Competition& collaboration

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Competition& collaboration

  1. 1. Competition & Collaboration Game Theory
  2. 2. Adam M. Brandenburger of Harvard Business School & Barry Nalebuff of Yale School of Management, utilized game theory- the mathematical study of decision making to business strategy. In May 1996 they published their signature work , “ Coopetition” which formed an exciting new approach to strategy.
  3. 3. Business is a game, just like many think it is. But business is a game with a difference. In any game someone must lose in order for you to win; As Gore Vidal puts it, it is not enough to succeed, Others must fail “ Things are just the opposite in business. “ In business” your success doesn’t require others to fail – there can be multiple winners.
  4. 4. In short business is war, but it is also peace. You have to compete, but if you are smart, you will also cooperate. You must do the same simultaneously. Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up. In other words business is War & Peace simultaneously.
  5. 5. Most importantly, game theory not only shows you how to play the game of business but actually change the game to one closer to your liking. That is where ,the authors suggest the big payoff from game theory comes in.
  6. 6. Changing the game of business starts with changing the parts. In any game, there are five basic elements: Players- the participants in the game Added values- the value the participants bring to the game. Rules – the regulations governing how the game is played Tactics- the moves players can make to gain advantage Scope- the boundaries of the game To change the game,one needs to change one or more of its elements. Change one of the parts and you change the whole
  7. 7. Changing the game by changing players
  8. 8. With regard to changing the players, before you enter game, asses your added value. If you have a high added value, you’ll make money in the game; so go ahead and play. But if you don’t have much added value--- you may still be able to make money by changing the game---- consider bringing in in customers, suppliers, complementors and even competitors. Any time the cast of players changes, so do added values. E.g. IBM with Intel. Compaq and Dell with Intel
  9. 9. Changing the game by Changing the Added value Limit supplyNintendo and Harley- Davidson Bajaj Scooters in the 1980’s and early 1990’s Make your product better. Create Customer Loyalty.
  10. 10. Changing the game by Changing Rules: Using MFC’s ( most favored customer) Wal- Mart’s tie up with Bharti Changing the game by Changing tactics: Changing Perceptions- Gillette’s Sensor Shaving System Reliance Power- IPO . Microsoft’s PowerPoint vs. Harvard Graphics
  11. 11. Changing the game by Changing Its Scope : For example you wan to get into a game , but there is already a powerful player. Do you challenge him or her on the existing turf, or do you change the game and create some turf of your own ? ExamplesSega did to Nintendo in the late 1980’s. Reliance Refinery at Jamnagar vs. Shell’s plans Tata small car project-Nano
  12. 12. Changing the game is not something one want to do once and then forget about . It’s best viewed as an ongoing process. No matter how successfully you have seized your current opportunities, new ones will appear that can be best utilized by changing the game again. There is no end to the game of changing the game.

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