Thinking Strategically
The programme, Thinking Strategically, is a six-module subject first delivered in October, 1997.Although they may not always aware of it, managers are continually making decisions in situations where the outcomes depend partly on what their rivals do. We call these situations strategic interactions, and the decisions strategic decisions, since they are, or should be, based on how someone else will act, and react. Decision making in strategic interactions is exactly what game theory was invented to analyse.
Thinking Strategically introduces managers to ways to unlock the power of this way of looking at strategic decision making, by providing simple frameworks and tools for looking forward and reasoning backwards before making such decisions. This provides valuable insights into what's really going on in every negotiation and strategic decision.
The program is made up of six themes:
- A broad-brush introduction to strategic decision making, with lectures, in-class exercises, cases, and discussions.
- Introducing strategic actions and managing your rival's expectations through credible commitments. "We will cut our fares next month" -- is this a credible signal? "We have doubled our capacity, and will price accordingly" -- is this a credible commitment? How will rivals and potential rivals react?
- How reputations are built via repeated interactions, and the value of reputation in strategic interactions. How repeated arm's length competition can still annoy Alan Fels by resulting in apparent collusion.
- Bargaining as a strategic interaction, with issues of information, credibility, and managing expectations to attain agreement.
- Designing such interactions, as auctions or as contracts requires understanding how players will behave under different rules; new and traditional forms of auctions are discussed and experienced.
- The Value Net is introduced to highlight possibilities for firms and organisations cooperate as well as compete, by introducing the ideas of complementors: firms whose output complements yours. Is your firm in the right game? Or should you be doing business differently and more profitably? Cases and in-class discussion of the implications of these ideas and concepts.
The overheads used in lectures are available at the links below, in the PDF format, for which you need the Acrobat Reader or an appropriately configured web browser.
- Theme A -- Strategic Decision Making
- Theme B -- Credible Commitments
- Theme C -- Repetition and Reputation
- Theme D -- Bargaining
- Theme E -- Tenders, Auctions, and Bidding in Competition
- Theme F -- Choosing the Right Game
- Exercises A -- Strategic Decision Making
- Exercises B -- Credible Commitments
- Exercises C -- Repetition and Reputation
- Exercises D -- Bargaining
- Exercises E -- Bidding and Auctions
- Exercises F -- Choosing the Right Game
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Last Updated 7 September 2000 Robert Marks, bobm@agsm.edu.au