The following table depicts a complete information and simultaneous move game in

Question

The following table depicts a complete information and simultaneous move game in normal form representation. Player 1has two strategies: T, B. Player 2 has two strategies: L,R. Each cell in the table below depcts the utilities from each outcome.
a) Find all the pure strategy Nash equilibria. Is there a dominant strategy for each player? b) Suppose that player 1 makes the first moves. Player 2 observes the choice made by player 1 (perfect information) and then chooses his two alternative choices. Depict this sequential game in normal form representation and find all the pure strategy Nash equailibra of this sequential game. c) Depict this sequential game in extensive form representation. Is there a unique Subgame perfect Nash equilibrium to this sequential game? explain
Answer ALL questions. epicts a complete information and simultaneous move game two in normal form representation. Player 1 has two strategies: T, B. Player strategies: L, R. Each cell in the table below depicts the utilities from each outcome. 2 has Player 2 Player 1 6, 2 2, 1 6, 0 8, 4 Find all the pure strategy Nash equilibria. Is there a dominant strategy for each player? Explain your answer. (10 marks) Suppose that player 1 makes the first moves. Player 2 observes the choice made by player 1 (perfect information) and then chooses his two alternative choices. Depict this sequential game in normal form representation and find all the pure strategy Nash equilibria of this sequential game. (10 marks) Depict this sequential game in extensive form rep Subgame Perfect Nash equilibrium (SPNE) to this sequ your answer. (10 marks) (a) (b) resentation. Is there a unique (c) ential game? Explain

Explanation / Answer

The strategy is an idea or action a business has to plan and execute to ensure survival in the market and making a profit. There is a need to identify the goals, the target customers, the competitors, and the profitability. Each business has to plan their strategy based on the following three parameters:

·        Goals: The First Step of Strategic Planning: Goal defines the basic decision you need to take regarding your business, target customers, product line, profit margins, and the scope of business national or international.

It will define your product and services, what are your expectations from the business; your product is a new idea or product or an innovation and the suitability and viability in the target markets. The product will be identified and will cater to the needs of the specified target market. The profits you plan to make from the business and the investments will map your cost-benefit analysis of starting the business.

·        Customers and Benefits: The Second Step of Strategic Planning:   The key to maximizing business strategy gets an accurate customer product matching.

The target customer can be a high profile of the market customer who is not price sensitive and open to spending on your specialized product, which adds to his social status and matches his needs.

You can also opt corporate sales, B2C (Retail) sales or B2B sales (wholesale). The product and target customer segmentation have to be clear and specific. The customer will value your product according to his need satisfaction. The customers are also further subdivided as local customers, corporate customers, and passionate customers.

The definition of your target customer will help define your product and services as the needs of different customer segment vary. There also a variety of product according to the area of sales like national or international sales as the consumer requirements will change.

·        Industry Dynamics and Analysis: The Third Step of Strategic Planning: This involves understanding the Industry trends and your competitors and planning your product and service according to the prevailing trends.

·        Strategy Selection: The Fourth Step in Strategic Planning: The strategic planning is based on differentiation, cost, and focus. Theses are also called generic strategies.

There are three classic strategies for businesses of all types:

·        Differentiation Strategy

·        Cost Strategy

·        Focus Strategy

·        Differentiation strategies are suitable for targeting mass markets. Your product and service are suitable for everyone who buys it. You can differentiate your product and services by giving benefit benefits, which make you, stand apart from your competitors. You can show how your product will give additional benefits to you over competitors products. This is suitable for big companies as a small business cannot target mass markets or will have to target a local mass market.

·        Cost strategies also target the mass markets. You will highlight how your product gives a cost-benefit over and above an existing product or service. The small business use this strategy to give similar product or service at a lower cost as their cost of operation is less and have negligible overheads

·        Focus strategies target a niche or a specialized segment of the market. For example, as cited in the text “Instead of selling mass-market gravel for everyone, a focus strategy might target people seeking decorative gravel.” The gravel can be distinguished by its size, color or durability which will make it stand apart from its competitors.

As stated in the text “small business uses a combination strategy where they use a mix of the differentiated and cost approach, which target a niche market.” Each business can formulate their own success model. This model will be defined by conducting a market study, customer profiling, surveys, competition data analysis etc.

2. According to this chapter, what are the 7 entry wedges specific to small businesses pursuing an imitation strategy?

The sudden appearance of a gap in the market or an opportunity which can be seen as a good business option for a new entrant which an entrepreneur can seize and maximize is called an entry wedge by Retired entrepreneurship professor Karl Vesper21. These are as follows:

Supply shortages: The entrepreneur sees gaps in supplies and an apparent opportunity to supply. This is normally a short-term demand and would be due to demand-supply gaps.
Unutilized resources: The physical resources from a farm, or a remote location, which, can be a future tourist spot, are all unutilized resources which entrepreneur can convert into profitable business.
Customer contracting: A contract signed with a customer to ensure regular supply of a product or service. This ensures regular demand. Normally a supplier of component manufactured for a big automobile giant.
Second sourcing: Second sourcing is acting a s a stand by product or service available in case primary product supplies fall short of demand.
Market relinquishment: The companies leave an existing market due to sudden risks or fear in doing business in the market for example after 9/11 many airlines just stopped their growth plans giving ample opportunities for new entrants and small businesses to expand.
Favored purchasing: This is done to encourage small business by having specifically fixed business quota allotted for small businesspersons.
Government rules: The government may lay down rules and regulations, which support small business and help them to meet specific rules, which are waived for small businesses.

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