This document provides an overview of a business simulation game developed by Tycoon Systems Inc. for operating a computer manufacturing business. The 3-sentence summary is: The simulation lasts 2-3 years and has players invest in industries along the computer supply chain to maximize their firm's value and share price. Players make decisions around strategic positioning, product life cycles, economies of scale, and supply levels to compete against other teams. The document outlines accounting basics, investment options, and general terms and conditions for using Tycoon Systems' online business simulations.

1. © 2014 Tycoon Systems Inc
Business Simulation Game
Computer Manufacturing

2. © 2014 Tycoon Systems Inc
The Business Simulation Game
• Advanced online business simulation -
operating in “Real-Time” on the web
• Lasts for 2 - 3 simulated years
= 8 or 12 business quarters
• Objectives
Start and manage a new corporation
: Invest in a number of computer-based industries
: Compete with all other teams to
- maximize your firm’s value
- maximize your share price

3. © 2014 Tycoon Systems Inc
Industry Structure - Personal Computers
• Vertical Supply Chain Effects ….
• Downstream Costs depend on Upstream competition
Components Manufacturers
Motherboards, Cases, Keyboards, Power Supplies,
Memory, Operating Systems …
Systems Manufacturers
Desktops, Laptops, Netbooks, Workstations, Servers
Computer Retailers
Computer Stores, B2B Distributors, E-Retailers
X No cost synergy !
X No cost synergy !

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4
Investment Options available
Where will you compete ?
USA ? Europe ? Asia Pacific ?
Components
Systems
Retail

5. © 2014 Tycoon Systems Inc
Strategic Positioning
How will you compete ?

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Strategic Positioning
A Sustainable Strategy

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Strategic Positioning
Strategic Positioning Decisions in the simulation
• Balance of Service, Quality, Innovation, Personnel policies, Warranties
• Relative to your price level and other offerings in the market
What are you trying to offer your customers ?
High quality, innovative products at good prices ?
Or lower quality, but still adequate product at lower prices ?
Increasing spending increases costs, but also impacts demand

8. © 2014 Tycoon Systems Inc
Product Life Cycles
Effect on demand, pricing and profitability
• Introduction – lower profitability, lower volumes
• Growth – profits improve, invest in extra capacity, grow market share
• Maturity – maintain profits, adjust pricing, “harvest”
• Decline – Lower profits and prices, “relaunch”, or liquidate

9. © 2014 Tycoon Systems Inc
Economies of Scale
Effect on market share, pricing and profitability
• Higher market share builds price leadership
• Building capacity builds market share, reduces average costs

10. © 2014 Tycoon Systems Inc
Supply Levels and Market Crowding
Effect on pricing and profitability
• As firms build capacity, total market supply increases
• If supply approaches 100%, average market pricing reduces
• Watch for supply increases – invest in unsaturated markets first

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Accounting basics
The Income Statement – Activity
Revenue
Cost of Good Sold
Gross Profit
Sales General & Admin Costs
Operating profit
Interest
Taxes
Net Profit
less
=
less
=
less
less
=
100
65
35
15
20
5
6
9
What happens if you raise prices ?
What happens if you increase advertising ?

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LIABILITIES (Things You Owe)
Short Term Loans
Payables
Total Current Liabilities
Long Term Loans
Shareholder Equity
LIABILITIES + EQUITY
Accounting basics
The Balance Sheet – the balances, simplified
ASSETS (Things You Own)
Cash
Receivables
Inventory
Total Current Assets
Total Fixed Assets
(equipment)
TOTAL ASSETS
10
25
35
25
40
100
AGAIN - What happens if you raise prices ?
What happens if you increase advertising ?
5
30
25
60
40
100

13. © 2014 Tycoon Systems Inc
Investment Process
Supply Levels, Product Maturity and Competitor Activity
A. Check Supply Level :
Is the market saturating ?
B. Check Product Maturity :
Can higher prices be supported ?
C. Check Competitor presence :
What pricing pressure might exist ?

14. © 2014 Tycoon Systems Inc
Invest !
Invest in a variety of
industrial markets.
Investigate options and
choose
$60M equity capital plus
debt to invest = $132M
Think “leverage” ! How
much debt can you take ?
How much capital is
available to you ?
Hint: Larger companies
tend to dominate the
markets and control pricing
Products available to you may differ from this illustration

15. © 2014 Tycoon Systems Inc
Manage !
Find data at various levels
within system
Check the product
detail information -
Price Level
Price Adjustment
Market Share
Product Maturity
Supply Level
Number of competitors
Inventory levels
etc

16. © 2014 Tycoon Systems Inc
Compete !
Track competition
using all available
information screens
Data is either updated
manually or according
to a timed schedule –
eg
7 minutes = 1 quarter
of simulated trading.
Every quarter you
may alter your
strategic positioning
(Service, Quality,
R&D, HR, Warranties)

17. © 2014 Tycoon Systems Inc
Check your position !
Where are you in the
competitive world ?
Check your position in the
“Real Time Scores”
Wide range of
Competitive
information available
eg,
Check Contribution
Margin against competition.
What do you do about this ?
You have a limited time
between each screen refresh if
running in automatic mode

18. © 2014 Tycoon Systems Inc
Extra note : Takeover Opportunities
After Q4 :
You have the opportunity to take over a Virtual Competitor
You should only attempt this if :
a. You have enough budget
b. It makes strategic sense for your company
You may be better off growing “organically” – or maybe acquisition works …

19. © 2014 Tycoon Systems Inc
General Terms and Conditions for use of simulations owned by Tycoon Systems Inc.
• Tycoon Systems will allow use of its online simulations (“TS Service”) to users under the following general terms and conditions.
• TS Services include, but are not limited to, access for selected individuals to Tycoon’s business simulation systems, business games and web-based
software, for use in executive education programs and on-line business competitions, on payment of access fees as specified in an agreed Scope of
Services.
• These General Terms and Conditions will form an integral part of any agreement to supply such services.
• Where a supply of TS Services involves access to Tycoon Systems’ webservers and websites then, the terms and conditions as specified on the websites
are deemed to have been read and understood and agreed prior to using such TS Services. A current example is available for inspection at
http://www.industrymasters.com/termsofuse.html
• Tycoon develops online, webserver based simulation games, which reside on their own secure webservers, and are under their control at all times. It is
not possible to install these games on any other servers – for example, on clients’ own web servers. Clients may access our simulations and games via
standard, widely-used web browsers such as Internet Explorer, Firefox etc from anywhere in the world by using a standard URL which we will supply.
• Intellectual-Property Ownership and Use: No proprietary software is required to be physically installed on clients’ systems, and no ownership of
software is transferred to clients. All Intellectual Property Rights of any business simulation, except Pre-existing Materials from clients, shall remain
exclusively with Tycoon.
• Any Tycoon Systems simulation that is based on real-world events is only representational and not an accurate depiction of real-world events. Users
should under no circumstances seek to imitate any game experience in real life.
• Privacy Considerations: In order to take advantage of the full capabilities of the simulation and to receive e-mailed information and announcements,
Tycoon may require information about the users. Any communications made through the simulation may be monitored by Tycoon's personnel, with the
consent of the client. We respect the users privacy and we will, of course, endeavour to take care of any information supplied to us. We reserve the
right to use "cookies," which are small computer files we would thereby transfer to your computer's hard drive to allow us to monitor website usage.
The users have the ability to accept or decline cookies, but if users choose to decline cookies, performance of the simulation might be adversely
affected.
• No Warranty: The simulation, including any content or information contained within it and any linked website, is provided "as is" and "as available." TO
THE FULLEST EXTENT PERMITTED BY LAW, Tycoon EXPRESSLY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION,
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
• Limitation of Liability: Tycoon shall have no liability for the deletion of any communications or information collected, maintained or transmitted by the
simulation or the failure to store any information, including personalized settings.
• Jurisdiction and Choice of Law: All claims regarding the simulation shall be governed according to the laws of the State of Delaware, United States of
America, without regard to its conflicts of law principles. Any claim or action arising under this agreement shall be subject to the exclusive jurisdiction of
courts in Delaware, United States of America.
• Complete Agreement: This agreement constitutes the entire agreement between the User and Tycoon with respect of use of simulations owned by
Tycoon Systems Inc.. If any provision of this agreement is found to be unenforceable, the other provisions shall still remain in full force and effect.