ECONOMICS GAME THEORY Harvard Case Solution & Analysis

Economics game theory Case Study Solution 

5(a) First Mover Advantage/Second Mover Advantage

Under the context of Oligopoly, the First mover advantage refers to the payoff the first mover receives which is higher as compared to the payoffs when moved simultaneously in the market. The first Mover has the advantage to set the game strategy of the market while the other players are entering the market later follow the guidelines of the first-mover. Also, the first mover has the advantage to shape the market forces according to him and set the trend in the market. It offers a competitive advantage to the first mover for being the pioneer in the market.

The second mover refers to the players who enters the market after the first mover has set the ground for particular offerings. The second mover has an advantage over the first mover because he has a de quate knowledge of the market and know the depth of the sea and thus frame his entering strategy smartly. The second mover has the advantage to learn from the mistakes of the first mover and design an offering which covers those mistakes and area, thus offering a better product/service and high harvesting pay offs .Also, the second mover has the advantage to target the customers and accumulate the offerings which are the mix of the offerings of the first player with the addition of more features that matches the demand of the market, thus offering a better product/service.

The competitive advantage and payoffs related to the First mover and second mover vary from industry to industry. In an ideal situation, the first mover advantage is better because it enables the player to set the game ofthe market according to his will.he has the advantage to set the trend that best suits him, and set the competition level, while the other movers have to follow the market trend set by the first mover. But the first mover advantage does not always work in all industries. For example, in field of technology and innovation, the second mover hasmore advantage over the first, because till the time he acquires the technology, thecost of acquiring reduces and the replication is easy, which offers a competitive edge to the second mover to develop an offering at low cost, thus gaining more in the market than the firstplayer. Lastly, the second Mover may not set the trend but can offer a better version of the same product at low cost because he has data and knowledge of the consumer behavior which the First Mover did not have.

Under the perspective of Prisoner’s Dilemma, Toyota and Honda are the two simultaneous player, that captures the market and position its strategy simultaneously. In doing so, Toyota, launches new cars in the market with the conceding move with Toyota, because if they move alone in the market, like Honda manufactures 8 cars a year and Toyota also produces 8 cars a year following Honda, there is high probability that both the players may face the loss, due to oversupply of cars in the market. In contrast to this, if both the companies work accordingly and simultaneous with each other, they will produce 4 4 cars each to make the most out of it and also keep the market at equilibrium. Here the concept of Nash equilibrium is also eminent, which states, the effect of the action of one player’s unilateral strategies on the other player .Since both Honda and Toyota, are the players in the same market, it is important for both players to frame the strategies in a way that doesn’t disturb the market equilibrium and fulfill the element of Nash Equilibrium.

5(B) Pre-Emptive First Mover strategy- Gillette & Bic

Under the pre-emptive First Mover strategy, there are certain elements that a company can use to counter the competition. As said, “The best offense is a good defense.”In the past and recently many companies have used such strategy to maintain their position in the market. Among them, Gillette and Bic the razor making companies entered the market .Gillette had been the first mover in making razors while Bic followed it lately and offered the same product. Gillette used the Pre-emptive Blocking strategy in which it launched the disposable razors before Bic. Approximately a year, the time it took Bic to stabilize itself in the razor industry and thus lost the competition. Here Gillette used the Blocking strategy as an advantage of the first mover. Being the first mover, it has the time, market knowledge, expertise and technology to develop a counter offering that wiped the competition Bic away from the industry while sustaining its position as the market leader. Gillette has been successful in implementing the Blocking pre-emptive strategy because of its expertise and position in the market. It had the prior knowledge of what next the customer would demand and thus developed a new product in a short time. Expertise and knowledge of the markets help the players to develop, re-amend or re-strategize the business offering without hurting OR minimizing the market share.

ECONOMICS GAME THEORY Harvard Case Solution & Analysis

 

 

8(A) Strategic Communication

Strategic communication is a process of pushing and delivering the message in right context. Strategic communication means communicating in the right direction, with the right message and right tone and most importantly through the right channel. The difference between a normal communication and strategy communication is that the strategic communication ensures the message delivered is of the right essence for the audience and that it offers value and right stuff which could be used to achieve the underlying goals for which the event of strategic communication took place...................

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