It's now year 3 of the latest round.  If you are wondering why the days go by so fast, its because the each game day is equal to 15 minutes.  As of now, my company has dropped to 10th place overall.  I dropped due to a substantial amount of cash I spend investing into a new business unit and the supply chains necessary.

 

The expansion should increase my overall revenues.  But I also predict my costs will increase as well.  I plan on building inventory in primary goods while its advantageous to do so.  One of the interesting twists to the game is the concept of supply shocks.  There is a 50% chance each year a primary good (oil, wheat, livestock, etc.) will be under a supply shock.  When a supply shock occurs, production of those goods is severely limited.  Thus its a good strategy to build stock in those goods when possible.  It will slow the growth of my company down somewhat, but I'll be in a better position in the coming years.

 

Currently, I have no competitors trying to challenge my position in the generic egg, milk, and juice markets.  Perhaps my low cost strategy has created an entry barrier.  I really don't expect this to hold up though.  It's just a matter of time before someone steps up. 

 

If you are interested in giving the game a try for yourself, the link is www.perfectcompetition.net.  The basic version of the game is free of charge.  What is so great about the game is all the different options available, from producing and selling goods to investments in other companies.  You can even work for another company as a manager or CEO! 

 

 

At the moment, it is day 277 of year 2.  My company is currently in 8th place overall.  I lost a spot or two due to some investing activities which have yet to pay returns.  The sales are beginning to pick up finally.  Still they aren't great, but I'm making enough per day to be able to support more units of my supply chain.  I currently own 40% of my company, which is making it easier to spend some of my accumulated profits for expansion.  I need to be sure to have some cash on hand to cover the required dividend payments for the next few quarters.

 

My decision now is how much capital do I need to finance a significant expansion in my company.  Also, how long do I wait before I pull the trigger.  If I wait too long, then I'll be playing catch up with the other competitors.  On the flip side, if I move too early, I could find myself in a cash flow crisis. 

As of right now, its day 184 of year 2 out of 16 years in a game round.  My company is currently in 7th place in terms of overall wealth.  The beginning of the round has proven to be difficult as the economy hasn't picked up much steam yet.  It's difficult to sell enough products in the shops to support the supply chain necessary to create a particular good. 

 

I have decided to utilize a cost leadership strategy.  My goal is to be the lowest price competitor in the markets and sectors I choose.  Right now I'm in the egg, juice, and milk markets without any generic competition.  That will certainly change as the overall economy picks up steam.  Once the competition does move in, I am in the position to lower my costs in response to their actions.  To be successful, I will need to have enough inventory built up so that I can lower prices below the production costs and still make a profit due to the higher volume of sales.

 

As I said, I'm struggling now to stay profitable while building the necessary supply lines.  I have had to rely on other competitors to provide inputs for my products.  Now as the economy starts to pick up, those competitors aren't nearly as willing to sell at low costs.  I'm going to have to invest more into my supply lines.  But of course that takes cash, which leads to my second source of flustration.

 

I own less than 40% of the shares in my company, which makes me vunerable to take over if another competitor had enough cash to consolidate the remaining ownership.  The process of buying shares in my company is slow at best due not having much in the way of cash resources at the start of the game.  To generate capital funds for investment, I could issue shares.  However, that would dilute my ownership even more if I'm not able to buy the majority of the issue.  I could issue a corporate bond, but that also has some drawbacks.  My company value will fall due to the bond obligation, reducing the value per share and ultimately the market price.  This would make it easier for a competitor to consolidate the remaining ownership and take control of my company through a hostile takeover.

 

For now, I'll just rely on generating enough cash from my existing operations to finance my expansion plans.  It will be a slow process, but less risky in the long run.