Additional videos: Value Net Analysis and Pay-Off matrix Flashcards
(8 cards)
What is a value net analysis?
maps firm’s external dependencies in order to show otherwise hidden sources of competitive advantage. It is preconditional to establishing strategic alliances, as it allows potentially competing parties to identify the benefits of cooperation
What is a competitor?
a player whose products customers value more when they have the other player’s product than when they have your product alone
What is a key disadvantage of many strategic models?
they view interfirm relations as exclusively competitive in nature. In reality, most interfirm relations are competitive / cooperative dualities.
What is a complementor?
a player where your customers value your product more when they have the other player’s product than when they have your product alone.
What is a value net analysis?
Company can create value in interconnectedness of the market. The most important elements are:
- Suppliers and customers (vertically)
- Competitors and complementors (horizontally)
What is a pay-off matrix?
defines structure of strategic interaction between two players
What are the four laws of the payoff matrix?
- Action is reaction: decisions of actors influence one another
- Only partial control: no single actor has full control over final outcome of interactive situation
- Gain seekers: game theory assumes actors act rationally, and seek to improve their lot
- Empathy: putting yourself in the other person’s shoes is necessary to foresee others’ moves affecting you
What are the 7 essential design questions of a payoff matrix?
- Who are the players
- What options are open to the player?
- What goals are the players pursuing?
- What are the sources of gains from trade?
- Can any of the players make credible commitments? If not credible the other player will ignore the commitment.
- What is the time structure of the game?
- What is the information structure of the game?
