 |
| "Tightly bunched" strategy |
 |
| Cup sales with the "tightly bunched" strategy: Not good! |
While we managed to come in first in net income that week, what jumped out at me was that we had a minuscule increase in cup sales that week, while our competition saw substantial gains. It turns out that offering the new sizes expands the market. And our small cup was $0.66 more expensive than the next most expensive competitor's.
 |
| Much better pricing strategy |
The results? For the first time all game, we came in first in cups sold. It was the first time in our simulation that a shop came in first in cups sold, revenue, and net income in the same week.
 |
| Cup sales with a 50-cent difference: first place! |
The lesson: adding the new cup sizes leads to an increase in overall cup sales, so be sure to accommodate that additional demand for small cups.
Other special decisions and incidents
There are several presentations posted online, mostly on Prezi, in which students have discussed their BizCafe experiences and the lessons they learned. There were things that happened in other versions of the simulation that didn't happen in ours, so I can't comment on them. There were also a few things that happened in our game that I haven't mentioned yet.
I will say this as a general bit of strategy regarding special decisions and incidents--don't spend money on your shop if there isn't enough time left in the game to recoup the expense.
Other incidents from our simulation
- We had the chance to switch suppliers. It came during the last week, and we could have made an extra $100, but I figured it wasn't worth the risk of potentially alienating our regular customers, especially when we already had the award for Best Quality.
- We had a "problem employee" one week. We fired her. She threatened to sue, but nothing became of it.
- We came close to running out of medium cups. I was prepared to let them run out. There's no point in buying branded cups in bulk if it's the last round of the game.
Incidents I read about in other simulations
- We bought insurance in the starting decisions, and in other simulations, there was a fire. If you didn't buy the insurance, you had to pay for a new espresso machine.
- You can buy a coffee roaster. Don't know how much it costs. (Only worth it if there's enough time left.)
- You can install "green" lighting and toilets. Don't know how much it costs. (Only worth it if there's enough time left.)
- You can change your furniture, or renovate, or something like that.
- Apparently, you can offer fair trade coffee, and you have the option of lying about serving fair trade coffee. In both versions I read, lying came back to bite them in the ass.
- You can offer entertainment in your shop to bring in customers. Live music, karaoke, possibly other stuff. I don't know what costs are involved in that.
- You can pay $500, I think, for a more detailed customer satisfaction survey. Seems like there could be valuable stuff in there, though I managed to ascertain what makes customers satisfied without it. If I had the option and a decent lead, I probably would have spent the $500.
There could have been more, but that's all I can remember, and I don't feel like researching again.
Conclusion
And that's it for our BizCafe experience. Final score after 8 weeks:
Total revenue: $126,194.40
Net income: $39,483.50
Total assets: $64,483.50
Net increase in cash: $30,255.31
Final bank balance: $47,639.99
THANK YOU! I´m from Latin America and needed some tips before I started the simulation because I was doing bad in the practice, but this really helps! Hope everything works out for me :)
ReplyDeleteI just looked at my results for the 8 weeks. My team, Brew Heaven, had the number 1 weighed score of 90, was in position 1, Cum. Revenue $101,959.00, Cum. Net Income of $34001.00, Cash $44221.00 cum. cups sold of 25620. I followed all the suggestions of the blogs: Elegant furniture, Quad machine, Grade of Coffee: Organic, Higher prices Medium cup started at $5.30 and then reduced the price to $4.85, had 26 employees maximum and 3 managers. I started with the maximum in advertising of $4200 and did that for four to five weeks. I then reduced the advertising on week 6 to zero. Weeks 6,7 and 8 had a little less sales of coffee but I reduced the pricing to below the average to overcome no advertising. I also reduced my employees in the last week 8 to 19 just to get a few more expenses down. I thank everybody in the blogs and suggestions. I had the maximun amount of hours 112 hours, including weekdays and weekends. I did the benchmark simulation with lower coffee prices at the beginning and it was very difficult to catch up with high expenses of advertising. Thank you eveyrone for all your ideas. Also, always continue raising your wages. I started with $610 for 2 managers and raised it up to $750. This was still below the industry of $769 but I had to keep expenses down. Wages for servers started at $9.00 and went up to $14.10. The raising of wages kept the servers and managers working harder. It also increased the number of cups sold. Some ideas. There are two ways to win, go low in pricing or go high. I chose high since the benchmark simulation for a four weeks had good results with high prices of $5.30 for medium coffee cup. As they say in any business and pricing, you can always go down, but don't go up!! Your customers will love you if you go down. My comment about this simulation: Not realistic. My experience in business: cannot always get the same price point as other vendors. Some vendors, such as Walmart, buy in bulk $1M per month, very hard for a small business to compete with that price tier. Then they resell the item below cost (to smaller vendors). It is called price fixing but it is very effective. Once they run out all the competition, then they raise the prices. It is the reason this game is not realistic. I cannot buy supplies at the same price point as Starbucks.
ReplyDeleteThank you to all that had blogs, ideas, including the comments below.
I just looked at my results for the 8 weeks. My team, Brew Heaven, had the number 1 weighed score of 90, was in position 1, Cum. Revenue $101,959.00, Cum. Net Income of $34001.00, Cash $44221.00 cum. cups sold of 25620. I followed all the suggestions of the blogs: Elegant furniture, Quad machine, Grade of Coffee: Organic, Higher prices Medium cup started at $5.30 and then reduced the price to $4.85, had 26 employees maximum and 3 managers. I started with the maximum in advertising of $4200 and did that for four to five weeks. I then reduced the advertising on week 6 to zero. Weeks 6,7 and 8 had a little less sales of coffee but I reduced the pricing to below the average to overcome no advertising. I also reduced my employees in the last week 8 to 19 just to get a few more expenses down. I thank everybody in the blogs and suggestions. I had the maximun amount of hours 112 hours, including weekdays and weekends. I did the benchmark simulation with lower coffee prices at the beginning and it was very difficult to catch up with high expenses of advertising. Thank you eveyrone for all your ideas. Also, always continue raising your wages. I started with $610 for 2 managers and raised it up to $750. This was still below the industry of $769 but I had to keep expenses down. Wages for servers started at $9.00 and went up to $14.10. The raising of wages kept the servers and managers working harder. It also increased the number of cups sold. Some ideas. There are two ways to win, go low in pricing or go high. I chose high since the benchmark simulation for a four weeks had good results with high prices of $5.30 for medium coffee cup. As they say in any business and pricing, you can always go down, but don't go up!! Your customers will love you if you go down. My comment about this simulation: Not realistic. My experience in business: cannot always get the same price point as other vendors. Some vendors, such as Walmart, buy in bulk $1M per month, very hard for a small business to compete with that price tier. Then they resell the item below cost (to smaller vendors). It is called price fixing but it is very effective. Once they run out all the competition, then they raise the prices. It is the reason this game is not realistic. I cannot buy supplies at the same price point as Starbucks.
ReplyDeleteThank you to all that had blogs, ideas, including the comments below.
Yes, you are right--in real life, you often have to raise prices, and that's standard practice.
Delete