Vehicle for Strategic Factor Market Success


At the core of a resource based advantage is the need to acquire strategic inputs at a bargain. Factor market success is either driven by superior information or expectations. Expectations, in turn, can arise from a creative entrepreneurial vision and/or unique complementary assets (see Barney 86). Brent McKnight created this experiential exercise to bring this dynamic out. Like the Egg Drop Auction exercise, teams bid for inputs, create a product, and compete to generate value based on accessing valuable inputs cheaply and engaging in entrepreneurial creativity as a team (see Coff & Perry-Smith, 2011). This exercise excels since is that it is greatly streamlined (less class time and mess) and it is very compatible with online teaching.

How it works: Teams are given a goal to build a vehicle from materials they buy at auction (shapes drawn in PowerPoint). Some shapes appear more valuable (e.g., circles for wheels) and teams will need to bid more for them. The trick is to develop bidding strategies for obviously valuable inputs and try to identify creative ways to use inputs that appear to be less valuable.

Here is what you need to run the exercise:

Contributed by Brent McKnight

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