To diversify or specialize

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To diversify or specialize

Postby Zerico on Tue Dec 30, 2008 6:03 pm

Likely we've al heard the saying "Diversify your stock portfolio" or the even simpler "Don't put all your eggs in one basket."

I imagine that's how many of you are playing this game, you're building up a portfolio of items to fill each store with different goods or even 4 different goods per store. You're having to juggle pruduction lines as the store isn't selling as many bottles of wine as you produce, or the number of cans that you're making is greater than the number needed for your soda production. And your profit margins I bet aren't all that great, huh?

I'm now "worth" nearly 20 mill dollar with 14 stores, 7 factories, and 2 warehouses (and $2.2 mil in the bank). However, I've only ever sold 1 good in my stores. I have a nice 170k monthly income off of the one good good.

When you're a newbie, you've got automatic maximum demand for any goods you produce, all the better to produce the heck out of one good product. Ideally when you hit that 10 mil mark, you'll have enough stores and cash that even if your sales per store go down, you have so many stores that you're still making tons of cash each turn.

For the last several "months" my main product has had -10% (or more) demand, but I've still been getting $170k paydays.
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Re: To diversify or specialize

Postby Kit on Tue Dec 30, 2008 7:43 pm

Interesting Strategy. It's surprising to me that it's actually working out that well for you.

One of the things I'm toying with is to not allow more than one sales unit in a store to sell one good.
If I were to do this, you would no longer be able to have stores selling only one good in 4 sales units.

I think that would be good for the game as it would force folks to diversify (at least a bit), thoughts?

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Re: To diversify or specialize

Postby Zerico on Tue Dec 30, 2008 8:09 pm

I think it will lead to slower and shakier starts for most players. Of course they're all pretty slow now. I've been playing for 8 days and I'm a top 6 player? I mean, come on! Others ought to atleast be giving me a run for my money, but out side of Free Stuff and his creative "loans", I haven't seen a single player come up from under me. That tells me that what I'm doing, or at least how well I'm managing it, is unique. I don't think you have too much to worry about with people adoptingthis strategy.

As for a RL/logic check, do not some companies only produce one good? Do not some stores only sell one item? Sure there's usually diversity in that item, but liquor stores really only sell alcohol (ok, some sell lotto tickets and chips too, but their primary good is alcohol).

In real life you've got Wal-mart on one end of the spectrum selling everything and stores like Specs and Micheals selling really only one major good (alcohol(wine) and fabric).
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Re: To diversify or specialize

Postby Kit on Tue Dec 30, 2008 8:15 pm

That's a fair point, and part of the reason I originally did not limit it.

Anyone else have any thoughts on this topic?

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Re: To diversify or specialize

Postby StillCrazy on Tue Dec 30, 2008 9:59 pm

I have 19 Stores - 27 factories - 7 warehouses.
I'll start building sporting goods stores later today.

First off I went the opposite way the entire time I've played. I carry a very large variey of items. But I do limit my stores to two types. Currently I have Furniture and Apparel and I did a reset on all my drugstores when I was able to build Apparel stores.

One thing I do notice is that the consumer demand does make a difference only when you get the big swings from like 1% to 10% change. Little swings of of 1to 2% are not noticeable enough to try and follow. I do always increase production in areas with the highest demand but I eventually produce most items.

This whole process of trying to manufacture / sell most items is now much easier with the new system update. I now have much more time to work on upgrades and tweaking my pricing and inventory levels. Its nice knowing that my excess inventory is sold and if I run short on an item or resource the market helps me out.

On a sad note contracts are now almost useless. Sure you can save a small amount by using contracts but not even remotely worth it for me.
Last edited by StillCrazy on Wed Dec 31, 2008 12:01 am, edited 2 times in total.
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Re: To diversify or specialize

Postby Zerico on Tue Dec 30, 2008 10:17 pm

I can understand that. With the update, what's really the point of producing anything? Since you can always buy the good for less than the market value, you might as well just buy a couple of warehouses and go straight stores.

I can buy wine at 2300 from the gov't and sell at 2600 no problem. Sure, I can produce items cheaper than buying from the gov't, but if i can buy an infinite number then my only limit is what I can sell (always at a profit).
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Re: To diversify or specialize

Postby Des on Tue Feb 24, 2009 6:10 pm

I am finding specialization to be an all too-effective strategy, especially early on where demand is maximized. By focusing on selling only the most profitable product I've managed to continually increase my ROIC to where its now over 30%. Moreover, my stores that sell only say milk that is bought from the government are actually more profitable than my other stores which sell corn, soup, etc that I have bought from other players at discounted prices or produced myself.
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Re: To diversify or specialize

Postby Kit on Tue Feb 24, 2009 8:57 pm

Well, with bottled Milk now at -12% it's not all that surprising that the profit margins on it are the highest.
While under new player protection there is no negative to selling only one good so sticking with the one good will be the best plan.

But once new player protection kicks out the negatives associated with overselling one good may well make it more profitable to balance things out a bit. Though it is highly unlikely that even with that you'll do better with Corn Flakes which are selling at +4% than bottled milk, selling at -12%.

For those goods you produce yourself the selling price from your factory to your store is based on the current market price. So while you'll see lower profits in your stores you may well see higher profits at your factory for goods that have high values on the market.

There is no free lunch here though. The reason milk is at -12% is that some player was selling lots of it to the market and no one was buying. This depressed the price. Your 30% ROI is comming from taking advantage of that. In essence their loss is your gain. Which is how Capitalism works :)

I think the watch word here is don't fight the market. The most profitable companies will be those that understand the market and take advantage of the bargins that can be found there.

Thanks for playing,

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Re: To diversify or specialize

Postby Morpheus on Fri Nov 20, 2009 1:12 am

in the current endgame specialising isnt really good.... since everybody wants to sell appliances they produce and sell them, and the 1350 units/lvl5 line at three shifts mean more than one shop using all 4 slots and marketing to sell them.

30 lines are taxfree, there are 6 appliances = 5 lines/appliance *1350 production/line = 6750 units per app/month... as i tried this i had 32 shopslots, or 8 shops per app. at full marketing and still produced more than i sold even during a prosperity...

so i had those 32 slots, ray had around 26 slots and the 3rd and below also sold apps.. =>price dump

after ray got resetted the price for a constant number of sales increased by 2 stages... =>if i or anyone else had 30 shops just selling dryers noone would have made money with them....
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