Launching BoatShare
fitz@th-brandenburg.de
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Background and Instructions
You are the founder of a new platform venture in the sharing economy. Your company rents small boats for
people to use for a few hours on a lake. Your company does not actually own any boats. You find other people
who already own boats who are interested in renting them through you. (For the sake of simplicity, this
simulation calls these sellers and buyers, respectively, because they are selling and buying time in the boat.)
This is a new idea in your market. There are a few rental companies, but they own their own fleet of boats, and
therefore have had trouble maintaining and growing their assets. Even with these difficulties, these firms have
long waiting lists of people who would like to rent a boat for a few hours. This means that you can expect market
demand, but do not need to worry about competition.
You initially have $100,000 for marketing. If you spend all of this money, there is no more. You cannot go into
debt. You must generate cash from your operation to replenish your bank account balance in order to spend
more money on marketing.
In each round, you have three different decisions to make, which fall into two separate categories. First, you
decide what percentage of your marketing expense you would like to spend on attracting boat renters (buyers).
The remainder is spent on attracting boat owners to rent their boats (sellers).
Your second decision sets the price for buyers to rent a boat. If you set a high price for buyers, fewer people will
want to rent a boat, but you will make more revenue for each rental. A low price will increase demand but reduce
revenue.
The third decision is the percentage of this price that you intend to give to owner of the boat as their payment.
The rest of the revenue that you collect from renters but do not give to boat owners stays with you as your
commission. If you set a high price for boat owners (by both setting a high price for buyers and a low
commission for yourself), you will attract more sellers.
For example, if you set a price to renters of $10 per hour, and give boat owners 20% (or $2) of that price, you
will keep $8 per transaction as your profit.
To simplify the simulation, all of your profit in one round is allocated to marketing in the next round.
Pay attention to the balance of boats supplied to your platform by boat owners and the demand for boat rentals
from prospective buyers of your service. For example, if you focus your marketing efforts on buyers, and set a
low price to buyers, you will generate great demand from buyers, but you might not have enough interest from
boat owners to provide the supply.
You only collect revenue (and commission) from the buyers and pay sellers if you have both demand from
buyers and supply from sellers, and can therefore achieve a consummated transaction. If there is no
consummated transaction, then there is no revenue from boat renters, no payment to boat owners, and no
commission for you.
The ultimate objective for your company is to maximize its in the 10th, final round after your launch.
Warning: This simulation works on computer or smartphones. However, it does not work well in Apple
Safari. Chrome is more reliable.
Get started and make decisions
Reset entire simulation (CAUTION)
© Copyright 2020
Ted Ladd | Hult International Business School
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