Thinking Strategically

The science of strategy is called game theory. In game theory, what person A should do, given the various actions person B might take, either independently or in response to A's actions are considered. The game is a situation of strategic interdependence: the outcome of the choices (strategies) depends on the choices of another persons or persons acting purposefully. The moves in a game may be either sequential or simultaneous.

The best choices, or moves, are governed by four basic rules. Dixit and Nalebuff fully explore, explain and illustrate these rules in Chapter 2: Anticipa

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hoice, producing smaller quantities of a larger number of cars and allowing buyers to customize their automobiles by selecting from a long menu of optional add-ons. Instead of seeking ways to sell more of the same, companies were exploring ways to increase sales by manufacturing multitudes of products: 41 types of Tylenol, dozens of styles of jeans, etc. True to his model of liberated management, Peters advises John Akers, chairman of IBM, to "split the company up into half-dozen or more pieces, then sell over 50 percent of each to the public. It's not that tiny is beautiful (after all, one-sixth of IBM would be over $10 billion); it's that inflexible is very, very ugly - and getting uglier with each passing day (p. 15)." This strategy can work only if companies are highly flexible; devote greater amounts of budges to design and product development; drastically reduce the time between conception and execution; and seek out or create new markets. Liberation Management is a guide for organizations who want to make this shift. Innovative companies are splitting their operations to form smaller groups which can be more flexible and responsive to their customers. In these economic times, the new small is the key. The
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Approximate Word count = 2534
Approximate Pages = 10 (250 words per page)

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