Month: May 2015

Congratulations to all of the new Grand Champions for coming out on top of the rankings in the Invitational.

Lots of teams also played well and yet still came up a bit short in the scoring despite their efforts.  If you ended up with a profitable and well-managed company, then that’s an achievement too.

Many teams did poorly too.  Hopefully they can learn from their mistakes in the game to possibly help them in the business world at some point in the future.

If you’re competing in this Invitational, are you ready?  Are you sure?  Just because you won 1st place in your class game, that’s not necessarily sufficient preparation to do well in the Invitational.  Every single competition I observe many teams making huge, fundamental errors.  The only explanation for this that I can imagine is that some of these teams must have had very poor competition in their class games.  You don’t necessarily need much skill to win when the competition isn’t very good.

While there’s many poor teams in each invitational, there are also many excellent teams.  Which kind of team will you prove to be?  Much will depend on your dedication to put the time and effort into analysis and strategic moves starting in Year 11.  A few key mistakes can easily put you out of competition for the rest of the game.  Earning 1st place position in the early years is also not a very good predictor of success in the end.  Often the 1st place teams in Y11 have better earnings because they didn’t invest in capital improvements that make a huge difference in the final standings.

Good teams will have good results throughout the game, but not necessarily be in 1st place for the first 3-5 rounds.  It often takes time for a good game strategy to accelerate growth and earnings.

Important strategic moves are plant upgrades and plant expansion over a period of years using cost effective financing.  Interest rates can have a major impact on how quickly you can do these investments without the interest costs soaring.

Currency exchange rates have had a major impact on game play in the last few months.  There has been very large moves in these rates recently, and the game amplifies these moves by 5 times the actual differences.  A strong US dollar can kill the profitability in the Europe, Asia, and Latin America regions.  A weak dollar can likewise have the opposite effect, making these regions highly profitable.

With high interest rates and poor exchange rates, a more conservative growth strategy is more appropriate to this kind of bear market conditions.  Low interest rates and good exchange rates signal a bull market that’s ripe for expansion.  A mix of these indicators calls for a more balance growth strategy.   There is no single right strategy for every Invitational.  The teams that respond more effectively to market conditions and competition will have a major edge over other teams.  You can follow the market currency rates to know where they’re headed in advance of other teams that aren’t watching them.

Market conditions include the cost of materials.  There is no way to predict where these costs will head in Y12, since you don’t see the market prices until after they occur.  If all the teams shift to standard materials, then those prices will skyrocket.  A shift to superior material will have those prices escalate.  Choosing a balance of these materials (on a dollar cost basis) will minimize the risks of choosing the materials that increase the most.   You can choose to focus on one kind of material or another after you see what the industry as a whole is doing, based on the choices made by individual teams.

Good luck, but hopefully you won’t need to rely on luck when you use analysis as the basis for your strategic planning and decisions.