Game theory model for the development of optimal strategy towards innovative products manufacturing at the enterprise

  • Received May 30, 2017;
    Accepted September 19, 2017;
    Published November 8, 2017
  • Author(s)
    Zoryna Yurynets , Rostyslav Yurynets , Taras Gutor
  • DOI
    http://dx.doi.org/10.21511/ppm.15(3-1).2017.12
  • Article Info
    Volume 15 2017, Issue #3, pp. 285-294
  • TO CITE АНОТАЦІЯ
  • Cited by
    1 articles
  • 1131 Views
  • 768 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The carried out research confirms the expediency of economic mathematical modeling (game theory) implementation in practice of economical activity. The paper presents a designed game theory model of optimal innovative strategy for product manufacturing at the enterprise considering the expenses due to the production, storage and transportation of basic goods; extra expenses for the development of innovative products and supplementary costs granted by the company for the innovative products development in order to decrease possible material losses by the defined reasons.
The developed game theory model aims to develop the optimal strategy for innovative products manufacturing was implemented and approved at the enterprise, which produces different means of operative communication. The assigned solution of a task included the calculation of the company’s optimal innovative product release with the aim of receiving a maximum income from the developed products realization. The model enables to define the percentage ratio of the efficient manufacturing of innovative products at the enterprise, considering the state of the market and competitive behavior in overall product assortment, the possibility of this ratio optimal correction in order to maximize the income from innovative products realization.
Performed calculations allow the company’s managers to determine the beneficial and non-beneficial market state for certain types of innovative products and to improve the decision making process concerning the increase or the reduction of innovative products manufacturing.

view full abstract hide full abstract
    • Table 1. The data on the range of products manufactured at the enterprise
    • Table 2. Calculated optimal strategies of improved product manufacturing
    • Barney, J. (1986). Strategic Factor Markets: Expectations, Luck and Business Strategy. Management Science, 32(10), 1231-1241.
    • Binmore, K. (2007). Playing for Real: A Text on Game Theory. New York: Oxford University Press.
    • Blekuell, D., & Girshik, M. (1958). Теория игры стратегических решений. [Teoriya igri statisticheskih resheniy]. Moskva: Izdatelstvo inostrannoy literaturyi.
    • Brandenburger, A., & Neylbaff, B. (2012). Конкурентное сотрудничество в бизнесе. [Konkurentnoe sotrudnichestvo v biznese]. Moskva: Keys.
    • Cachon, G., & Netessine, S. (2003). Game theory in supply chain analysis. (Working paper). The Wharton School of Business, University of Pennsylvania, Philadelphia, PA.
    • Drucker, P. (1986). Innovation and entreprenership: Practice and principles. London: HarperCollins Publishers.
    • Dyubin, G., & Suzdal, V. (1981). Введение в прикладную теорию игр. [Vvedenie v prikladnuyu teoriyu igr]. Moskva: Nauka, Glavnaya redaktsiya fiziko-matematicheskoy literaturyi.
    • ELFakir, & Tkiouat. (2016). A multiagent game theoretical approach to adverse selection in corporate financing. Investment Management and Financial Innovations, 13(2-2), 292-299.
    • Fudenberg, D., & Tirole J. (1991). Game Theory. Cambridge, MA: MIT Press.
    • Gallini, N., & Winter R. (1985). Licensing in the Theory of Innovation. Rand Journal of Economics, 2, 237-252.
    • Gibbons, R. (1992). Game Theory for Applied Economists. Princeton, NJ: Princeton University Press.
    • Grant, R. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, Winter Special Issue, 17, 109-122.
    • Greif, A. (1996). Economic History and Game Theory. (A Survey Stanford Working Paper).
    • Hurwicz, L., & Reiter, S. (2006). Designing Economic Mechanisms. New York: Cambridge University Press.
    • Jaumotte, F., & Pain, N. (2005). An Overview of Public Policies of Support Innovation. (OECD Economics Department Working Paper, 456).
    • Kaiser, U. (2001). Product Innovation and Product Innovation Marketing: Theory and Microeconometric Evidence. (ZEW Discussion Paper).
    • Katkalo, V. (2006). Эволюция теории стратегического управления. [Evolyutsiya teorii strategicheskogo upravleniya]. Sant-Peterburg: Izdatelskiy dom Sant-Peterburgskogo gosudarstvennogo universiteta.
    • Knight, F. (1994). The concept of risk and uncertainty. THESIS, 5, 12-28.
    • Lamben, Zh. (1996). Стратегический маркетинг. [Strategicheskiy marketing]. Sant-Peterburg: Nauka.
    • Markides, K. (2010). Новая модель бизнеса. Стратегии безболезненных инноваций. [Novaya model biznesa. Strategii bezboleznennyh innovatsi]. Moskva: Vidavnitstvo Yurayt, Alpina Pablisher.
    • Maskin, E. (2011). Commentary: Nash equilibrium and mechanism design. Games and Economic Behavior, 71(1), 9-11.
    • McAfee Preston, R. (2005). Competitive Solutions: The Strategist’s Toolkit. Princeton, NJ: Princeton University Press.
    • McMillan, J. (1996). Games, Strategies, and Managers: How Managers Can Use Game Theory to Make Better Business Decisions. New York: Oxford University Press.
    • Mitchell, T. J., & Hustad, T. P. (1981). The Analysis of Options Approach to New Product Screening. Research in Marketing, 4, 143-179.
    • Muto, S. (1987). Possibility of Relicensing and Patent Protection. European Economic Review, 1, 927-946.
    • Myerson, R. (1997). Game Theory: Analysis of Conflict. Cambridge, MA: Harvard University Press.
    • Popov, A. (2008). Инновационная экономика: лекция. [Innovatsionnaya ekonomika: lektsiya]. Tambov: Izdatelstvo Tambovskogo gosudarstvennogo tehnicheskogo universiteta.
    • Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press.
    • Porter, M. (1998). Competitive Strategy. Techniques for Analyzing Industries and Competitor. New York: The Free Press.
    • Prahalad, C. K., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review, 68(3), 79-91.
    • Rumelt, R., & Lamb, R. (Eds.). (1984). Towards a strategic theory of the firm. In Competitive Strategic Management (pp. 556-570). Englewood Cliffs, NJ: Prentice Hall.
    • Santo, B. (1990). Innovation as a tool for economic development. Moscow: Progress.
    • Somaya, D., Teece, D., & Wakeman, S. (2011).Innovation in Multi-Invention Contexts: Mapping Solutions to Technological and Intellectual Property Complexity. California Management Review, 53(4), 47-74. University of California, Berkeley.
    • Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management, Strategic Management Journal, 18(7), 509-534.
    • Von Neumann, J., & Morgenstern O. (1944). Theory of Games and Economic Behavior. Princeton, NJ: Princeton University Press.
    • Winer, R. (2002). Marketing Management. Milan (IT): Apogeo.
Related Articles

  • The risk management practices in the manufacturing SMEs in Cape Town

    Clinton Mbuyiselo Sifumba , Kevin Boitshoko Mothibi , Anthony Ezeonwuka , Siphesande Qeke , Mamorena Lucia Matsoso doi: http://dx.doi.org/10.21511/ppm.15(2-2).2017.08
    Problems and Perspectives in Management Volume 15, 2017         Issue #2 (cont. 2)         pp. 386-403 Views: 3426 Downloads: 542 TO CITE АНОТАЦІЯ

    Risk management is one of the prominent issues which are pivotal to the success of a business and may adversely affect profitability if not properly practised. Therefore, the main objective of this paper was to determine risk management practices in manufacturing SMEs in Cape Town. The research conducted was quantitative in nature and constituted the collection of data from 74 SME leaders, all of whom had to adhere to a list of strict delineation criteria. All data collected were thoroughly analyzed through means of descriptive statistics. From the findings made, it is clear that SMEs in the manufacturing sector do in fact understand risk management initiatives applicable to ‘manage’ their respective businesses towards sustainability, but not to a large extent. It was found that respondents are unaware of the elements which make risk management effective, which ultimately aids to the development of problems for SMEs. All employees, managers and owners must coordinate their efforts together to identify and manage organizational risks within their ambit to obtain total risk coverage, as well as provide assurance that these risks are effectively managed from a coordinated approach. Further studies may be carried out to identify measures that can be taken to improve the effectiveness of risk management practices in SMEs.

  • Business dynamism in the world economy

    Zuzana VirglerovaORCID , Felice AddeoORCID , Eliska ZapletalikovaORCID doi: http://dx.doi.org/10.21511/ppm.18(3).2020.14
    Problems and Perspectives in Management Volume 18, 2020         Issue #3         pp. 160-169 Views: 2846 Downloads: 324 TO CITE АНОТАЦІЯ

    The creation and growth of new enterprises and, on the other hand, their decline and market exit are crucial factors of business dynamism and economic growth. Thus, business dynamism is an important aspect in the market chain and productivity of an economy, as well as a trigger for market reforms. The aim is to analyze business dynamism using Global Competitiveness Index 4.0 and its variables worldwide and to verify the relationship between business dynamism in the EU states and economic characteristics such as Valued added at factor cost, Enterprise Birth Rate and Enterprise Death Rate. Data were collected from the 2019 Global Competitiveness Report and from the EUROSTAT database, using the most recently updated source for each indicator. The 11th pillar of the Global Competitiveness Index, focused on business dynamics, and a set of indicators were analyzed using PCA to verify if all the variables are effective representatives of the concept. It was found out that the pillar does not effectively represent the concept of business dynamism in case of the EU countries; therefore the new pillar was constructed. A strong and statistically significant correlation between business dynamism and Value Added was confirmed. A relationship between business dynamism and other economic indicators was not proven. From a territorial point of view, Oceania achieved the best overall result in the analyzed field. The process of starting a new business is the most challenging in terms of start-up costs in South America. By contrast, the EU has reached the best result in this process.

  • State financial assistance within Lesotho Maseru’s small, medium and micro enterprises

    Liako Priscilla Masupha , Andrisha Beharry-Ramraj , John Amolo doi: http://dx.doi.org/10.21511/pmf.06(4).2017.01
    Public and Municipal Finance Volume 6, 2017         Issue #4         pp. 7-14 Views: 2030 Downloads: 293 TO CITE АНОТАЦІЯ

    Small, Medium and Micro Enterprises (SMMEs) function in both the micro and macro environments, and are subject to internal and external forces in most economies. The monitoring of the external and internal factors and vital strategies by SMME owners and stakeholders including government and supporting institutions is necessary to attempt a reduction in their failure rates. Literature supports this proposition in the development of SMMEs.
    The aim of this study was to analyze the environmental factors that result in a low rate of success and a high failure rate of SMMEs in Maseru the capital city of Lesotho. Primary data for this study was collected through questionnaires which were distributed to a sample of 250 SMMEs owners, however, only 180 respondents completed and returned questionnaires, which were then used for data analysis. The data was analyzed using the Statistical Package for Social Sciences (SPSS21). The findings revealed that there still persists inadequacy in financial assistance and the need to develop a financial strategy by the state. Government key intervention is proposed to enable growth and development in a sector that sustains job creation and poverty reduction through financial strategy. Further research on how the sector establishes support is also proposed.

Download Preview
Close
Problems and Perspectives in Management
Problems and Perspectives in Management