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General guide

All GMC scenarios are unique and for long history of the championship they have accumulated several dozen. However, there are some universal tips that you can follow safely in any scenario while making company's strategy for upcoming game. Based on the cumulative experience of our experts, this topic provides general advice for game strategy in new version of the GMC simulator. These tips are used in development of calculation model v2, which you can purchase in our store.

 

Opponents in the group - it is important to analyze before start of the game, how much your opponents will interfere with selling your products. Elasticity of some demand factors depends on market load very much. The smaller total market share occupied by you and your opponents, the easier it will be to increase sales volumes and vice versa. For example, if your group with you will be total of 4 teams (minimum number), then you can expect average demand x2 growth (very simplified calculation) compared with group, which will play all 8 teams (maximum number). But even if your group consists of 8 teams you need to roughly understand the real strength of your opponents - play in 1 round of national championship, where a lot of newbies or in world championship where play only best of the best teams - these are 2 very big differences. In "weak" group you need to play more aggressively, investing more money in expansion into markets. In “strong” group, on the contrary, you need to switch to safe mode, since you will not be able to earn anyway because of opponents in the group, and you will just burn money for nothing. This and other guides are valid for groups with average rivalry, where is conducted active struggle for market.

 

Advertising

  1. Corporate advertising - remember strong cumulative effect of investment in corporate advertising, so invest maximum in 1 and 2 period with a gradual decrease to 0 in 5 period. For greater effect, choose market with prospective maximum sales, usually it is market EU and Internet. EU market is much smaller and large investments in corporate advertising will hardly pay off.

  2. Direct advertising - follow simple rule, the more potential product sales, the more you need to invest in direct advertising for this market. Total budget for direct advertising is calculated based on 4 - 8% share of planned sales revenue. Accumulative effect of direct advertising is small, so in last periods reduce investments in direct advertising very smoothly (unlike corporate advertising), otherwise you may lose market share.

 

Prices - one of the demand factors, which elasticity directly depends on market load. Price strategy will resemble a roller coaster. In 1 and 2 periods, market load is still small, elasticity of prices is maximum - we reduce prices and grab market shares. If you managed to capture market shares more than opponents, then in last periods (3-5) we wait when market load becomes higher than 60 - 70%, then we raise and set prices slightly above the average. Thus, you keep market share which won in the beginning of the game and get additional profit in last periods due to higher prices and greater profitability compared to opponents. In 5 period, you can again reduce prices and further increase market share to increase goodwill (market share is one of goodwill factors), but in this case you will lose part of the profit due to lower profitability.

 

Production plan - when calculating amount of products for shipment to agents and distributors, try not to send semi-empty or partially filled containers. Especially it concerns Nafta market, where sending 1 container costs 8000. Priority for large markets EU and Internet, development of Nafta market should be on residual principle. Among products, the most important is 1 product for same reason. In common, plan production for each period, depending on market needs and chosen strategy. Take opportunity to leave part of products in the warehouse, in order to evenly balance factory load in conditions of changing seasonal demand.

 

Quality of products

  1. R&D implementation (product improvement) - it is necessary to implement only MAJOR developments, MINOR developments are implemented automatically. Implementing MAJOR development destructs all warehouse stocks of this product. It is important to remember that sometimes in history scenario can be “hidden” MAJOR development that have not been implemented into production before. If you are not sure that there are no "hidden" MAJOR developments in scenario, then it's better to implement all R&D just in case.

  2. R&D development - It is rather difficult to predict R&D developments without having ready-made R&D statistics, so it is easier to choose optimal R&D plan from our pre-prepared R&D databases and build production strategy around it. In exact period when you plan to implement MAJOR development, try to predict demand very carefully in case not to leave large stock of products in warehouse, because you have to destruct it at the price of scrap.

  3. Assembly time - effect of increasing assembly time comes only in next period, so if you decide to increase assembly time of product, then it should be already done in 1 period, maximum in 2 period. In common, it will be optimal to leave assembly time at the same level or even reduce to 115 - 120% of nominal value.

  4. HQRM (high quality raw material) - using HQRM can make sense if raw materials price is relatively low. In fact, HQRM has only 2 general options (demand has linear dependence on the factor) - if using of HQRM in production is economically profitable, then set 100%. If using HQRM in production is economically unprofitable, then set 0%. Forecast company’s profit from using HQRM and determine the need for using, can be easily done in calculation model v2.

 

Subcontracting - extremely useful and cheap option for rapid production increasing, if you need to increase output of products. There are only 2 alternative to subcontracting - switching to more number of shifts (2, 3) and purchasing new machines. Disadvantages of these methods will be discussed below. For proper use of subcontracting, forecast production plan for next period and purchase as many components as you need for normal factory work 5 days a week - 100% machines load (maximum load for 7 days a week is 137%). Thus, you will not overpay your personnel for overtime work and reduce cost of production. Take care that in 5 period you do not have unused components left in warehouse, these are frozen funds which decrease liquidity of your company.

 

Agents and distributors - use special agent and distributors map to select best plan for recruting agents. Number of agents and distributors depend on expected volume of sales in EU and Nafta market. In common, optimal number of agents for EU market is 5 - 8 and 4 - 6 for Nafta market depending on scenario. Try to recruit required number of agents and distributor in 1 period and do not change it until the end of the game. In 5 period recruit 1-2 additional distributors for Nafta market to increase company's goodwill (increasing agency network is one of goodwill factors).

 

Operations

  1. Materials - buy materials with a small reserve to have enough resources for production. It is useful to plan production in advance for all 5 periods and purchase materials for 3 and 6 month futures, so you can save money. Remember that when using components for production, you do not need to buy materials, it is not required and will simply lay in warehouse.

  2. Maintenance hours - during operation, machines spend their resources and require constant maintenance hours. If machines are not timely serviced, their efficiency will decrease and machining workers will spend more time producing parts, which will increase cost of production. Try to keep machine efficiency 92%, it will be optimal. Achieving higher level of machine efficiency requires more hours of maintenance and economically unprofitable.

  3. Shift level - simple rule is - production in 1 shift is always cheaper than 2 shifts (if all other things are equal), and production in 2 shifts is always cheaper than in 3 shifts. Chose work in 1 shift for your personnel and use subcontracting to compensate shortage of components. The only case when you need to set production to higher shift level is 1 period of the game. In absence of opportunities to increase production here and now changing shift level to 2 or 3 will be necessary, but proper measure. Otherwise, you can lose your market share, because you will not be able to supply your agents and distributors with enough amount of products, unlike your more aggressive opponents.

  4. Number of ports - very simple calculation, which is described in detail in special topic. Purchase enough ports to maintain no more than 0.1% of estimated level of failed visits. In 5 period number of ports can be doubled.

  5. Website development - website development increase demand only in Internet market. The more investments in website, the greater sales growth you can expect. Optimal value of investment depends on size of Internet market and is in the range of 15-40.

 

Personnel

  1. Recruit assembly workers - cheap way to recruit additional workers. In absence of competition in labor market (or sufficient number of unemployed workers), recruiting required number of workers is practically assured. With shortage of free workers in labor market, probability of successful recruitment of new workers is reduced to 20-30% of planned number. In this situation, attempts to hire even more and more workers does not make sense, you will spend money for nothing.

  2. Train assembly workers - expensive but guaranteed way to increase number of assembly workers. It is used in exceptional cases, when competition among companies for personnel in labor market is exorbitant. In any other situation, it will be cheaper to increase recruiting of assembly workers or set higher wage rate in order to increase chances of personnel recruitment.

  3. Wage rate - reducing wage rate is impossible, it will cause strike of personnel. You can increase it, but it also cause increase of production cost. Raising wage rate makes sense only if there is shortage of workers in labor market and, as a consequence, production of goods is limited. Then you need to offer the most favorable working conditions which will help to attract assembly workers from labor market to your company. In such situation, increase of production cost will be offset by increase of production scale and income growth from sales.

  4. Management budget - important parameter, which is often underestimated by challengers. Management budget affects all major processes in company. Raising management budget will increase demand for products, decrease percentage of rejects, speed up research and development of improvements, reduce risk of force majeure, increase attractiveness of company for personnel recruitment, etc. Optimal value of management budget is 13-14% of administrative expenses. Calculate average administrative expenses during all 5 periods of the game in advance and set required management budget in 1 period. Remember that it is strongly not recommended to reduce management budget.

  5. Staff training - principle of staff training is completely analogous to management budget, but it costs much cheaper and has less effect. Unlike management budget, staff training can be reduced or even set 0 without any risk of causing personnel strike or force majeure. Staff training has significant cumulative effect (similar to corporate advertising), so it is recommended to invest most funds in traning at the beginning of the game and gradually reduce to 5 period.

 

Finance

  1. Shares to issue/repurchase - detailed information about issue and repurchase shares described in this topic. Issue shares increases available liquidity of company, which increases goodwill and investment performance, therefore, issue shares minimum 2 times during the game - 10% of share capital each calendar year. For greater effect, choose right moment to issue and repurchase shares - issue shares at maximum share price, repurchase at the lowest price. This way company earns extra profit due to the difference in share prices.

  2. Dividends - important factor for increasing investment performance, calculation of dividend payment described in this topic.

  3. Term loans - loan that you can borrow, but you can not return. In old version of GMC simulator, money taken on term loan was still considered as liquid funds of company and teams often took term loan in 5 period to increase goodwill (liquidity is one of goodwill factors). In new version of GMC simulator money taken on term loan does not considered as liquid funds and this decision lost any sense at all.

  4. Term deposit - all "free" funds is useful to put on deposit, which will give you small but additional income.

  5. Machines to buy - in old version of GMC simulator purchase of machines was very popular solution for increasing production. With addition of subcontracting, the need to buy machines has disappeared at all, especially since they start to work only in next period.

  6. Machines to sell - sale of machines makes sense only if you are limited in factory space and want to free some place occupied by machines for recruiting additional assembly workers. Risky strategy where it is important to remember that when you sell machines you pay additional tax 60000 and need to earn extra money next periods. In competitive groups, it is very difficult to do, so most often such strategy can be found in early stages of national championship or in groups with incomplete number of participating teams.

  7. Factory space - main limit, which restricts production at company's factory. Do not forget to check amount of free space in factory when buy new machines or recruit personnel. If space is not enough, then you will not be able to buy machines and hire staff.

  8. Insurance plan - in new version of GMC simulator, accidental loss of force majeure was eliminated in order to fair play between teams, so if you have at least 1 set of reports, then you can always accurately predict in which period company will get force majeure and buy insurance. Or you can buy database of insurance plans in our store.

 

Information

  1. Market shares - it's useful to buy information about market shares at least in 1 and 2 period, when companies are just beginning to expand into markets. So you will be able to estimate relatively free product niches and correct your strategy in time. In next periods, you can play without information about market shares, because market load will change very slowly and its change can be predicted on basis of existed management reports.

  2. Corporate activity - information about companies will not help you much during the game, but it will tell you what strategy was chosen by opponent teams in subsequent analysis. If you try to correct your strategy and adjust to your competitors (increase your advertising budget, cut R&D), repeating their decisions, you are likely will lose. Information about corporate activity makes sense to buy only in 1 period, in order to understand approximately what to expect from opponents. However, if you are confident that you are winner or vice versa, that you have not got chances anymore, then buy all information safely, at least you will exchange it with your rivals from the group after game.


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