Thursday, June 14, 2007

Just Like the Real Thing

Summarizing our team's efforts in the past twelve weeks participating in the marketing and business simulation game "If the Shoe Fits" we're satisfied to say that, from a loosely collected group of final year grad students of diverse interests and backgrounds, we've honed ourselves into an effective fighting unit ready to overcome whatever simulated challenge our laboratory marketplace throws at us.

The object of simulation game is of course to post superior financial results in a hypothetical global market for athletic shoe manufacturers. Various algorithims work behind the screens to model typical consumer behavior, production constraints, stock market fluctuations, labor output and of course, consider the decisions and inputs of the real student teams we compete against in class.

That said, lets burrow into the simulation and consider the results of our business decisions with a real world flavor.

Year 1: Our "firm" opted to increase the premium raw material in our sample running shoe and market it with a particularly high cost advertising initiative in a select market at a high price point. We estimated limited market share but felt that generous individual margins would cover what we lacked in sheer volume.

Well, our market share fell to something the output stats couldn't represent because the computer didn't calculate that many negative decimal places. Our stock price plummeted and our credit rating was noted "if you get any closer to default, you're team will be re-named San Andreas Shoes." Point taken. Perhaps there were a few small holes in our strategy.

Year 2: We adjusted our price downwards slightly to move closer to the retail competitive set. Our market share moved into negative territory and various consumer groups picketed our production facilities demonstrating against an introduction of baby seal fur lined tennis shoes (maybe an algorithm got off kilter here, we only recall input choices of 'standard' and 'premium')

After we burnt through an emergency cash loan to repair the plant from the firebomb damage, we re-set our strategy for more mainstream quality shoes with a broader retail distribution network and lower advertising dollars. We borrowed at prevailing interest rates to cover the cost of operations in year 3.

Year 3: Apparently our loan was sold to a financial concern called "Fast Nicky and the boys" who quickly depleted our remaining cash with an 1100 percent interest rate, compounded daily. So much for covering operations. Fast Nicky consumed our entire year's output and compensated us by "forgetting that youse were an hour late on last week's payment." Having no product to sell, our warehousing costs were rated as "most efficient in industry" by the software. However, we also received a "don't bother thinking about graduating" message from the software's administrator. Needless to say, this upset certain more sensitive members of the board.

Year 4: Fast Nicky once again spoke up for our annual shoe output. We were conpensated with "I'll remember that you did right for my nephew's fifth birthday" but otherwise our income statement stayed relatively static, which is to say flatter than those salt stretches that dragsters are always competing on on Speed Channel. We're a little worried as a corporate team about being able to modify our strategy so as to remain in contention for top position by year 12. As students, we're frankly a little concerned that we've opened up a seedy subroutine on this stupid simulation that, were this real life, somebody would be on the phone to the fucking SEC and none of this shit would be going down, let me tell you! But I digress.

Year 5: Alpha team has celebrated its millionth unit produced and has hit double digit profit margins. Beta team has cornered the internet market. Charlie and Delta team are neck in neck for Pacific rim majority market share. Fast Nicky is "starting to like you losers." We're a little confused and discouraged at where our strategy has taken us.

Year 6: Our North American production plant has mysteriously burned to the ground. Fast Nicky is telling us not to worry, he's in tight with the insurance boys. Personally, we don't like our classmates getting up and moving a chair away from whereever we happen to sit down.

Year 7: Fast Nicky sleeps with the fishes. The insurance dollars will double our Pacific rim plant size and allowed us a modest advertising budget with enough of a cash reserve to retain professional legal counsel. Sorry, the nationwide media blitz "Alpha Team shoes made by sexually exploited dwarves" must have been some sort of a misprint. We apologise.

Year 8: Honestly, we had no idea that GPS coordinates thought we were sending out to trucking companies turned out as bombing targets for the 8th air force wing. Sorry about the complete loss of plant output in North America, Beta and Charlie teams. But think of it this way, you did your part for homeland national security. No idea where the "Osama Bin Shoeware" signs came from outside of the factories. Oh, Delta team, Sarbanes Oxley violations are pretty serious. No, can't really say who tipped them off.

Year 9: From cash surpluses we are able to lend Alpha team enough to produce shoes to be photographed for their next year's catalog. Yes, the interest rate is compounded hourly.
The hostile takeover of Beta team is complete and their executives will be retained as promised in the original terms of the deal. A few minor adjustments, but their talents will fit well into our food services unit so long as they remember to smile using the phrase "want fries with that?"

Year 10: No idea who tipped ATF off on the raid of Charlie Team.

Year 11: Given that we currently hold a 99.8 percent global market share, we don't thing that a four hundred percent margin on a pair of shoes is a lot to ask. And if you don't like working for a dollar a day, maybe you should head down the road and see if Alpha team is hiring. Oh, sorry, we forgot we allowed Alpha team to supply janitorial services only to us this year. Here's your toothbrush, there's the executive bathroom then. Now run along a be a good former vice president of customer relations.

Year 12: We feel that we've had a postive learning experience playing the simulation. We feel that it has given us a new perspective on a highly competitive business market and endowed us with certain survival skills that we will be able to transfer to our individual careers. Naturally, we deserve an "A" for our efforts and should that letter grade not be immediately forthcoming on this semester's reports, well, do we need to remind you that its still a dangerous world out there and chances of being buried under several truckloads of athletic shoe inventory clearances are, statistically speaking, probably overstated in this game compared to real world likelihoods?

Nonetheless...

Sincerely,

Echo Team
Shoes for Everyone, or Else.

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