zealand.

Coming from a technical background, I soon realized that the main decision-making ability lies with people who understand business. This motivated me to come to New Zealand and pursue a Master’s in International Business. I wanted to expand my knowledge further, learn the commercial aspects of business and to grow in the industry. The purpose of selecting this course was to gain deep knowledge on the commercial side of the International Business – focusing on International Trade, Logistics, Global Operations and Consultancy. In addition, I also wanted to gain skills in managing people, operations, research and development, planning and strategy in complex business environments.

MikesBikes Experience

My first course in this program was Managing People and Organisations, which introduced me to MikesBikes Advanced. It was the most exciting part of my learning. I want to thank Professor Darl Kolb for teaching this course and giving us the ability to run our own companies.

When I was doing my Marine Engineering course, I had an experience using a simulation to design ships and learn how to calculate. I never knew that we could run a business using a simulation.

The idea of using a business simulation was very new to me. I wanted to try and understand it in order to help me make decisions in a real business. I came from a technical background with literally no experience in business, so it was tough for me to understand the different business functions.

We first tried the single-player version for a week and then progressed to form our teams, where we managed our companies in the multi-player version. I was selected as the CEO of my company, Cycle planet, because I managed achieve a Shareholder Value (SHV) of $200 in my single-player version.

Competing against our friends and running my own company was one of the most thrilling experiences for me. The MikesBikes Advanced simulation is a perfect combination of the human-machine interface, which makes use of technology to develop human thinking. This motivated me because, it was exciting as every decision is unique and brings a different outcome. It also gave me an ability to manage and learn from people by competing against their companies.

Invitation to MikesBikes World Champs

The best thing happened to me towards the end of the quarter. Smartsims sent an invitation to participate in the MikesBikes World Champs. I got excited because we were just playing among our friends and classmates, and now I’m given an opportunity to compete against other students from all over the world. I wanted to experience this and develop my understanding further, so I participated in the world championship.

In the world champs, there was a condition where we could not design more than two R&D (Research and Development) projects in a given year. This was something different from the scenario we do in the course. It required a new set of decisions and more strategic planning. My team and I made some mistakes with our strategy and our group ended up in the Top 14 worldwide, which was not bad but gave me more motivation to learn and master the simulation.

My Single-Player Journey to First Place

Using MikesBikes for around 10 weeks in the course honed my learning and understanding of business. I was also becoming more familiar with the simulation. After every rollover, I look at the Hall of Fame ranking. I wondered how people could get such high scores and what they did differently.

After joining MikesBikes World Champs, I decided to play with a target of getting in the Top 20 Hall of Fame. Since I have a technical background in marine engineering, I started to think like an engineer than a business person. I started optimizing my decisions to generate more profit. As soon as I realized I’m spending too much money, I needed to minimize my cost in all aspects of my planning and came up with a new strategy to enter the Hall of Fame. I tried and looked at my decisions very carefully and started optimizing my R&D, Operations and Marketing spend.

As an example, in my initial rollover, the cost of making one Adventurer bike inclusive of all costs was close to $260 which I optimized to as low as $97. This increased my profit margins. Additionally, I also adjusted my Operations, Advertising, Distribution and Finance decisions to reach a Shareholder Value (SHV) of $1,022 with an overall net profit of $73 million which landed me the top spot in the Hall of Fame.

Impressions on the simulation

When I was first using the simulation, I thought it is just like a game. However, that was not the case. I noticed that every aspect of the simulation is interrelated and it requires strategic planning in aspects such as R&D, marketing and operations. It also involved a lot of teamwork, because we make decisions that involve a lot of planning and some calculations. Some of the decisions in my initial rollovers were just based on trial and error. However, as the course progressed, they became more planned, calculated and forecasts were made more accurately. Working well in your teams is one of the keys to succeed in the simulation.

Value and impact of the simulation in my learning

I got a chance to work with a diverse group of people. I also realized that interaction with your team is necessary in order to share ideas with each other. Every member of the team has specific duties, which is essential to make collective decisions.

In MikesBikes, our firm needed to maintain profitability in order to increase our Shareholder Value over time. This can be achieved by proper planning, understanding the components of business functions and making informed decisions.

One of the main challenges we faced as a team revolved around making the right decisions as some of our members were not aware of some of the concepts. This created misunderstanding among us when analyzing the reports. Our main priority as a team was to learn and understand our roles and duties to strengthen our relationship with each other. To improve on this, we kept a record of all our previous decisions so that we can focus on modifying these and to achieve better results. In MikesBikes, we are dealing with competitive markets which were hard to predict. Every decision required a large amount of funding.

MikeBikes provided us with a very realistic platform, which is an essential part of my learning and development. As an individual and also as someone that’s part of a team, the simulation gave me an insight in every aspect of the business. It also gave me an understanding of the value of money and how to avoid overspending to maximize our output. The simulation has helped my development in the university.

I want to thank Professor Darl Kolb for always encouraging and motivating me to develop my learning in the simulation through his weekly stock reports. This report showed us how we are doing in class against our competitors.

Advice to my past self

If I were to go back and play the simulation again, I would improve and optimize my pricing and financial decisions. I have not not mastered these aspects yet. As an example, if I keep my prices too high, my competitors will take the market share by offering low prices. Additionally, if I drop my price, I will miss out on potential profits. I need to find balance between pricing my products and knowing when the best time time is to make financial decisions.

Using my MikesBikes Experience in LinkedIn

I want to be an expert in my field and want to grow in the industry. I worked day and night using MikesBikes to develop my learning and understanding of business. I think in this competitive environment, it is necessary to do something different and stand out in the eyes of employers by showing your potential.

I used LinkedIn to demonstrate potential employers that I have great abilities and skills, which I developed over time and would be a great asset to them if they provide me with an opportunity to work with them. It has been eight years till date, and my struggle to find a full-time job has pushed me beyond my comfort level to grab any opportunity to show employers my potential and worth. I believe LinkedIn can market my achievements to the world of employers.

Connect and get to know Sajjad:

University of Auckland Celebrates 20 Years of MikesBikes

April 14, 2019Teaching Methods, Business Simulation, NewsCamille Canuto

2019 marks the 20th Anniversary of using MikesBikes Advanced at the University of Auckland. The “MikesBikes Reunion” took place on the 25th of March to enable alumni to reconnect with their fellow team members and simulation users.

MikesBikes Advanced is used at an undergraduate level in Management in Dynamic Contexts taught by Peter Smith and Andrew Patterson. As well as at a masters level in Managing People in Organisations taught by Darl Kolb.

The evening started with a few words from Peter Smith, Darl Kolb and Smartsims CEO, Dennis Gain.

“It was great to catch up with so many former students and hear about their achievements since leaving University. We were also lucky enough to have representatives from Smartsims (the makers of MikesBikes), come along and support the event (many of whom are also alumni too).”

– Peter Smith

One of two previous Masters student, David Thomas, who wrote their Thesis using MikesBikes data, were present at the reunion. The other was Emma Dawson, who is now based in California.

We also met Sajjad Arastu (first person on the right), who is currently sitting in first place in the Single-Player (All-Time) Hall of Fame.

The rest of the evening was spent reminiscing about the fun times, mishaps (where best lessons come from!) and experiences from MikesBikes.

“Students come back to us and talked about how they’ve gone into an interview in the big four accounting firms. They haven’t had any other experience in other organizations, but they can say with pride and confidence that they’ve actually worked in a team that had real work to do. It’s always heartening because it does actually simulate a professional work team. I’ve also had people at a personal level realize that the simulation gives them a chance to think about their own personal direction, who they are and who they want to be. It’s quite rewarding and fulfilling as professor.”

– Darl Kolb

We are only now really appreciating how powerful the use of MikesBikes has been. Darl and I were struck by the warm feelings the alumni had for MikesBikes and the value they saw in its use. For example, I had a really nice email from one student (who now works overseas and couldn’t attend) explaining how useful he had found the lesson learnt through MikesBikes when he worked in Software Development, and how much its shapes what he does now that he is a university lecturer.

– Peter Smith

2019 MikesBikes Reunion at University of Auckland

We would like to thank Peter Smith, Darl Kolb and Andrew Patterson for their continued support for the past 20 years. We’re looking forward to many more years of working together!

Photo credit: All photos are provided by University of Auckland and Natalie Newton

MikesBikes Question of the Week: What does “Weighted Average” mean?

April 13, 2019Business Simulation Hints Tips Cheats, Student Advice, Business Simulator, Business Strategy, Experiential Learning, Business Simulation, NewsCamille Canuto

It is the average Price / Awareness / PR / Distribution / Quality index weighted by the volume of demand for each product.

We use a weighted average to give a better indication of the overall level of value for consumers.

For instance, if you have two products A and B with A priced at $100 and B at $50, then the average price of those two products is $75, ie. ($100 + $50) / 2 = $75).

But for the weighted average we look at the amount of demand for each product.

If A had 100 units of demand and B had ten times as much demand (1,000 units) then the weighted average price would then be:

(100 * $100 per unit + 1000 * $50 per unit) / 1100 units = $54.55

Part 2: Common Mistakes in Music2Go Marketing Simulation

April 10, 2019Marketing Simulation Hints Tips Cheats, Marketing Simulation, Student Advice, Experiential Education, Business Simulator, Business Strategy, Experiential Learning, Business Simulation, NewsCamille Canuto

Mistakes are the stepping stones to success.

– John C. Maxwell

What are the other common mistakes in Music2Go Marketing?

In Part Two, we’ll talk about the importance of reaching the right customers and how to better allocate your Sales Promotion Mix.

Here’s Part One of the article in case you missed it.

Mistake #4: Misunderstanding the Importance of Reaching the Right Customers

Not understanding this can be a costly mistake as it often leads to incorrectly assigning your Advertising Mix. This can have a negative impact on the demand for your products and can also lead to overspending. Meaning your firm’s profitability is at risk!

How do you know if you are spending your advertising budget inefficiently? Follow through this section, it will show you how to efficiently allocate your advertising budget.

Each market segment is sensitive to different dimensions. View the Market Information report.

How do I interpret this Product Dimension Sensitivities graph?

The best way to explain it is through an example. If you take the Standard segment, you’ll see it has a high sensitivity to Price. This means that an increase to your price (example setting the price to the maximum) is going to have a negative effect on your sales volume.

What these sensitivities mean is a change in any of these factors, will result in a proportionate change in the consumers’ demand for your product(s).

There are four media choices to develop your advertising mix on: Television, Newspapers, Magazines and Digital Media.

There are two substantial sources of information you can use to determine your optimal advertising mix for a given advertising spend: Advertising and PR Reach by Media Curve and Media Viewing Habits. Both information can be found in the Market Information report.

Each media type can reach a given proportion of its audience for a given investment. This is shown within the Advertising and PR Reach by Media Curve.

The best way to explain this would be to provide an example.

Example: Budget of $4 million on Standard Segment.

Option 1: 42% of the Standard Segment read magazines.

So our $4 million spend would reach approximately 90% (taken from the graph at a spend of $4 million) x 42% (Media Viewing Habits) = 37.8% of the Standard segment can be reached

Option 2: 85% of the Standard Segment can be reached via Digital Media.

So our $4 million spend would reach approximately 50% (taken from the graph at a spend of $4 million) * 85% (Media Viewing Habits) = 42.5% of the Standard segment

Option 3: But maybe we can do better than that still. What happens if we spend $2 million on Newspapers, and $2 million on Magazines?

If we spend $2 million on Newspapers, we could reach approximately 40% of Newspaper viewers and 58% of the Standard segment reads Newspapers. So we could reach approximately 40% (Media Viewing Habits) x 58% (taken from the graph at a spend of $2 million) = 23.2% of the Standard Segment.

If we spend $2 million on Magazines we could reach approximately 50% of Magazine viewers and 42% of the Standard segment reads Magazines. So we could reach approximately 50% (Media Viewing Habits) x 42% (taken from the graph at a spend of $2 million) = 21% of the Standard segment.

So, together our $4 million spent half on Newspapers and half on Magazines would reach approximately 44.2% of the Standard segment, which is obviously a better use of our Advertising budget than the first two options.

As you can see, with the same budget, but a different allocation towards each media channel can make a huge difference in the amount of consumers you can reach.

This is only an example of good and bad marketing mixes. This is far from the best mix you can make. We suggest playing around on different Marketing Mix and see what works best for your strategy and budget.

Mistake# 5: Inaccurately Allocating Your Sales Promotion Mix

Your Sales Promotion strategy will need to vary with the Life Cycle of your product. For instance, Trade Shows and Sales Force training will be important a new product launch, bur progressively less so as the product ages. Your existing product will be in the Mature phase of its life cycle for your first Sales Promotion decision (Sales Promotion decisions are available after the 1st rollover).

It is important that you get your Sales Promotion Mix right, because it helps boost your distribution coverage and distribution index. In addition, some segments are particularly sensitive to Distribution, such as the Standard Segment.

There are 6 types of Sales Promotion activities available to you to promote your products and support your distributors:

Trade Shows
Salesforce Training
Premiums (Gifts)
Website/Social Media
Point of Purchase Displays
Rebates

So, how do I choose a Sales Promotion Mix for my products?

Remember that each of your products will progress through the Product Life Cycle starting in the Growth phase for new products and then gradually progressing through to the Decline stage over the next six rollovers.

Say we launch a new Youth product this period. This new product will start in the Growth phase of the Product Life Cycle (See Market Information Report > Sales Promotion). Then from looking at the tables above, we can see that our Ideal Sales Promotion Mix for a new Sports product is:

Trade Shows – 15%
Sales Force Training – 25%
Premium (Gifts) – 5%
Website and Social Media – 25%
Point of Purchase Displays – 25%
Rebates – 5%

Total = 100%

That was a simple example, but what happens in the second year that we sell this Youth product? The product will be moved from the “Growth” phase to “Growth – Starting to Mature.” So the optimal Sales Promotion mix will be 1/3 of the way between the ideal Growth and Mature figures in the Sales Promotion Table. That would give us an optimal Sales Promotion mix something like:

Trade Shows – 10% (Ideal Growth = 15%, Ideal Mature= 5%)
Sales Force Training – 17% (Ideal Growth = 25%, Ideal Mature= 10%)
Premiums (Gifts) – 15% (Ideal Growth = 5%, Ideal Mature= 25%)
Website and Social Media – 23% (Ideal Growth = 25%, Ideal Mature= 20%)
Point of Purchase Displays – 25% (Ideal Growth = 25%, Ideal Mature= 25%)
Rebates – 10% (Ideal Growth = 5%, Ideal Mature= 15%)

Total = 100%

You should buy the Distribution Coverage and Sales Promotion Market Research report for detailed information on the Sales Promotion Rating and Stage of Product Life Cycle for all firms in the Industry.

MikesBikes Introduction to Business Simulation is a 2019 Finalist for The EdTech Awards

April 7, 2019NewsCamille Canuto

We are happy to announce that MikesBikes Introduction is one of the Finalists for The 2019 EdTech Digest: Cool Tool Awards in the category of “Games for Learning/Simulation Solution.”

About the EdTech Awards

The EdTech Awards by EdTech Digest is one of the “largest and most competitive recognition program in all of education technology. Recognizing the biggest names in ed tech – and those who soon will be. We celebrate who’s who and what’s next. The EdTech Awards recognizes people in and around education for outstanding contributions in transforming education through technology to enrich the lives of learners everywhere.”

About MikesBikes Introduction

MikesBikes Introduction is a next generation interactive business simulation application, specifically designed for foundation-level courses.

MikesBikes Introduction features a unique structure which allows students to gradually build confidence. This is achieved by progressively gibing students control over their own company. They will initially determine the price and marketing mix for their only product. Each subsequent decision period they are given additional decision areas to manage to provide an insight into distribution, operations and finance; as well as the task of launching new products into emerging markets.

Recommended For:

Foundations of Business
Introduction to Business
Business Administration
Business and Society
Business Fundamentals
Business Organization and Management
Leadership for Business
Small Business Management
Business Concepts
Management Principles

Try MikesBikes for Yourself

Professional Fraternity Exploring Entrepreneurship through MikesBikes Advanced

March 20, 2019Teaching Methods, Experiential Education, Business Simulator, Experiential Learning, Business Simulation, NewsCamille Canuto

The article below is written by one of our previous students, Michael Stewart from Boston University. Michael took the Managing a Growing Enterprise course with Professor Greg Stoller and used MikesBikes Advanced as part of this.

Upon completion, he had the idea to incorporate MikesBikes Advanced into their program for this semester’s pledge class in their business fraternity, Delta Sigma Pi. The purpose of their fraternity is to foster the study of business in universities and to promote the association of students studying business for their mutual advancement through research and practice.

Michael is in charge of instructing the pledge (underclassmen students at Boston University) as they seek brotherhood within the fraternity. He felt that the simulation would be academically enriching and will create some level of competitiveness and enjoyment.

MikesBikes Advanced Experience in the Managing a Growing Enterprise course

This past fall, I was introduced to MikesBikes Advanced in my Managing a Growing Enterprise course at Boston University. This class was for students interested in pursuing Entrepreneurship and much of the lesson plan was focused on how to strategically position a new company in a competitive market.

Our Professor, Gregory Stoller, used the simulation to further our understanding of class material, as well as a tool to keep students engaged outside of the classroom.

MikesBikes Advanced is an online business simulation that offers students the opportunity to run their own company, while managing all the key functional areas of a business. It is an interactive tool that applies the basic concepts of business in a real-life context. Through the simulation, we received hands on experience making marketing, operations, product development and financial decisions.

After introducing the simulation to us and dividing us into teams, Professor Stoller assigned us our first deliverable; the Strategic Plan.

Our Strategic Plan set the guidelines of our businesses and assisted teams as they set variables for the first few weeks of the simulation.

The plan outlined our company’s mission, corporate and functional strategy and the key metrics that would be utilized to measure our company’s performance. The plan allowed for teams to show how they were going to position their companies relative to others in the virtual industry and how they were going to structure their spending in each functional area to achieve this position.

My classmates and I understand how much work would be involved in this assignment and found ourselves working on plans late into the night and often overnight into the morning they were due. This shows the complexity of the simulation and all the variables that you must stay apprised of over the course of the weekly rollovers. Once the first rollover hit, we still found that we failed to account for many of the variables that play into the shareholder value, which happened to be the most important metric in MikesBikes.

As the weeks passed, we saw the virtual market begins to take shape as teams began to adapt their strategies. Some teams chose to launch products into all possible market segments, whereas others held tight within only a few segments. By the end of the simulation, the teams that diversified their product found the most success. With only a few weeks left, teams who were behind did not have the time needed to launch new products and replicated the success of others. The lagging teams resorted to paying dividends and manipulating other financial variables in order to inflate their shareholder values in the final hour.

At the very end of the semester, each of the teams presented their performance and the lessons they learned from their experience in the simulation. Each team spent time discussing some of the mistakes they made early in the simulation and how they could have operated differently. The improper use of cash was a factor that impacted all the teams. Almost all the teams sat on heavy cash balances and did not use resources to reinvest back in their operations. It was not until the end of the simulation that we all began to pay dividends, buy back equity and pay off debt.

The simulation gave the class a more competitive feel than other business classes. Every Wednesday night my classmates and I would stay up to see who was on top after the weekly rollover. We spent hours trying to find the best ways to position our respective companies, may it be targeting a different segment or possibly improving product quality. We knew that if we found ourselves at the bottom of the rankings on Thursday morning, we would be subjected to some friendly banter among others in the class. As a rather small class, a shared bond developed within the group. It also helped that most of us had pre-existing relationships from our shared brotherhood in the business fraternity, Delta Sigma Pi.

Delta Sigma Pi (DSP)

Delta Sigma Pi Brothers at Boston University — From left to right: Max Reich, Gabor Imre, Hiro Nango, Eric Zhu and Michael Stewart (Brothers of DSP)

Our fraternity, Delta Sigma Pi, or more fondly known as “DSP”, was organized in 1907 to bring students of commerce together, develop their skills and prepare them for the world of business.

Since its origin, DSP has attracted thousands of students to join its organization by emphasizing its four pillars: Brotherhood, Service, Professionalism and Scholarship. Along with a sense of identity, these pillars help guide DSP chapters across the country as they help mold young men and women into business leaders of tomorrow.

The shared brotherhood is also why we all found ourselves together in Professor Stoller’s class. The five of us all have interest in entrepreneurship, a few having some prior experience running their own companies. We were all driven by our shared desire to practice our business skills in an academic environment. Once a few of us signed up for Managing a Growing Enterprise, we quickly influenced others in the fraternity to join as well. I believe that this factor was what led to the simulation feeling so competitive – the fact that we wanted to have higher shareholder value than our brothers on the opposing teams.

Taking the class also opened our eyes to something that could be done to better our fraternity. Our chapter does not offer many outlets for our brothers to practice their business skills, work together in teams and compete against one another. We have been actively searching for different ways to accomplish this in the Spring 2019 semester. It is for this reason that we have decided to partner with Smartsims in order to share the MikesBikes simulation with our pledge class this spring.

After being introduced to MikesBikes this past semester, it became obvious to us that this could be a great tool to be added to our semester-long pledge program. Each semester, our new pledge class could take part in the simulation and practice their skills as they compete against one another. The simulation will provide the pledge class with an opportunity to better understand the functional elements that go into running a company.

MikesBikes Advanced at Delta Sigma Pi

Our plan is to run the simulation very similar to how it was conducted in Professor Stoller’s class. Of course, there will need to be many resources available to the pledge class as they will be less familiar with the functional areas of running a business as they are only underclassmen who have not taken some of the pre-requisite classes yet. We will address this concern by assigning advisers to each team and providing a two-week “ramp up” period before the first rollover.

Each team will work with the advisers to create Strategic Plans that will outline both their corporate and functional strategies. These plans will guide their decision making once the first rollover takes place. Advisers will continue working with teams throughout the semester and help guide them as they set variables that fit related to the simulation. The advisers will also help to further their understanding of topics such as trade-offs, competitive positioning, and other business-related activities. Since these topics are relative to almost every sector of the business world, these students will gain much value from taking part in this experience even if they have no aspiration towards running their own company.

The final deliverable will be a team presentation during which the pledges will talk about the lessons they learned and critical decisions that had the most impact on their performance. We hope this will be a reflective exercise that will also allow the pledges to practice speaking in business settings.

The winning team will be decided by both this presentation and simulation performance. The presentation will also be a tool for Administrators to review how to better implement the simulation in the future with pledges who have no prior entrepreneurial experiences.

As a fraternity, we are looking forward to seeing how we can further experiment with the MikesBikes Advanced simulation. We are certain that it will provide academic value to the pledge class. However, we are realistic in that we expect there to be some kinks given that this is our fist attempt implementing the simulation. We feel fortunate to have the opportunity to share this experience with the pledge class and hope it ignites an interest in Entrepreneurship.

Michael is currently running the MikesBikes Advanced simulation until April, so stay tuned for the next article featuring their pledges experience with the simulation!

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

University of Auckland Business Masters’ MikesBikes Presentations

Student Success Stories: Journey from a MikesBikes Business Simulation Student to a Smartsims Employee

Making Distribution Decisions in the MikesBikes Business Simulation

February 27, 2019Business Simulation Hints Tips Cheats, Student Advice, NewsCamille Canuto

What is Distribution?

Distribution (place) relates to the ability of the firm to make products accessible to its target segments. This is achieved through distribution channels – in this case through retail outlets.

The number of stores in the channel that decide to stock your products will depend on the retail price, margin, unit sales history, and extra support offered. You must specify what margin and what extra support you are going to offer the retailers in each channel.

What is Retail Margin and Extra Support ($)?

The retailer margin decision refers to the percentage of the retail price that the retailer keeps. So don’t increase it too much! Example, if your bike is priced at $1,000 and your retail margin is 40%, then the wholesale price that you receive for each bike is only $600.

Maintaining existing distributors and acquiring new ones require considerable resources. Extra Support (e.g. in terms of special promotions and discounts) costs are required to enable product training of retailers and providing promotional literature.

Distribution costs vary based on the number of stores that currently stock your products.

Vendors of bikes can be broken into three categories:

Bike Shops
Department Stores
Sports Stores

(Note: Sports Stores are only available in Multi-Player in MikesBikes Advanced)

Your challenge is to decide how to set price and distributor retail margins in order to influence your distribution coverage in a way that results in either increased market share or increased profit.

Distribution Index

Your distributors look at how much total retail margin they make from stocking all of your products and based on this they decide how many stores will stock your products. This then translates into a Distribution Index which ranges from 0 to 1 (higher is better). In general as your distributors make more money from selling your products, then more stores will stock them and your Distribution Index will increase.

Example of Distributor Behavior

Note: The market segments all have medium sensitivity to Distribution apart from the Commuter segment, which has low sensitivity to distribution (see the Market Information report under the Key Reports menu).

For instance, if you sold 10,000 bikes at $1000 with a 50% retail margin, then your distributors would make 10,000 * 50% * $1000 = $5 million

Perhaps you dropped your price to $900, and your retail margin to 45% you can now sell 12,000 units. Your distributors would then make 12,000 * 45% * $900 = $4.86 million

In this case, your Distribution Index would fall slightly as your distributors made less retail margin in total. This may not be an issue in the Commuter market, but it may disadvantage you in the other market segments. Of course, it also depends on your competitors’ actions. If your competitors have much higher distribution indexes than you, then you will lose more market share.

As you can see, sales volume is also an important component of distribution. So it may be beneficial to keep retail margins slightly higher whilst building initial market share for new products. It may be possible to gradually reduce margins once you have established products with high sales volumes without adversely affecting your Distribution Index.

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

February 11, 2019Student Advice, Experiential Education, Business Simulator, Business Strategy, Experiential Learning, Business Simulation, NewsCamille Canuto

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 in 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

2018 MikesBikes World Champs Winner: Whatever-Go from University of Auckland

February 7, 2019Student Advice, Business Simulation, NewsCamille Canuto

We have interviewed the 2018 MikesBikes World Champs winner, Whatever-Go with Wiput Tantulaphongse, Yijing Tang, Meiyicong Lin, Zhen Peng and Fengkai Han from University of Auckland. They have also managed to achieve the second highest Shareholder Value from the past 9 MikesBikes World Champs!

MikesBikes World Champs 2018 First Place Winners — From left to right: Meiyicon Lin, Fengkai Han, Zhen Peng, Wiput Tantulaphongse

In this interview they talk about their experience in the simulation, their decision-making process, strategy and advice to future students.

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

Whatever-Go: First of all, we look at the information in the Scenario Tab then we discuss about the strategy of the investment. The decision was based on the forecast market volume and the expected market share of our team. The expected market share is derived from the advertising expenditure and the target price. Moreover, we calculated the capacity needed to produce the expected amount of bikes two years in the future. The last decision made on the financial aspect. We simulated cash flow analysis and expected equity in the next rollover, so, we had the rough idea of how our cash on hand would be, and the likelihood of achieving that target. All of the decision made was influenced by the forecast of competitors’ decision as well.

Smartsims: What was your strategy going into the simulation?

Whatever-Go: Our strategy is to be the market leaders who produced high quality products with reasonable price. This strategy needs a thorough analysis of every aspect including marketing, product development, financing, and production as a whole. We had to understand the risk of each decision made in the particular rollover. We invested heavily in product development and advertisement in the first three rollovers because we expected to secure the highest market share earlier than our competitors. The forecast of the cash balance was really important to understand the sensitivity of financial information.

For example, if the expected market share change by 1%, we need to know how this would affect the ending cash balance. So, we can prepare the financing strategy whether we should take debt or equity financing. In the middle of the competition, we focused on optimizing the operation activities and maintaining a reasonable market share regardless of the price of products. We estimated the contribution margin of each product to ensure that every single product lines made the profit the team.

Every rollover, we aim for the highest profit which is the ultimate goal of a business. Moreover, we also focused on giving the dividend to shareholders. For the last two rollovers, we invested in investor PR to help our SHV and tried to maintain the investor PR index at 1 which is the optimal point.

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

Whatever-Go: The most challenging part is the first three rollovers.

First rollover: We were not sure what the price of the Adventurer bike would be. If we set the price too high, it would lead to having a low profit in the following rollover. If we set the price too low, we could end up with loss sales which means loss of profits. In addition, we had to come up with the strategy for our product development. We had to guess which market to place the bike into. Finally, we decided to develop Adventurer and Kids bikes. We made the decision based on the profitability of Adventurer in the long run because we can double the profit of the Adventurer segment by investing 2-3 million. For kids segment, we had the assumption that most of the competitors would develop Racers. We decided to take a risk in developing a product in the Kids segment. The assumption in that moment was to take 30%-50% of kids market and gain a huge amount of profit rather competing in the “red ocean market” of Racers segment.

Second and Third rollovers: It was challenge to guess the competitors’ strategy. We had to estimate and monitor changes in price, awareness, PR, and quality of our competitors’ product. This helped us to understand the trend of each competitors and we adjusted our plan accordingly.

For both situations, teamwork is the answer to overcome all of these challenging issues. The more we share to the team, the more solutions we came up with.

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

Whatever-Go: Cash flow analysis, cash balance sensitivity analysis, product development plan (for the whole simulation period), and the most important part is to understand how advertising, operations, finance and product development are linked together, and how the simulation software works. Read the Players Manual!!!

Smartsims: What do you think of the business simulation?

Whatever-Go: The simulation needs comprehensive decision making method.

This is one of the best activities we have done so far throughout the course.

MikesBikes shows every single element in the accounting perspective such as balance sheet, cash flow statements, statement of change in equity, and the costing information for management accounting. This is the good experience for management students so far.

Smartsims: Comments on your experience in your course simulation and with the MikesBikes World Champs

Whatever-Go: We had fun in the course and found that in MikesBikes World Champs is far more challenging because of the additional rules such as the limitation of numbers of development in a roll.

Smartsims: Advice to future students

Whatever-Go: Focus on your business strategy, set the target, think about the plan to achieve the target, adjust your decisions based on the business environment, focus on every aspect equally (advertising, operations, finance, R&D) because each decision supports each other and contribute to your overall Shareholder Value.

2018 MikesBikes World Championship Results

MikesBikes World Champs: Past Winners

2018 MikesBikes World Champs Runner Up: Maksym Chernenko

February 7, 2019Business Simulator, NewsCamille Canuto

De Anza College student, Maksym Chernenko, has achieved second place in the final round of the 2018 MikesBikes Business Simulation World Championship.

Maksym Chernenko

From 20,000 students who used a Smartsims simulation this year, 120 of the top students were invited to compete in the 2018 MikesBikes World Champs. Over the qualifying rounds Maksym was able to place in the top 10 which put him in the final round against other students and teams across the United States, Canada, New Zealand and Turkey. Makysm has only used our MikesBikes Introduction simulation in his Intro to Business course. Competing against senior and MBA students, Maksym achieved second place with a shareholder value of $241.53. Maksym says:

“I believe MikesBikes game is a must have experience for every student majored in Business. It gives amazing possibilities for everyone to implement their own strategies on the highest level and check outcomes most of us will never get in real life”.

Makysm is also featured in the following articles:

Big Finish in Business Contest