Strategy as Options Games

2015 ◽  
Author(s):  
Han Smit ◽  
Thras Moraitis
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Real Options ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Growth Opportunities ◽  
Conceptual Approach ◽  
Market Conditions ◽  
Acquisition Strategy ◽  
Major Pharmaceutical Company

This chapter develops a framework for assessing the value generated by both the option-like and competitive characteristics of an acquisition strategy. The conceptual approach is based on real options and principles from game theory. It illustrates the approach with an example of how real options and games thinking were used in strategic decision making at a major pharmaceutical company. The method treats an acquisition strategy as a package of corporate real options actively managed by the firm in a context of competitive responses or changing market conditions. This framework can help management answer several questions that are important for a successful acquisition strategy: How valuable are the growth opportunities created by the acquisition? How can we best sequence the acquisition options in the strategy? When is it appropriate to grow organically, and when are strategic acquisitions the preferred route? How is the industry likely to respond, and how will that affect the value of our acquisitions and future targets? The subsequent sections present a series of frameworks to address these questions.

scholarly journals Game theory and the surgeon

2015 ◽  
Vol 97 (8) ◽  
pp. 335-337 ◽  
Author(s):  
AP Marco
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Strategic Decision ◽  
Strategic Decision Making

How the controversial study of strategic decision-making plays out in our profession.

A Real Options-Based Framework for Strategic Decision-Making in Hostile, Turbulent and Ultra-Volatile Environments

2016 ◽  
Vol 841 ◽  
pp. 323-329
Author(s):  
Mircea Boscoianu ◽  
Laura Bacali ◽  
Elena Corina Boscoianu ◽  
Dragos Popa ◽  
Aura Codreanu
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Net Present Value ◽  
Force Balance ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Strategic Decisions ◽  
Discounted Cash Flow ◽  
Resource Dynamics ◽  
Tactical Decisions

The resources required by modern military action are essential in establishing a favorable force balance and thus become a critical landmark in strategic decision making. The imbalance in resources is of utmost importance and needs to be analyzed in full relation with the current dynamic and volatile environment. Decisions made based on such resource dynamics are rapid, intuitive and can be easily transferred into practical approaches provided that the complexity of the processes characteristic of combat environments is fully taken into account. Moreover, the dynamic management of portfolios needs to also include options. Additionally, strategic decisions must be harmonized with operational and tactical decisions while integrating all available means by which to employ resources and meeting the deadline set by the features of real time situations. Traditional approaches like discounted cash flow/ net present value (DCF/ NPV) cannot provide the flexibility required by the changes in combat environment. Unlike the financial options focused on bonds, stocks, financial rates, military real options (MRO) evaluate military resources and bonds and are thus advantageous under uncertain and ultra-volatile conditions. Thus, strategic decision makers need to not only deter against losses, but to also understand how to preserve the opportunity to act in turbulent times.

Programmable Automation and the Locus of Decision-Making Power

1999 ◽  
Vol 25 (1) ◽  
pp. 29-53 ◽  
Author(s):  
Paul D. Collins ◽  
Lori Verstegen Ryan ◽  
Sharon F. Matusik
Keyword(s):  
Decision Making ◽  
Longitudinal Study ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Market Conditions ◽  
Decentralized Decision Making ◽  
Computer Based ◽  
Operating Decisions ◽  
Locus Of Decision

Computer-based technology is often credited with making decentralized decision-making possible, helping firms to respond rapidly to changing market conditions. Research on this subject, however, shows contradictory effects: some studies support decentralization and others support centralization. This longitudinal study examines how one form of computer-based technology, programmable automation (PA), affects centralization. Unlike previous studies, it attempts to clear up some of the confusion surrounding technology’s effect on centralization by distinguishing between strategic and operating decisions, and between decision-making authority and influence. As expected, PA flattened the hierarchy. It had no effect on strategic decision-making power, but surprisingly, did influence centralized line-operating authority and influence. This finding is particularly striking because firms with decentralized line-operating decision-making are more likely to adopt PA.

scholarly journals METHODS OF MANAGEMENT DECISION-MAKING BASED ON GAME THEORY AS A GROUP OF METHODS OF STRATEGIC DECISION-MAKING CLASS BASED ON THE OPTIMIZATION OF PERFORMANCE INDICATORS

2018 ◽  
pp. 14-23
Author(s):  
A. V. Tebekin
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Performance Indicators ◽  
General System ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Management Decision ◽  
Management Decision Making

Within the framework of the General system of management decision-making methods, the role and place of management decision-making methods based on the optimization of performance indicators are shown. The features and areas of application of methods of game theory as a group of methods of the class of strategic decisionmaking based on the optimization of performance indicators are considered. The classification of a group of methods of management decision-making based on the theory of games on the basis of cooperation, symmetry, the value of the total amount, sequence of actions, completeness of information, finiteness of the number of steps, continuity, purity of strategies, type of winning function.

scholarly journals Analysis of Foundations of Resource-Based Theory

2014 ◽  
Vol 13 (2) ◽  
pp. 10-24
Author(s):  
António José Pinto Pedrosa ◽  
Fernando Manuel Pereira Oliveira Carvalho
Keyword(s):  
Decision Making ◽  
Competitive Advantage ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Business Managers ◽  
Economic Sectors ◽  
Conceptual Approach ◽  
Resources And Capabilities ◽  
And Performance ◽  
Resource Based Theory

The assumptions of the resource-based theory (RBV) are often tested using an approach centered on the heterogeneity of resources, allowing only identify specific resources or capabilities that should be exploited to achieve competitive advantage. In this paper we use a conceptual approach seeking to test whether value, rare and inimitable combinations of resources and capabilities, rather than their specificity, achieve competitive advantage and performance. The results obtained from 368 questionnaires validated by business managers of several Portuguese economic sectors show that the increase in value, rarity and inimitability of the combinations tested, raises the company's competitive advantage, and that performance is achieved by this route. The findings are of interest for the development of the field of strategic management and for managers enabling strategic decision-making based on valuable, rare and inimitable company`s resources and capabilities combinations.

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