position in trying to ensure mistake-proofing computes the n
) + E(r
). The action that is S
is contingent on r
-root expected return. Across the strategy set,
there are S
strategy with the maximum return as computed with n
-root formula is the
adopted strategy. The choice is binary, that is, management as a player will
choose strategies from a set of strategies and can refer back to historic E(r) for
any related strategy.
Burden of Loss Standard
The complexity of the strategy set mirrors the complexity of playing the game;
there is a
burden of loss
standard that impinges on management in adopting
mistake-proofing or ‘poka-yoke’. In other words, the burden of loss standard
requires management to minimise the firm’s exposure to loss. In many respects
the interpretation of strategy is in the context of actually playing the game with
rival management, while the interpretation of risk falls back on the issue of
whether it is judicious for management to play the game. Making a decision,
and knowing that a decision has to be made, is crucial. As noted it may be the
case that management decide not to play a game
but proceed with
business. Whether this happens or not depends on technology. In a world where
management can influence rivals’ actions by their type, a reliance on profit
maximization or shareholder value as the key drivers of management behavior
may no longer seem reasonable. Making a decision, and knowing that a decision
has to be made, is crucial.
Management in oligopoly markets find themselves coming closer to the
rhythm and pattern of real price movements. Prices are no longer arbitrarily
guided by a march towards the Holy Grail of a perfectly competitive price.
Rather prices fall into a pattern that pervades the market for products and
management have to redeem themselves through their behaviour in the firm.
Management’s rational nature can help management to decide to accept the
reality or change the pattern of observed behaviour through their own actions
and reactions in the market.
The economic price standards appear arbitrary or
are imposed by institutions without any reference to the right reason or the
preferences of management. There are price opposites of the perfectly
Signalling, Strategy & Management Type