Railroad Tycoon 2

Introduction

Railroad tycoon 2 is a strategy game. It’s a business game. It’s a railroad game. The aim of any business is to make money. First of all though before any money can be made, you have to spend some money. Then you hope that you will get some money back.

Trains and Profit

As chairmain as a company in railraod tycoon 2, your aim is going to be maximising your profits. When you run trains, you will charge people a fee for the service, in this game you get payment when the journey is completed. You have to transport comodities from a station that supplies them to a station that demands them. However, there are running costs, such as fuel for the engine, maintaince for the engine and track, and salaries for the managers. If the revenue that you get by completing a journey is greater than the cost of doing that journey, then you have made a profit.

Strategy

Well, in the quest to maximise profits, there will always be a best route and a best train to use which will be the most profitable on the map. However, before you actually start running services, you don't know which services will make money and which will not. So you have to make an informed guess, and this is what makes the game interesting - after all it wouldn't be much fun if it told you exactly where to build and what engine to use!

Important business concepts

In running a business there are three concepts which are crucial, scale economies, profit maximisation and fixed and variable costs

Scale economies

It is cheaper for a large company to run than it is for a small one. A large company can use the same piece of track for many trains, and therefore spreading the cost of the track. Similarly a large company can just put a few roundhouses in a few key places and they can serve lots of trains, the same applies with other station buildings. It therefore makes more sense to have a large centralised network, rather than lots of small individual routes

Profit maximisation

Say you have a railway between two towns, and you have two trains. They are always running completely full, and making very large amounts of profit, and there is always a bit of passengers/mail left waiting at the station. Should you put in a third train? Well you might think yes, but this isn't always a good idea. If you do put in a third train, then that will reduce the amount of passengers/mail at the station. As a result, some of your train's cars may start to run empty. Although your third train may make a profit, the profit that the other two made will be reduced and it is possible that adding the third train actually caused your total company profits to decrease. As a result it is important to remember that maximising profits is not the same as maximising revenue. Even if there is excess cargo at a station, don't rush into adding additional trains.

Variable and fixed costs

There are two different types of cost which face busines. Fixed costs are tottally unrelated to the output of the business. For example, paying interest on debt is fixed and unrelated to how many trains you run. Variable costs are the ones, which depend on the business output, a good example is fuel costs. This is an important concept. If your company is making a loss, you might think it is a good idea to halt all operations. However, if your trains are making a profit then this is a bad idea, because it will increase your losses. In the long run you should shut down though.