Capitalism 2 and Capitalism Lab Forum

In my current game I started manufacturing desktop PCs & notebook computers. Eventually after earning several years of very high profit margins (upwards of 65%) I decided to invest heavily into retailing to try and cash in on my products. In all 8 cities I built a mix of department stores & computer stores, gaining a demand bonus & these stores were only built in traffic density areas of 50 or higher. I'm onto year #3 of my retailing expansion and my retailing division has yet to earn a profit.



And if it's any help here is my income statement from the prior year (these screenshots were taken Jan 1st of the current year)



This is a screenshot of production & retail, guess I should have provided seperate screenshots for production, then retail.




I can provide screenshots of other things if required. But basically the problem from what I've noticed is that the AI is buying desktop pcs/notebooks from me under a price contract but they're outselling me in retail. Several of my stores are operating on a loss while the AI is operating on huge profits. My branding is generally higher with all products across all stores but I still can't sell very well. Any help/tips is appreciated.

Just raise your factory or warehouse price where AI buy from you. If the price is high enough they will drop (if they don't drop, you can enjoy AI paying you more). It doesn't matter whether your retail store is profitable or not, you retail store is paying your own factory, as long as they combined making good profits.

So I progressed a few more years into my game, the AI continues to buy my products!

Here are some key notes:

I expanded the margins but approximately 40-50% across all of my products.
I completed R&D for the tablet PC
Completed a $800M acquisition for a 80% stake in a retailer

Now for more questions;

1)Having greatly increased prices for the products I am selling out of my factories, do I continue to operate a retailing division even though roughly 60% of my retail stores are operating with losses?

2)The demand for tablets is showing very little, if anything the bar is at 0%. Will demand arrive if I start to build this product? Or should I wait?

3)My new subsidiary is currently operating with negative cash flow in the prior year, they have roughly $600M cash on hand, but the economy is currently in a recession. Should I use my subsidiary to generate a dividend which would in turn give me (The parent company) a small cash infusion at the end of the year as a payout? Or leave the sub paying no dividend? Some general advice for handling a sub is appreciated.

Thanks

therealevan wrote:
1)Having greatly increased prices for the products I am selling out of my factories, do I continue to operate a retailing division even though roughly 60% of my retail stores are operating with losses?

2)The demand for tablets is showing very little, if anything the bar is at 0%. Will demand arrive if I start to build this product? Or should I wait?

3)My new subsidiary is currently operating with negative cash flow in the prior year, they have roughly $600M cash on hand, but the economy is currently in a recession. Should I use my subsidiary to generate a dividend which would in turn give me (The parent company) a small cash infusion at the end of the year as a payout? Or leave the sub paying no dividend? Some general advice for handling a sub is appreciated.

Thanks

1) Although AI's might still buy your products, but if retailer AIs still buy your product at a loss, they will go bankrupt sooner or later. Unless they have other income method to supplement. Your own retail chains is the insurance of guarantee outlet. You might have higher operating profit margin without retail, but without guarantee outlet, you are giving downstream AI the opportunity to choke your businesses, especially if other AI sources start to pop-up (this really depends on how many AI opponents exist, what's their expertise, and what's their strategies). This is a question of risk and reward.

2) Most newly researched products don't have demand, since there's no local providers if you are the first to reach the tech. Their demand will be depend on your own rating for a while after you start selling the products (before finally local providers start to show based on the setting of local competitors' competence some months or years after 1st product hit the market).

3) As I state in 1, it's obviously hurting your downstream outlet when your wholesale price is too high. And if they have negative operating profit, no matter how high you set their dividend payout ratio, the total dividend they paid will still be 0. Even if you use some "techniques" to gain cash from this subsidiary (usually these techniques are close to exploits), it will only increase the speed of their market value dropping, hence you will just have high lose in stock return. And might eventually going to be 0, once it's bankrupted. The money you invest in stocks will be reflected in your net profit. Not just your operating profit margin is important, how you use the cash is investment is equally important, especially if you turn on inflation.

counting wrote:

therealevan wrote:
1)Having greatly increased prices for the products I am selling out of my factories, do I continue to operate a retailing division even though roughly 60% of my retail stores are operating with losses?

2)The demand for tablets is showing very little, if anything the bar is at 0%. Will demand arrive if I start to build this product? Or should I wait?

3)My new subsidiary is currently operating with negative cash flow in the prior year, they have roughly $600M cash on hand, but the economy is currently in a recession. Should I use my subsidiary to generate a dividend which would in turn give me (The parent company) a small cash infusion at the end of the year as a payout? Or leave the sub paying no dividend? Some general advice for handling a sub is appreciated.

Thanks

1) Although AI's might still buy your products, but if retailer AIs still buy your product at a loss, they will go bankrupt sooner or later. Unless they have other income method to supplement. Your own retail chains is the insurance of guarantee outlet. You might have higher operating profit margin without retail, but without guarantee outlet, you are giving downstream AI the opportunity to choke your businesses, especially if other AI sources start to pop-up (this really depends on how many AI opponents exist, what's their expertise, and what's their strategies). This is a question of risk and reward.

2) Most newly researched products don't have demand, since there's no local providers if you are the first to reach the tech. Their demand will be depend on your own rating for a while after you start selling the products (before finally local providers start to show based on the setting of local competitors' competence some months or years after 1st product hit the market).

3) As I state in 1, it's obviously hurting your downstream outlet when your wholesale price is too high. And if they have negative operating profit, no matter how high you set their dividend payout ratio, the total dividend they paid will still be 0. Even if you use some "techniques" to gain cash from this subsidiary (usually these techniques are close to exploits), it will only increase the speed of their market value dropping, hence you will just have high lose in stock return. And might eventually going to be 0, once it's bankrupted. The money you invest in stocks will be reflected in your net profit. Not just your operating profit margin is important, how you use the cash is investment is equally important, especially if you turn on inflation.

1) Guess I'll leave my retailers alone, is it worth to expand my retailing footprint?

2) Is it worth to start manufacturing tablet PCs and output into a warehouse to be branded with no output coming from the warehouse? In theory, once demand arrive, my tablets will have a greater brand rating.

3) The retailer I have the stake in actually has no business with me, I bought them out simply "because i could". I'm interested in turning them into a profitable business, and at one point they were profitable until the economy entered a recessionary state.

therealevan wrote: 1) Guess I'll leave my retailers alone, is it worth to expand my retailing footprint?

2) Is it worth to start manufacturing tablet PCs and output into a warehouse to be branded with no output coming from the warehouse? In theory, once demand arrive, my tablets will have a greater brand rating.

3) The retailer I have the stake in actually has no business with me, I bought them out simply "because i could". I'm interested in turning them into a profitable business, and at one point they were profitable until the economy entered a recessionary state.

1) It depends on your preference I suppose. Normally I don't like to squash all opponents, but allowing them to thrive. The more you cooperate with AIs the more likely they can survive. If you wish to go head-to-head against AI at retails, it certainly is a viable strategy. A lot of times it's even a good strategy to use AI retailers with just a few of your own outlets setting the price and rating, against a common competitor with just its own retails. It's more effective than just your own retails. However under lower AI expertise, the advantage of borrowing AI's unfair expertise is less of a concern, and you generally need your own outlets for all your products. Where AI can hardly keep up players expansion speed.

2) From your descriptions I'd say you use unique brand for each product, right? So it is viable to build up the brand awareness before hitting the market. Whether this is worth or not, depends on a lot of factors, like CPM of the cities' media, whether you owned them, how good of a quality of your tablet, what's the raw cost and how many cash do you have in reserved (per-branding without selling would damp your cash quite hard, if you don't own medias, and wish to gain awareness quickly), even inflation settings. Whether or not the increased selling price thus profit margin can outweigh the initial brand investment really isn't that clear without proper cost analysis. BTW, if you use corporate or ranged brand, then you don't need to worry about this.

3) Well, in that case, your "investment" strategy isn't quite sound as I can see you lost a lot in net profit from massive negative stork returns. Either way, there's no point setting dividend payout ratio to a subsidiary when it has negative operating profit in previous year, you won't get any dividend anyway no matter how many cash it has. It's very difficult to directly influence AI's profitability. especially if its a pure retailer/real estate AI. The only way you can do is to encourage it to buy from you, if you put a warehouse close to its outlets and pray it decides to buy from you, and immediately put internal sale back on, so other AIs won't take advantage to the same supply warehouse (if you failed and others get to it first, simple cut off the link in warehouse output, remove and rebuild the output and try again). I haven't tested enough to know the new re-direct links in 2.7 beta worked well as a tool for AI assistant yet. Otherwise, it's usually best to just inject cash using "issuing share to parent company". AIs sometimes need more time to expand their businesses (sometimes might take years and they are very venerable to recession, and sometimes it will fail regardless what you do). This really isn't a well explored area in strategies, regarding assist and cooperate with AIs (There could be other ways to encourage their businesses I am not aware of). I'm still more used to squeeze profit from AIs, and rarely thinking in the opposite (and normally it would end badly for human players, if you give too much leeway for AIs)