dDiscuss how the economics of game theory could add value to the risk assessment of the likely competitive threats facing a company in the market.

Outline and discuss how the economics of game theory could add value to the risk assessment of the likely competitive threats facing a company in the market.

(2700 words)

 

The key objective is to write a critical essay outlining the overlap between the economics and game theoretic concepts introduced in game theory and the practical case research undertaken by your group during the Workshop ( I have attached presentation for your reference). Please use real case study materials where appropriate.

Hint: The best way to approach the assignment is to imagine that the essay is to be read by senior management. Their concerns may have to do with:

(i)                 
market entry

(ii)               
product launch

(iii)             
challenges of technology or

(iv)             
prices.

Analyze the market-as-a-game, identify and filter the competitive threat, assess the action-reaction sequence of events and evaluate your results.

Remember: You are an MBA consultant. Here is an opportunity to reflect on both the research undertaken by you at the Workshops and on the learning obtained in the preparation of your assignments for this Module. In any consultancy, you must try to impress upon the team. One way to do that is to convince them of the value-added of applying economic concepts and economic reasoning from game theory and transactions cost economics to an evaluation of strategy.

Markers comments on the presentation:

1.     
The group provide a good overview of Lego and its strategic analysis in the construction toys market with some quick facts and consumer behaviour impacts.

 

2.     
The financial analysis is well developed and the group analysed the drop in financial revenues in 2017. This was outlined in the CTL and reasons provided e.g. collapse of Toys ‘R’ Us. The group outline the market share positions in 2017 with 6% of global market.

 

3.     
The T/3 framework is well developed identifying Lego as a Marris type who invests heavily in R&D. The group also developed ideas regarding technology, education and games with extensive educational programmes over a number of different tiers. STEAM Park and World Award Winner. Also acquisitions were outlined.

 

4.     
The CV Matrix is also well developed with various actions – reactions in product variety; movies; education and theme parks. The near-rival is identified as Mattel.

 

5.     
The game dimension is also well developed as Marris player type in Cournot game. The group outlined a game using Maximin : Minimax criterions to solve the saddle point value.

 

6.     
The CTL is well developed with market entry strategies into different target markets. Make v Buy dilemma was outlined with Megabrands. Also diversification into adult market e.g. Lego Adult set.

 

7.     
The group also provided action-reaction pattern of behaviour in terms of movies launches and education programmes. Lego and MIT cooperation was also outlined.

 

8.     
Good set of conclusions presented with recommendations to continue to invest in R&D and Education programmes; develop STEAM; invest in Lego Movies and invest in eCommerce and disruptive technology e.g. Augmented Reality etc.

 

9.     
The group marshalled arguments and answered questions well.

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