Vol 2: May 2005
Currency Movements and Marketing
- Let’s Play a Game!
By Tanuja Singh
One of the hardest things to teach, particularly at the undergraduate level, has been the concept of different currencies and how minor fluctuations in currency values can have a significant effect on a company’s prices and profits. Students find the usual Wall Street articles boring and Alan Greenspan’s Fedspeak nearly incomprehensible. So, I devised a different idea—why not play a game that involves buying and selling currencies and winners get actual cash prizes (I personally pay for these in case you are wondering why valuable state dollars are being wasted in playing a game!)?
The basic premise is simple—students have to make decisions about how currency values are affected by events around the world (geo-political, economic, geographic, and sundry). After “lecturing” them on the concept, particularly on topics such as the Big Mac Index and Purchasing Power Parity, I ask students to follow political, economic and other events around the world for a few days. To play the game, they are assigned to independent teams; each team has to decide which currencies are worth buying or selling depending upon whether they are undervalued or overvalued, and how the particular currencies will likely move in the future. During the course of game, I “flash” news and events from around the world (some real and some made up) and students have to evaluate the relevance of each news item on the movement of a particular currency. Teams have to make quick decisions about buying or selling a currency depending upon these assessments. Then each team presents its recommendations to the rest of the class in, “laypeople” terms. I also show them currency movements on the screen and have used some free websites to give them an idea of “live” transactions. How effective is this exercise? Well, I have seen a significant enhancement in students’ understanding of the currency world and its relevance for global marketing.
Starting Fall 2005, I plan to extend this further—I am taking students to the Chicago Mercantile Exchange where they will be able to watch live currency trades and be able to invest in the currency markets using “mock portfolios”. The Director of the Globex Learning Center has generously invited our students to catch a glimpse of the “real currency world”!
Dr. Tanuja Singh
Associate Professor of Marketing
Northern
Illinois University
DeKalb, IL 60115
Marketing Insights is a publication of the Marketing Management Association