1. Take all types of loans in the initial rounds.

These loans should be used in the initial rounds to fund

your R&D and automation.
2. Release products in all segments such that they form a diagonal on the perceptual maps of high tech
and low tech products. Ideally, one product should be launched each year till year 5
3. High tech products launched initially would slowly move to low tech segments. Keep launching newer
ones in high tech
4. Production automation gradual increase to 10. This is very important to increase contribution
margins which are very helpful in later rounds
5. Target 100% awareness and keep spending on marketing till you reach this stage. The spending could
follow this
Round when the product is launched 1700
Subsequent rounds till awareness reaches 100% - 2500
After awareness reaches 100% - 1400 to maintain dominance
Target 100% accessibility and keep spending on sales till you reach this stage. The spending could follow
this
Round when the product is launched 2500
Subsequent rounds till awareness reaches 100% 3000
After acessibility reaches 100% - 2000 to maintain 100%
6. 1000-1200 is the maximum market share for a product in a competitive market.
7. Sales forecast can be determined by taking the total of potentials for each segment of your product
8. No dividends should be given in any rounds
9. Whenever cash available, buy back the shares. This would increase your share price significantly
10. At each round, keep an eye on Balanced score card proforma. Your target in each round can be
Rounds 1-3 : 40+
Rounds 4-6: 70+
Rounds 7-8: 85+
first move advantage by: BORROWING FIRST, LAUNCHING NEW PRODUCT FIRST, PROMOTION first.
why he did all of those?? THIS IS BECAUSE THE FIRST MOVER CAN CAPTURE THE BIGGEST MARKET
SHARE !!!!! when you just on your feet by having adequate market share, even a mediocre CEO can do
JUST
1. If you are being graded on specific areas, become an expert in that area. (ie If you are being
graded on Return on Assets or Leverage learn those equations and look at what impacts those
numbers).
2. When creating a strategy, dont look at where we are now and how to get through the next
round. If your school is running 8 rounds, look at where you want to be at the end of 8 rounds.
Then map out how to get there. Its the same when you go to college. You choose a major (this
what I want to get a degree in) and then a path is developed for you to follow.
3. An ideal strategy. Everyone wants to know which market segments are the best ones to go into
and win!! If all teams decided to go into the Low, Traditional and High end then the
Performance and Size segments are not being taken care of. The teams that are in the Low,
Traditional and High End will be in a blood bath. Some teams that try to divide themselves
between all market segments have a harder time all of their resources are divided across 5
market segments. If a team has 2 products in one market segment, they can increase their
accessibility (run by the sales budget amounts). Remember, you can manufacture up to 8
products.
4. After printing the Courier which everyone gets the same one print out the financial reports
for your company. This will show Confidential information about your companys products.
Make sure that each product is bringing in enough money (the contribution margin) to cover the
fixed costs of that product line.
It's pretty easy to score within the top 99% of teams. Just borrow as much debt and issue as much
common stock as you can in the early rounds. The key of course is to pick a strategy and stick with it. Be
low cost or be a differentiator, it's tough to be both. Going the low cost route is usually the easiest, but
make sure you invest heavily in automation in order to squeeze out as much savings as possible. Even if
you don't go low cost it's beneficial to have high automation.

Putting multiple products in a market segment is a good idea, the more you can spread out your
marketing and sales cost the better. Rule of thumb is that you need at least 2 products in any segment
that you seriously want to compete in.

The big money makers are Low Cost and the average or normal segment, forgot what it is called. Hardly
anyone tries to compete in the Size and Performance segments, so you can have it all to yourself if
you're lucky. Unfortunately, the profit margins in both of those segments are razor thin, so you won't
make as much money as in the other market segments.
To win capsim, you must keep releasing products continuously. Utilize all that you can get in loans for
your research and development, especially for new technologies.
Promotional budget to increase awareness. The aim is to reach 100% awareness in the shortest
period of time. For the first product which is already in the market, YR1 spend $1700 and YR2
spend $2500, subsequent spending is $1400 to maintain 100% awareness. For new product, on
the year that it is going to be launched (eg. Mar 09), make the spending on YR09 $3000 (this
will come out in your statement as $3250), YR10 which is the year after will required $3000 as
well and subsequent spending is $1400 to maintain 100%.

Sales budget to increase accessibility. Its very hard to come out with a proper formula on how
this works as it takes into consideration all products in an existing market. My suggestion is,
don't be stingy. Spend $3000 on each product until accessibility reach 100% then tune down to
$2000. Yearly!

Next, its our product. What kind of specification and how many and which market?

Launch 5 products. 1 product each year. All product will target the low tech market but will also
cater for the high tech market. MTBF will set to highest point for low tech requirement, if I
remember correctly is 21000. To get the yearly specific product positioning, you have to get the
fine cut line for both high tech and low tech in YR8 which is the final year. Your 5 products
should be spread out and resting on the low tech fine cut line which is in the high tech region.
After you have decided the positioning for all 5 products, you can calculate backward for each
products as you already know how much the low tech market move each year. Performance
increase by 0.5 units every year and size decrease by 0.5 units every year just in case. Work
backwards!

When you want to launch a new product, the positioning of the product should be for the year the
product will be ready to be sold in the market. In our strategy, it will take 2 years to upgrade your
product (due to automation 10, I will explain later). Therefore, you must upgrade your product
when it is around 2 years old. Takes 2 years to upgrade, by the time it finished upgrade, it will be
4 years old. For an upgraded product, age will be divided by 2, and your product will go back to
2 years old, and you upgrade it again. This will in fact put your product in the optimum age
range, 2-4 years old and 3 years old being the best. When you are upgrading, its very hard to
position the product exactly as you wish, but give and take, make sure the product comes out in
within 2 years, not 2.1 years or 2.2 years!

You have your product, and you need to produce it and sell!

My experience tells me that in a competitive market, you cannot sell more than 1000 units for
each product. Our strategy will utilize 100% overtime as it saves us the overhead cost. We will
buy 500 units capacity for each product. Automation will be set to 10 which will gives us the
lowest possible labor cost which is variable cost. This will give us the maximum margin.

In order to know how many units to produce each round, you need to do sales forecast. The
easiest way to do the forecast is by looking at the last few pages of your statement. There will be
a page that shows all the product in the market, the actual and potential number of units sold in
units and percentage. The potential percentage should be used as a forecast for your product, use
the percentage number and get the unit number from the following year's market size. Do it for
both low tech and high tech and add together, that will be the number of units you will be
producing, repeat for each product. If your product just enter into the market like Mar 09, you
can put in maximum possible production in YR09.

Now, to buy all that capacity, to buy all that automation, to pay for all that marketing and new
product research. You need money!

In the beginning, no matter what is the source, be it stock issue, short term loan, long term loan,
emergency loan, they are all good! Money is important at all cost! So, go all out in financing in
the beginning.

Here's a system loophole. To maximize short term loan borrowings, you need to set your unit
sales forecast in the marketing tab for each product to 1 unit. It will affect the numbers shown
there, a lot of reds, but don't bother about it. Then go to your financing tab and get the largest
possible amount of short term loan.

You should never pay dividend. After your company start making positive cash flow (not
profit!), and you have sufficient cash flow to pay for your investments, you should start buying
back all your stocks. Share buy back will make your stock price shoot up faster and higher than
getting an erection. If you still have excess money from your share buy back, pay back as much
long term loan as possible, as they carry fix interests which are high. Issue new long term loan at
a lower interests rate. Reducing your short term loan will be on the last priority.

There are some debates that I have been thrown into:

1. Marketing expenses is too high.
MPS is a marketing subject, I have yet to encounter a marketer who would ask his boss to reduce
the company's marketing budget when every marketer out there is fighting for more money to
spend on marketing. The amount of money spent is like buying an insurance that guarantee all
your products to be sold out, so that you don't need to carry all the dead load on inventory cost.

2. Automation 10 incur high depreciation and slow down product upgrade.
Depreciation is not a cash flow, it is just an accounting number. Depreciation expense lets you
pay less tax. The super high margin provided by automation 10 brings in more revenue than
depreciation expense in numerical terms. You are dealing in a low tech product market, it creates
a synergy with your product upgrade as it takes two years exactly and you can keep your product
in optimum position and age. Plus, you can make do with super crazy price war selling below
your competitors' cost price.

3. No point borrow short term loan as you have to pay back in 1 year.
Have you ever swiped a HSBC Credit Card, when the statement comes, transfer the balance to
your Citibank Credit Card, when the next statement comes, transfer the balance to Maybank
Credit Card? At the end of the day, you only pay the interest and not the balance. If you are a
finance major, you will have learned of the 3 month loan which you roll over every time it
expires. Its the same thing with short term loan, you don't need to pay back at all. Just keep
rolling over.

4. Stocking out is not really a good idea.
Its a good enough idea for me. I carry 0 inventory cost and I am happy I have sold out all my
products as planned.

That's all. Good luck and all the best!