Evolution in Global PCS Automobile Industry

Product Evolution Game

  evolution of car

The evolution of the car industry is process that depends on many small controlling factors. Car producers may try to guide and control this process though market analysis (to secure the selection of their product), or lobbing (to avoid normative pressures), but the control is limited. In production and consumptions systems there are many economic actors and stakeholders involved, each with different interests, trying to pull the balance towards their benefit.

Here, I present a game that intends to illustrate the evolutionary process of the car industry. This game consists of three stakeholders and one bank. Produces, consumers, and the government are the main stakeholders, each with their own aim to the game. The producers and consumers have different aims and different ways of reaching their aims. These two stakeholders are not up against each other, but they do interact and need each other in order to play and win. The government, on the other hand, doesn’t compete against anyone but has a important role: to maintain a healthy, sustainable and balanced society. The rules of the game are the following:

Stakeholders:

Producers

Consumers

Governments

How Rounds Work

First thing is first. Before starting each round:

  • Consumers pick a card with: Salary (Received from the bank in each round)
  • Producers pick a card with: Money loan to start producing (Received from the bank at the beginning of the game

Each round starts with the producers designing one car model, paying for the batch and placing new batch into the market. The round continues with the consumers choosing one car, and paying for it to the producers. And finally the round ends with the government analyzing consumer behavior and placing taxes in the car characteristics. This taxes are then given to the producers so they can use this information for the next round.

Producers

Aim: Win the most money

Each producer initially receives a fixed quantity from the bank in order to produce their first batch of cars.

Producers design a car according to certain characteristics. Each characteristic has a ranking point (P).

Comfort (Big) Quality (exclusivity) Speed (time spent) Ecology
5 Very comfortable 5 Very luxurious 5 Very fast 5 Very eco-friendly
4 Comfortable 4 Luxurious 4 Fast 4 Eco-friendly
3 Average 3 Average 3 Average 3 Average
2 Uncomfortable 2 Austere 2 Slow 2 Contaminating
1 Very uncomfortable 1 Very Austere 1 Very slow 1 Very contaminating

The points (P) turn into money by multiplying them by a conversion factor (CF). The conversion factor is given by the government (In the first round the conversion factor is 1).

The costs sum up into the total cost of the car.

Total cost per car = SUM ((P)X(CF))

Before placing the car into the market the producers have to predict how many cars they are going to sell. The total cost of the batch is the multiplication of the number of predicted cars by the total cost per car.

Total cost per batch= (Total cost per car) X (Number of cars in a batch)

This amount of money goes back to the bank.

The money that returns to the producers by selling the cars is their utility. The aim of the producers is to have the biggest utility.

Each producer should keep count of their points and money in the Producers Game Card:

Table 2. Producers Game Card

Round no. Big/Small Luxurious/Austere Fast/Slow Eco-friendly/ Contaminating Total cost per car Number of cars in a batch Total cost of batch (to bank) Money earned (from consumers)
P CF P CF P CF P CF
Round 1 (1-5) 1 (1-5) 1 (1-5) 1 (1-5) 1
Round N (1-5) (1-3) (1-5) (1-3) (1-5) (1-3) (1-5) (1-3)

If a consumer doesn’t have enough money to place a new batch of cars into the market he is automatically out of the game.

Consumers

Aim: Win the most points

Before the game starts the consumers picked a card which contained their earned salary. Each consumer receives from the bank their designated salary.

When one producer places their a car into the market, they show to the consumers a table with the characteristics (Points) plus a picture of the car.

The consumers buy the cars once they are placed into the market. Each consumer has to buy one car each round. Consumers much chose a car according to their preferences (characteristics of the car) and the price set. The money that isn’t spent in one round passes to the next round as savings. Consumers should keep count of their points and money in the Consumers Game Card:

Table 3. Consumers Game Card

Round no. Big/Small Luxurious/Austere Fast/Slow Eco-friendly/ Contaminating Total points Money saved
Round 1
Round N

evolution of car 2

Governments

Aim: to keep a balanced and healthy society.

The job of the government is to analyze the consumer behaviors after each round and set taxes (through the conversion factors) to the producers. The aim of the government is to have a balanced, sustainable and healthy society. If for example, consumers are contaminating to much the can directly put taxes in the following characteristics: “contaminating” and/or “ very contaminating”. Government can also place taxes in a general characteristic. If consumers are buying very big cars, the government can place a general tax (CF) in the size of the cars. Because the government can only react to what is happening, the taxes (CF) will be applied to the next round. The taxes (CF) can be applied or removed in each round. There is no limit to tax placement, but the government has to take into consideration that taxes put economic stresses into the producers and could push them to bankruptcy.

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