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PostPosted: Sat Mar 07, 2009 4:49 am 

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Managing Your Business, Lesson 8:
The Art of the Business of War

Many people assume that the most interesting person I know is Bill Gates. But that's not true for 2 reasons. First, the guy is always asking for advice and it gets kind of annoying. And second, I have a much better sense of history than that. Sure, Gates is important right now. But for significant historical context, I turn to my buddy Sun Tzu.

Sun Tzu was a Chinese general who lived around the 5th century BC, and was known for being a genius with military strategy. He wrote the book "The Art of War" which has been used for centuries as a guide not just to war but to games and business and all manner of competition. So you can imagine my surprise when I ran into him one day at the local Starbucks. I wasn't going to go that day, but it got a little colder after the rain stopped so I suddenly felt the need to buy coffee.

Sunny (as he lets me call him) is such a smart guy that I had to ask him for some personal advice. What he said to me is very profound, and I pass it on to you in the hopes that it might better your life the way it has mine. What he said was "Image". Wise words I'm sure you'll agree.

More useful to our current situation though are some of his writings on war. They are applicable to business, especially when you have a goal and someone is standing in the way. And especially if that someone happens to be bigger than you. The example I will be using throughout here is one that can apply to this game at any time: trying to dominate a product where someone bigger than you already rules. But these also may apply to individual events or other goals you may have.

Here are a few of Sunny's more famous admonitions:

If ten times the enemy's strength, surround them; if five times, attack them; if double, divide them; if equal, be able to fight them; if fewer, be able to evade them; if weaker, be able to avoid them.

For to win one hundred victories in one hundred battles is not the peak of skill. To subdue the enemy without fighting is the peak of skill.


He who knows when he can fight and when he cannot will be victorious.

This leads to an inevitable conclusion:

------------

The Question

What is the best way to survive a fight with a bigger opponent?

Scroll down to part B to see the answer, after which we'll start evolving some tactics.


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PostPosted: Sat Mar 07, 2009 4:49 am 

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The Answer

The answer is obvious, but also probably not what you want to hear: the best way to survive a fight with a bigger opponent is not to get into that fight in the first place! It's important to cover this first because if you have the option to avoid them, but refuse to do so, then you have helped the enemy by boxing yourself in. So always look for an out!

In Simunomics what this often means is that you should be flexible in your goals until you find one that is easier to grasp. In our example, you may really really want to fight over that one product. And I'm sure by the time you get to this stage you may already be committed to it with your farms or factories dedicated and your research centers chugging away. However, if it's going to be a difficult battle then often it would be easier and more profitable to just switch to a different product. Let them have their dominance award and go find fresh terrain to claim for your own.

For example, I flipped through a few of the rankings in Bellerive, and saw a massive discrepancy. NPC has been almost entirely squeezed out of the Automotive category, and 4 companies control 96% of the sales there. Now could you enter that market? Sure, probably. But would it be easy to dominate? Not by a long shot!

On a tip from PHIL I looked at the Toys category. And the top 4 sellers there have a combined 16%. (Excluding NPC.) So clearly right now, if someone small or new wanted to dominate the Automotives category in Bellerive, the best way to do that is to sell toys instead.

And there are other ways to avoid fighting. Perhaps you work out a deal with your biggest competitor, and they step aside for a while. Maybe your shifting goals make you the seller and them the supplier, or vice-versa. Anything that lets you avoid the fight will leave you better off.

OK, so now that we've covered that, let's say you find yourself facing a battle anyway. More words from Sun Tzu:

Those skilled in war bring the enemy to the field of battle and are not brought there by him.

What Sunny's saying is crucially important. You need to dictate the field of battle. In war this meant positioning yourself on the higher ground. Or choosing someplace where you had cover and they did not. Or sieging them in their cities and making them starve instead of letting them do it to you.

(This was perhaps best employed by Hannibal's small force against Rome's massive one. He was very successful by going outside of Rome, destroying their crops, forcing the Roman army to leave their fortifications, then picking off targets as he retreated to the security of the mountains. He eventually lost when the Roman generals finally ignored him, went to Carthage, and forced him to fight where they chose.)

In Simunomics this follows on the last lesson. If are going to fight someone, don't just do it blindly. You have to strategize for advantage.

It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.

So you're trying to dominate one product, but someone else already does, What else do you know about that company? What is your own position? Answer these questions about yourself:

  • What else do I sell?
  • Where do I make the bulk of my money?
  • If I have to lose money to win this battle, will it cripple my business? What else could I lean on?
  • What advantage do I have? (Quality? Brand? Make my own supply? Have a lot in the warehouse? Lots of cash to spend?)
  • What tools do I have to use? (Advertising? Comparative Ads? Allies? Distractions?)

Then ask yourself the same questions about your enemy. If you can't give a pretty good answer for both of you, then you are not ready to fight!

The victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.

You must plan ahead. There's no magic trick that can save you once you are already being beaten. You must retreat and attack again when you have strategy and the strength to back it up.

All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.

The best reason to break off a fight you're losing is not just to regain strength, but to let him think he's won. In Simunomics an opponent who knows you are trying to steal market share may lower his prices to heighten the competition. But if he thinks you have given up, he likely will raise them again to try to make money back. He may turn his attention to other matters. That is when you want to strike, when his guard is down.

The place of battle must not be made known to the enemy. If he prepares to defend the left, the right will be weak. If he prepares to defend the right, the left will be weak. If he prepares to defend everywhere, everywhere will be weak.

On open ground, do not try to block the enemy's way. On the ground of intersecting highways, join hands with your allies.

I put these together because they can make for very effective strategy. You know your enemy now, right? This product you're trying to beat him in, is that where he makes most of his money? If so, it's a good target because your pressure will really limit his growth. But if not, he doesn't need to make so much profit here. So he makes money in his main business and crushes you in the one he doesn't care about.

Clearly that should not be the "field of battle" that you choose. Instead, attack him from all sides. How does a small business do that?

Allies.

You know what else he sells. So check out those categories. Look for anyone else who might be in striking distance of their own dominance. And don't neglect wholesale. Does he have customers or suppliers that you can steal or redirect? If they are big enough to be in your way, then chances are they are big enough to be in someone else's way too. You just need to convince them that the time to strike is now, and that all of you together can succeed where none would individualy.

And you might even get allies who are bigger than them. Even the biggest businesses have to watch their back. Would #2 team with #s 20, 43, 52, and 60 for a chance to steal share from #3? Maybe! It's a fight they could win anyway, but they can do it easier with your help.

Conclusion
Figure out what kind of fight you could handle the best, and which would be the most painful. Then do it the same from your enemies side. And find a way to make their worst nightmare come true.

In the next section I put this all together, then bring in a real-life example.


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PostPosted: Sat Mar 07, 2009 4:50 am 

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Putting It Together

Let's say I've looked around and found that the Eggs market is one without too much competition. You have your own farms and Grocery stores to sell them in. There's only one guy to knock off, and by the time I steal NPC's share I'll be just below him, let's say his 40% to my 30%. I'll still need some direct competition to take him down. Here are the steps I would take, but note that they overlap a bit.

Step 1: Maximize profit for a little while. Collect up some extra cash, and store up some extra eggs too.

Step 2: Build up your farms more than your stores. This will help with the storing, and will be crucial because more share requires more supply.

Step 3: Advertise. Start getting the Awareness score up.

Step 4: Find a backup income source. If eggs are all you make, see if there's something else you can do with them. In this case, eggs are used by Baked Goods manufacturers, so try contacting one and seeing if he wants to be a customer, at least for a while.

Step 5: Find someone else who can sell eggs in your city, and offer them a good price. Because you're going to for the sales award you don't need them to sell a lot. But if you can get in their stores, it will boost your Reputation. You might try just putting your Eggs on the market too, but bear in mind it doesn't help if you if they get rebranded, and the price to a retailer can potentially be lower than what you were trying to arrange in Step 4.

Step 6: Browse the categories, ads, market listings, etc and look for what else your target sells.

Step 7: Find allies in any other products you identified in Step 6. This could also be someone just below them in fixed assets, or a chief competitor in an Event, or anyone who might take advantage of their weakness. Remember to give them lead time.

Step 8: Pounce! If your goal is to knock out their 40%, you shoot for 41 while simultaneously knocking them down. You've been in Earnings mode so far, right? Well drop that price down and start selling off your extra. If possible, activate Comparative Ads for up to a 15 point Reputation swing. Remember you need to maintain this pace for at least 7 days, so I hope you stored extra or else you'll be buying NPC to back yourself up.

If you are fast enough and stealthy enough, they may not even notice what happened until it's too late. Or they may be busy defending on other fronts, and decide it's not worth trying to compete with you.

Step 9: When you hit your target, or realize that you can't, ease up on the throttle. A long battle will not help you, and will only leave you long-term vulnerable to someone else.

--------

Now if your goal is as big as hitting #1 or #something in Net Worth, then this will require an ever-changing strategy in an ongoing fight. The lessons still apply though - choosing the field of battle and knowing yourself vs the competition (which is everyone). You have to constantly look for opportunities to get ahead, rotating from weaker sectors to stronger ones and always calculating to maximize profit.

The Lesson to Take Away

Businesses in the real world often perform something called SWOT Analysis. This stands for Strengths, Weaknesses, Opportunities, and Threats.

Strength comes from within. It could be top quality or brand, or a large production or retail capacity. Anything that you have that not everyone does.

Weakness also comes from within, but it's the areas where you might not match up to your competition. Do you have to rely on someone else for key materials? Do you have all your sales in one easily-targeted segment?

Opportunities are external. That undersold product (Toys, as mentioned ealier) is just waiting for someone to start making profits there. It could be you. Other opportunties are things like that dominance award that's just out of reach as you sit in position #2.

Threats are the opposite of Opportunities, what someone could do to you. It's anyone who is crowding your market big or small, because they can steal your sales and hurt your profits.

Businesses disregard this at their peril. US automakers thought Japanese cars were a joke up through the 70s when they should have recognized the threat. They were weak though, letting thier cars be big gas guzzlers. The quality fell behind and their strength, a great brand name, lost a lot of value. If only Ford and GM had realized that the field of battle was shifting, they would have a lot more market share today.

_________________
The Guide to Managing your Simunomics Business:
Lesson 1: Should Bill Gates cut his own lawn?
Lesson 2: The Apple Forest or the Apple Tree?
Lesson 3: Which Business is Best?
Lesson 7: All is Well - Advantage Mine or Raw Deal?
Lesson 8: The Art of the Business of War


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PostPosted: Sat Mar 07, 2009 5:28 am 

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"There's only one guy to knock off"

i think this guy is me!!! :grin:

oh, god, a tutorial of Knolls to "how beat the egg´s guy!!!" :bow:

i think i have to change my strategies!!! :silence:


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PostPosted: Sat Mar 07, 2009 5:41 am 

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Oh ... um ...

All opponents in this guide are fictional. Any resemblance to real-world competitors is unintentional and just a coincidence.

:grin:

_________________
The Guide to Managing your Simunomics Business:
Lesson 1: Should Bill Gates cut his own lawn?
Lesson 2: The Apple Forest or the Apple Tree?
Lesson 3: Which Business is Best?
Lesson 7: All is Well - Advantage Mine or Raw Deal?
Lesson 8: The Art of the Business of War


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PostPosted: Sat Mar 07, 2009 7:04 am 

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Very entertaining knolls with lots of insight, thanks for both the laughs and the strategies :P


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PostPosted: Sat Mar 07, 2009 8:14 am 

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That was really a big addon to my strategies. :clap: :clap: Thanks Buddy :thanks: :wave:

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PostPosted: Sat Mar 07, 2009 8:46 am 

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Finally it is up! Thx knolls for this amazing guide!a pity I am not firstblood

First of all, I have read the book of Sun Tzu a few years ago. And I found that numerous books talking about business is related to Sun Tzu's writing as well. It is enlightening to see someone finally put it up here :)

Second, I meet a few criteria u mentioned as a target being attacked: Dig in only 1 business, dominating at the moment, and good retail price of the product.

So feel free to join the market and you will see how I will respond.

All in all, thx knolls again for this delighted writing!

p.s. This writing is good for those smaller one to beat the larger one, but then, if unsk noticed this and implements it in his plan, doom may come :P

p.p.s. Maybe you can write another guide 'How to prevent ur enemy using knolls approach to beat u' :P

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PostPosted: Sat Mar 07, 2009 8:53 am 

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User avatarMetatron
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he doesn't need to write another guide for the opponent. anybody can use this guide, but it will only be easier for a guy that is already dominating


Last edited by m3tatron on Sat Mar 07, 2009 8:55 am, edited 1 time in total.

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PostPosted: Sat Mar 07, 2009 8:54 am 

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m3tatron wrote:
he doesn't need to write another guide for the bigger players. they can use this same guide, but it will only be easier for them


Well, his guide is for attacking, but seems that defending is absent(though, the very truth you can find some insight in it and know how to defend)

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Spokesman of ReadOnly, the dominant company offerring education material to all ages

My guides(update)
Basic Tips & Land Choice
Megastore


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PostPosted: Sat Mar 07, 2009 2:04 pm 
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Bellerive Chamber of Commerce
Knolls wrote:
I wasn't going to go that day, but it got a little colder after the rain stopped so I suddenly felt the need to buy coffee.

I see what you did there!

Amusing and informative. Nice guide. :smile:

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Please read the rules. Have information? Why not write a guide?


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