Eco 360 Simulation Review

Simulation Review

After nine years as manager, it is appropriate to conduct a review on the performance of the Atlantis based properties owned by GoodLife Management. The last nine years has seen significant changes in and around the Atlantis area, most of which has been beneficial for GoodLife. This review will reflect on the causes that result in a shift in supply and demand, as well as how those shifts affected the strategic decisions made to ensure profitability for GoodLife. Additionally, a discussion will be presented on some of the economic triggers that played an impact on managerial decisions during the last nine year supported by a hypothesis reflecting how lessons learned during the last nine years could be applied in a different profession. And finally, a summarization on the last nine years will be provided for consideration.

Shifts in Supply and Demand

During the last nine years, there have been several issues that have caused a change in the supply and demand of our two-bedroom apartments. For brevity’s sake, the top reasons have been bulletined below:

• Regardless of the fact that GoodLife maintains a monopoly on apartments, the Atlantis properties were experiencing a shortage of rentals. This was corrected by a reduction of the rental price which resulted in a maximization of both rentals and profits.

• A change in corporate expectations lead to an initiative to maximize rental on all 2500 units, this resulted in an increase in rental to ensure maintenance and profit equilibrium on all the units.

• A boom in employment and economic growth occurred when LinTech, Inc decided to set up production in Atlantis which led to an immediate demand for rentals in Atlantis.

• A decrease in demand was experienced when our sole competitor, Oakridge detached homes, started acquiring a share of the housing market due to an increase in personal wealth and market trend to live in a detached home versus an apartment.

• Further decrease in rentals occurred, as well as a decrease in available apartments due to the conversion of some units to condominiums. This was again correct by a slight decrease in rental fees. This was decided upon to capitalize on the market trend to own property versus renting.

• And finally, a government imposed price ceiling caused a loss of equilibrium due to a unit shortage and price fixing.

Decision Making in Response to Supply and Demand

Successfully adjusting an overall business model and pricing in response to changes in supply or demand can determine the difference between survival and success. Simplified, if the market for our apartments is showing a high demand then an equal increase in pricing should be instituted. This would ensure that we maintain profitability and quality of product for our customers.

However, when the market starts to reflect a downward trend in demand, then the cost of rentals should be either lowered or the units be put to use for other purposes. Both of which will ensure the continued success of GoodLife. Of course, factors such as competition, disposable income levels, and unemployment would be key factors in the decision making process.

Economic Key Factors

To assist in the understanding the factors that played a central role in the fluctuations in the supply and demand for our apartments will be provided in a scholastic manner.

• Business Cycle – GoodLife has experienced both expansion and recessive periods in the last nine years. In response to these cycles, pricing has adapted to maximize profits.

• Unemployment – Or actually lack of unemployment through the influx of new jobs and residents to Atlantis caused an impressive increase in profits. This caused an interrelated flow (the circular flow of an aggregate economy) of profits, which led to purchasing more units, which led to an increase in rentals, which again led to more profits.

• Personal Income and Disposable Personal Income – As the amount of work increased in the Atlantis area, an increase of personal income translated into an increase in disposable personal income. The wave of success experienced in Atlantis after LinTech moved into the area had an affect both positive and negative on property rental. First, the overall demand skyrocketed bringing with it a boon in profits and growth. However, as a percentage of the market started looking to other housing alternatives, our profits started to decrease, which resulted in a reduction in supply.

• Keynesian Equilibrium/Stabilization – As a result of limited housing for