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Chris's decision on the 20% - a shrewd move


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Old 09-12-2010, 19:46
Kyle123
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I saw it more of a major blunder that he got lucky on. It wasn't even a conscious gamble, he didn't see anything wrong with the offer.
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Old 09-12-2010, 22:33
Orbitalzone
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Classic boardroom stuff though - if they'd lost he'd got fired for such a terrible business decision or if he wins it's a masterstroke of genius.

Ultimately it's got very little to do with real business, just what works each week.

Anyone notice this weeks boardroom Alan says he's sending them out the room "again" (so I guess they were in and out several times during the firing discussions)
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Old 09-12-2010, 23:55
The Rhydler
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It only seemed that way, but because there only three the initial 'which three you gonna pick' bit wasn't needed so that was the part you thought was extra, it wasn't
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Old 10-12-2010, 01:47
thenetworkbabe
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For a banker Chris comes across as quite dim. The tour company could not beleive their luck when they received that offer. He didnt know he was 'taking a gamble' and Sugar didn't need to lavish any praise onto him.
Its become significant though as the summary show tonight on the last 5 was claiming the point heavily that this was a flash of brilliance from Chris . The point was made that he lacked imagination in early tasks but this one was suggested as proof that he had the spark required.

We need someone to work out the maths for us too.

If the travel agency brings in 50% of your sales at 35% commission and you sell 100 places total at £20 you end up paying them £350 and making £1650 net. If they sell 50 seats and you sell none you make £650 and if they sell none for you you make £1000 .

If you go with Chris' negotiation, pay them 20% of your total sales, and sell the same numbers, with them providing 50%, you make £1600 net and they pocket £400. If you sell none and they sell their 50 you make £800. If they sell nothing this time you only make £800.


IWhere is (are?) the cross over point where Chris's deal makes you less? I can't remember the maths to work that out. Not sure how Chris could either - or how he could estimate who would sell what? We need algebra and potential sales data to know if this is a good idea and Chris seemed to have neither available.

In there too there may be some perverse consequences.

Not getting the travel agencies support is key in this task - but the best way to get its support is to put in an offer that offers them more money and you less on what you do sell. Offering them too much, up to some point, is a winning move.

Its also the case that its perfectly possible to sell much less yourselves and price too low if the travel agency does the work for you . You can be weaker at two fundamental skills and put on the worst tour - and still win if you offer the travel agency a good enough deal.

Its truly a strange task and I suspect there's more strange results in there if we knew the maths.
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Old 10-12-2010, 09:51
Jepson
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I did the maths (on the information available) and it appeared that they would have made about an extra £90 if they's gone with the standard 35%.

However I then realised that, as Chris pointed out, it was vitally important that they got the travel agency rather than the other team. So in that respect, although I don't think he realised what he had offered them, he did win the task.

Kudos for realising the importance of getting the agency.
None for not realising the mistake he's made offering them 20% off the top.

But, as I keep banging on about, they are operating under immense pressure and as we've seen time after time, even candidates with a strong business maths background can completely overlook simple things that cost their teams dearly.

So, having done the calculations and thought about it I've changed my opinion of Chris's part of the that task from "Cocked it up and got lucky" to "Perceived a vital point then made an error but one which was more than made up for by getting the agency on board".
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Old 10-12-2010, 10:20
soos1
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it clearly wasn't 'shrewd' as they tried to go back on it the next day!
Erm no Joanna tried to go back on the deal, making Chris look stupid " I don't think Chris understood what you meant" !!!
Remember the show is edited and Chris would have been given exactly the same 35% offer but we were not shown this....he did well
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Old 10-12-2010, 10:23
lynwood3
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It was stupid, I'm surprised Lord Sugar didn't criticize the team because they would have made much more money if they hadn't had done this deal. Also if it hadn't worked Lord Sugar would have torn Chris apart!
The truth is that due to the edit, it is difficult to decide whether it was shrewd or stupid.

If the deal resulted in enough extra business, therefore profit it could be deemed shrewd, but it did not seem from the edit that Joanna's team did significantly more business. In fact they showed them having a handful of people on their last tour at 3 p.m, whereas, Stuart's team ran an extra, full to capacity, bus at 4p.m.
We have to assume that it was a shrewd move, because we were told it was, and we don't have the full facts.

I, for one, feel suspicious of the story we are being told, and suspect we are being manipulated.

Off to the Strictly forum now to post in a similar vein......
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Old 10-12-2010, 12:40
notary
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I am not sure why the travel agent cant be used for both teams. They were going to different places.
The travel agent has their own tours and still promoted chris's.
The answer is that people dont trust just anyone how ever well he is dressed up. They could have ran off with the money as well.
I would very much like to know how much Joanna's team sold on their own.
Why dont they tell us that. I bet it wasnt as much as Liz team.
Liz really worked the hardest on this task, I am sure of it and got the most money. For that her reward was being fired. If LS doesnt want her, which I can understand, she is not for him, but at least dont fire her when she works the hardest.
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Old 10-12-2010, 19:32
thenetworkbabe
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I am not sure why the travel agent cant be used for both teams. They were going to different places.
The travel agent has their own tours and still promoted chris's.
The answer is that people dont trust just anyone how ever well he is dressed up. They could have ran off with the money as well.
I would very much like to know how much Joanna's team sold on their own.
Why dont they tell us that. I bet it wasnt as much as Liz team.
Liz really worked the hardest on this task, I am sure of it and got the most money. For that her reward was being fired. If LS doesnt want her, which I can understand, she is not for him, but at least dont fire her when she works the hardest.
Thats part of the mystery. How much did each team sell on their own? How important was getting the travel agency involved?

As it is its very strange. The travel agency is more important the better they do and the worse you do. You always gain money when you pay them 35% on their sales only - you gain with Chris's 20% offer unless they do so badly and you do so well that the 20% deal costs you more.

The task ends up depending on who offered the travel agency the best deal to get the extra sales they brought in - but thats equivalent to giving the win to whoever gave each of the people at the travel agency a bundle of fivers for the contract.

You can't do things properly and do some market research on themes, prices and demand and, as you say, you can't see who can negotiate the best deal without having two agencies to try with. The result is that you have to decide everything on no information and who wins the contract even on the agency's terms has an advantage.

The result in turn makes no real sense. Chris gets praise for making a contract he can't possibly have worked out the benefits of. Chris can't even explain the logic to Joanna and doubts it himself, but LS jumps to the conclusion it was shrewd. Winning then relies on the agency doing well enough and you doing badly enough to make the contract profitable. Meanwhile, the winning team seemingly sold less themselves than the losing one. Who produced the worst tour also didn't matter and there's no way of proving how bad or good each theme was and whether that dictated sales. Its an odd game when winning may, or may not, depend on getting one contract by whatever means you can or doing an impossible calculation. The task looks to be about selling but, by Lord Sugar's conclusions, its about getting a contract when its not clear how important the contract is ,or what its worth, or even if its just getting the contract or getting the calculation right that matters.

Then you get the conclusion. The theme setter for the tour that doesn't sell gets away with it. Stuart sets the wrong price and fails to get the contract and gets away with it. Liz goes after she's sold far more than Stuart even with the wrong price and when she seemingly even sells more than the other team did individually with their stronger product.
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Old 10-12-2010, 20:29
Jepson
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The result in turn makes no real sense. Chris gets praise for making a contract he can't possibly have worked out the benefits of. Chris can't even explain the logic to Joanna and doubts it himself, but LS jumps to the conclusion it was shrewd. Winning then relies on the agency doing well enough and you doing badly enough to make the contract profitable. Meanwhile, the winning team seemingly sold less themselves than the losing one. Who produced the worst tour also didn't matter and there's no way of proving how bad or good each theme was and whether that dictated sales. Its an odd game when winning may, or may not, depend on getting one contract by whatever means you can or doing an impossible calculation. The task looks to be about selling but, by Lord Sugar's conclusions, its about getting a contract when its not clear how important the contract is ,or what its worth, or even if its just getting the contract or getting the calculation right that matters.
I thought that but after I did the maths I realised that what was important was getting the contract.

Not only did it get you more sales but it prevented the other team getting sales so it was effectively worth twice what you paid for it.

Chris had worked that out.

I think he goofed up the actual negotiation but he had the important part correct so he was shrewd to realise the importance of the agency even if he fouled up the nitty gritty of the deal.

Until I did the calculations I thought he had just got lucky but I then realised that his basic instinct was correct.

Compare and contrast with the bagginator's abysmal effort and understanding.
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Old 11-12-2010, 01:02
Grianne
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How can it be a shrew or innovative move, when he just made a basic error.

He meant to say 20 percent of tickets they sell, and instead he gave away 20 percent of everything...

Which would have actually cost his team money I assume.

It was obvious that Chris and Joanna sold more tickets, and Jamie got around 60 quid in tips compared to 8 quid from Stella......

So yes, why people are acting like Chris won this task is rather baffling.
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Old 11-12-2010, 01:28
allafix
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How can it be a shrew or innovative move, when he just made a basic error.

He meant to say 20 percent of tickets they sell, and instead he gave away 20 percent of everything...

Which would have actually cost his team money I assume.

It was obvious that Chris and Joanna sold more tickets, and Jamie got around 60 quid in tips compared to 8 quid from Stella......

So yes, why people are acting like Chris won this task is rather baffling.
He clearly meant what he said. It was his response to the agent telling him 35% of agency sales was the going rate (we didn't see this but he said it later to Joanna). The agent asked him to confirm he'd offered 20% of all takings and he did so (he could have retracted there and then if he hadn't meant it). He later said his reasoning was to ensure they got the agency deal. It was a gamble, but it was also deliberate. Since getting the agency deal was the key to winning the task, Chris's gamble was decisive.
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Old 11-12-2010, 03:26
allafix
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I did the maths (on the information available) and it appeared that they would have made about an extra £90 if they's gone with the standard 35%.

However I then realised that, as Chris pointed out, it was vitally important that they got the travel agency rather than the other team. So in that respect, although I don't think he realised what he had offered them, he did win the task.

Kudos for realising the importance of getting the agency.
None for not realising the mistake he's made offering them 20% off the top.

But, as I keep banging on about, they are operating under immense pressure and as we've seen time after time, even candidates with a strong business maths background can completely overlook simple things that cost their teams dearly.

So, having done the calculations and thought about it I've changed my opinion of Chris's part of the that task from "Cocked it up and got lucky" to "Perceived a vital point then made an error but one which was more than made up for by getting the agency on board".
The agency thought 20% of the total was better than the standard 35% on their sales alone, which is true up to a point after which the more they sell the worse off they are per ticket. The break even point is if the agency sell £4 for every £3 the team sell. Above that ratio Chris's offer is better for the team and the agents are actually getting less than 35% per ticket they sell.

Assuming both teams sold the same amount on the street, with the industry standard 35%, the agency team would win every time. With Chris's 20% of revenue commission, if the agency sell more than a quarter of the tickets the team sell his team would win. Not bad odds really, given the attraction of Chris's offer to the agency, as you'd expect the agency to sell well.
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Old 11-12-2010, 11:15
Grianne
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From his expression when he gave his team the news he sounded baffled by his own stupidity I thought....

And if he meant it, why would he have just let Joanna beg for them to reduce it.
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Old 11-12-2010, 14:47
allafix
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From his expression when he gave his team the news he sounded baffled by his own stupidity I thought....

And if he meant it, why would he have just let Joanna beg for them to reduce it.
He always sounds baffled. I think he knew he'd get a rollicking from Joanna for making such an offer without consulting her. He did defend himself to her by saying he wanted to be sure of getting the agency deal.

It's hard to be sure, but given some of the pieces we actually saw I'd give him the benefit of the doubt.
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Old 11-12-2010, 15:39
brangdon
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Was it unprofessional of Joanna to try to claw back the 20% on everything that Chris agreed, to 20% of ticket sales?
I thought it was OK for her to clarify whether there had been a misunderstanding, and further to see if there was any flexibility even if it wasn't. However, her position was weak, and given how adamant the agency was, she should have conceded with good grace more quickly than she did.
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Old 11-12-2010, 15:52
brangdon
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We need someone to work out the maths for us too.
Here's how I look at it.

Suppose the other team get £1000 on their own, and the agency brings in £150. If the other team get a deal of 25% of agency tickets, then their total is £1112. That's what you have to beat. Let's say you get £1111 on your own: so you lose.

Now suppose instead you get the agency deal at 20% of everything. If you still make £1111 on your own, your total be that (£1111 + £150) * 80%, or £1008.80. That's less than you would have without the deal. However, the other team now only gets what they bring in themselves, which is £1000. So you win by £8.80. Getting the deal turned a loss into a win.

Obviously it depends on what deal the other team make and how many sales the agency makes, but in that example, even with the agency only bringing in 15% of your revenue, it's still worth giving them 20% of your total.
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Old 11-12-2010, 17:03
Artois
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I saw it more of a major blunder that he got lucky on. It wasn't even a conscious gamble, he didn't see anything wrong with the offer.
I totally agree with this - he couldn't believe his luck !
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Old 11-12-2010, 22:18
thenetworkbabe
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I thought that but after I did the maths I realised that what was important was getting the contract.

Not only did it get you more sales but it prevented the other team getting sales so it was effectively worth twice what you paid for it.

Chris had worked that out.

I think he goofed up the actual negotiation but he had the important part correct so he was shrewd to realise the importance of the agency even if he fouled up the nitty gritty of the deal.

Until I did the calculations I thought he had just got lucky but I then realised that his basic instinct was correct.

Compare and contrast with the bagginator's abysmal effort and understanding.
Possibly very true. but if Chris realises that the contract is important he doesn't have to come up with a figure of 20% - which might make the return negative under some circumstances. That looks at best like a guess and at worst a misstatement of an, unacceptable, offer to only give them 20% instead of their usual 35%. He could just offer them their usual 35% and rely on a better presentation. and product In the event, Stuart will not get it anyway because of his style, his theme and his high price. Chris can also out bid the other team. If Chris realises the agency is key, and thinks that his teams individual sales won't be much worse than Stuart's, he can offer the agency 36% or 40% just to secure the contract. Thats safer than going for 20% - not knowing what the consequences are.

It would be funny (tragic) if Chris's shrewd move turned out to be a mistake. If he had only offered them 20% of their agency sales instead of 35%, they might well have not given him the contract at all. It would be a great case of a losing move being turned by mistatement into an accidental winning move - ready for Lord Sugar to deem it a spark of brilliance....
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Old 12-12-2010, 11:33
brangdon
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It did look like he mis-spoke, and then stuck to it because he didn't want to admit his mistake. If he just wanted to give a generous deal, he could have offered 50% (of the agency's sales). That way he deprives the other team of the benefit, avoids the risk of losing money if the agency does nothing, and gives the agency a strong incentive to sell more tickets.

That last point could be important. There would have been other bus tours the agency was selling tickets for, presumably at 35%. As it was, they were only getting 20% for Chris's tour, so the agency would have made nearly twice as much money per ticket if they sold a rival ticket instead of Chris's ticket. That might have discouraged them from pushing Chris's tickets. You rarely see deals like that because they are bad, because they don't motivate the seller.
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Old 13-12-2010, 15:48
RMorgan
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It could have just been done for dramatic effect but you would think that if the Agency had made more for them than 20% of the other sales then they wouldn't have been handing over a wad of cash to the agency at the end, instead they would have been collecting an amount from the agency which would have been reduced by whatever 20% of all sales was.

Doesn't make sense how they keep holding it up as a shrewd move that won them the task.
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Old 14-12-2010, 03:06
Odd Socks
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Having seen the episode tonight, after reading the forums, I'm none the wiser.

He seems apologetic at first in front of his team and in the boardroom, but then champions his move.

Gut instinct is that he got lucky and went with it, he took a risk.

However, the editing does make it difficult to read for sure.
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Old 14-12-2010, 04:19
thenetworkbabe
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It did look like he mis-spoke, and then stuck to it because he didn't want to admit his mistake. If he just wanted to give a generous deal, he could have offered 50% (of the agency's sales). That way he deprives the other team of the benefit, avoids the risk of losing money if the agency does nothing, and gives the agency a strong incentive to sell more tickets.

That last point could be important. There would have been other bus tours the agency was selling tickets for, presumably at 35%. As it was, they were only getting 20% for Chris's tour, so the agency would have made nearly twice as much money per ticket if they sold a rival ticket instead of Chris's ticket. That might have discouraged them from pushing Chris's tickets. You rarely see deals like that because they are bad, because they don't motivate the seller.
Indeed, and looking at the other side of that if he had offered them, say, 40% he would have got the contract and the agency would have had an incentive to divert the people going elsewhere (gaining them 35%) to Chris's tour (gaining them 40%) Its less risky than the 20% overall, it gets you the contract and it incentivises the agency rather than disincentivise them...With the agency's potential profits in play as another factor too , I have no idea which would have been the better deal, but I don't think he could have either.
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