Proceeds donated to local charities
At the beginning of the spring 2009 semester operations and marketing students at UNM’s Anderson School of Management were challenged to do something that over half of all new business owners can’t do - succeed and make a profit. Professor Howard Kraye presented the students in his Management 490 class with the following syllabus instructions: Using only limited financial resources, create a profit-making business that buys raw materials from at least two overseas companies to create a profit making business by the end of the semester.
Now just three months later these students have answered the challenge, proving that by using what they have learned while at UNM it is possible to create a successful business even in today’s poor economy.
At the first class meeting students were told that they had to meet the syllabus goal of creating a profitable business before the end of the semester or they would receive a failing grade in the class. They had the option to drop the class or accept the challenge unconditionally. Twenty-eight students accepted the challenge.
At the next class, students were divided into two groups - each receiving $1,000 in cash as their starting capital. Their task was to apply everything that they had learned while at Anderson (marketing, product design, manufacturing, global supply chain management, operations, and finance/accounting) to meet the challenge they had agreed to undertake.
After some extensive market research, one group named their business “Reign” and decided that their product was going to be custom designed drawstring backpacks with raw materials from Pakistan and Hong Kong. The market they wanted to sell to was young children and adults who wanted a Southwestern theme drawstring backpack. Their product sold for $10 and had a cost of $6.66. Their initial production run was 150 drawstring bags and all were sold at full price giving them a profit of $501 or a 50 percent return on the $1,000 initial investment.
The second group, named their business “Thread Lightly.” They developed a product around a 100 percent organic t-shirt made in Hong Kong and a “Thread Lightly” tag from Taiwan. Their marketing plan embraced the green movement and used the slogan “RENEUE: A six letter word for going green.”
The initial production run of 100 shirts were sold on the UNM campus and in Albuquerque in advance of Earth Day on April 22. The RENEUE shirts sold for $15 and cost $9.30 yielding a profit of $570 or a 57 percent return on Investment.
Professor Kraye believes in the Paul Newman model of business where profits are given back to the communities that the business is in, so all the profits will be given to two local charities, EarthShare and the American Cancer Society Making Strides Against Breast Cancer.
The Thread Lightly Group believes this project will give them an advantage over their contemporaries when entering the work force because they have actually demonstrated that they “can start, operate, and maintain a profitable business”.
Gabe Krause, a student in the class, called the project a success.
"We have literally taken our knowledge and created a product from scratch,” said Krause. “We marketed our t-shirts, sold them and made a respectable profit. This type of experience of combining classroom theory and real world implementation is what will give us an edge over others in the job market."
Both groups will discuss the theories and approaches they used and how they applied them to the global business world on Tuesday, May 5 at 2pm at the Anderson School of Management in classroom 1065 on the UNM Campus. The public is invited to attend and learn more about the successful business models ASM students developed. Additional presentations will take place on Thursday, May 7 and Tuesday, May 12 also at 2pm. Admission is free.
For more information contact Joseph Aragon at (505) 321-6975 or jlaragon@unm.edu.