Making moneys with subsidiaries

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TheDiaz
Posts: 8
Joined: Sun Sep 04, 2016 7:13 pm

Making moneys with subsidiaries

#1 Post by TheDiaz » Wed Oct 11, 2017 10:56 am

Experimenting with subsidiaries (I'm still learning the game) I noticed is possible to make subsidiaries in order to make a yearly income. I managed to become a billionaire this way and never built a single building by myself.

What I did was to make a subsidiary and give them enough money. I still have to get a good strategy to make the most of of this but this is the bade to this strategy, so I have no specifics on how to adjust them as I'm still trying to figure it out.

You want to hire CEOs with different expertises and personalities based on what you need. One choice would be to make them a retailer that only buys stuff from his own or parent company, giving him a reasonable price for the product which you make or have a second sub that builds factories. The point is to allow them to make a profit while they are still a private part of you company and you help them by injecting money, fine tunning the AI or placing buildings in their name. Just let them grow.

Once you are comfortable and believe the sub has a good market value, make it go IPO and set a dividend to it and make sure you own a nice amount of the company. You will be making money once a year from these diidends, so the bigger the sub (and profitable) the more money you will receive and the parent company net worth will be worth a lot more because of how much you own on the stock market. But remember, they must keep growing in order to make this strategy worth it, so don't set the dividend too high.

Something I've noticed is that retailer companies will make the biggest amount of money on the early game while manufacterers will be struggling untill they launch a product with good quality that allows them to compete unless they go for something that has no other companies on the market.

At this point, is like hiring people to do your work for you and then ask them for the results, making it a more passive experience and a strategy for stock market players, as you can try to invest your money on other companies and try to merge them into your own while making a nice amount of passive income. You can, obviously, be more active and take a diversified strategy, which might be ultimately better to help your companies grow.

Any feedback and information to make this work with greates results?

Njeroe
Level 3 user
Posts: 57
Joined: Fri Jul 21, 2017 6:51 pm

Re: Making moneys with subsidiaries

#2 Post by Njeroe » Wed Oct 11, 2017 12:23 pm

I do the same but I keep most of my subsidiaries private and set the dividend myself to extract the most money if they need capital I decide if I invest it back.

bdubbs
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Posts: 34
Joined: Sun Feb 28, 2016 9:15 am

Re: Making moneys with subsidiaries

#3 Post by bdubbs » Thu Nov 02, 2017 9:40 pm

I never played much with subsidiaries because I liked using range brand and seeing how many product classes I could compete in through the game. I decided to shake things up last night after I got a game where my expertise was cosmetics. I used corporate branding to dominate that market in the first 3-5 years and spent the rest of the game setting up subsidiaries to handle other product classes. Eventually the first few I set up ended up with revenues and profits greater than my own company. By the time I was 15 years in I was receiving about $15 billion from dividends annually.

My favorite part about it was that I usually set up discount mega's early in the game to retail seaport goods and as the game progressed it was a pain to micro manage them as product disruption occurred. I was able to just transfer those firms over to my subsidiaries and let them manage those stores.

The problem I noticed that kept my subsidiaries from running flawlessly is the AI's penchant for overpricing goods from their factories. If you want to set up a subsidiary that focuses solely on retail with others focusing solely on manufacturing one of them is likely going to be making little to no money. AI manufacturers charge crazy prices for high quality goods unless they're set to internal sales set to cost, and the retailers margins can end up razor thin as a result. So if you separate which company retails and which manufactures one of them is likely to make the lion's share of the profits while the other is barely profitable or taking a loss, which would require future cash injections.

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