Occurring each semester, the Intopia Business Simulation allows for Strategic Management (ADM4311) students to compete in a simulated marketplace with two specified products. Teams must make hundreds of decisions which require expertise in accounting, finance, marketing, and management. The goal of this blog is to provide you with some helpful tips and tricks to help you in both your preparation for the simulation and your strategy during the game.
1. Read the Manual & Watch ALL of the Preparation Videos
This may seem self-explanatory, but the best teams have a very deep understanding of how the simulation works, as well as how their decisions will impact their outputs each period. The manual details how different numbers on your balance sheet and income statement are calculated, which becomes extremely important when you begin calculating your cash flows each period.
2. Treat the Practice Round Like the Real Game
There are two different ways to approach what the simulation calls the “Market Trials” (A fancy way to say practice round). The first is to try as many different strategies as possible to see what your team may excel at, and to learn about all parts of the game. The second is to decide what your team’s real strategy is, and to use the Market Trials as practice for the actual simulation. Both approaches are valid, but no matter which one you choose, it is important to take the trials seriously. You should meet with your team before every decision, as you would during the simulation, and try to finish near the top of the leaderboard. Having a good reputation heading into the game can help your team secure loans and long-term contracts as teams are more confident in your ability to be profitable.
THE REAL GAME
3. Make Relationships Early
One of the most important tips to winning the Intopia Business Simulation has to do with how you interact with other teams. Whichever strategy you decide on, you are going to need to work with all different types of companies (teams). Having contracts signed for multiple periods not only eases your team’s stress, but also puts you in a much better position for the later periods as you start needing to either buy or sell more inventory due to increases in production capacity and demand.
4. Think About Leveraging Your Position to Start the Game
This strategy doesn’t necessarily apply to all company types, but if you are a producer looking to expand your operations as fast as possible, taking out a loan from another team to start the game can be a great idea. My team was an X producer that had the capital to build 4 plants in period 1. We decided to leverage ourselves, allowing us to build a fifth plant which gave us more inventory than all other X producers for a large portion of the game. In the Intopia Business Simulation, aggressive teams are rewarded as all teams are profitable, for the most part. Therefore, the teams that expand the quickest get a leg up on the competition strictly due to their higher inventory volume.
5. Start Paying Dividends as Early as Possible
The majority of your grade for the Intopia component of ADM4311 comes from your “Value Added” compared to other teams within your chosen strategy. Paying dividends directly increases your “Value Added”, and it can lead to money being reinvested into your company. You should become profitable by period 4, which is when you should begin repatriating your earnings from your areas of operation in order to pay dividends. This is another key tip to winning Intopia, and you should be paying higher dividends each period until you reach the maximum amount ($99,999,999). However, be sure you never decrease your dividends paid from period to period as it can lead to a lack of confidence from your shareholders.
6. Know your Numbers
This goes back to your preparation, but it is super important that you understand exactly how your cash flows work. Once you have a solid grasp on how much cash you have each period, you can start planning ahead to build plants or sales offices. Your team should have detailed spreadsheets that calculate your break-even point, projected cash flows and projected earnings, among other things. Receiving outputs each period that match your projections not only eases your stress, but also puts you in a great position for the upcoming rounds.
7. Be Aware of Tax Implications
Different Areas have different tax rates, and moving money around can help limit the amount of earnings you lose to taxes. Also, it can be beneficial to determine how you sell inventory based on tax rates (higher priced products get sold in areas with lower tax rates), in order to send more income to retained earnings each period.
I hope this blog helps you in completing, and hopefully winning, the Intopia Business Simulation. If you have any other questions feel free to connect with me on LinkedIn.