Decoding Strategy - Patterns & Predictions by McNutt Patrick A

Author:McNutt, Patrick A. [McNutt, Patrick A.]
Language: eng
Format: epub
Publisher: McGraw Hill
Published: 2013-08-29T16:00:00+00:00

The DQ is composed of management type and firm as they morph into one game-playing entity: the player. If a player per se finds itself in a market with fewer than five competitors, it behoves management to identify each rival as a type of player. At its simplest, all players are incumbents in the smallest bounded market and any new player wishing to enter that market is an entrant type. Post-entry, the entrant type evolves into an incumbent type and the blending of management type with entrant-turned-incumbent player type begins to unfold. The player is an extant (still existing) type. This becomes more acute in a market where the number of players is less than five and interdependence — the quintessence of oligopoly — is a key driver of competitor reaction. For example, both Sony and Nintendo are extant players in the video games market but Sega is not, while Microsoft has morphed from an entrant type in 2000 to an incumbent type today.

If DQ1 has a CV = 0, DQ1 does not expect a reaction from DQ2; conversely, if DQ1 has a CV ≠ 0, DQ1 anticipates a reaction from DQ2 and formulates a reply strategy (see Table 7.2 ). The reason why a reaction is anticipated may be due to the management’s reading of the signals from the type of management blended with the player type that has become DQ2. For example, if DQ2 was characterised by DQ1 as an extant player, there is less likelihood that DQ2 would follow a price reduction by DQ1 than if DQ2 was characterised as an entrant type .

Table 7.2

Reply Strategy

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