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And so it begins. The first rollover has occurred. The results are in. But what to make of those results? 

I'm going to start by looking at the relative position of the the three 'worlds' of Christchurch, Dunedin, and Wellington. That might seem like an odd starting point; why not look at the performance of each of the firms? The reason is that individual firm performance is constrained by how 'good' is the world in which the firm operates. There are a number of ways to think about this. First, it is hard to be an outstanding firm (i.e., the one with the best SHV in the long run) if, for example, the world is locked into some kind of price war. Such an event can drive down everyone's profits (and hence SHV). Secondly, it is hard for any firm (no matter how good they are) to increase the demand for bikes (as a whole) by themselves–if you bankrupt all the other firms and have all the markets to yourselves its nigh on impossible to grow those markets as fast as occurs in a good world. You need other firms creating demand. In other words, to be really successful you want to be in a world with healthy competition, rather than destructive competition. If you're goal is to obliterate the competition, then you are unlikely to be firm with the highest SHV across all the worlds. That said, you still want to out compete them.

And so to some results.

Let's start by looking at the industry sales revenue.

So, Dunedin is well in the lead for industry sales.

My mantra is often, "Where sales go, profit should go; Where profit goes, SHV goes". The rub, is the should between sales and profit. So let's see if that is true.

Whoa! Everyone's profit has gone down. And the world with the biggest sales has seen the largest drop in profits. I wonder what they are spending all that money on?

Well everyone seems to have boosted their capacity (by about the same amount), so it's not that.

Looking at the Advertising Ratio is seems Dunedin has really spent big on advertising. That's not surprising. One of the easiest ways to get ahead in SoloMike is to go wild on advertising. But that doesn't pay off too well if the increase in advertising doesn't (eventually) lead to an even greater increase in profit. One thing that such high-levels of spending can result is advertising wars, which can really drive all the profit out of a world. 

I wonder what the 'correct' level of advertising is—rather than, how much can be spent on advertising?

As a bit of an aside, let's look at the Cost of Goods Manufactured, compared to the cost of each SCU. It looks like, in all the worlds, the cost of manufacturing has become more expensive, with Christchurch being the most expensive.

Hmm, until now I'd expect (because of the profit) for Christchurch to be doing the best, but with such an increase in costs, I'm not sure.

And then we notice that Wellington has cut it's retailer margin. Okay, let's cut to the chase here.

Overall, the world with the highest capitalization is Wellington, so I would kind of bet, that it is the best performing firm. Let's turn to the scoreboard and see.

Looking first at revenue, Sigma in Wellington is top of the table. (I wonder why more firms didn't change their names).

ChristchurchWheelin N Dealin$22,055,200
DunedinPsicle Path$19,147,709
DunedinPeakPerformance Bros$16,758,087
ChristchurchWheelie Cool Bikes$15,050,711

But Sigma doesn't quite manage to translate that into profit. That honour falls to Dunedin's E.N.T.E.R.A.I.N It was close, and I don't expect Sigma to let E.N.T.E.R.A.I.N get away with that in the next rollover.

ChristchurchWheelin N Dealin$3,025,873$22,055,200
ChristchurchWheelie Cool Bikes$2,556,514$15,050,711
DunedinPsicle Path$2,343,128$19,147,709
DunedinPeakPerformance Bros$198,406$16,758,087

And so to the big board who is top of the list?

ChristchurchWheelin N Dealin$16.64$16.64$3,025,873$22,055,20029,6652,000,000$33,287,080$7,978,397
DunedinPsicle Path$16.47$15.63$2,343,128$19,147,70924,8852,000,000$31,262,342$5,036,362
ChristchurchWheelie Cool Bikes$15.23$15.23$2,556,514$15,050,71125,2912,000,000$30,469,828$5,301,723
DunedinPeakPerformance Bros$11.31$11.31$198,406$16,758,08727,2972,000,000$22,624,756$4,507,471

At the end of the first rollover, Sigma is in the lead with a SHV %$18.16.  Although more than half their firms have improved there SHV, a few haven't experienced any real movements, and PeakPerformance Bros have actually slid back from their starting position to $11.31. 

It's interesting to see that Rho has been tinkering with issuing shares (which has some pros and cons). 

Oh well, it will be fun to see what happens next time.

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1 Comment

  1. Peter Smith AUTHOR

    A nice edit by Finn O'Brien, who added the Pie Chart

    (Finn, I hope you don't mind me tweaking so the values work a little better)