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MANAGEMENT STRATEGY ELABORATION JAVA TOOL Edward Pogossian [email protected] Academy of Sciences of Armenia, IPIA State Engineering University of Armenia. Optimal Management Strategy Provision Problem.

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Optimal Management Strategy Provision Problem

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Optimal management strategy provision problem

MANAGEMENT STRATEGY ELABORATION JAVA TOOLEdward [email protected] of Sciences of Armenia, IPIAState Engineering University of Armenia


Optimal management strategy provision problem

Optimal Management Strategy Provision

Problem

A company is competing in oligopoly markets for some success criteria (max cumulative profit, max return on investment, etc.) and is going to make decisions in market situations that are consistent with the best strategy at least for k periods of the competition


Optimal management strategy provision problem

The set of all plans

Strategy planning

Identification of the market situation

Plans allowable for the competitors

Identification of the competitors

Given plans search of the best strategy

1st stage: Test our plans without competitions

2nd stage: Test our plans by the competitions

Take a perspective plan

The set of our perspective plans

Test the plan by the competitions

The Best Strategy Formation


Optimal management strategy provision problem

New competition

Data input dialogs

Dynamic changes dialogs

Market description

Our company description

Market and competitors data changes

Competitors description

Competitors number changes

The game tree depth and assessment method changes

Main window

Start the competition

The Best Strategy Formation

Select the best strategic move

Carry out the selected strategic move

Show the competitors changes

Show the market changes

Show the carried out move

System overall structure


Optimal management strategy provision problem

Strategy Provision Advisorforrecommending decisions to a company in its oligopoly competitions


Optimal management strategy provision problem

Internet Agents able to elaborate decisions for e-commerce, auctions, etc., to represent interests of owning them companies in competitive environments


Optimal management strategy provision problem

Standards for Management Skill Assessment –

a scale consistent with on-the-job performances of the managers and allowing to measure their skills by standard means independent of human peculiarities.


Optimal management strategy provision problem

Strategy Elaboration Skill Tutoring And Assessment Tool

for producing scalable strategies in oligopoly competition simulation games and making them regular participants of the games for training of the users in development of valuable strategies


Optimal management strategy provision problem

In solving the MOSP two basic goals are targeted:

- achieving an acceptable level of management decision making in business games, and

- constructing regular mechanisms for strategy improvement and learning.


Optimal management strategy provision problem

The model must include, in particular, the following components:- a proper market model,- a store for common and classified strategy planning knowledge – Strategy Planning Ontology (SPO), and syntax for their regular use,

- a strategy search environment able to address to the SPO and, as a result, change its strategy search procedure,- an instrument for comparing the strategies and the selection of the best one as well as qualifying them on the management scales, - procedures causing guaranteed improvement of the strategies by records from the OSP.


Optimal management strategy provision problem

ALTERNATIVES ARE ALL STRATEGIES IN THE GAME TREE

STRATEGIES ARE CASE SOLUTION CHAINS COMPLETED BY GAME TREE SEARCH

COMMON PLANNING AND PLANS DYNAMIC TESTING STRATEGIES

STRATEGY EVOLUTION and LEARNING MODELS


Optimal management strategy provision problem

In the Common Planning and plans Dynamic Testing (CPDT) model of the MOSP :

Common strategic planning knowledge is formed to narrow the search space followed by direct dynamic testing of the plans in the game tree.

It is supposed that knowledge in strategy planning is presented in corresponding ontology and the tree search is arranged by a procedure closed to the idea of Botvinnik’s method.

Java implementation of the model :

Oligopoly Planning And Competing Tool

The first version : OPACT1


Optimal management strategy provision problem

  • It is worth to focus on the CPDT model of the MOSP because it

  • provides an ability for regular improvement and learning of the strategies by injection of common knowledge and achievements from the management theory and methodology as well as individual experiences from the experts,

  • is consistent with broadly recognized models of management,

  • is consistent with recommendations of an advanced strategy search Botvinnik’s method.


Optimal management strategy provision problem

New competition

Data input dialogs

Dynamic changes dialogs

Market description

Our company description

Market and competitors data changes

Competitors description

Competitors number changes

The game tree depth and assessment method changes

Main window

Start the competition

The Best Strategy Formation

Select the best strategic move

Carry out the selected strategic move

Show the competitors changes

Show the market changes

Show the carried out move

System overall structure


Optimal management strategy provision problem

The set of all plans

Strategy planning

Identification of the market situation

Plans allowable for the competitors

Identification of the competitors

Given plans search of the best strategy

1st stage: Test our plans without competitions

2nd stage: Test our plans by the competitions

Take a perspective plan

The set of our perspective plans

Test the plan by the competitions

The Best Strategy Formation


Optimal management strategy provision problem

Market current situation

\

Fig. 1. All plans combinations in a competition

1.1

1.2

1.3

2.2

2.3

2.4

Example

Initially all combinations of possible strategic plans for our company and competitors are constructed (Fig. 1).

  • Then for each combination a game tree is generated, where all our strategic moves are assessed, based on the chosen strategic plan and all the combinations of competitors’ possible answer moves.

  • Let’s see the combination i.j of strategic plans, where our plan is supposed to be Raise Price/ Raise Quality. For this case the tree shown on Fig. 3 will be generated.


Optimal management strategy provision problem

A combination of our and competitors’ plans

i.j

Price +ΔP1, Quality+ΔQ1

Price +ΔP2, Quality +ΔQ2

1.1

1.2

1.3

k.l

2.1

2.2

2.3

2.4

Price +ΔP1, Quality+ΔQ1

Price +ΔP2, Quality+ΔQ2

Price +ΔP3, Quality+ΔQ3

1.1

1.2

m.n

2.2

3.1

3.2

Price +ΔP1, Quality+ΔQ1

Price +ΔP2, Quality+ΔQ2

Price +ΔP3, Quality+ΔQ3

1.1

1.2

2.1

2.2

3.1

3.2

A step of price and quality changing with “essential” responses of the competitors

The tree generated for the Raise Price and Quality plan


Optimal management strategy provision problem

Get current node

Identify the state of our company

Get our possible moves

Generate nodes for each our move

(competitors are not responding)

Go to the next node

Yes

No

Is it a depth of the search enough?

No

Yes

Go to the next level of the tree

The most promising plans selection by “independent” assessment

  • Testing plans without competitions


Optimal management strategy provision problem

Get current node of the tree

Identify the state of our company

Identify the competitors

Get our possible moves

Get all moves for the competitors

Get one of our not performed moves

No

Yes

Carry out our move along with all competitors’ move combinations

Assess our moves and remove non perspective ones

Assess competitors’ moves and remove non perspective ones

Is a depth of the search enough?

No

Yes

Go to the next level

Go to the next node

No

Yes

Assess the generated tree and select the best strategy

Testing our plans with competitions


Optimal management strategy provision problem

The utility of the OPACT

is is evident, at least, in the following applications:

1.     - generating strategies for business simulation games with different and known strengths to make them regular participants in a teaching of marketing

2.     - constructing an advisor that will recommend decisions for a company in its oligopoly competitions

3.     - constructing a tool that allow to simulate different scenarios in oligopoly competitions to recommend the best one for a requesting company

4.     - completing the1-3 tasks by a unit for strategies regular improvement and learning

E - developing management skill measuring scale invariant to measuring human peculiarities


Optimal management strategy provision problem

The following stages are planned:

1.Constructing OPACT1 able to form the best available strategies given market and strategy planning (SP) models, particularly:- acquiring oligopoly market model of an acceptable adequacy,

- realizing basics of the Porter’s SP model, - given market and SP models developing methods for SPs dynamic testing and selecting the best decision,

- experimenting with OPACT1 strategies in a marketing game to achieve an acceptable level of decision making, - modifying game tree search methods to achieve max available effectiveness given market and SP models,- determining OPACT1 strategies quality.


Optimal management strategy provision problem

(continued)

2. Constructing OPACT 2 allowing to measure improvements of the strategies.

3.Constructing OPACT 3consistent with the syntax of the strategy planning ontology (SPO) and involving SPO concepts in the strategy formation methods.

4. Experimenting with the OPACT3 to reveal means for strategies regular improvement / learning


Optimal management strategy provision problem

Constructing OPACT 2

allowing to measure improvements of the strategies


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