

Capitalism Strategy Tips by Jeff Sze









Capitalism Strategy Tips by Szu-Yu Wang



 Copyright 1995 Szu-Yu Wang (email:  wangj@metamor.com)









How do I change prices faster, borrow money in bigger chunks?

How do I clear the hall of fame?

Does Advertising and Inventory units ever increase in unit levels?

What are writeoffs?

How do I design layouts?

How do I get rid of people buying from me?

Event Tracker

Effects of Multiple Buy/Sale units

Price Wars

What is the most profitable product?

What is the most profitable industry?

Percent of Orignal Ownership

Loans or Cash

Training and Equipment

Technology

Acquisitions and Mergers











How do I change prices faster, borrow money in bigger chunks?

If you'll read the manual (what me? read the manual?) you'll find that

right clicking will change the price by a bigger percentage, and change

stock ammount by 1%, borrow amount by 10,000,000 etc.







How do I clear the hall of fame?

In you capitalism directory, delete the file CAPITAL.HOF







Does Advertising and Inventory units ever increase in unit levels?

No.  Those people are not really "people." They represent the storage

space cost and the overhead to work with an advertising company.







What are writeoffs?

These are generated when you close down facilities or just units.  Clearing

stock in sale unit, or changing supplier in purchasing unit (only when the

source companies change) also creates writeoffs.  Basically, it's whenever

that you get rid of inventory (not selling it) or when firing people.







How do I design layouts?

Department stores are pretty much standard.  Four purchase-sale pairs around

the side and an advertising unit in the middle.  The most change you can make

is getting rid of the advertising unit, not recommnanded.  R&D depends on how

many units you want to give each product, again quite standard except for

the different links you might want to make.



Farm and factories depends very much on your strategy.  First of all, what to

produce in that one particular place?  Well, choose something that will fill

up all the nine squares.  You might want two manufacturing unit for one set

of purchase and sales.  You might want two livestock unit to support the

processing units.  This all depends on who your customers are.  If you are

selling to everyone, more production the better.  If you are only selling to

yourself, make sure that you are not under- or over-producing comparing to

your selling power.  One manufacturing unit can sell to two department stores

without problem early on, many times, that will become a burden, and you will

have to build new ones.  Above all it depends on the product and the

competion in the stores.







How do I get rid of people buying from me?

First of all, why?  Well, if you are producing and also selling in your

department stores, letting other people buy from you generally brings a

shortage of supplies.  Setting the product to "internal sale" does not get

rid of any existing customers.  In this case, what you would want to do is

increase prices.  Go as high as you can, and watch your competitors suddenly

lose intrest in your product!  Your profit does not change as long as you

do not change your department store price! This is because your actual profit

is really the sale price-transportation-material costs-salaries.  Factory

sale price only effects your opponents.







Event Tracker

One of the most useful tools in the good.  Learn to use it well.  It is

often good enough to set the time on very fast and stop it only when

your event tracker lights up.  Learn to depend on it.  It will save you

a lot of wastage and a lot of time.







Effects of Multiple Buy/Sale units

The effect of multiple buy-sale pairs in a city is that you can divide

your share of the market into several parts, and thus decrease the strain

on each of those pairs.  With the added effect of a better economy of

scale.  The effect of multiple buy-sale pairs in a single department

store is much less, namely they sell from the first buy unit that

you place and do not have any significant good effects.  In other words

you pretty much waste upkeep.  However, apparently no such restrictions

exist on factories.







Price Wars

First of all, what sort of company are you running? Do you have lots of

factories? If so, are other people buying from you?  Do you have lots

of operating capital (can you let money come in big chunks, or do you need

it to dribble in?)



If you set your factory prices high (or even higher) compared to the stores,

than you will have money come in big chunks, as you receive delivery orders.

This is good if you want to make money off of other players, and you don't

care if your stores lose money.  Conversely lower factory prices means that

your money comes constantly as you sell your stuff in stores, and lets you

keep a lower amount of working capital.  Another factor to consider is

that the price of "inventory" is the sale unit cost times the number of units.

This means that you will have a illusory high "asset" listing if you have

high factory prices. (Rather, factory prices higher than that of retail

stores.)



Store prices isn't all that much adjustable.  There really isn't much of a

choice when dealing with opponents.  If you set your prices lower than that

of your opponents (result in a better market share,) if you check back in

a week or so, you'll find that they have decreased their prices too, but

if you incrase it, they won't do a coresponding increase.  The end result is

that you really shouldn't bother, as long as you have satisfactory market

share in comparison with the locals.



As to the locals, if I don't have player competition, I usually keep my

product rating 1-3 points above the locals, and check prices every three

to six months, this allows brand loyalty and market share to show up.







What is the most profitable product?

Based strictly on profit, cars are probably the most profitable product,

followed by desktop computers.  Mines are quite good also -- if you can

find the customers.  The problem with Cars and Desktop Computers is that

they require a large amount of research, and also a large support base of

steel, slicon, electronic component, glass, etc.  Namely, lots of factories.

Based on profit as a percentage of revenue, cigarette is probably the best

product.  Approximately 70% of cigarette revenue is profit, while the number

runs to around 50-60% for cars, and less for others. (30-40% for computers)

The problem is that cigarettes sell cheap, and each year, a company that

has $20 million from cigarettes will gain $120 million from cars if sold

in the same stores with the same advertising.







What is the most profitable industry?

Based on need, food is the most important industry, with a high percentage

of need.  This means that if you raise prices in the food industry, then you

will still have the same sale quantity, where in lower necessity industries,

if you raise prices, most of the time quantity will decrease.  This means

that as your tech, advertising, and quality increases, the food industry

will become better and better.  High profit industries in the middle include

automobiles and electronic equipment, and at the beginning, chemical products

seems to be a good industry also.  Mining is good only if you are selling to

other companies also.  There is virtually no chance that you can make

significant profits selling to yourself.







Percent of Orignal Ownership

There are really three ways that you can go about with ownership.  The first

is obviously to hold it all in your own hand.  This is risky, because you

will have to start out slowly, and you can not be an investment firm.  You

simply do not have the resources and the loan limit to do so.  However, there

is also no way for your opponents to take you over or even attempt to.  This

category includes starting capital from $5-$20 million.  since all of those

will prevent a merger, and if you wish, allow a gradual buyback.



At the other extreme, is to issue so many shares of stock that you will not

be able to able to buy your company back, but then, neither will everyone

else.  These are companies in the range of $150-$300 million.  You will be

able to start extremely fast, and probably stay out of debt, but issuing

dividend to your player is extremely hard unless you want to pay other

players too.  Any kind of corporate structure is possible with this setup.



The last choice is the most dangerous choice, which is a company that has

between $20-$150 million in starting capital.  This means that you neither

have control and capability to buy yourself back.  Usually, I treat this

area as the first kind of company with extra debt, because those extra

shares need to be bought back to make sure that you do not get taken over,

especially if you are sharing the world with an agressive or very agressive

computer player.  Take note that the second and third configuration, and

to a lesser extent, the first one, are all subject to rapid price changes

when an opponent buys lots of shares to force you to buy back your own

shares to protect yourself, and then sell them off rapidly, causing a rapid

lowering of stock prices.







Loans or Cash

One of the biggest difference between an aggressive player and a brash player

is how he treats his loans.  Using only cash as you expand either at the

beginning or when acquiring companies can cause for slow expansion.  However,

borrowing will produce a a drain on your available cash each month.  It can

get quite high as you increase the ratio of increase to assets.







Training and Equipment

Training and Equipment is very useful, especially in the area of research.

Higher unit levels means more efficient research, better sales and purchase

capacity, faster mining capabilities, and better qualitied processed goods.

The problem is that you can spend up to two times of the salary, and choosing

how much to pay is difficult.



The most profitable return that you will get on T&E would be to invest it in

R&D centers.  They will be around for a long time, and they will not stop

being R&D.  When you get higher levels, the advantage is quite obvious.  The

second main area is the farms.  Again, they will not change from what they

are doing very often.  Mining, forestry and oil seems to be another good

alternative, but I've never seen any of those run over capacity, and the

quality of the stuff that you get out is not different, so it probably is

wasted time.



The amount to spend on factories is debatable, depending on your research

cycle.  From 0 at a research cycle of 1 year to whatever you want at 10

years, it is mainly how to make sure that you advance at least one level of

manufacturing while you research, that way you at least stay even with the

setbacks.  At the beginning, department stores are obviously not a good

choice for T&E, but during the later stages, it might be profitable to invest

in T&E to increase selling capacity and purchasing capacity to process more

sales.







Technology

Sometimes, I believe that without technology I could have been a billionaire

the first time I played and in 10 years.  Unfortunately, there is technology,

and I went bankrupt, and billionairedom doesn't come nearly as fast.  The

basic problem with technology is that you can never start too early and

spend too much.  It is often the key to high product quality and therefore

a higher price for your products.



Now, the problem is how many topics to research and how many units to devote

to each topic.  With the problem that each R&D facility drains $400,000 from

your profits each month, you obviously can't support all that many places.

At the beginning 2 units per topic is good enough to get a competitive

advantage.  However, later on, 3 units per topic is necessary to stay even,

and 4 or even 5 is needed to get an advantage.  Concentrate on the products

that you are selling, and make sure that you have R&D capacity before you

enter into other areas.  Sometimes it is also profitable to take some company

over just before they go out of business just for their techs.



The time span is also an important consideration.  Obviously a 10 year

cycle gives the most advantages, provided that you can survive that long to

reap the rewards.  At the beginning, 1 year seems to be optimal, extending

to 3-5 or even 10 years as you get to the top of the tech ladder.







Acquisitions and Mergers

This topic gets a whole section because it is one of the fastest ways you

can expand.  Certainly you can ignore this section and build up your empire

one block at a time, but I can gurantee you that you'll run into problems

with tech and competition.  In that case, I just follow the old adage,

if you can't beat them, join them. (Or buy them.)



The first step in an acquisition is the choice of the company.  There are

basically two criterias.  One, is compatibility.  The company has to have

stuff that you need.  For example, technology, or specific mines, or

factories that you are buying from.  This will ensure that the merger is

going to make something that is more than the two companies combined.  The

second criteria is affordability.  Check your financials and add your

credit line, cash, his cash, and stocks (if you want to sell some.) to see

if you have enough moeny.  Usually, I take the remaining public shares,

double the value, and take the remaining private shares, and triple to

quadruple the value.  (And sometimes I still run short of money.)



The second step is the price and the finances.  Here, you have to decide

whether the number you arrived at in step one is worth it.  I usually value

department stores at $4 million, factories at $2 million, R&D at $6 million,

etc.  Basically, on the low side of the coin.  If you are going to issue

stocks to finance the merger, then I usually value that at 3 times their

issuing price for the pain that you're going to have buying that back

(assuming that you will buy it back.) After that, I look at the price.

In real life, Standards and Poors 500 companies sell for 2-8 times their

assets, and venture companies usually sell for 4-10 times.  In the game,

I try to limit sale between 2-6 times, depending on company size, the

larger the higher.



The third step is the acquisition iteself, which I'll largely gloss over

because it is in the manual, but note that it is much better to have the

money to pay for outstanding shares for merger than to issue stock.  The

final cost to you is much less.  Another way to reduce the cost is to

buy with your player at the beginning of your bid and sell at the end of

your bid.  This way, you can reduce the cost of merger buy quite a bit and

also give your player a rather tidy profit.  The last way isn't all that

trustworthy, and it is to gradually build up your share in the company.

The problem is that the price that you are likely to to save is offset

by the need to offer when other players buy up the company that you are

buying off when they see that you are trying to do so.



The final step is the most important actually, it is the integration of

the company.  Make sure that the new factories, department stores, etc.

are buying from your own company where appropriate, your research firms are

researching correct stuff, and so forth.  Close a few places if they are

completely useless, such as three tobacco farms when you have one cigarette

company.  With good management, you can be gaining money the first month of

the merger, and hopefully pay off the merger in 10-30 months.



A word of warning.  Doing so is also the fastest way to bankruptcy if you

are not careful.  Check the company very carefully before attempting the

merger, and save right before that just in case.  One thing to look out for

is their debt.  Getting a couple hundred million of debt after accumulating

that much from buying it creates a HUGE cash problem.  Also look out for

those shares held by non-public sources.  Remember that they cost much more

than that written value.  And as you buy 5% and 5% more, price does go up,

quickly.











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