Management Reflection Article on Game Theory

The instructions for this project were as follows

Your reflection article must include an introductory statement of the problem discussed in the article. Present your thoughts and opinions on the problem discussed in the article. Your summary report must include the article title, source of the article, and the author name(s). Length of the report: Minimum of 3 pages and double space. Your report must be in APA format and grammatically correct.

About the Solutions
The reflective essay connects with an article published in the Wall Street Journal and has been fully reproduced below. If you want to hire an expert to complete a reflective essay like this one for you you can use our services for that. You may also purchase the full solutions on this page if you wish to use this particular project.

Reflective Essay

Business professionals and management personnel are given a lot of theories which with they can work with. Theory X and Theory Y, Game Theory, The Hierarchy of needs and several other ideas which they can apply to their profession as they manage and control businesses. However, the theory itself is often not enough and practical examples may be needed to understand how a theory can be applied to the real world. The application of Game Theory and an explanation of how it can be used in the real world have been presented in The Wall Street Journal by William Barnett. The article was first published in 1995 and the self explanatory title of the work is ‘Manager's journal: Making game theory work in practice’.

The author begins by informing the readers that Game Theory is certainly a valuable idea since the Nobel Prize for economics in 1994 was given to the individuals who presented and supported the theory. The idea of Game Theory is not new, but the ways in which it is applied are certainly new discoveries since it can be applied to everything from auctions to setting prices of commodities and even to making purchase decisions. Essentially, the reason for this rediscovery of Game Theory is the advantage brought by the theory which allows decisions to be made for the near term while keeping the bigger picture in mind.

Barnett (1995) explains Game Theory using the simple example of two players who have incentives to fight against each other by undercutting each other. If they choose to fight with each other on the basis of price, they both stand to lose revenue until they come to a point of equilibrium. However, if they decide to cooperate and maintain their prices, both of them stand to gain while none of the two would lose anything. This is also true of competition which can be made in terms of sales support, advertising and product features.

However, Barnett (1995) is quick to clarify that Game Theory is not that simple since to win the game, perfect or near perfect knowledge of the market is necessary. Managers who wish to use this theory need to understand everything from the costs of entry and exit to demand functions that affect cost curves. Further, Game Theory may not be applicable to all industries at all times and places. This is because Game Theory works best when there are few players (players include competitors, suppliers, producers etc.) who can benefit from improvements in industry wide conditions rather than the benefit of individual companies. Additionally, rouge players who are much smaller or much larger than the other companies can spoil the game for other players.

Further, a small number of buyers and low numbers in terms of clients for an industry can also destroy the game since companies would be forced to compete very hard for scarce orders. However, with the application of cooperative bidding for these orders, the balance of power can shift from the buyer to the seller. Aggressive behavior on part of the sellers however, may cause the buyers to gain more power and thus be in control of the game.

When the competition has cost and revenue structures that are more or less the same, the game has to shift from the product being supplied to less tangible areas such as service quality and distribution networks. The nature of demand itself can cause the Game Theory to be altered and even become inapplicable as declining or seasonal demand patterns may cause cooperation between players to be abandoned in favor of cutthroat competition.

The article as a whole makes several very interesting point but it falls just short of suggesting that companies should band together to form a cartel in order to seek monopoly powers. Game Theory seems to discourage competition or pushes competition out of the realm of price towards other (perhaps less tangible) factors which affect the buying decisions of consumers. However, that is not necessarily a bad idea since it would certainly give companies the ability to control their profits and not bleed each other to death. In conclusion, it is easy to say that Game Theory appears to be quite interesting and the industrial sectors mentioned in the article could certainly benefit from the application of Game Theory to improve their profits as well as their business outlook if they apply the theory correctly.

Works Cited

Barnett, F. (1995, February 13). Manager's journal: Making game theory work in practice. Wall Street Journal, p. A14.

Word count: 758

Other Details about the Project/Assignment
Subjects: Business Management -> Business Strategy
Topic: Short Reflective Essay on a Management Article
Level: College / University
Tags:

Management, Reflective Essay, Reflection Article, Game Theory

Price: $4.95

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Project Details

Subjects: Business Management -> Business Strategy
Topic: Short Reflective Essay on a Management Article
Level: College / University
Tags:

Management, Reflective Essay, Reflection Article, Game Theory

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Management Reflection Article on Game Theory

Management, Reflective Essay, Reflection Article, Game Theory

Management, Reflective Essay, Reflection Article, Game Theory