The concepts of microeconomics are the driving force behind the key personal and business financial decisions that we make in our daily lives. Therefore, it is imperative to understand the core fundamentals of microeconomics via experimentation rather than through mere theoretical observation. Coming from a technical background, my concepts of economics were, let’s just say, a bit blurry. But, I and many of my classmates who share the same academic and industry background learnt the entire concept of Microeconomics in a matter of days through experimentation.
The Micro-Economics project of Term-I at Great Lakes Institute of Management, Gurgaon was very different. As part of this project, the batch of 120 students was divided into groups of six and every group had to start a business inside the college campus. The business could be anything from product manufacturing and home & personal care to food delivery and miscellaneous services. Our investment cap for the business was established at INR 500 and initially it seemed impossible to start a business under that amount. But all the groups then started analyzing the market, needs and demand of their target customers. Everyone did extensive market research before starting the businesses to understand the requirements and needs of their target market. Market research was done through questionnaires, by conducting interviews, taking suggestions etc. Every group collected the primary data about their prospective customers before starting the business. After the research was over, it was time to put it to use and execute the business idea. There were twenty groups and hence, twenty businesses. Some of these were SantaKaBanta (a soda point corner), Fortune Coffee (a small scale coffee house and coffee delivery service), IceExpress, DeliverIt, a Bhelpuri corner etc.
Our group started a business named “Need2Home.” It was a delivery business in which we delivered anything and everything that is required by the students on a daily basis and could be bought from the nearby areas. On day 1 we designed our team’s pamphlet and distributed those among the students and staff members. We then started taking orders. Initially, we didn’t get many orders and most of the orders that we did get were from immediate friends. But, slowly our business started picking pace and after 2-3 days of providing impeccable services, we became quite famous among the students. We enjoyed managing all the important aspects of running a business like marketing, operations and maintaining balance sheets. Although it was a project of Microeconomics, we applied the knowledge of all the subjects that we had learnt in Term-1 of our course.
We had quite a free hand when it came to experimenting with our business. We (i) fluctuated the price of the services depending upon the market conditions (ii) reduced the profit margin (iii) made demand forecasts etc. Initially, we had kept a higher profit margin but due to severe competition from another team, we had to lower our margins. However, due to this, we managed to secure a large number of orders and as a result also managed to increase our sales figures substantially. And yes, we had a competitor in this small business space. We also felt threat from Amazon, Flipkart and other e-commerce entities because, as a small scale business, we did not plan on entering the online marketplace.
Altogether, it felt like having a real business. By the time the project got over we earned more than INR 5000 in revenue. Considering the fact that we invested about 100 bucks in the venture, it was a tremendous achievement.
Finally, we had to prepare a report based on the data collected from our business. We used all the basic concepts such as demand equations, curve, cost function, profit maximization, regression analysis and demand forecasting techniques to prepare the business report.
This project helped us in the following ways: (i) It broadened our vision towards the various business dimensions, (ii) It helped us understand the concepts of Microeconomics, and, (iii) it gave us the ability to realize and overcome the challenges in business world.
It was truly an extensive and amazing learning experience and we enjoyed every bit of it. I believe such projects help a lot in practical understanding of the theoretical concepts and we are extremely grateful to our faculty, Dr V.P Singh Sir, and the college for providing us such wonderful opportunities to learn in a practical manner.
Authors: Akhilesh Tripathi & Shubham Singh
PGPM, Class of 2018, Great Lakes, Gurgaon