|
We
played for eight half-year periods. At the start we had to define the airline's
strategy decide how the management team would work interpret the data
presented from the last period make some medium-term and long-term
fleet decisions decide frequencies fares marketing policies and so on
for the next period and enter our decisions into the computer. We were
given six hours.
The
disks from the three teams were then collected the computer performed
the simulation for Period 1 and the disks were returned.
We
could then print out our results review them and make our decisions for
Period 2. The decision making time was reduced steadily. At the end of
the game we had just 90 minutes to make all our decisions for Period 8.
While our team did not return the worst financial performance over
eight gruelling periods our performance was certainly as any airline
chief executive might say at a press conference announcing his losses
for the year ,below acceptable standards'.
|
|
We
started well increasing our net profit in the first period by 25 per
cent to EURO 30 million ($42.3 million). After that things went
downhill badly. Our profits fell for two periods. Then we sunk into the
red and stayed there for four consecutive periods. It was only in the
last period when the economy was recovering and we had got to grips
with the marketing that we returned to profit. Over the four years we
lost EURO102 million on revenues of EURO3.2 billion. Our share price
started at EURO 100 rose to EURO 156 fell as low as EURO 29 and then
recovered to EURO 83.
Our balance sheet was decimated.
The
game posed most of the management challenges present in real life
1 Information
overload.
We had masses of data but it was not presented very effectively and
there were significant gaps in information. Market research reports could
be purchased but they were not always reliable. The trick was to
establish systems to make sure you made the best of the data available.
|
|
2 Shortage
of resources.
With only five people and very limited time there was immense pressure
to make decisions quickly.
3 Communication.
Our mini-airline demonstrated very effectively that every decision you
take in one area affects something else. Most of the key decisions had
to be taken collectively yet the number crunching was best done singly
or in pairs. Getting this balance right was crucial.
4 Competitive
pressure.
You had to be innovative in the marketplace and second-guess your
competitors especially on pricing.
5 Financial
pressure.
The combination of losing money on the operation and borrowing money to
finance new aircraft was nearly lethal as cash flowed out of the
company and the balance sheet position deteriorated rapidly.
Once the downward spiral had started it was very difficult and
time-consuming to climb out.
|
