Application Of Game Theory In Strategic Formulation Marketing Essay

Application Of Game Theory In Strategic Formulation Marketing Essay This particular article talks about the application of game theory in the business world. In todays highly competitive market it has become harder and more complicated to decide about the pricing strategies and budgeting of the advertisements. This article explains the concept of game strategy with various examples. Keywords: strategy, pay offs, prisoners dilemma. Introduction Game theory, a branch of  applied mathematics  that is used in the  social sciences, most notably in  economics, biology, engineering, political science,  international relations,  computer science, and  philosophy attempts to mathematically capture behavior in strategic situations or  games, in which an individuals success in making choices depends on the choices of others. While initially developed to analyze competitions in which one individual does better at anothers expense (zero sum games), it has been expanded to treat a wide class of interactions, which are classified according to several  criteria. Today game theory is widely used in the business for solving situations in which there are a number of players. Companies are using the science of Game Theory to help them make complicated strategic decisions in this highly competitive market with least possible risk. History of Modern Game Theory is more than 50 years old and has demonstrated an  ability to  generate the ideal strategic  choice in a variety of different situations, companies and industries. Principles of game theory are applied through the use of strategy games.   Game theory and its applications: A powerful tool for predicting outcomes of a group of interacting  firms where an action of a single  firm directly affects the payoff of other participating players. Enables  a company  to formulate their optimal strategy. Ideal for strategic situations where competitive or individual behaviors can be modeled.   For example:   Auctions (sealed project bids), Bargaining activities (union management negotiations), Product decisions (entry or exit markets), Principal-agent decisions (compensation negotiations, supplier incentives) and Supply chain design (capacity management, build vs. out source decisions). Multiple strategy games are analyses to  model different competitors, various payoffs  and potential strategies.   The objective of these games is to deliver A recommended set of strategic  decisions to guide competitive behavior to a desirable outcome, and; An analysis of how a series of possible strategic moves can predict various competitive outcomes.   Various types of games can be used and analysed based on the strategic situation, the number of players, the amount of  information available  and the timing constraints. Classification of game theory: There are basically three types of games Fully co- operative game: to explain this game we can take the example of two cyclists coming towards each other. it is in their best interest to avoid the collision and If they have to avoid the collision each of them has three strategies: move right move left maintain direction The strategy followed by one person in this case depends on the other person. As they both dont want a collision they will change their direction based on the opponents strategy. This type of game is called full co operative game. Zero sum non co operative game: to explain this case we can take the example of the retail outlets in one locality. All of them use different pricing strategy to attract customer. in this case if store is able to attract customers it is on the account of the other retail store. In this particular case a strategy followed by one player affects the other player always. In simple words the win of one person comes on the account of other persons loss. Mixed strategy game: this type of game explains the situation where the interests of both the player are interdependent. But they are partly opposed and partly coincident. This kind of strategy is followed mostly in the case of union management feuds. In the case of union and the management their benefits are interrelated. At the same time they have conflicting interests as well. Other classification: game theory has been divided into following categories: Static games: this basically deals with anticipating rivals move. These kind of games involve pricing strategy, prisoners dilemma, the concept of dominant strategy, fixing up of advertisement budget etc. Dynamic games: deals with the concept of perfect and sub perfect games. Prisoners dilemma: Below given diagram depicts the prisoner dilemma. Figure 3: Prisoners dilemma Prisoners dilemma is a beautiful concept of game theory that explains various complications that firms face while taking the decision regarding fixing the price or on deciding on the budget for the advertisement. The evidence available with police is not sufficient enough to convict these criminals to convict. Though they are supposed to get 20 years of imprisonment if the crime is proved, they will get only one year of imprisonment if the crime is not proved. if they apply the best strategy they both can avoid the conviction. The strategies that they can follow are: A confesses B remains silent: A gets an imprisonment of 5 years and B gets an imprisonment of 20 years. B confesses A remains silent: B gets an imprisonment of 5 years and A of 20 years. Both of them confess: both get an imprisonment of 5 years. Both remain silent: both get an imprisonment of 1 year. The dilemma here is that they dont know about each others strategy and they end up confessing the crime as both of them want to avoid the 20 year of imprisonment. But if they know about the strategy of the opponent they can decide about their strategy and can get best equilibrium possible that is one year for both of them. The same theory applies for many firms in the corporate world and they end up choosing the wrong strategy because of the opponent or the apprehensions in their mind. The Concept of Dominant Strategy: Dominant strategy is the strategy followed by any player that will supersede all the strategies followed by the opponent. Eliminating Dominant Strategy: It will in the best of interests of both the rivals to eliminate the dominant strategy. One beautiful example of this is the OPEC. Nash Equilibrium: A Nash equilibrium is a combination of strategies such that no individual player can deviate unilaterally from his or her to improve his pay offs. Few examples of game theory in the practical corporate world: Price wars: this can be explained by the following example: imagine there are two pizza providers in the city and they have different pricing policies namely- high, low and medium. There are two restaurants in a small town, pizza hut and dominos. They are in competition with each other for customers. They have three price slabs: high (H), medium (M) or low (L). The customer base is 1,000 of which 300 only ever buy at Dominos and 300 only buy at Pizza hut. The other 400 are price-sensitive and always buy the cheaper pizza and choose at random if they charge the same price. Both providers make a margin of  £12 per pizza if they charge high prices,  £10 per pizza if they charge medium prices, and  £5 for low prices. Both Dominos and Pizza hut cannot guess what the other player has chosen before they choose themselves. We can calculate profits by multiplying the number of customers with the margin per customer. For example, if dominos charges a medium price and Pizza hut a high price, Dominos will sell to his 300 loyal customers and the 400 price sensitive customers at a margin of  £10 each, giving him pay-offs of  £7,000. Pizza hut only sells to his 300 loyal customers, but at a margin of  £12 per pizza, giving him p rofits of  £3,600. Figure 2: pricing war between two suppliers PgIn this case three equilibrium arises one of 6/6 , 5/5 other one of 2.5/2.5. the noble picture for both the firms is 6/6 but becausee of the price wars between them none of them are able to extract ad No ad Ad wars: No ad $5m colgate $5,m $5.5m, $2m Ad $2m $5.5m $2.5m $2.5m Figure 3: advertising war between P G and Colgate This particular situation is of the two brands of toothpastes in which both of them follow different ad strategies. The decision of going for an ad and not going for an ad depends upon the opponent. They have four possible strategies: Both of them go for ad None of them go for ad P G goes for ad but colgate does not go for ad Colgate goes for ad but P G not. In two cases the equilibrium exists one for 5,5, and the other for 2.5, 2.5. the firms can make more money without going for any ad but as both the firms want to capture the non loyal market they go for ads and finally end up by lower margins. The dilemma here is that if one firm does not go for the ad and the other goes, then it will lose money. So guessing rivals move becomes very important here. Assumptions: Players and rational and they select strategies based on their interest. The market is equally divided in the players. Other factors are constant. Shortcomings of Game Theory: Game theory has many short comings as well and that needs to be considered. Assumes the players are rational and they play in their self-interest.  This might not be the case all the time. Assumes players act strategically and consider the competitive responses of their actions. But every manager does not think within a strategic context.   The concept of Game Theory is most effective when managers understand the expected outcomes of the strategies they are following and the strategy that their competitors will follow.   To be little precise most of the companies often do not have enough knowledge of their own payoffs let alone those of their  competition. Despite  its shortcomings, a properly constructed game can perceptibly reduce business risk, can produce valuable competitive insights, improve internal alignment  around decisions  and maximize strategic utility. According to the  The Economist  magazine Managers have much to learn from game theory provided they use it to clarify their thinking, not as a substitute for business experience. Conclusion: Game theory is a beautiful concept of applied mathematics. Though it has got shortcomings and its assumptions might not be applicable in all the cases it can help firms and industries in finding the appropriate strategies. Based on the pay offs, number of players and other strategic situations game theory can be helpful in developing the optimum strategies for the firms. .

Three Skills I Need to Improve

Three Skills I need to Improve Part I Identify three skills for studying and learning online from Assessment 3. 1 that you would like to improve. Develop a brief action plan detailing the steps you will take to develop each skill. Part II Reflect on the people (friends, family, co-workers, social group, etc. ) in your life who support your choice to return to school, and answer the following questions: a. Who is part of your personal support system? Briefly describe each person/group. . How has each person or group of people supported and encouraged you in achieving your goals Identify three skills for studying and learning online from Assessment 3. 1 that you would like to improve . Develop a brief action plan detailing the steps you will take to develop each skill. Overcoming aloneness , Meeting deadlines, Enjoying relaxation I will be trying to work on how to talk with my words verses me always seeing people face to face. I started keeping a personal journal.I am working on deadli nes I seem to wait then realize that it’s more work than what I thought. Self-discipline is hard but its working for me with trying to get my work done on day to day. Relaxation I tried that at Panera Bread in the mall just to read over some work it was good. Part II Reflect on the people (friends, family, co-workers, social group, etc. ) in your life who support your choice to return to school, and answer the following questions: a. Who is part of your personal support system?Briefly describe each person/group. b. How has each person or group of people supported and encouraged you in achieving your goals? My husband and children are part of my support system. My daughter is very smart and says mom I can do your work. My husband helps me with understanding of this online school since he’s been doing this for a long time. They keep me encouraged because I get frustrated very quick. My husband says calm down and breath do this at your pace and you will get the hang of it .

The Bizarre Secret of Best Term Paper Writer

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History and Geography of India

India, formally called the Republic of India, is the country that occupies most of the Indian subcontinent in southern Asia. In terms of its population, India is one of the most populous nations in the world and falls slightly behind China. India has a long history and is considered the worlds largest democracy and one of the most successful in Asia. It is a developing nation and has only recently opened its economy to outside trade and influences. As such, its economy is currently growing and when combined with its population growth, India is one of the worlds most significant countries. Fast Facts: India Official Name: Republic of IndiaCapital: New DelhiPopulation: 1,296,834,042 (2018)Official Language(s): Assamese, Bengali, Bodo, Dogri, Gujarati, English, Hindi, Kannada, Kashmiri, Konkani, Maithili, Malayalam, Manipuri, Nepali, Odia, Punjabi, Sanskrit, Santali, Sindhi, Tamil, Telugu, Urdu  Currency: Indian rupee (INR)Form of Government: Federal parliamentary republicClimate: Varies from tropical monsoon in south to temperate in northTotal Area: 1,269,214 square miles (3,287,263 square kilometers)Highest Point: Kanchenjunga at 28,169 feet (8,586 meters)  Lowest Point: Indian Ocean at 0 feet (0 meters) Indias History Indias earliest settlements are believed to have developed in the culture hearths of the Indus Valley around 2600 BCE and in the Ganges Valley around 1500 BCE. These societies were mainly composed of ethnic Dravidians who had an economy based on commerce and agricultural trade. Aryan tribes are believed to have then invaded the area after they migrated into the Indian subcontinent from the northwest. It is thought that they introduced the caste system, which is still common in many parts of India today. During the fourth century BCE, Alexander the Great introduced Greek practices into the region when he expanded across Central Asia. During the third century BCE, the Mauryan Empire came into power in India and was most successful under its emperor, Ashoka. Throughout subsequent periods Arab, Turkish and Mongol peoples entered India and in 1526, a Mongol Empire was established there, which later expanded throughout most of northern India. During this time, such landmarks as the Taj Mahal were also constructed. Much of Indias history after the 1500s was dominated by British influences. The first British colony was established in 1619 by the English East India Company at Surat. Shortly thereafter, permanent trading stations opened in present-day Chennai, Mumbai,  and Kolkata. British influence then continued to expand from these initial trading stations and by the 1850s, most of India and other countries such as Pakistan, Sri Lanka, and Bangladesh were controlled by Britain. Queen Victoria of England took the title of Empress of India in 1876. By the late 1800s, India began a long struggle working toward independence from Britain. That finally happened in the 1940s, when Indian citizens began to unite and British Labor Prime Minister Clement Attlee (1883–1967) began to push for Indias independence. On August 15, 1947, India officially became a dominion within the Commonwealth and Jawaharlal Nehru (1889–1964) was named Indias Prime Minister. Indias first constitution was written shortly thereafter on January 26, 1950, and at that time, it officially became a member of the British Commonwealth. Since gaining its independence, India has undergone significant growth in terms of its population and economy, however, there have been periods of instability in the country and much of its population today lives extreme poverty. Government of India Today Indias government is a federal republic with two legislative bodies. The legislative bodies consist of the Council of States, also called Rajya Sabha, and the Peoples Assembly, which is called the Lok Sabha. Indias executive branch has a chief of state and a head of government. There are also 28 states and seven union territories in India. Economics Land Use in India Indias economy today is a varied mix of small village farming, modern large-scale agriculture as well as modern industries. The service sector is also an incredibly large part of Indias economy as many foreign companies have  such places as call centers located in the country. In addition to the service sector, Indias largest industries are textiles, food processing, steel, cement, mining equipment, petroleum, chemicals, and computer software. Indias agricultural products include rice, wheat, oilseed, cotton, tea, sugarcane, dairy products,  and livestock. Geography and Climate of India The geography of India is diverse and can be divided into three main regions. The first is the rugged, mountainous Himalayan region in the northern part of the country, while the second is called the Indo-Gangetic Plain. It is in this region that most of Indias large-scale agriculture takes place. The third geographic region in India is the plateau region in the southern and central portions of the country. India also has three major river systems, all of which have large deltas that take over a large portion of the land. These are the Indus, Ganges, and Brahmaputra Rivers. Indias climate is also varied but is tropical in the south and mainly temperate in the north. The country also has a pronounced monsoon season from June to September in its southern portion. More Facts About India Indias people are 80% Hindu, 13% Muslim, and 2% Christian. These divisions have historically caused tensions between different religious groups.Hindi and English are Indias official languages, but there are also 17 regional languages that are considered official.India has several cities that have undergone place name changes such as Bombay being renamed Mumbai. These changes were mainly done in an effort to return the city names to local dialects, as opposed to British translations. Sources Central Intelligence Agency. CIA - The World Factbook — India.Infoplease.com. India: History, Geography, Government, and Culture - Infoplease.com.United States Department of State. India.