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Blog from August, 2014

All eyes turn to India

As the year came to a close, India looks like the place to be. Let's have a look at why that might be.

First, what is the picture like for revenue? Well, Brazil seems to be storming ahead in that regard. So what else might be going on?

The main purpose of revenue is to produce profit. And there, there is a different picture; India is considerably more profitable (by about $10m)

That is true despite each country having a similar number of products (give or take a few).

Could it be that there is too much spending on Advertising? Brazil seems to have spent nearly $15m more on advertising, compared to India. That could easily account for the difference of profitability between the two industries. I don't think I have spoke to a single team, and said "I think you are spending too little on advertising". To the contrary, I've been warning most teams about the dangers of 'advertising wars', and many of the learning journals and posts by teams from previous years talk about how advertising can be a great way to spend (waste) money.

Whatever the cause, the net effect is that, there is a material difference in the profit that each industry is producing as a percentage of sales (how effective are they at converting sales into profit).

The odd thing is that India has also gone down a low quality path. Now that is curious ... I haven't checked individual firms, but if they are all doing it then it will be interesting to see how that plays out over time.

Moving on to the detailed numbers. What's happening? The revenue picture is a little more mixed when we look at individual firms.

IndustryFirmSales
  Revenue
BrazilMajestick Bike$71,418,324
ChinaShanghicycles$55,800,265
BrazilRacing Bike Company$53,961,830
IndiaNeighbourhood Bikes$41,863,868
IndiaSaikels INC$38,241,022
ChinaCycleangelo$36,891,476
BrazilWheelie Good Bikes$31,868,705
BrazilSpoketacular Ind$31,307,498
IndiaLife Cycle$30,658,205
ChinaGalaxy Bicycles$30,262,749
IndiaDoggiez Inc$30,070,122
BrazilWicked Wheelz$29,796,804
ChinaBobs Bikes$28,506,600
IndiaVicious Cycles$27,674,816
IndiaFusion$26,650,715
ChinaApollo Industries$25,290,567
BrazilHigh Gear$14,709,159
ChinaCruise Cycles$14,582,775

 

Whereas the profit picture shows the strength of India. There are no Indian firms near the bottom of the pack. 

IndustryFirmProfitSales
   Revenue
ChinaShanghicycles$11,491,993$55,800,265
IndiaVicious Cycles$6,971,074$27,674,816
BrazilMajestick Bike$6,042,478$71,418,324
BrazilRacing Bike Company$5,846,968$53,961,830
IndiaLife Cycle$4,778,277$30,658,205
IndiaNeighbourhood Bikes$4,658,267$41,863,868
BrazilSpoketacular Ind$4,516,357$31,307,498
BrazilWheelie Good Bikes$4,160,754$31,868,705
IndiaSaikels INC$3,956,204$38,241,022
IndiaDoggiez Inc$3,832,274$30,070,122
ChinaCycleangelo$2,529,574$36,891,476
ChinaCruise Cycles$1,979,848$14,582,775
IndiaFusion$1,803,653$26,650,715
ChinaApollo Industries$1,776,362$25,290,567
ChinaGalaxy Bicycles$912,235$30,262,749
ChinaBobs Bikes$95,126$28,506,600
BrazilHigh Gear-$740,789$14,709,159
BrazilWicked Wheelz-$1,375,767$29,796,804

Turning to the big board (the scoreboard) what do we see? First, there are three firms duking it out for first place, and there is nothing really in it. However, Shanghaicycles seems to be carrying most of China's performance ... that's going to be a hard place, as they will have to take the lead in growing the Chinese market. In contrast, Brazil's Majestik Bike and Racing Bike Company are able to feed off each other. In the middle of the pack, there are a good number of firms around the $20s range. They will, no doubt, be tuning their strategies; executing more carefully; following the examples of the top three firms. Then there are a group for firms that working hard to try and keep up. 

 

IndustryFirmShareholderShareProfitSalesCapacityNumber ofEPSMarketTotalEconomicCash
  Value (SHV)Price Revenue(SCU)Shares CapitalizationSHVValue Created 
ChinaShanghicycles$35.67$35.25$11,491,993$55,800,26547,0052,000,000$5.75$70,490,552$71,330,552$10,796,902$17,621,835
BrazilMajestick Bike$35.16$34.66$6,042,478$71,418,32455,6492,000,000$3.02$69,315,444$70,315,444$5,435,340$6,535,268
BrazilRacing Bike Company$34.64$32.78$5,846,968$53,961,83052,4062,000,000$2.92$65,555,400$69,277,401$5,295,880-$612,615
IndiaSaikels INC$24.48$22.72$3,956,204$38,241,02238,3302,000,000$1.98$45,434,080$48,954,080$3,438,438$4,328,476
IndiaLife Cycle$22.63$22.53$4,778,277$30,658,20530,7512,000,000$2.39$45,066,196$45,266,196$4,132,046$9,628,327
IndiaVicious Cycles$21.99$21.99$6,971,074$27,674,81652,6312,113,421$3.30$46,470,833$46,470,833$6,423,816$9,472,667
IndiaNeighbourhood Bikes$21.69$20.28$4,658,267$41,863,86836,6362,575,955$1.81$52,230,105$55,351,601$4,265,936$13,074,802
BrazilWheelie Good Bikes$21.18$20.93$4,160,754$31,868,70533,5782,000,000$2.08$41,869,286$42,369,287$3,406,215$8,901,151
ChinaCycleangelo$20.84$20.34$2,529,574$36,891,47631,3412,000,000$1.26$40,676,580$41,676,580$1,830,646$8,673,012
IndiaDoggiez Inc$19.53$19.48$3,832,274$30,070,12240,7252,000,000$1.92$38,956,690$39,056,691$3,216,387$6,540,484
ChinaApollo Industries$13.54$13.54$1,776,362$25,290,56729,9792,000,000$0.89$27,088,654$27,088,654$1,260,083$6,877,855
ChinaGalaxy Bicycles$11.88$11.22$912,235$30,262,74937,7702,000,000$0.46$22,448,878$23,750,879$147,734-$5,547,641
BrazilSpoketacular Ind$10.98$10.98$4,516,357$31,307,49833,7162,000,000$2.26$21,956,372$21,956,372$3,857,998$14,053,026
ChinaBobs Bikes$10.70$10.50$95,126$28,506,60039,9432,000,000$0.05$21,004,832$21,404,832-$333,314$1,120,372
IndiaFusion$9.15$9.05$1,803,653$26,650,71536,8142,000,000$0.90$18,104,206$18,304,205$1,391,043$2,445,199
BrazilHigh Gear$4.24$4.24-$740,789$14,709,15931,3892,000,000-$0.37$8,485,796$8,485,797-$1,463,112-$812,326
ChinaCruise Cycles$3.26$3.26$1,979,848$14,582,77539,2322,000,000$0.99$6,520,580$6,520,579$1,589,696$5,831,730
BrazilWicked Wheelz$2.70$2.70-$1,375,767$29,796,80443,4802,000,000-$0.69$5,390,582$5,390,582-$2,190,120-$6,770,925

 

But what do the analysts think? We got an independent evaluation of each firm (not done by me) asking the question, should we BUY, HOLD, SELL, or DUMP and this is what came through. Two Brazilian firms at the bottom are going to have look long and hard at what they are doing—the analysts worry that they might soon be insolvent—and that does not bode well for the other Brazilian firms. It's hard to grow the market if only one or two firms can afford to do it. Having said that, I suspect that Majestick Bike and the Racing Bike Company will be surprised that they were ranked "Hold", whereas Spoletacular was given a "Buy" rating. The analysts feel that there could be a lot more upside with Spoketacular than the other two firms (i.e., in percentage terms it is expected that Spoketacular will grow more than the other two).

The other firm with a "Buy" recommendation is Cruise Cycles. Can they capitalize on the relatively weak situation of the Chinese market (notwithstanding Shanghaicycles).

But is was the recommendations around India that surprised me. Even single firm there was given a "Hold" rating. My interpretation is that there is a lot more potential for good takeovers in India, and that could easily propel and Indian firm far into the lead. Imagine what would happen if say, Life Cycles bought Vicious Cycles; you would have a company with a SHV of maybe as much as $50. But, then again, there are no takeovers (yet). Whereas, one has to question whether or not someone like Shanghaicyles could take over anyone (do they have too much market share already)?

As for the firms rated "Sell". The analysts are not convinced they are going to grow ... they may not go backwards, but at the moment, there are questions around will they keep up with the market as a whole.

 

IndustryFirmShareholderProfitEPSEconomic 
  Value (SHV)  Value CreatedAction
BrazilSpoketacular Ind$10.98$4,516,357$2.26$3,857,998Buy
ChinaCruise Cycles$3.26$1,979,848$0.99$1,589,696Buy
ChinaShanghicycles$35.67$11,491,993$5.75$10,796,902Hold
BrazilMajestick Bike$35.16$6,042,478$3.02$5,435,340Hold
BrazilRacing Bike Company$34.64$5,846,968$2.92$5,295,880Hold
IndiaSaikels INC$24.48$3,956,204$1.98$3,438,438Hold
IndiaLife Cycle$22.63$4,778,277$2.39$4,132,046Hold
IndiaVicious Cycles$21.99$6,971,074$3.30$6,423,816Hold
IndiaNeighbourhood Bikes$21.69$4,658,267$1.81$4,265,936Hold
BrazilWheelie Good Bikes$21.18$4,160,754$2.08$3,406,215Hold
IndiaDoggiez Inc$19.53$3,832,274$1.92$3,216,387Hold
ChinaApollo Industries$13.54$1,776,362$0.89$1,260,083Hold
IndiaFusion$9.15$1,803,653$0.90$1,391,043Hold
ChinaCycleangelo$20.84$2,529,574$1.26$1,830,646Sell
ChinaGalaxy Bicycles$11.88$912,235$0.46$147,734Sell
ChinaBobs Bikes$10.70$95,126$0.05-$333,314Sell
BrazilHigh Gear$4.24-$740,789-$0.37-$1,463,112Dump
BrazilWicked Wheelz$2.70-$1,375,767-$0.69-$2,190,120Dump

 

But it is still early days, and there can be a lot of movement as teams find their feet.

I'd be interested to know what is your 'take' on the results. Post your comments here.

 

Change and changes

Overview

Once again, thank you all for the helpful feedback you have provided on the course through the SSCC/ClassRep process. I particularly appreciated the positive comments about the course but here I will concentrate on the things that are seen as needing attention

 

The rooms

Comment: The rooms outside of the Business School are not seen as ideal; especially in the case of HSB. There is a strong desire for the class to be held inside the Owen G. Glenn Building.

Response: Since the Business School was brought under one roof in the OGGB, most of the MGMT 300 classes have been held here. Talking to the timetabling/scheduling people, one of the reasons the class has ended up in Old Government House and in HSB 2 is that student numbers this semester were materially larger than previous years (often it is closer to 60 than the other side of 100) and so it was hard to find space in OGGB. One of the reasons behind the rise in numbers is the fact that last year students complained a lot about the time-slot of the course (it used to be one of the earliest classes), and the move to the middle of the day has made it more popular. I am asking what can be done for next semester, but I know they are reluctant to put the class into one of the 250-seat rooms in OGGB.

In the meantime, for weeks 6–11 (inclusive) I have booked two labs in OGGB for Thursdays at 13:00 (when we would normally meet in HSB 2). They are labs 1 and 9. Rather than been in HSB, I'll be in one or other of those labs. In week 12, we will meet again in HSB 2 (for the last time). The labs seat 60 in total, so it will be on a first come, first served basis (sorry, I couldn't get more space).

Mac users

Comment: MAC users are frustrated by some of the missing features on the web-version compared with the PC application.

Response: Yes, I can imagine that. I will pass the comment on the SmartSims. In the meantime, Mac users can use the remote access function to 'get into' the virtual PCs that the Business School has. That way, they can run the PC version. Check out the details at https://www.cloud.auckland.ac.nz/digital-services/students/student-terminal-services.

The wiki

Comment: There is some surprise and confusion regarding the penalties around late or missing learning journals or for not giving feedback. The information is seen as being buried on the wiki

Response: This time I am surprised—as opposed to you being surprised—as I thought it was pretty clear and accessible. From the main/starting page if you to Assessments and then Learning journal the information is there. Alternatively, if you have worked your way through the To Do checklist, that will also take you to Assessments and then the Learning journal page.  In addition, I explicitly said in the first class that there would be penalties for late/missing journals and feedback (I checked with Emma Sadera in case I missed remembered). So, I am open to suggestions as to how else I might present the information.

Follow on comment: Just was is the deal with later or missing learning journals and not giving feedback.

Response: The policy is there to try and make sure that students do the learning journals and provide feedback to each other. I know that stuff happens, so like most managers I try to be sensible about applying sanctions. The challenge is that is there is a general 'amnesty' then folk will take it as a right to skip doing one or more of them, and that's counter productive. At the end of the course I'll run a report that checks the dates etc (creation times, modification times) to see the state of play. I know that's ambiguous, but I want to be reasonable rather than just being black-and-white about things. So, if you want black-and-white, I can do that ... but I think my current way is more humane.

 

Comment: It would be nice to have more help with the wiki earlier on in the course.

Response: Okay. What would you like (I note that only one person has asked for help this year, which leads on to ...)

Labels and labeling

Comment: How do I label my journals correctly

Response: At the bottom of the page, once you have created your journal, there is a little icon like a pencil; if you hover over it, it says "Edit labels". Either click it, or press the 'l' key.

Poor journal entries

Comment: Some people are doing poor journal entries, and that makes it hard to give good feedback

Response: Yes, that's true. Emma Sadera and I have been talking about this at length. There are clearly a group doing good (and getting better) journals who we have no worries about. We think they will do really well with the Summative Learning Journals. There are also a group who seem (my interpretation of events) to be putting little effort into their journals (and typically into the feedback they are giving). The second group seem to be digging a hole for themselves. Emma Sadera's recent post 'Reflections on reflection' is her response to the poor quality of many learning journals.

Poor feedback

Comment: Some people are really frustrated by the poor quality feedback some of their peers are giving.

Response: I can understand that. It is clear that some people are being rather perfunctory in their responses/feedback. Their marks will suffer at the end of the course.

Tips and questions

Comment: You are giving some hints and tips to teams during team-time. That seems unfair.

Response: I do answer questions during team-time. That's why I'm there. You might interpret that as tips, but I really only say what is in the handbook or in other people's journals. 

Training wheels

Comment: We really want the rollback/rollfoward feature.

Response: The training wheels are off. As someone noted in their journal, you do not get access to something like that outside of the simulation.

The double-edged nature of freedom

Comment: Students are liking the freedom that the course provides them, they like the fact that they are given many responsibilities which challenge them. However, some find the freedom challenging and they wish they were more guidelines at the beginning of the course. Some feel as though too many new concepts were introduced and not explained enough.

Response: Okay. Now that you have some experience of what is going on. What---specifically—did you want to know (in advance) and what would you have found to be an effective way to access that information? Can you please post your feedback as comments to this blog entry.

Are there lecturers during team-time?

Comment: Students are unsure whether or not there are lectures during our team meeting times
Response: No
Sometimes I don't get any feedback
Comment: A student emailed saying he hadn't received feedback for his reflection for two weeks and he said it limits his progression in terms of his reflections and writing.
Response: If someone has been allocated to give you feedback, you can contact them—you can see their UPI and hence you know their email address. Alternatively, let Peter know.
Reflections on reflection

Everyone has generally got to grips with the most superficial level of reflection, so the ‘stopping to have a think about what I did this week’ aspect has been met across the board. That’s great. What’s not so great is that many of the journals are still, even in Week 5, not really getting beyond this level, and are still focused on having a little thinky and making some brief notes about how you felt about the week, possibly with some tangential comments about the week’s readings. The thing that seems to be missing is the critical thinking about your learning, enabling you to reach the higher levels of Bloom’s taxonomy.

To break that down further, some people seem to be struggling with the idea of what ‘learning’ is or how they can problematize their experience when everything seems to be chugging along (more or less) fine, which leads them to feel that they can’t write a substantive learning journal for that week. I want to suggest that if you find yourself in this situation, you’re just not being reflective enough! Ask more questions of yourself – if everything seems to be moving along without any bumps in the road, why might that be? However good things are, there is always scope for improvement. What could you do to make things work (even) better? Are you really functioning that well as a team, or is there some groupthink and reluctance to cause conflict that is inhibiting people from offering dissenting views? Are you reluctant to voice alternative strategy suggestions in case they fail?  What about the readings – is there a perspective you disagree with? Why? What alternative view or solution would you argue for? Do they make sense to you?

If I was being cynical, I might think that some of you are still caught in the mental space of being a reluctant reflector – aiming to just get two or three hundred words bashed out just before submission deadline to satisfy the letter of the assignment requirement. This is not to suggest that the quantity of your reflection correlates directly to the quality (there are equally some examples of lengthy but waffly journal submissions which talk around the issues but never quite come to the point), but if you haven’t given yourself the space in which to engage in cogent reflective articulation, your learning journal will only ever skate over the surface of the learning you’re doing during this paper – which in turn will undermine the further accumulation of learning and insight as you go along. And however delighted your reviewers might be to see a short entry for them to read through, it won’t do you any favours in the long run.

With reference to journal reviews, the other issue I’ve noticed is the quality of the journal feedback. In large part, this is also often very superficial (and is too often not getting above the level of ‘nice journal but you made a couple of grammatical errors’). As it clearly states in the journal wiki instructions, issues with spelling and grammar should be the minor, rather than major, part of your feedback. I wonder if there is some concern that if your review feedback is perceived as ‘harsh’, then you may in turn ‘suffer’ when you come to be reviewed by that person? This really shouldn’t be a consideration; if you want to look at it in selfish terms, if you contribute to a general feedback inadequacy by offering hastily written, poor quality, disengaged feedback on learning journals, you’ll only be able to receive the same type of peer feedback on your own learning journals – which won’t give you any constructive cues about how your reflections can be improved, and which will again undermine your learning. Done well, peer feedback can be a powerful tool for learning, which is one reason it’s part of this paper.

Mike’s bikes is absorbing. Decision making, working in your teams, navigating and negotiating the complexities of roles and relationships, responsibilities and rationales are compelling ways to use your study time for the paper – and that is particularly true given that the stakes are raised now that practice rollovers are no longer an option. However, what is ultimately at stake from writing superficial or inadequate learning journals is 80% of your final mark. If you don’t write deeply reflective, structured journals as you go along, you’re very unlikely to be able to write your final summative journal in a way which reflects your total learning on the paper. Whatever you come up with at the end of the course will be reflective of where you are at that point, and too much of how you got there will have been lost along the way. (Generally, humans are pretty good at convincing themselves that whatever opinion they currently hold is the one they had all along…) Your weekly journals need to lead you to an a posteriori knowledge about your learning on the course, structured in a way that makes clear that you have followed Daudelin’s (or Kolb’s) model.

As 2015 came to a close it was clear that there was a great deal of competitive spirit, and there is a lot to talk about in the results.

The starting point has to be sales revenue. All the regions got off to a very strong start, growing revenue by nearly 50%. Brazil and India neck-and-neck, and slightly ahead of China.

On a per-region basis, the sales of Brazil's Racing Bike Company and Majestick Bike were pretty much identical. But turning in China and India their firms of Shanghicycles and Neighbourhood Bikes were also neck-and-neck. Some firms have really boosted their capacity, with Vicious Cycles, anticipating huge production requirements. I'd love to be a fly-on-the-wall and see how much idle time they (and some of the other 'big factories') are now sitting on.

 

Industry Firm Sales Capacity
    Revenue (SCU)
Brazil Racing Bike Company $25,964,152 31,676
Brazil Majestick Bike $25,930,187 34,236
China Shanghicycles $24,869,094 23,913
India Neighbourhood Bikes $24,149,190 27,679
India Vicious Cycles $21,539,145 37,165
China Galaxy Bicycles $21,246,160 23,628
China Cycleangelo $20,633,724 22,297
India Life Cycle $20,146,502 23,546
Brazil Wicked Wheelz $20,105,928 25,170
India Saikels INC $20,079,800 23,132
China Bobs Bikes $19,704,945 25,123
Brazil Wheelie Good Bikes $19,551,180 25,861
India Doggiez Inc $18,096,238 22,949
China Apollo Industries $17,918,271 22,459
India Fusion $17,470,250 24,898
Brazil Spoketacular Ind $16,163,559 28,110
Brazil High Gear $13,531,732 24,885
China Cruise Cycles $10,688,000 24,343

The picture—with regard to capacity—looks even more striking on a region-by-region basis. Brazil really is gearing up to make a massive number of Bikes. That's not to say the other regions aren't also thinking big, but one has to wonder if every firm has over estimated their needs.

 

So were firms able to translate those sales in to profit. The short answer is, "Yes they can". But, and it's a big but, the profit level in all the regions went down. The overall picture is that profit declined by about 50%. Woah. Revenue up by 50%, Profit down by 50%. Someone (some firms) must be spending up large.

As an aside, it is worth remembering that last year these firms turned over about $14m and were making a profit of about $2m.  Watch out for the negative numbers below.

Industry Firm Profit Sales Capacity Cash
      Revenue (SCU)  
Brazil Wheelie Good Bikes $3,030,366 $19,551,180 25,861 $7,008,204
China Shanghicycles $2,889,227 $24,869,094 23,913 $4,986,298
China Cycleangelo $2,328,665 $20,633,724 22,297 $8,289,522
Brazil Racing Bike Company $2,274,629 $25,964,152 31,676 $2,263,971
China Galaxy Bicycles $2,004,107 $21,246,160 23,628 $1,706,138
India Life Cycle $1,917,392 $20,146,502 23,546 $6,972,758
India Saikels INC $1,879,945 $20,079,800 23,132 -$423,936
Brazil Majestick Bike $1,484,878 $25,930,187 34,236 $1,909,990
India Doggiez Inc $1,270,956 $18,096,238 22,949 $7,712,814
India Vicious Cycles $800,070 $21,539,145 37,165 $2,721,014
India Neighbourhood Bikes $495,255 $24,149,190 27,679 -$1,380,161
China Apollo Industries $281,546 $17,918,271 22,459 $5,117,091
Brazil Spoketacular Ind $231,131 $16,163,559 28,110 $4,586,952
Brazil High Gear $107,430 $13,531,732 24,885 $2,355,249
Brazil Wicked Wheelz -$601,375 $20,105,928 25,170 $1,589,724
China Bobs Bikes -$642,099 $19,704,945 25,123 $2,371,581
India Fusion -$888,536 $17,470,250 24,898 $1,629,224
China Cruise Cycles -$2,741,405 $10,688,000 24,343 $382,944

When we look at the profit as a percentage of sales, the margins firms are operating on are looking pretty lean.

Looking back a the profit table, some firms are sitting on large pools of cash—war chests, perhaps. Other firms have no spare cash, or maybe not enough working capital for the year. They might find it expensive to get money from the bank. Does that mean we will see those firms issuing shares to get in some cash. I wonder if those CFOs get paid overtime.

One of the better predictors of performance is the economic value created by firms. And there we see a somewhat different picture.

      Revenue (SCU) Shares Value Created  
Industry Firm Profit Sales Capacity Number of Economic Cash
Brazil Wheelie Good Bikes $3,030,366 $19,551,180 25,861 2,000,000 $2,543,997 $7,008,204
China Shanghicycles $2,889,227 $24,869,094 23,913 2,000,000 $2,400,972 $4,986,298
China Cycleangelo $2,328,665 $20,633,724 22,297 2,000,000 $1,839,799 $8,289,522
Brazil Racing Bike Company $2,274,629 $25,964,152 31,676 2,000,000 $1,777,403 $2,263,971
China Galaxy Bicycles $2,004,107 $21,246,160 23,628 2,000,000 $1,544,684 $1,706,138
India Life Cycle $1,917,392 $20,146,502 23,546 2,000,000 $1,426,834 $6,972,758
India Saikels INC $1,879,945 $20,079,800 23,132 2,000,000 $1,411,015 -$423,936
Brazil Majestick Bike $1,484,878 $25,930,187 34,236 2,000,000 $1,001,522 $1,909,990
India Doggiez Inc $1,270,956 $18,096,238 22,949 2,000,000 $682,240 $7,712,814
India Vicious Cycles $800,070 $21,539,145 37,165 2,000,000 $303,754 $2,721,014
India Neighbourhood Bikes $495,255 $24,149,190 27,679 2,000,000 -$5,684 -$1,380,161
China Apollo Industries $281,546 $17,918,271 22,459 2,000,000 -$218,234 $5,117,091
Brazil Spoketacular Ind $231,131 $16,163,559 28,110 2,000,000 -$313,075 $4,586,952
Brazil High Gear $107,430 $13,531,732 24,885 2,000,000 -$393,664 $2,355,249
Brazil Wicked Wheelz -$601,375 $20,105,928 25,170 2,000,000 -$1,108,835 $1,589,724
China Bobs Bikes -$642,099 $19,704,945 25,123 2,000,000 -$1,147,292 $2,371,581
India Fusion -$888,536 $17,470,250 24,898 2,000,000 -$1,399,166 $1,629,224
China Cruise Cycles -$2,741,405 $10,688,000 24,343 2,000,000 -$3,325,912 $382,944

 

Having said all of that, who really knows how to run a bike factory. Who can squeeze the most value out of their plant. One way to look at this is the profit firms can make from each SCU. And here we see another interesting picture (using last years SCU as it more accurately reflects what firms had to work with). I would say that Wheelie Good Bikes lived up to their name! By the way, as a benchmark, last years figure was about $99 per SCU.

      (SCU) Profit per
Industry Firm Profit Capacity SCU
Brazil Wheelie Good Bikes $3,030,366 22,577 $134.22
China Shanghicycles $2,889,227 22,577 $127.97
China Cycleangelo $2,328,665 22,577 $103.14
Brazil Racing Bike Company $2,274,629 22,577 $100.75
China Galaxy Bicycles $2,004,107 22,577 $88.77
India Life Cycle $1,917,392 22,577 $84.93
India Saikels INC $1,879,945 22,577 $83.27
Brazil Majestick Bike $1,484,878 22,577 $65.77
India Doggiez Inc $1,270,956 22,577 $56.29
India Vicious Cycles $800,070 22,577 $35.44
India Neighbourhood Bikes $495,255 22,577 $21.94
China Apollo Industries $281,546 22,577 $12.47
Brazil Spoketacular Ind $231,131 22,577 $10.24
Brazil High Gear $107,430 22,577 $4.76
Brazil Wicked Wheelz -$601,375 22,577 -$26.64
China Bobs Bikes -$642,099 22,577 -$28.44
India Fusion -$888,536 22,577 -$39.36
China Cruise Cycles -$2,741,405 22,577 -$121.42

 

Of course there are more accurate ways to look at the efficiencies of the various firms, and no doubt Ops Managers will be digging in to that data. And industry pundits are looking at the COGs per SCU.

But, I am sure that most folk just want to know how shareholder value went. There is nothing in it at the top of the leader board, with four firms all with 50 cents or so of each other, and a fifth firm hard on their heals. 

Industry Firm Shareholder Share Profit Sales Capacity Number of EPS Market Total Economic Cash
    Value (SHV) Price   Revenue (SCU) Shares   Capitalization SHV Value Created  
Brazil Racing Bike Company $18.80 $17.99 $2,274,629 $25,964,152 31,676 2,000,000 $1.14 $35,988,262 $37,608,262 $1,777,403 $2,263,971
China Galaxy Bicycles $18.51 $18.20 $2,004,107 $21,246,160 23,628 2,000,000 $1.00 $36,398,446 $37,018,446 $1,544,684 $1,706,138
India Saikels INC $18.26 $17.46 $1,879,945 $20,079,800 23,132 2,000,000 $0.94 $34,926,702 $36,526,702 $1,411,015 -$423,936
China Shanghicycles $18.21 $18.01 $2,889,227 $24,869,094 23,913 2,000,000 $1.44 $36,027,114 $36,427,114 $2,400,972 $4,986,298
Brazil Majestick Bike $17.30 $17.30 $1,484,878 $25,930,187 34,236 2,000,000 $0.74 $34,605,448 $34,605,447 $1,001,522 $1,909,990
Brazil Wheelie Good Bikes $15.46 $15.46 $3,030,366 $19,551,180 25,861 2,000,000 $1.52 $30,926,224 $30,926,224 $2,543,997 $7,008,204
India Life Cycle $15.45 $15.45 $1,917,392 $20,146,502 23,546 2,000,000 $0.96 $30,897,424 $30,897,424 $1,426,834 $6,972,758
India Neighbourhood Bikes $15.43 $14.62 $495,255 $24,149,190 27,679 2,000,000 $0.25 $29,242,074 $30,862,073 -$5,684 -$1,380,161
China Cycleangelo $14.94 $14.94 $2,328,665 $20,633,724 22,297 2,000,000 $1.16 $29,881,024 $29,881,025 $1,839,799 $8,289,522
India Vicious Cycles $13.92 $13.92 $800,070 $21,539,145 37,165 2,000,000 $0.40 $27,842,380 $27,842,381 $303,754 $2,721,014
China Apollo Industries $12.80 $12.80 $281,546 $17,918,271 22,459 2,000,000 $0.14 $25,605,230 $25,605,230 -$218,234 $5,117,091
China Bobs Bikes $11.88 $11.88 -$642,099 $19,704,945 25,123 2,000,000 -$0.32 $23,766,466 $23,766,466 -$1,147,292 $2,371,581
Brazil High Gear $11.65 $11.65 $107,430 $13,531,732 24,885 2,000,000 $0.05 $23,301,906 $23,301,906 -$393,664 $2,355,249
Brazil Wicked Wheelz $11.04 $11.04 -$601,375 $20,105,928 25,170 2,000,000 -$0.30 $22,082,660 $22,082,660 -$1,108,835 $1,589,724
India Doggiez Inc $10.73 $10.73 $1,270,956 $18,096,238 22,949 2,000,000 $0.64 $21,455,174 $21,455,174 $682,240 $7,712,814
Brazil Spoketacular Ind $10.06 $10.06 $231,131 $16,163,559 28,110 2,000,000 $0.12 $20,117,154 $20,117,153 -$313,075 $4,586,952
India Fusion $9.21 $9.21 -$888,536 $17,470,250 24,898 2,000,000 -$0.44 $18,426,342 $18,426,341 -$1,399,166 $1,629,224
China Cruise Cycles $6.73 $6.73 -$2,741,405 $10,688,000 24,343 2,000,000 -$1.37 $13,450,116 $13,450,116 -$3,325,912 $382,944

 

No let's think about the costs for a moment, where did the money go. I wonder what the advertising picture looks like. Yikes. With just a couple of bikes firms are spending like there is no tomorrow; did firms really need to triple there ad spend? Are advertising wars here already?

 

That's probably enough to be thinking about for now. Next year, we'll look at the consumer surplus and what that says about firms ability to extract money from consumers.

 

What do you think about the big picture? Let's see your comments.

 

 

It's a kind of magic

It is really interesting that, when I get feedback from Class Reps from this course (as distinct from other courses I teach, rather than this particular cohort of MGMT 300 students), it always seems to be more actionable. Something works here; and I would say works well. Students increasingly give, expect, and demand actionable feedback. That is a rather good thing, and I hope you also see it more often in the response you get from each other.

 

It's a new day

So, here we are in week five. The solo practice and the team practice is over. As we enter this new phase, I thought it would be useful to encourage you to take stock of how you are doing and to re-emphasise some critical/important parts of the course.

I am pretty sure that there will be something in this post that many/most/all of you might reflect upon in your next learning journal (hint, hint).

Let's go back to the learning outcomes of the course. I think it's useful to review these as they will (a) help shape your future learning journals—for the better—and that will (b) help with your summative learning journal. There is method behind what goes on here.

The learning outcomes from the Course Outline lists a number of things that, by the end of this course, it is expected that the you will be able to do. Let me talk you through these in some more detail now that you're 'hitting your stride' in the course.

 

Identify the theories and perspectives of management that are relevant to their team and organisational environment

The readings are allocated to particular weeks. However, as I said at the beginning of the course, that is done with a view to ensuring you get through them, rather than being the best order. Depending on how you individual, your team, and your firm is doing, you should start to be more tactical (or maybe even strategic in your reading). Think about the different types of challenges you are facing. You may want to revisit earlier readings or skip ahead. That being said, by the end of the course you want to make sure you have read them all, and I would expect see many of them surfacing in your summative learning journal.

Illustrate these theories, perspectives, contexts, and assumptions with examples from their own experiences

That really should be evident in your weekly learning journals. If it is not the case, you may well struggle with the summative learning journal. Just because you are labeling things with 'theory' that does not mean you are using the readings well. Indeed, looking through the weekly journals it is fair to say that many people seem to be doing a 'once over lightly' with the readings (judging by how you use them). To repeat; if you are just using theory/the readings to label 'stuff', is that really learning? I'll be commenting that more to individuals as I read your journals.

Analyse situations in order to identify appropriate interventions and thereby improve their own, their team-members’, and their company’s performance

The fact that you have meaningfully thought about the situations you, or your team, or your firm, is confronting is the essence of a good learning journal. Remember, Daudelin's framework (and Kolb's too) include an analysis component, so embrace it and make the analysis that you have done obvious. By the way, I'm no longer citing the Daudelin or Kolb articles ... they should be common knowledge amongst our community/class.

 Work effectively in a simulated cross-functional management team in a way that preserves and develops shareholder value

This is perhaps the heart of the work you do in the simulation, and it behooves you to explicitly do at least one learning journal on that topic. Some people will grow this into the opening section of their summative learning journal

Act upon their reflections of their individual learning and performance in the course (and in their team) in a manner that demonstrably improves their learning and performance

If I cannot see that in your weekly learning journals, it will be hard for you a meaningful summative learning journal. As I give you feedback on your learning journals, this is what I will probably be emphasising most. Remember, the ability to evaluate/assess your own work and your own learning and to see how can improve is a very valuable transferable skill for the workplace. As much as you will want it to be otherwise, you will find that many managers will only give you feedback when you are doing badly; and some will only give you feedback after a period of sustained poor performance—by then it may be too late for you to recover. They may have permanently formed a bad opinion of you and your work. The ability to reflect well and to improve on what you do can make the difference between being seen as a good/outstanding employee (who is destined to do well) and someone who is seen as so much deadwood who needs to be constantly managed (I'm exaggerating the poles here, but I hope you see what I mean).

Demonstrate that they can give and utilise feedback from others to improves their performance and learn

I have had a number of people coming to me talking about the quality of feedback they have received from their peers. The often report is is 'nice' and 'encouraging', but it fails to give them anything that is concrete or actionable that they can use to improve their learning journals.

At the risk of sounding like I am waving a big stick, I will remind you that what is said on the page about assignments; in giving feedback you must address: (a) How well the journal meets the guidelines provided by Daudlin; (b) The extent to which the journal demonstrates achievement in the higher levels of Bloom et al.'s (1956) taxonomy of the cognitive domain; (c) The quality of the writing; and finally, (d) You must providing specific actionable ways they might improve (emphasis in the original). If you do not do that, how can the person to who you are giving feedback reasonably be expected to utilise it? That is why "Each instance of ... failing to give meaningful feedback will result in a 5-percent penalty being applied to your summative learning journal". The quality of your feedback will be counts and will be checked.

As is the case of acting upon reflections, the ability to give actionable feedback is also an important (and useful) transferable skill. You are all smart people, and sooner or later you will probably be put in charge of people (if you are not already). The ability to give actionable feedback is important and it will make your life easier in the workplace. You do not want to be known as one of those managers who never give feedback until it is too late.

As always, if you struggle with any of these learning outcomes, feel free to come and talk to me (or email me, or put something up on Piazza). Or you might talk with the people in your team; if your really believe in the notion of 'mutual accountability' (Katzenback and Smith, 1992), you will be striving to ensure everyone in your team does as well as the best in your team. There is no marking 'on the curve' in the course and if everyone deserves an A-grade that is what they will get, and I will be a happy person. 

Looking forward to the summative learning journal (at the end of the course), you should seek to demonstrate that you have actually met/delivered on some (or probably all) of these learning outcomes. You might not do it explicitly (and it could be pretty boring if you do do it explicitly), but there should be strong evidence that you have hit these outcomes.

 

 

 

Katzenbach, J. R., & Smith, D. K. (1992). Why teams matter. McKinsey Quarterly, (3), 3–27.
 

 

The end of the begining

Practice rollovers are now over, and I am interested to read what people have learnt. Of course, most (many?) (all?) teams will not be sharing their strategies from the past two years. But it would be nice to know what they might have figured out about working together and running a firm.

Once again, I think I'll look at industry revenue. Overall, Christchurch is doing well in that regard.

 

In particular, The Racing Bike Company is a big driver in that region's achievements. They have also been pretty enthusiastic in buying up capacity ... whereas Dunedin and Tauranga both lack stock (overall) and Hamilton lack capacity.

 

IndustryFirmSalesCapacity
  Revenue(SCU)
ChristchurchThe Racing Bike Comp$97,240,84558,767
Palmerston NorthNeighbourhood Bikes$52,925,53540,243
NapierCyclepaths$46,677,57241,833
NapierMajestick Bike$45,887,61836,705
TaurangaWicked Wheelz$44,101,44557,521
Palmerston NorthApollo Industries$43,220,30526,048
DunedinVicious Cycles$37,321,89542,126
DunedinCycleangelo$36,310,69945,940
TaurangaLife Cycle$35,875,38526,447
ChristchurchKruiser$35,048,06431,115
NapierDoggiez Inc.$34,708,68237,581
ChristchurchGalaxy Bicycles$33,127,86033,688
DunedinWheelie Good Bikes$32,685,40027,892
HamiltonHigh Gear$30,295,18228,463
TaurangaFirm1$28,806,43231,870
Palmerston NorthSpoketacular Ind.$28,005,44844,959
HamiltonFusion$24,511,96030,961
HamiltonCruise Cycles$14,893,52524,749

 

Advertising is often an area where folk spend-up large. At certainly, Christchurch has been very active in that area. Is that all there is to it ... spending a lot on advertising?

Or is it the way the retailer margins have been cut?

Of course, Andrew Eberhard would say "A little bit from column A; a little bit from column B".

The Profit picture comes out like this ...

Which in dollar terms per firm looks like this, with firms from each region in the top six places.

IndustryFirmProfitSalesCapacity
ChristchurchThe Racing Bike Comp$31,628,992$97,240,84558,767
Palmerston NorthNeighbourhood Bikes$15,450,148$52,925,53540,243
NapierCyclepaths$12,560,467$46,677,57241,833
DunedinVicious Cycles$10,766,582$37,321,89542,126
NapierMajestick Bike$10,406,289$45,887,61836,705
TaurangaLife Cycle$9,669,932$35,875,38526,447
ChristchurchGalaxy Bicycles$8,889,670$33,127,86033,688
Palmerston NorthApollo Industries$8,437,559$43,220,30526,048
HamiltonHigh Gear$7,728,160$30,295,18228,463
DunedinWheelie Good Bikes$7,442,901$32,685,40027,892
DunedinCycleangelo$7,427,001$36,310,69945,940
TaurangaWicked Wheelz$6,604,293$44,101,44557,521
ChristchurchKruiser$6,469,255$35,048,06431,115
Palmerston NorthSpoketacular Ind.$6,239,368$28,005,44844,959
HamiltonFusion$4,970,791$24,511,96030,961
NapierDoggiez Inc.$4,622,148$34,708,68237,581
TaurangaFirm1$4,400,448$28,806,43231,870
HamiltonCruise Cycles$1,352,623$14,893,52524,749

I notice that most people are paying of debt, and I do not really understand why. Most of the CFOs I have talked to understand the importance/usefulness of having debt, and yet ....

The big board, and the end of the practice rollovers has The Racing Bike Company at the top of the rankings. It stands out that a number of firms have been buying back shares. 

 

IndustryFirmShareholderShareProfitSalesCapacityNumber ofEPSMarketTotalEconomicCash
  Value (SHV)Price Revenue(SCU)Shares CapitalizationSHVValue Created 
ChristchurchThe Racing Bike Comp$92.96$90.20$31,628,992$97,240,84558,7672,000,000$15.81$180,396,238$185,918,239$30,796,404$39,983,453
Palmerston NorthNeighbourhood Bikes$63.09$61.72$15,450,148$52,925,53540,2431,638,019$9.43$101,106,610$103,370,906$14,896,753$10,637,842
NapierCyclepaths$44.65$44.23$12,560,467$46,677,57241,8332,000,000$6.28$88,465,416$89,305,415$11,638,642$16,307,460
Palmerston NorthApollo Industries$40.59$40.34$8,437,559$43,220,30526,0481,809,823$4.66$73,007,820$73,460,276$7,716,141$11,377,563
DunedinVicious Cycles$37.88$37.85$10,766,582$37,321,89542,1262,000,000$5.38$75,700,320$75,760,320$10,016,993$13,481,924
ChristchurchKruiser$33.87$31.43$6,469,255$35,048,06431,1152,000,000$3.23$62,865,120$67,747,121$5,746,487$9,900,530
TaurangaLife Cycle$33.43$32.93$9,669,932$35,875,38526,4472,000,000$4.83$65,860,140$66,860,140$9,037,112$16,209,087
ChristchurchGalaxy Bicycles$33.16$32.16$8,889,670$33,127,86033,6881,810,139$4.91$58,206,942$60,017,081$8,506,594$8,007,324
DunedinCycleangelo$32.71$32.71$7,427,001$36,310,69945,9401,942,699$3.82$63,537,601$63,537,601$6,663,262$3,846,151
DunedinWheelie Good Bikes$32.19$30.69$7,442,901$32,685,40027,8922,000,000$3.72$61,371,124$64,371,125$6,582,711$15,478,311
NapierDoggiez Inc.$28.93$27.87$4,622,148$34,708,68237,5812,000,018$2.31$55,743,750$57,854,198$3,925,275$2,866,728
NapierMajestick Bike$26.38$26.38$10,406,289$45,887,61836,7052,156,412$4.83$56,896,379$56,896,378$9,635,670$21,793,285
HamiltonHigh Gear$26.37$26.37$7,728,160$30,295,18228,4632,000,000$3.86$52,733,124$52,733,123$7,135,469$16,222,931
TaurangaWicked Wheelz$25.63$25.63$6,604,293$44,101,44557,5212,000,000$3.30$51,256,742$51,256,743$5,925,922$12,657,502
Palmerston NorthSpoketacular Ind.$22.04$20.54$6,239,368$28,005,44844,9592,000,000$3.12$41,079,438$44,079,437$5,429,666$8,458,539
TaurangaFirm1$20.51$20.51$4,400,448$28,806,43231,8702,000,000$2.20$41,023,712$41,023,711$3,749,124$11,815,920
HamiltonFusion$18.68$18.43$4,970,791$24,511,96030,9612,000,000$2.49$36,858,810$37,358,810$4,328,075$11,370,504
HamiltonCruise Cycles$12.36$12.35$1,352,623$14,893,52524,7492,000,000$0.68$24,709,972$24,729,972$724,876$8,270,099
HamiltonFirm4$12.09$12.09$1,584,787$12,065,60022,4062,000,000$0.79$24,184,534$24,184,535$941,150$9,471,517
DunedinFirm4$9.67$9.67$218,785$8,849,60022,4062,000,000$0.11$19,343,062$19,343,062-$431,375$7,441,727
TaurangaFirm4$9.55$9.55$153,409$8,614,40022,4062,000,000$0.08$19,102,850$19,102,849-$497,177$7,194,868
NapierFirm4$9.43$9.43$90,433$8,384,80022,4062,000,000$0.05$18,862,686$18,862,686-$560,309$6,952,120
Palmerston NorthFirm4$9.22$9.22-$31,866$7,988,80022,4062,000,000-$0.02$18,442,208$18,442,208-$683,418$6,532,549
ChristchurchFirm4$9.05$9.05-$160,346$7,668,00022,4062,000,000-$0.08$18,092,908$18,092,908-$812,599$6,192,808

 

I expect most firms are starting to think about the new worlds and what they will look like. Which firms will be competing head-to-head with each other?

 

Running and learning

My field of primary field of research is strategising (which might be thought of as how people make strategy). More particularly, I am curious as to how people get better at strategising; how do they become better strategists. This has given me a deep interest in how people learn socially-complex activities, in general.. 

I also run. I'm a road runner. I mainly run on the streets rather than being a trail or cross-country runner. My event of choice is the marathon (42.2 Km) and the half-marathon (21.1 Km). I do other distances too (e.g., 5 Km races) but for me, they are mainly training events.Perhaps unsurprisingly, I'm also interested in how people become better at running.

In endurance running, people practice and build their capacity to run long distances. They practice and build up their capacity to run better, runners do a mixture of hard and easy runs. They serve different purpose but both help the runner enhance their capacity to compete. Few, if any runners, only do races with no training. That would limit their ability to get better. Practice and repetition develops better runs. Just doing races would not really help one become better.

And yet, a lot of time at University students are only confronted with just doing races. There are many courses where all the deliverables they have—say, a mid-term test and an exam—are races where they have to do well. There are often little if any opportunities to get better. There are few if any chances for an easy build up. No, in many courses, all students get is a chance to race ... and they better do well.

All I know about getting better at stuff, suggests that such an approach is very effective. 

What is needed is the chance do practice; to do things repeatedly (e.g., to do many learning journals) where one can try different ways to get better. In running one might, on a easy run, try a slightly different gait to see how that effects ones running economy. Maybe it will make things better; may worse; Maybe it will have no effect. In the same way, with the learning journals you get the chance to practice to see what works well for you.

 

When you are used to only racing, being asked to practice can be challenging. It can be hard not to see every practice race as needing you to 'go hard' a try and win. It can be hard  to be disciplined in the practice so that it actually has a training effect, otherwise one ends up doing 'junk miles' that have no real training effect. 

In this course, when you are so used to everything being a 'race', it can be hard to practice and say "Okay, in this learning journal, I am going to try and master the structure of doing a good learning journal"; rather than trying to do a great (wining) learning journal. It can be hard not to just 'blow off' the learning journal so it has no real learning effect. 

But already I can see some people whose training is placing them in a position where an A-grade will loom large when there is a race (the summative learning journal), and those people who might just manage to complete the course (Oh there is a bit of unintended pun) and get a C-grade.

You get to practice with your learning journals. You get to practice with Mike's Bikes. You don't need to turn in a winning performance every time. But, to be successful, you do need to learn from your practicing. I hope that the practicing is not too stressful, but if it is come and talk to me—there are things we can do to adjust your training programme.


Sports metaphor ends.

It is a new year ...

... and the results of the recent rollover are in. Of course, one should not read too much into early results. Many teams are not competiting per se, but testing their control in the simulation.

Nevertheless, I tend to think about two things early on. They are sales and profit. Where sales go, profit should follow. And where profit goes shareholder value certainly follows.

Christchurch pulls away strongly, having three out of the top six firms (by sales).

IndustryFirmSalesCapacity
ChristchurchThe Racing Bike Comp$29,592,06225,736
NapierCyclepaths$27,446,69222,940
ChristchurchGalaxy Bicycles$25,146,00026,359
Palmerston NorthNeighbourhood Bikes$23,583,56025,621
TaurangaWicked Wheelz$21,425,52525,008
ChristchurchKruiser$21,044,11522,899
DunedinWheelie Good Bikes$20,483,10025,314
DunedinVicious Cycles$20,337,30028,267
Palmerston NorthSpoketacular Ind.$20,114,12528,047
NapierMajestick Bike$19,894,68529,313
Palmerston NorthApollo Industries$19,736,67822,297
DunedinCycleangelo$19,666,61228,565
TaurangaFirm1$18,431,46726,595
HamiltonHigh Gear$18,234,15024,857
HamiltonFusion$16,913,84422,255
TaurangaLife Cycle$16,319,66622,662
NapierDoggiez Inc.$16,254,42622,949
HamiltonCruise Cycles$14,001,60024,280
ChristchurchFirm4$12,739,20022,037
DunedinFirm4$12,739,20022,037
HamiltonFirm4$12,739,20022,037
NapierFirm4$12,739,20022,037
Palmerston NorthFirm4$12,739,20022,037
TaurangaFirm4$12,739,20022,037
As an aside, I notice a few firms have not renamed their firms ... that will have to wait now until after the practice rollovers

One proxy for costs, is the amount of money folk are spending on new capacity and on advertising. Looking at the table above, and the figure below, Dunedin has been spending up big in terms of capacity ... 

 

Turning to the other proxy for costs, advertising,  Christchurch has been advertising "like crazy".

Overall, these effect have combined to make Christchurch the most profitable place to be.

IndustryFirmProfitSalesCapacity
ChristchurchThe Racing Bike Comp$5,877,019$29,592,06225,736
NapierCyclepaths$5,452,625$27,446,69222,940
ChristchurchKruiser$4,624,202$21,044,11522,899
DunedinWheelie Good Bikes$4,571,899$20,483,10025,314
Palmerston NorthNeighbourhood Bikes$4,026,817$23,583,56025,621
Palmerston NorthSpoketacular Ind.$3,640,471$20,114,12528,047
DunedinCycleangelo$3,471,593$19,666,61228,565
DunedinVicious Cycles$3,310,167$20,337,30028,267
Palmerston NorthApollo Industries$2,988,802$19,736,67822,297
NapierDoggiez Inc.$2,709,179$16,254,42622,949
TaurangaFirm1$2,054,686$18,431,46726,595
TaurangaWicked Wheelz$1,990,607$21,425,52525,008
TaurangaLife Cycle$1,978,086$16,319,66622,662
HamiltonFusion$1,826,848$16,913,84422,255
ChristchurchGalaxy Bicycles$1,812,314$25,146,00026,359
HamiltonFirm4$1,706,485$12,739,20022,037
TaurangaFirm4$1,706,115$12,739,20022,037
DunedinFirm4$1,705,587$12,739,20022,037
Palmerston NorthFirm4$1,704,417$12,739,20022,037
NapierFirm4$1,703,659$12,739,20022,037
ChristchurchFirm4$1,703,193$12,739,20022,037
HamiltonCruise Cycles$1,515,026$14,001,60024,280
NapierMajestick Bike$1,330,956$19,894,68529,313
HamiltonHigh Gear$1,297,961$18,234,15024,857

One might assume that Christchurch's achievements are a function of it's high advertising budgets (Warning, warning, warning: don't get sucked up into advertising wars — read the journals of course alumni). Then again, it might be a function of how aggressively they have cut retailer margins.

And did SHV follow profit? Looking at the 'big board', it certainly has so far.

FirmShareholderShareProfitSalesCapacityNumber ofEPSMarketTotalEconomicCash
 Value (SHV)Price Revenue(SCU)Shares CapitalizationSHVValue Created 
The Racing Bike Comp$28.07$27.26$5,877,019$29,592,06225,7362,000,000$2.94$54,523,006$56,143,007$5,417,596$5,740,710
Neighbourhood Bikes$22.83$22.68$4,026,817$23,583,56025,6211,810,139$2.22$41,062,496$41,334,017$3,567,394$5,070,378
Cyclepaths$21.73$21.53$5,452,625$27,446,69222,9402,000,000$2.73$43,052,178$43,452,179$4,971,550$10,595,110
Kruiser$20.01$19.20$4,624,202$21,044,11522,8992,000,000$2.31$38,401,000$40,021,000$4,137,748$8,349,126
Galaxy Bicycles$19.65$19.65$1,812,314$25,146,00026,3591,810,139$1.00$35,568,556$35,568,556$1,350,148-$96,820
Wheelie Good Bikes$17.97$17.97$4,571,899$20,483,10025,3142,000,000$2.29$35,939,158$35,939,158$4,089,763$10,636,083
Doggiez Inc.$17.70$17.65$2,709,179$16,254,42622,9492,007,821$1.35$35,442,689$35,543,080$2,249,756$5,510,463
Vicious Cycles$17.49$17.49$3,310,167$20,337,30028,2672,000,000$1.66$34,972,696$34,972,696$2,824,680$8,496,034
Apollo Industries$17.43$17.43$2,988,802$19,736,67822,2972,000,000$1.49$34,867,346$34,867,347$2,502,297$8,809,371
Cycleangelo$16.58$16.58$3,471,593$19,666,61228,5652,000,000$1.74$33,158,150$33,158,150$2,995,116$7,364,121
Wicked Wheelz$16.06$16.06$1,990,607$21,425,52525,0082,000,000$1.00$32,124,282$32,124,282$1,500,364$4,408,741
Spoketacular Ind.$15.98$15.98$3,640,471$20,114,12528,0472,000,000$1.82$31,957,992$31,957,993$3,155,953$9,177,509
Firm1$14.17$14.17$2,054,686$18,431,46726,5952,000,000$1.03$28,331,902$28,331,901$1,564,714$8,049,403
High Gear$14.15$14.15$1,297,961$18,234,15024,8572,000,000$0.65$28,307,216$28,307,217$804,454$6,597,082
Life Cycle$14.07$14.07$1,978,086$16,319,66622,6622,000,000$0.99$28,132,828$28,132,828$1,487,790$7,592,151
Fusion$13.89$13.89$1,826,848$16,913,84422,2552,000,000$0.91$27,772,102$27,772,102$1,339,395$7,237,300
Majestick Bike$13.40$13.40$1,330,956$19,894,68529,3132,156,412$0.62$28,904,367$28,904,368$845,533$7,355,181
Cruise Cycles$13.06$13.06$1,515,026$14,001,60024,2802,000,000$0.76$26,111,662$26,111,663$1,022,614$7,775,625
Firm4$12.95$12.95$1,705,587$12,739,20022,0372,000,000$0.85$25,897,154$25,897,154$1,214,080$8,061,356
Firm4$12.95$12.95$1,706,485$12,739,20022,0372,000,000$0.85$25,900,188$25,900,188$1,214,982$8,062,638
Firm4$12.95$12.95$1,703,659$12,739,20022,0372,000,000$0.85$25,890,632$25,890,633$1,212,143$8,058,601
Firm4$12.95$12.95$1,704,417$12,739,20022,0372,000,000$0.85$25,893,196$25,893,196$1,212,905$8,059,684
Firm4$12.95$12.95$1,706,115$12,739,20022,0372,000,000$0.85$25,898,940$25,898,939$1,214,611$8,062,110
Firm4$12.94$12.94$1,703,193$12,739,20022,0372,000,000$0.85$25,889,054$25,889,055$1,211,675$8,057,935

 

Roll on year 2.

Stuff happens

I've met the former CFO of Fonterra a few times–first during the contamination scare of 2013, and more recently at an MBA Breakfast. As he says, stuff happens ... and that is the essence of management in dynamic contexts.

It has been, depending on your euphemism of choice, an interesting/challenging/disturbing/distracting/upsetting week. Some of the class clearly feel strongly about the issue, whilst at the other end of the spectrum some are 'over it' (if they ever thought it was material). We all respond differently and as in the example of Fonterra, that makes finding a perfect solution improbable, if not impossible. If anyone wants my three slides from today here they are:  MGMT300 -03-StuffHappens.pptx.

Now, I hope to get back to reading and commenting on the learning journals, and—as requested—doing more blogging.

I expect that some people's learning from the week will centre on the class-wide events. For others, they'll be wrestling with their plan of attack for the practice rollovers. What to focus on? How much of their strategy/capabilities might they give away? Generally, I would suggest is that goal for teams in the practice rollovers is to see if you can set clear targets and achieve them; can they, say, make, 43,000 bikes and sell them at specific profit. To what extent do you control the simulation? Do you really know how little you need to spend on, for example, advertising in department stores to sell those 43,000 bikes. 

Generally speaking, teams excel through the quality of their execution, not on the brilliance of their strategy. A brilliant strategy, poorly executed, usually loses out to a solid strategy well executed. And yes, as I was asked today, many of the best teams do a successful takeover—and many good teams flounder when they have an unsuccessful takeover. But once again, it comes down to the quality of the execution of the strategy, rather than finding some magical strategic formula.