Finishing up the ninth week of the semester, and the escalation shows no signs of slowing down. At this point in the competition, with all the markets filled, and shares within their confines limited, teams are struggling against one another to fill the percentages. This learning journal will follow Daudelin’s (1996) four step reflection process to break down the trials and tribulations of this week’s activities.
Following a string of consecutive failures leading up to last week, in which we gained an increase, the most recent rollover was set to reinforce the turnaround. To this end, we utilised our finances heavily, taking risks in order to hopefully boost us back into the competition. However, rather than bolster our shareholder value, it yet again dropped minutely, erasing the progress made last week.
The key problem we faced for the shareholder drop was our over spending, as despite our increased profits brought around, the ratio of money spent against the money gained dropped. Many of the choices we made most likely were not beneficial enough to the business ventures for them to be worthwhile. As such the money was effectively wasted, due to the gamble we undertook failing. Buchanan and O’Connell (2006) describe risks as an inescapable part of making decisions, and as such all actions will have chances of failing. As such they describe that the company must analyse the cost of failing, not just the benefits of succeeding. More than this, the person taking the action needs to appraise whether the chance of success is worth the cost if it doesn’t. It is clear that we did not fully grasp the cost that we could, and did, face for our actions taken, and this resulted in the drop in shareholder value faced.
In order to combat this in the future, I am going to take further steps to calculate damages. To achieve this, I am going to check the amounts spent in each option against the value that they bring to the business. Risks are a necessary part of the company activities and as such there is no way to avoid them, but analysing and mitigating the costs of failing is something that we can do.
Buchanan, L. & O'Connell, A. (2006). A brief history of decision making. Harvard Business Review, 84(1), 32–41
Daudelin, M. W. (1996). Learning from experience through reflection. Organizational Dynamics, 24(3), 36–48