Military Perspective of Strategy The Five Books: 2.

Games with simultaneous moves

– taken concurrently under
Boardrooms – like Battlefields. 1. The Ground Book – the
imperfect or incomplete information.
roadmap to strategy.
Strategies – the guns and ammunition. - uses a payoff table.
2. The Water Book – methods in
Art of War attaining victory. Zero-sum game – any benefit gained by one is a
3. The Fire Book – how to fight to loss to another. (e.g., Rock, paper, scissors)
- by Sun Tzu.
attain victory.
- Oldest military classic in Chinese Dumping game – Garbage collection
4. The Wind Book – explains the
literature.
other ways. Social Dilemma - has a dominant strategy
- First book that formalized strategy.
5. The Void Book – explains the equilibrium where the dominant strategy
- Necessary reading for any successful
true spirit of strategy. solution is different from the cooperative
corporate individual.
solution to the game.
People – are trained to win.
Cooperative solution – list of strategies and
Book of Five Rings Winning – the sole goal of engaging in war.
payoffs the players would choose if they could
- by Miyamoto Musashi (a samurai) commit.
- Samurai is the highest esteem in Japan.
Game Perspective of Strategy Non-cooperative solution – there is no
- The Way of the Sword, Kendo. The
commitment.
moral teaching of a samurai. Strategy is viewed from the standpoint of
- 4 Ways: The Ways of Strategy playing games. Nash equilibrium – equilibrium of a
1. The way of the gentleman noncooperative game where each player’s
Focuses on winning and achieving a reward.
warrior – master the virtue of strategy is best for him, given that each one is
his weapon. More on valuing. Game Theory – linked to neoclassical satisfied with the strategy of his choice.
2. The way of the farmer - economics. Rationality.
3. Games with strategic moves
Attuned to the changes in the
Rewards – may be in the form of income and – devices applied to work to
milieu. More on observing.
returns. one’s advantage.
3. The way of the carpenter –
-actions are observable and
proficient in the use of his tool. 1. Games with sequential moves
irreversible.
More on doing. – are steps taken
4. The ways of a merchant – live  Threats – deterrent.
chronologically where an action is a
by making profits. More on  Commitments
consequence of a previous move.
creating.  Promises – bring about compliance.
-there is an order of actions.

Tree diagrams – an extensive form of a game. 4. Styles in game strategies

Consists of nodes and branches.

Terminal nodes – contain respective payoffs.

Economics Perspective of Strategy
Horizontal Boundaries of a Firm

Vertical Boundaries of the Firm Economies of Scale

- Average cost declines over a range of
Vertical Chain or Supply Chain Management
output.
- Begins with the acquisition of raw
Explanation: This is a strategy used to lessen
materials and ends with the distribution
your cost per unit of your product by
and sale of finished goods.
producing more (the same product) output.
Alternatives to vertical integration:
Cue word: QUANTITY (Kadaghanon)
1. Tapered integration
- perform and buy strategy.
- Sharing of internal and external channel Economies of Scope
processes.
- When a company achieves savings by
2. Strategic alliances – 2 or more firms
producing a variety of goods.
agree to collaborate or share resources.
* Vertical if it is between buyer and Explanation: A strategy to lessen the cost
supplier. per unit of your product by producing
* Horizontal if it is between 2 firms in different kinds of products.
the same industry.
*kibali naa kay Negosyo nga maghimo ug
Ex: Joint Venture – 2 or more firms
Sanina, imbes na Sanina lang imong himo-
create and jointly form a new
on, pwede maghimo pud ug trapo gamit ang
independent organization.
salin sa imong gipanghimo nga Sanina. So in
that way nakasave ka kay ang imong halin
3. Implicit contract – alternative for
atong trapo pwede nimo iuban sa halin sa
vertical integration.
imong Sanina, so dako na imong kita pero
- A tacit or unspoken understanding
same ra imong gasto.
between parties.
Cue word: VARIETY (Lahi-lahi)
4. Collaborative relationships – manifested
in subcontract and keiretsu.

Keiretsu – a Japanese term that refers to

business network made up of different
companies or organizations.
Ex: Sanwa and Mitsubishi