Position in trying to ensure mistake proofing

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position in trying to ensure mistake-proofing computes the n th -root of {E(r 1 ) + E(r 2 ) + E(r 3 ) + ....... + E(r n ). The action that is S 1 is contingent on r 1 with an n th -root expected return. Across the strategy set, S, there are S 1 to S n and the strategy with the maximum return as computed with n th -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 per se 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 66
competitive equilibrium, for example a cartel-like price, which can be turned into a negative signal (quaternity) when included with monopoly and dominant positions. So in this view of the business world management, robbed of their rationality, must avoid cartel price or monopoly position because otherwise their behaviour will be constrained and retarded by external factors. Strategy Set Although a fact finder may observe play in a market by observing management actions, for management, however it is more complex. Observed behavior may not be repeated or as in our fictitious example, player A may not have expected a reaction from B because in the past, B did not react. This is a crucial point in

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