SIMULATING COMPETITION

LOS ANGELES -- The Food Industry Management Program at the University of Southern California here takes hypothetical situations to a high-tech level.The university's Food Industry Management Simulation -- or FIMSIM -- is a computer model simulating a competitive food-retailing environment that was developed at USC 12 years ago by Tom Arnold, program director, and Dr. Jim Stevenson, Arnold's predecessor

LOS ANGELES -- The Food Industry Management Program at the University of Southern California here takes hypothetical situations to a high-tech level.

The university's Food Industry Management Simulation -- or FIMSIM -- is a computer model simulating a competitive food-retailing environment that was developed at USC 12 years ago by Tom Arnold, program director, and Dr. Jim Stevenson, Arnold's predecessor as program director.

"Our students have conducted business simulations for more than 20 years," Arnold said, "but they were very primitive until we developed FIMSIM," in which students run groups of supermarkets against each other and the local industry.

The simulations consist of groups of four students each who "inherit" a single store, which they run for four operating weeks, after which they "inherit" a second store for four more operating weeks and then a third store -- all of which are losing money at the time the students take them over. Late in the simulation three more stores become available that are auctioned off to the highest bidders.

"The students' job is to apply what they've learned in the classroom to turn these stores around," Arnold said. "They must create a detailed business plan outlining the strategies of where they want to go and how they can get there."

The simulations help individuals think through challenges in ways they never did before, Arnold added. "For example, someone from a [consumer packaged goods] company may not have thought about shrink before, but now he has to.

"They also teach students to build teams and learn how to make decisions," he added.

Each group is comprised of individuals from different companies, and there are never two people from the same company in any single group, Arnold said.

Groups are designed so each student comes from a different industry segment -- for example, a group with people from a conventional chain, an upscale chain, a warehouse club and a manufacturer -- "to take advantage of their different perspectives," he explained.

"Given their backgrounds, each thinks entirely differently and approaches problems differently, and that's one of the biggest advantages of FIMSIM.

"When we developed the simulation program, we didn't expect the impact that spending time with people from other companies would have. But it's had a tremendous impact."

At the end of the semester, students make presentations about their strategies and the operating results they achieved before an invited audience of industry executives, which numbered 140 last year, Arnold said.

Asked if he's seen any trends coming out of the simulations over the years, Arnold said, "The groups that do best are the ones that are able to manage internal and external components best -- internally, taking care of expenses, and externally, doing a good job driving revenues."