anagement

Experience in business is not required to play MANAGEMENT. The

only prerequisite is common “horse” sense. The rules are patterned
after situations common in actual practice. Some players who are inex-
perienced in business have found themselves playing like veteran busi-
ness managers before their first game is half over! This is because the
game progresses from one step to the next according to a simple plan.
Read the rules over carefully, then keep them handy for reference. You
will find the playing procedure, plus many reminders, printed on the
board in front_of -you.
After you become acquainted with the fundamentals of “Basic
MANAGEMENT” you will want to try the post-graduate play entitled
“MANAGEMENT Tournament Game” which requires only the materials
included in this set.

by Avalon Hill

Copyright 1960, The Avalon Hill Co., Baltimore, Md. Printed in U.S.A. INSTRUCTIONS — RE AD FIRST =a
 BASIC GAME
To Be Successful in MANAGEMENT, you must analyze market Beginning Play
conditions, take shrewd advantage of your competitors’ circumstances, There are six “phases” to be played each month, as indicated on the
and prudently operate your own factories and warehouses at peak effi- Running Record Sheet. All Presidents must complete work on one
ciency. You and your competitors must agree beforehand whether the phase (of the same month) before proceeding to the next. These phases
game is to end after a predetermined number of game years, at some follow the logical sequence of doing business. The corporation must first
specified time on the clock, or by elimination. In a “time limit” pay its fixed expenses in cash, then purchase raw materials, convert raw
“clock” game, the player with the greatest net worth,.as revealed by the materials into finished inventory, then sell the finished inventory for
. final audit, is the winner. In an “elimination” ‘game, play continues until cash. The cash is used to pay off loans and for capital improvements
all players but one (the winner) are eliminated by reason of bankruptcy. before building a capital reserve.
The Presidents are now ready to begin business. Each has a Running
Two, Three or. Four Players may participate. Each player Record Sheet properly filled in, 4 Raw Material Units, 2 Finished Inven-
assumes the role of President of a: manufacturing corporation. tory Units, 2 Standard Factories, and $10,000 in cash. Shuffle the situa-
tion cards and place them in the center of the board. One of the 24 cards
will be turned up for each month of business. At the end of a 12-month
Each Corporation begins the game with $10, 000 in its treasury. series, the deck will be reshuffled to begin the next year.
The remaining cash is held in the Bank. Any President may double as
the Banker throughout the game—without providing his own corpora- Playing Procedure
tion any undue advantage. For convenience in playing the game, the
1. Turn up the top situation card and pay fixed expenses—
Bank also serves as the market place, and all spare counters (the square
Each corporation must pay the Bank $1,000 per month for each Stand-
pieces supplied with the game) are kept there. The Banker will find it
ard Factory ($1,500 for Automated Factories). This represents over-
convenient to keep a scratch pad to record bids of the current month,
head items such as rent and utilities which must be paid whether the
so that he can determine how the counters are to be distributed. Each
factory produces goods or not. There is a monthly charge of $300 for
corporation starts the game with two.standard factories ready to produce.
As.the game progresses, either standard factories or automated factories storing each Raw Material Unit and $500 for each Finished Inventory
can be acquired as will be explained later. Notice that the large counters Unit. For example, in January, when the Presidents begin with the same
supplied with the game are marked sTD. on one side and AUTO. on the number of factories and units, play opens with each President paying
other. Place two of these counters, with the sTD. side up, in the factory fixed expenses as follows:
site area of each corporation. Each corporation has four Raw Material $1,000 for 2 Finished Inventory Units
Units (RMU) and two Finished Inventory Units (FIU) in stock at be-
ginning of play. Notice that the small counters supplied with the game 1,200 for 4 Raw Material Units
are marked RMU on one side and FIU on the other. Place four small 2,000 for 2 Standard Factories
counters, with the RMU side up, in the raw material site of each corpora-
tion. Place two small counters, with the FIU side up, in the finished
inventory site of each corporation. To add color to the game, the Presi- $4,200 ToTAL—Pay this amount to Bank
dents may consider their corporations to be specific competing industries,
such as automobile manufacturers. Each finished Inventory Unit would 2. Purchase raw mafterials—The number of Raw Material Units
then represent a fleet of automobiles. available and the minimum bid price is indicated on the situation card
for the month. Each President may make one bid, writing the number
of units and the price per unit on his Running Record Sheet. Be-
Situation Cards are supplied to state availability of raw material, cause the smallest denomination of money supplied is $50, all bids
minimum price for which raw material can be obtained, potential mar- must be in multiples of $50. Bids are confidential at this point, so
ket for finished inventory, and maximum market value of finished in- cover your Running Record Sheet with your hand or a piece of paper.
ventory. At the start of each round of play, measured as one month in If a President wishes to withhold bidding, he may do so without reveal-
the game, a new situation card is turned face up. Each situation is ing his secret to the competition until they have recorded their bids.
different, but all Presidents are confronted with the same opportunities Remember, the price listed on the situation card is the minimum figure
‘at the same time. Disregard the “Special Situation” comments. They that you can bid and hope to get raw material. Should you inadvertently
are used only in the Tournament Game. bid below the minimum, you forfeit your opportunity.
After all bids have been recorded, the Presidents then expose their
bids. The highest bidder receives his units first, and the remaining avail-
able units go to the next highest bidder, and so forth until all available
Running Record Sheets are provided for each President. These units are sold. If there are more units for sale than there are offers: to
are used to account for all of your own transactions and to make notes
buy, the Bank will retain the unsold portion and no action will occur
of competitors’ transactions if you so desire. Information about your
with these units.
competitors might at some future point in the game permit you to make
an important decision. Each President takes one sheet from the As an example, if the first situation card indicates that there are 8
Running Record Sheet pad and fills in the name of his corporation units for sale during the current month for a minimum of $400 each,
along the side. The current year is then circled (1 for the first year). the Presidents might make these bids:
If the. game continues into the second year, a new Running Record
Sheet will be required and the year 2 must be circled on that sheet. The NORTH. . . . . . . . four @ $600 each
President of North corporation (East corporation if North is not in SOUTH . . .. . . . . two @ $550 each
business): becomes the Senior President during the month of January
and writes his initials above the JAN. column. The Senior President WEST . .... . . . five @ $500 each
title, which determines the successful bidder in case of a tie, is passed on EAST. . . . . . . . . two @ $450 each
to the next player on the left at the beginning of the next month of play.
The Running Record Sheet has been designed for use in both the basic North offered the highest bid, $600 per unit. He will pay the Bank
game and the tournament game. For the basic game, ignore the vertical $2,400 and receive four Raw Material Units. South will get two of the
dashed lines in the RAW MATERIAL and SALES portions, the STOCK REC- remaining units for $550 and pay the Bank $1,100. There are two
ORD at the bottom, and the PROFIT AND LOSS STATEMENT on the reverse more units available for purchase under the terms of the situation card,
side. These are used only in the tournament game. and they are purchased by West at a price of $1,000. Tied bids are
 resolved in favor of the Senior President for that month. If the Senior “becomes due, he may reborrow during the same month. A President
President is not involved in a tie-bid, ties are resolved in favor of the may wish to finance a new factory during the same month that it comes
tied-bidder seated closest to the Senior President in clockwise rotation. into production. For instance, if a factory comes due in March, you
may take out a Loan in March during Phase 5 to cover the final payment
Should there be a shortage of counters in the Bank, the RMU situa- of that factory. A. President may borrow money during other phases
tion of the Bank over-rules the Situation Card. For instance, if the of the game should an emergency need arise, but the interest on these
Situation Card shows 6 RMU’s available, but there are only 4 left in the emergency loans is 1% per month (12% per year). No loans between
Bank, then only 4 can be bid on. Presidents are allowed.
3. Plan production—After paying fixed expenses and buying new 6. Order capital improvements—Players order new factories or
material, the President of a newly formed corporation finds his cash on receive factories ordered in previous months during this phase. A lead
hand at a low point, and wishes to manufacture and sell as many prod- time of four months must elapse before a Standard Factory is put into
ucts as quickly as possible. Decide how many Raw Material Units you production. Lead time is the time required for construction, measured
wish to convert to Finished Inventory Units and record this figure on from the month in which the factory is ordered to the month in which
the Running Record Sheet—but keep your production planning confi- the factory is completed. For instance, if a Standard Factory is ordered
dential at this point. Each Standard Factory may produce one Finished in January, it is completed in May, and comes into production in June.
Inventory Unit per month at a processing cost of $2,000, while an Auto- Six months’ lead time is required for Automated Factories, while a con-
mated Factory can produce two units for $3,000 or one for $2,000. version from a Standard Factory to an Automated one requires an eight-
After all Presidents have planned their production for the month, then month lead time. Standard Factories cost $5,000, Automated Factories
beginning with the Senior President and progressing clockwise around $10,000 and a conversion $7,000. One half of the cost. must be paid
the board, each President pays the Bank for converting his Raw Material ‘to the Bank when construction is started, and the remainder upon com-
Units into Finished Inventory Units. Note. It is not mandatory that units pletion. Fixed expenses must be paid from the first month the factory
be manufactured, or that full production capacity be utilized. is put into production, which would be the month following completion.
4. Sell finished inventory—The situation card shows the market Factories under conversion may continue production at Standard Fac-
_ potential for Finished Inventory Units ‘during the current month, dnd the tory capacity.
highest price that the bank is willing to pay, which is the maximum mar-
ket value. The price tag that you will have to place on your Finished If at any point in the game you should become desperately short of
Inventory Units will be governed by the law of supply and demand, working capital, you may sell an operating factory to your competitors
together with other factors that you should consider, such as your need at mutually agreeable terms. You will note that the number of available
for ready cash and expectations for a better market next month. If the factory sites is limited to six. Six Automated Factories, however, are
situation card reveals a market for 12 units, yet the total finished inven- capable of satisfying the entire market for Finished Inventory.
tory for all corporations is only 9, a “‘seller’s market” situation exists and
you can confidently offer your inventory for sale at maximum market
value. The maximum market value fluctuates from $4,500 to $6,500. Continue Business Cycle for Next Month and follow the
same six phases of play. If the game is to be concluded after a certain
Conversely, if the market potential is limited to 9 Finished Inventory
number of months or after a fixed limit of hours, the Balance Sheet on
Units and the total inventory for all corporations is 12 units, you will
the reverse side of the Running Record Sheet should be filled out. All
have to underbid itors to make a sale. If you do not
wishto
necessary instructions for filling out the Balance Sheet are given on the
sell any or all of your Finished Inventory Units during a particular
sheet. The President showing the highest net worth is the winner. (Net
month, keep this fact confidential until your turn to reveal your asking
worth is the total of stock issued plus surplus.) At the end of the game,
price. The Bank will, of course, buy the units with the lowest price tag
any surplus inventory which cannot be absorbed by the market is valued
first, next lowest second, etc. If two or more Presidents offer their units
at the market figure on the situation card. Raw material in stock at the
at the same price, the Senior President sells his inventory first. If the
end of game is valued at the raw material price on the situation card.
Senior President is not involved in a tie-bid, ties are resolved in favor
of the tied-bidder seated closest to the Senior President in clockwise
rotation. Remember, the price listed on the situation card is the Maxi- Test of Bankruptcy
mum market value—if you: place a higher price tag on your finished
inventory, it cannot be sold. If a player has insufficient cash on hand to pay his debt in full to the
Bank when due, and if he has already borrowed to the full extent of his
If the bank runs short of money at any time, it cannot buy Finished
credit, then that player is bankrupt and out of the game.
Inventory until funds are replenished through the sale of Raw Material.
-5. Make or repay loans—During this phase, Presidents may bor- The bankruptcy occurs immediately upon failure of a player to meet
row money from the Bank, pay interest on loans, or repay loans. A Presi- his obligations and not necessarily at the end of the month. Another
dent may borrow up to one half the value of his factory units. All loans President may not buy out a bankrupt President. He may sell if bank-
are payable 12 months after the loan is made, with interest at the rate of ruptcy seems evident, so long as it has not actually occurred. For ex-
%% per month (6% per year). Loans cannot be paid off sooner ample, if a player has sufficient cash to finish March but will not be able
than 12 months. Interest payments must be rounded off to the nearest to pay Fixed Expenses in April, then he may arrange a sale to a competi-
$50. A President cannot refinance a loan if the money is not available tor in March.
to pay off the original obligation; but if he pays off his loan when it The Bank takes over all assets in the event of bankruptcy.

TOURNAMENT GAME
Introduction ations which may have effect on any or all presidents. Each such com-
ment explains itself on the card and players must obey the comments if
The Tournament Game of MANAGEMENT is simply the Basic Game
applicable.
plus certain additional rules designed to make the play even more real-
istic. /t is absolutely essential that players become proficient at the Basic
Game before attempting the Tournament Game. Basic Game rules apply
Game Ending Details
except where otherwise stated herein.
The Tournament Game may end in the same various ways as outlined
for the Basic Game. In the Tournament Game, however, players must
Situation Card Comments
complete a PROFIT AND Loss STATEMENT, pay taxes and complete a
On many Situation Cards there are special comments describing situ- BALANCE SHEET at the end of each calendar year.
 Instructions regarding completion of the P&L STATEMENT are printed Closing Procedure
on the form, and additional details will be mentioned later in these
instructions. At the end of the year, do the following in order:
(1) Complete your Profit & Loss Statement (Pay taxes to Bank).
(2) Figure up Balance Sheet.
Dividends and Steck issuance (3) If Surplus exists, pay Dividend. Subtract Dividend payment from
Surplus and Cash.
In the Tournament Game, players may issue additional stock for their
Corporations but in order to do so, they must establish a record of full (4) Record Dividend payments and ARREARAGES in Stock Record
payment of dividends. A corporation must pay a dividend equal to 10% Section.
of the Book VALUE of its stock each year to the Bank. Jf a Corporation (5) If additional Stock is issued, adjust Cash and Stock Issued sec-
does not wish or plan to issue stock, it is not necessary to pay dividends tions of Balance Sheet.
although an arrearage record must be maintained on the Stock Record If P&L shows a loss, subtract loss from Surplus. If any Surplus re-
form. In the event a Corporation should later decide to issue stock, and mains, you may pay a dividend even though operations in that year
has accumulated arrearages, the total arrearage plus 10% penalty must were unprofitable.
be paid to the Bank. It is permitted to make partial dividend payments
and accumulate the difference as an arrearage. Depreciation
Book VALUE is computed as follows: On your current Balance Factories depreciate in value each year in a “straight line” manner at
Sheet, add Stock Liability plus Surplus and divide by the number of the rate of 10% per year. Example: If the purchase price of all Factories
shares outstanding to reach the Book VALUE of each share. Dividends is $10,000, then Depreciation would be $1,000 each year. Factory value
per share are based on 10% of this valuation on each share. A simpler then becomes $9,000. However, the following year’s Depreciation is
method, of course, is to simply add Stock Liability and Surplus, paying based on the purchase price, not the depreciated value of $9,000. The
dividends as 10% of the total. depreciation suffered during a year of business is listed on the Profit and
Loss Statement when closing the books for the year, and the factories
Example (1): At the end of the first year, Stock Issued ($32,000) must be listed on the Balance Sheet at their depreciated value. Loan
and Surplus ($8,000) equal Book VaLuE ($40,000). Dividends, value, of course, is based on the depreciated value of a factory.
based on 10% of $40,000, would be paid to the Bank. Deduct $4,000
from CasH and SuRPLUs and re-compute the Balance Sheet. Stock Taxes
Issued remains the same, but Surplus now reads $4,000 and Cash will
If a net profit exists, 50% of it must be paid to the bank for corporate
be $4,000 lower.
income taxes. If a corporation suffers a loss for one or more years and
then has a profitable year, previous losses for five years back may be
‘Dividends can be paid only after taxes have been paid and Surplus charged against the profit for tax purposes only. Profit and Loss State-
has been computed on the Balance Sheet. Dividend payments are not ment or Balance Sheet figures are unaffected except for the tax entry on
tax deductible, and are never computed in any current or future Profit the Profit and Loss Statement. For example, if a corporation lost $5,000
& Loss Statement. over a three-year period, and the fourth year a net profit before taxes
of $8,000 is made, the corporation may deduct the previous loss of
Dividends can only be paid from Surplus. This is a matter of law—
$5,000 from the $8,000, thus entering only $3,000 in the Net Profit
you cannot pay dividends from Stock Liability. Thus, if at the end of a Before Taxes blank. The tax bill for that year is reduced from $4,000
year no Surplus remains, it is not possible to pay dividends even though to $1,500. Similarly, if operations were profitable for several years and
an arrearage based on 10% of Book VALUE must be maintained. In this then a loss is sustained, a refund of taxes paid within a five-year period
case, of course, the Book Value of a share has dropped below its Par, or
from the time of the loss can be realized.
original, VALUE. Before it is possible for a Surplus to exist, one must
carry stock at full liability, which is to say its full PAR VALUE. It is possible, in a game between experts, that one corporation with
high profits may want to merge with a near-bankrupt corporation in
Example (2): If, in Example (1), there is a Surplus of only $2,000, order to take advantage of the these tax credits.
the Book VALUE would be $34,000 instead of $40,000. The divi-
dend requirement would be 10% of $34,000, which comes to $3,400. Split Bids
This is $1,400 more than the Surplus figure. Therefore, the entire
Surplus of $2,000 is paid to the Bank. The remaining $1,400 is an Presidents may submit two differently priced bids for raw material,
ARREARAGE and must be recorded as such on the Stock Record section. but the total number of units bid on cannot exceed the number of RMU’s
available. Similarly, finished inventory may be offered for sale at two
If a Corporation has paid dividends and has no arrearages, per the different prices, but the same unit cannot be offered twice, nor can the -
foregoing, then it may issue stock. total number offered exceed the potential market. For example, in a
market calling for 4 Flu, North (if he has at least 4 FIU in inventory)
Only one issuance of stock may take place per year per Corporation may bid 3 at $4,000 and 1 at $3,000. In the case of tie bids, the Senior
and the issuance must be done at the year end. In no single year may a President is the successful bidder.
Corporation issue more shares than an amount equal to half of the shares
currently outstanding. Thus, at the end of the first year of operations, Shut Downs
only 16 new shares may be issued. In the event that a strike should occur, operations become unprofit-
able, or for any other reason, a President may elect to shut down his
Valuation of each share sold must be at Book VALUE. Thus if Book factories. By so doing, he loses all productive capacity, but cuts his
VALUE per share is $1200 and 10 new shares are to be issued, the Bank fixed expenses in half. The decision to shut down must be made during
must pay that price per share for a total of $12,000 for the 10 new the sixth phase (capital improvements) of the month preceding the
shares. This is done to avoid “watering down” the equity of older shares. The
shut-down period. However, a corporation must decide to reinstate
$12,000 figure would be entered as a new stock liability in full amount.
operations one month before such operations may be resumed. The
Stock may be issued at the end of the first year of operations if circum- decision to reinstate operations must be made during the sixth phase of
stances allow. Dividends may not be paid, however, on the new shares the second month preceding the month in which operations are to
issued at that time. All stock transactions must be “public’”—other resume. For instance, if you decide to Shut Down in March, you pay 2
players are entitled to full disclosure. the amount of Fixed Expenses beginning in April. In April, you may
decide to re-instate operations. The Factory does not come into pro-
A Corporation may, at the end of any year, “repurchase” its shares duction until June. Full amount of Fixed Expenses is paid in June.
from the Bank for the Book Value plus current dividends plus 10%
We will be happy to answer any questions on this game if you will write us,
penalty on the total of Book Value and dividends. enclosing return postage in the current first class amount.