Capitalism 2 and Capitalism Lab Forum

colonel_truman wrote: ↑Sun Mar 03, 2019 6:56 pm News: I have been very careful, but today I accidentally patched the game and behold! the save games are gone...

Which version were you using before and after the patch?

I should be able to help you restore it.

smith121362 wrote: ↑Sun Mar 03, 2019 11:48 pm That is a crying shame. I have been following your progress from the beginning. Do you feel like trying it again? I would enjoy following your progress.

Thank you! and please add any comments so I know which parts I´m missing to report or to develop in your opinion.

David kindly provided the solution to my fat finger issue and the 5.0.33v has been re-installed and is up and running again.

THE ADVERTISEMENT INDUSTRY.

This is a sector we had been overlooking, until 2007, when we noticed how much our subsidiaries were spending in ads.
In 2008 we created a small Media corporation with 250mm cash, with the objective of probing the market and assesing the possibilities of investing further in the field.
After 2 years these are the results:

3 newspapers built for 82 million (all) and 1 purchased for 103 million.

Starting capital: 250mm.

Setup costs: -185mm.
Revenue: 211 mm.
Operating expenses: -54 mm.
Operating profit: 157mm.
-----
Current assets: 363mm, of which:
Business assets: 202mm.
Cash:161mm.

That´s a 45% increase in value in 2 years and a very nice performance, so we believe the publishing industry deserves some atention and a small summary:

We have looked up how much cash ALL corporations have been throwing at brand building and these are the numbers:
TOTAL money spent (20Y): 4,88 billion.
Public corporations: 3,83 billion (stock market triptych).
Tomahawk subsidiaries (private): 1,05 billion.

That makes for 244mm expenses, average, for all corporations combined, every year (or business potential if you prefer).
As we think that average does not fully grasp the reality, we have created yet another chart, this one to pinpoint past expenses during the last 10 years.
There is just one data entry for each year. We can see that the money spent has been increasing every year, what tells us that both public and private corporations are
investing heavily in building their brand.
We see a marked decline for the past two years, and that probably has been the added competition we have introduced, which has forced sellers to cut their price. That´s our conjecture but we might be wrong. The ad industry is a good barometer of the financial position of the players, so we could be looking at a slowdown for some reason, but we doubt it.
We can see that during the past 2 years total expenses have been about 1,3 billion, of which 211mm have been spent through our Gazzette, meaning that of every 6$ spent about 1$ has been spent with us.

The main player in the ad industry is government, as it has most of the media firms.
There´s a TV station, purchased at a very early date from govt, that has changed hands between some corporate players and that is currently operated by "HPW". Take a look at the stock market triptych to realize the big earnings number this corporation currently has because it is related to their TV station. Apart from that we have "LOG" that is a media corporation that sold to us their, back then, only newspaper in Glen Fork.

If we expand our media business, ad prices will have to come down, profitability will suffer and the cities will take a hit in their budgets, so we´ll have to increase taxes further.
On the other hand, we have access to a big credit line and could easily purchase distressed firms if a price war ensues.
As our Gazzette´s CEO is doing quite a good job we could expand their operations in steps and follow their progress and adjust down the road.
So, we´ll procceed to build some radio stations and see if these appeal to a new clientele that could have been eluding us.
We´ll also try to build another chart, by city, to record the performance of the different firms on the field in another post to give a picture of what´s going on.

FEBRUARY 2010 - FEBRUARY 2012

I´ll start reporting this period showing images of the cities and specially where our new residential districts are located. It was quite some time since we offered such city views.

Lambs Grove:
You can see the upper boundaries of the commercial district below and the two areas that we have chosen because of its downtown and services proximity and also affordable land values.
There´s also shown the TV station belonging to Hyper Power that we mentioned earlier, the one with such a fantastic revenue, currently for sale (they make 39mm/year and ask 393mm for it). Funk:
We have included the mini-map to show the location of New Funk (the new pollution-free residential area) with five of our buildings already in place and lots of services around. As you can see there´s already a bit of business activity going on with five stores, and two R&D labs, functioning in the area. The soviet-style buildings on the right are city owned and were the seed core of the "new" city. Lynden:
Here we have also included the mini-map to give a perspective of the new district´s location. We were finishing our downtown district and will probably begin constructing here this 2012, and heartly expect that new stores will follow and offer the needed consumer goods to give our apartments a good life rating. Glen Fork:
There´s no special area allocated for a new residential district in this city. The yellow areas will be harboring the new apartments. You can see Tomahawk´s HQ in the lower right corner and also the HQs of two of our new subsidiaries: Fruitcake Stores Ltd. and Jumbo Camera Ltd. The hand shows where our most recent buildings are being placed. The two small office buildings to the left are located at the center of the CBD.
FINANCES.
We are paying a 3,64% interest on our debt.
As always, we present the current balance sheet, income statement and public stock holdings of our corporation.
Our net assets increased by 3 billion to 15 billion since 2010 and our debt increased slightly to 3.8 billion. Our income has increased just a fraction as last time we reported all our existing RE firms were steaming hot. From 2008 to 2010 there was virtually no construction, so we reached an income plateau sometime during 2009. The Stock Market.
Some brief comments about our present holdings:
We shed our position in the photography corporation Platinum Coil after purchasing their most recent technology and started our own project through a new subsidiary: Jumbo Camera Ltd.
We had 34,5 million shares purchased at an average cost of 6 $ylvanor and sold them at about 10,5$ into a very hot-minded public for a modest gain of 150 million.
We´ll show how that company was doing after we terminated our ownership in the NEW VENTURES section.

Mankind and Tricubic Space are two toy corporations that sell each the video game console and the handheld game console products. We have no way of researching these technologies fast nor cheap, so we´ll have to participate in that market segment through acquisitions.

We also increased our participation in Magnet corp (electronics) and Victory Group (computer), over-paying for them to have them inside Tomahawk´s sphere.

Finally, a curious development unfolded, and we have a consumer goods corp. valued below their book price: Rising Sun International (beverages).
We decided to show their price chart in the screenshot.
We had purchased some of their stock at book value and we will keep buying them as long as their shares remain shunned, as they are a direct competitor of Saratoga Mills and are currently profitable through their wines and high quality grapes.

Signed up to the forum. Long time fan of capitalism 2, but reading your progressive story here got me to buy lab and all the DLC's. Looking forward to your next update.

Damm so sorry to hear! Love following your summaries

Is this still being updated?

matt217th wrote: ↑Sat Apr 27, 2019 10:55 am Signed up to the forum. Long time fan of capitalism 2, but reading your progressive story here got me to buy lab and all the DLC's. Looking forward to your next update.

Hey! Nice to see I can help make this community grow.

NEW VENTURES
So, welcome our new subsidiaries. We transfered to each 500 million$ from Tomahawk´s reserves so they could start their first set of operations. That includes the building of the HQ and the transfer of our technology to them, at market price. The total cost is show in the Income Statement: "R&D expense", under the "lifetime" column.

Fruitcake Stores Ltd.
Finally, we have corporation focused on selling snacks. As we said, that sector remains in the hands of the local producers for the most part, so we expect to turn a profit in the short term.
Selling candy is not the best money maker, but we want to encourage the economic activity in our nation by building factories, creating jobs and paying taxes. Our newly hired CEO seems to be aware of our expectations and is already involved in producing and selling 4 of the 6 possible products inside that class.
We provide an overview of the company. Jumbo Camera Co.
Our new subsidiary has been set to deal with our adversary, Platinum Coil, and their promising field of business.
As we mentioned before, we purchased Platinum Coil´s technology after our 200mm$ investment gave us access to their board of directors. We then had to pay 30mm$ for the compact camera and digital camera´s blueprints, which were then handed without delay to our subsidiary. The designs are currently being enhanced in the labs and turned into consumer goods in the assembly lines, to our satisfaction.
As always, we could have had our own monopoly, but we placed our bet for more jobs and higher wages overall, rather than profits, as we´ve been saying all along...
Here´s an overview of the corp. You can see that they are already selling compact cameras, but they might find the digital camera design to be uncompetitive as it is. Here´s Sylvania´s market for digital cameras:
You can see that there are a couple of resellers unable to sell their 40 odd quality stock (Funk Apt and IQ), but the 55 quality cameras are being sold smoothly (Magnet and Victory). That puts our current research in the field in a proper perspective, and our subsidiary will probably have to "build" its brand before it can compete here, too.
We finally want to mention that photo cameras have very low production costs: compact cameras about 6$ and digital cameras about 12$, maybe then double that number after transportation costs. If you compare that to the price being asked at the stores you will realize that the margins in this market segment are huge.

Platinum Coil.
So, we sold our last bit of ownership in this company in February 2011, receiving 350mm$ from the desinvestment.
We present the market metrics from Platinum Coil in 2012.
We can see that the price has been stuck around 10$ for the last year, and that the company presents strong earnings but an expensive valuation by current assets, altough that could be considered normal if the company´s succesfully expanding. We could try to estimate their present situation by looking at their income statement and detailed product sales in order to guess where the company´s heading. So let´s try:
We present the data from 2010 and 2012.
1- We can see that they went from making 1,3 mm$ (net profit after tax) in 2009 to 29,5 in 2011. That looks like an impressive feat! Also, if we look at their biggest expense, it´s donations to political parties (donations to public facilities). That masks the history of their profitability: In 2010 we could have had the impression they didn´t turn up a dime in their entire life and that they were losing money constantly. That alone could be a call to pay due attention and not to haste.
2- Their costs for both 2009 and 2011 have remained quite the same (except cost of sales) and that indicates a somehow "mature" business (?)
3- Looking at the product sales we see that the only product that grew their profits in the interim was compact cameras. Do they have there pricing power or are they expanding their operations and gaining market share?
4- Their revenue grew by 30%, from 65mm$ to 85mm$, but...
5- The operating profit (revenue minus costs) for both 2009 and 2011 grew by 50%. A fast growing corporation.
6- Let´s look at the cost of sales: that also grew by 50%, meaning their sales efficiency didn´t grow, so they probably are expanding their operations rather that charging a higher price for their compact cameras.
7- Let´s see what percentage of the revenue was used to produce their sales: They went from using 32,6% of their revenue in 2009 to 35,4% in 2011. We believe that infers their sales efficiency has modestly deteriorated, and we think the appearance of our subsidiary could have caused that: they might have been forced to adjust their prices down.

We´ll try to remember to update this in the 2016 post so we have data to compare again the evolution between 2013 and 2015.

SUBSIDIARIES.

Here´s a summary of all our subsidiaries. It is presented so you can see at a glance those that did set sail and those still berthed.
In our opinion, the ones showing an (estimated?) annual loss are the ones that should be reviewed with care, and so we did, giving you just a few remarks now.
Putting aside our most recent ventures from that category:
A) We see Falcon Industries and Buzzard Automotive both steadily climbing their way out of the mire.
The first (Falcon) has a promising outlook as they have access to the new electronic products (camcorder&portable player). Also, part of their competition (Magnet Corp, one of three with expertise in the field) will be absorbed soon by Tomahawk, as they are on the verge of bankrupcy (so we claim).
The second (Buzzard) has the usual problems of both having a very limited variety of goods to sell (car&motorcycle) and on top of that their own specialized retail store.
We are helping them by means of R&D so they can establish a proper supply chain of semi-products and see if we can help them boost the final quality of their automotive brand.
About their competition (Anlin Corp), we reviewed them in an earlier post, but just to mention it now they are a big corporation with a horrible brand (corporate brand with both autos and sports goods, deep negative) and many natural resource-semi-farm firms.
Losing money and steadily falling into a debt hole, it might take them many years to go under, unless investors (bank&private) lose faith first, for the best course for Anlin would be to be taken apart, sold piecemeal and their name erased from all memory.

B) Skynet industries: are just starting to retail their own products (camera phones), as we recently appointed a new and more active CEO. Their field is telecom and there is one competitor: an investment firm turned diversified (Ideas Hotbed Corp).
As both the smartphone and Hud glasses will probably be invented by our subsidiary, or their parent, it´s just a matter of time to see them making big money.
In any case, their camera phones have at this moment lvl 100 quality vs the competition´s 50. On the other hand they have a much less developed distribution infrastructure (6 retail stores vs 18!)

C) Tidy-Mart Inc: are facing tough competition from one Shining Star Corp (household products).
We´re happy enough offering them liquidity as long as they use it to expand, produce and hire folks, but we´d like to see both Shining Star´s investors and lenders pick up the bill, and not us. Let´s see how they are faring vs them.
We can see they have not jumped fully into two of their possible consumer products. We visited their stores and saw they JUST started selling washing powder and tissues in two of the four cities. That explains the low market share.

Looking at 2011´s Income Statement we can see that the costs of sales are 70% vs our 54% of revenues (sales efficiency). That, together with a much higher cost to keep their brand (twice as expensive) gives us a nice competitive edge. Despite the above the margins are thin and we barely break even.
On top of that Shining Star has to pay 8mm/year in interests.
As there is room to grab some more market share we assume that in the future we´ll do somehow better and they will spiral down, as long as our "efficiency" edge remains.

D) Finally, our resource subsidiary Rock Smelters: The gold mine they were operating just stopped producing, so we went to the books to asses its profitability.
Easy done? well, we looked into the firm statements and saw a 16mm net profit. BUT, we cannot see how much we paid for it! That´s where a cash flow statement could come in handy.
As we have been wise enough to prepare for such an occurrence, we loaded the game previous to our purchase to see the cost of the mine "to be".
So 21 million$, plus the building.
Obviously, we haven´t considered the benefits derived that our gold mine provided our other subsidiary making gold rings, as the market for gold was back then monopolized by Global Link...

As a side note, mention that the possibilities to expand in natural resource production are currently very limited, as there are no cheap locations available and most other corporations have sunk their cash reserves into setting up extraction facilities. We will try to be alert to any news regarding the finding of new deposits of any kind of resource to see if they don´t come with a land cost premium.

TECHNOLOGY:
Finally, we prepared a list of our completed research. Despite being very simple, it gives us a nice snapshot.
I believe it would be nice to add current research (subsidiaries included), leadership, and possible purchases too, but that for another time.
If you wonder how we achieved such advanced technology for segments where we have no expertise (like food staples), the answer is we hire researchers from the universities. That said, we should present another snapshot of city competitiveness (linked to university research), so here it is.
These two will help us assess our position, current and future.
REAL ESTATE:

We built since 2010: 25 new apartment buildings and 11 office buildings. The supply is still higher than the demand for both, and we are keeping it there, between the 0-10 range.
The moment we see money rates coming down we´ll speed up the construction and keep the supply above the 10 range.
Once we reach 2020 we´d like to offer a chart correlating the RE supply with the GDP and see if it matches.