Comparing The Effectiveness Of Game Theory Commerce Essay

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Marketing is said to be the most important component of business. The aim of marketing is promoting sales and occupying market with different types of ways. In this fierce competitive market, marketers began using strategy to reach this aim. For strategy, there are two main approaches, which are planned and emergent approaches. This paper's main topic is about finding a balance between the planned and emergent approaches to the strategy through comparing the effectiveness of game theory and driving markets.

There are three main parts of this paper. First part describes the planned and emergent, these two approaches. After describing them, there is a part comparing them and analyzing the advantages and disadvantages of these two approaches. The second part states about why the balance between these two approaches are required and the balance's varying depending on the different circumstances. The third part describes two frameworks those are game theory and driving markets and comparing the effectiveness of the above two frameworks in assisting marketers to find a balance between the two approaches.

2.0 Planned and emergent approaches

2.1 Description about the planned approach

The planned approach is one important route to reach the strategy aim. It can be seen a process of the corporation to establish and execute the strategy according to the different outside environment and internal conditions; at the same time, the new strategy is made according to the past strategy's performing process, the feedback and evaluation of the result. Through observing one corporation's formal structure, process and control, it can be known that whether an organization takes the planned approach to strategy. According to different period, planned strategy can be called as different names, such as long planned strategy, middle planned strategy and short planned strategy (Mintzberg, Henry. 1994). With planned strategy's utilizing, corporation can improve some disadvantage situation, but sometimes even planned strategy itself also has the disadvantage aspects.

2.2 Description about the emergent approach

In the developing process of the corporation, managers also hypothesized it run in a steady, normal and balanceable route, while the world is full of changing, from the outside environment to the internal running of the organization, both of them staying in the changing process. Just like some philosophers' statement, moving is absolute, but still is relative. This means that planned strategy also cannot help a corporation to control the situations that far away from equilibrium. Although the emergent situations cannot be predicted, managers can design some ways to poor the negative affection of it, which is called as emergent approach strategy (Douglas K. Macbeth. 2002).

2.3 Comparing the planed and emergent approaches

The advantages of them

With the above statement about planned and emergent approaches to strategy, it can be known that both of them have different objectives and characters. This means that both of them have the advantages and disadvantages. What are they?

First it is about the planned approach strategy. In the middle of 1960s, planned strategy was born out and came into managers' mind. At that time, it was described as one best way to design and perform the strategy of organizations. With planned strategy, it can provide the data to analyze the past situation and then predicate the future reasonably. No doubt it, with analyzing the past situation, the future's plan will be more strategically and performed. With planned approach to strategy's utilizing, the future of the corporation can be predicted out in some sense; the future can be controlled in some times, although not always. With the predication, managers can do some preparation for the negative things and make the positive affection play greater role (De Geus, Arie P. 1988).

Comparing with the planned approach to strategy, emergent approach to strategy can make up the loopholes in the thinking aspect. It provides the project to deal with the rushing hitting and problems. All of these cannot be resolved just with the planned strategy.

The disadvantages of them

Planned strategy and emergent strategy cannot always have positive influence. Sometimes there are also the problems that they cannot resolve. First of all, both of them are just designed, not the reality that must happen, so there must be difference between the real situation and the designed plan. For the planned strategy, if the execution process is too strictly to reach its aim. In the implementing process, there are also the barriers those should be faced, such as different managing levels cannot communicate with each other adequately and effectively. Toward the long time planned strategy, the implementing process is too long to predict out the possible accident. Sometimes the employees not cooperate with each other very well to promote the planned strategy and some other times, they may be not have the capabilities to reach its aim. All of these should be considered into in the implementing process for the planned strategy (De Geus, Arie P. 1988).

Different with planned strategy's long time character, emergent strategy can be seen as the strategy to resolve the short time problems and the emergent accidents. It can avoid some problems of planned strategy, but it also has its own problems, for example, the establishing process is lack of effective analysis on data, so the strategy is not rational (Douglas K. Macbeth. 2002).

No matter for the planned approach strategy or emergent approach strategy, both of them have the advantages aspects and disadvantages. How to use them to play their roles in the organization's developing process? For resolving this question, managers always combine them together. With this resolution, another issue also should be considered about, which is how to deal with the relationship between them. This asks to find a balance between them.

3.0 Necessity of balance and variety of balance

3.1 Necessity of balance

Just like stated in the above, both of the planned approach strategy and emergent approach strategy have their own disadvantages; for constraining their disadvantage and making them more helpful for the corporations' development, they should be put into the right position. This means that it is necessary to find a balance between them. With the balanceable relationship, the rigid planned strategy and the flexible emergent strategy can be combined together with each other. They will play their role together to make the corporation run in a much better direction. At the beginning of 21st century, Christensen Clayton stated out one new strategy, which is called as double strategy, combining planned strategy and emergent strategy together (Christensen Clayton, 1997).

3.2 Variety of balance

The balance is not stable or still between the planned strategy and emergent strategy. It is variable. Strategy is made basing on the outside environment and internal factors of the corporation's (Porter, M. E. 1980). Both of them are in a changing process. For the outside environment, there are so many factors those should be considered about, such as the political factors, the economical policies and the competitive situation in the market, all of these cannot be decided by the organization itself. If these changing, the corporation should adjust its strategy. What is more, corporation is also combined with human, capital and other assets. All of these are also in a moving process. Employees may run away; the running aim might not be achieved; the cash flow cannot satisfy the required etc. There are so many factors those should be considered about. These factors are also not in a static situation. All of the above factors ask to adjust the balance between the planned strategy and emergent strategy.

4.0 The framework of game theory and driving markets

From the above reasoning, it is known that for the present managers, it is important to find the balance between the planned strategy and emergent strategy. How to find this balance? It is really an important and difficult question that should be answered. For the marketers, there are different frameworks those can be borrowed and used. This part will use the game theory and driving markets to analyze their effectiveness in assisting the marketers to find the balance between planned strategy and emergent strategy.

4.1 Framework of game theory

In the mind of Thomas J. Watson, who is the founder of IBM, business is just a game in the world; it would be great if it is played very well (Notebook).

Toward the game in his mind and in the game theory, there are some sameness and differences.

Game theory can be seen as one value to deal with so many different problems in different areas in the world, such as economy area, competitive area and so on. In the economy area, game theory is used to explain the interactions between different competitors in the market. If the actions of each competitor have strong influences on the markets, the game theory is more effective than in other market. For one corporation, the process of establishing and implementing the strategy is also a process of game theory's utilizing. Strategy's establishing is up to different parties' position in the internal part of the corporation and the corporation's own position in the whole market. Strategy's implementing will also affect different parties and be affected by different parties in the market and in the internal part of the corporation. This means to every action, there is one reaction. So in the game theory, the other parties' action should be focused on. Games theory has so many different factors, such as players, added value, rules, tactics and scopes. For grasping it, all of these factors should be understood very well (Brandenburger, Adam M. 1995).

4.2 Framework of driving markets

Driving markets is another framework. It tells about different parties' influence in the market. New competitors coming in, old competitors coming out, primary competitors' functions adjusting, all of these can be seen one generic ways of market structure's changing. According to the changing quantities and changing magnitudes in the market, driving markets play different functions. So as a component of the market, corporations can be driven by the market, but also can drive the market develop toward different directions. No doubt it, driving markets stresses on different players role in strengthening the competitive situation in the market (Bernard Jaworski, et al, 2000).

4.3 Comparing the effectiveness of the two frameworks in assisting the marketers to find a balance between the two approaches

With above statement, it can be known that game theory and driving markets are two frameworks those can be used into the market. Which will be more effective in finding a balance between the planned strategy and emergent strategy? Different framework has their different advantages in this situation.

In the game theory, not only different corporations in the market affect each other on the strategy establishing and implementing, the internal different components of the corporations also affect the strategy's establishment and implementing. It also tells that planned strategy and emergent strategy also affect each other strongly. With their affections' on each other, they also can adjust their position in the whole strategic system of the corporation. Planned strategy plays its role with three different preconditions: all important details of the strategy should be understood by the implementing people; the coherence is required in the strategy's implementing process; the strategy's realizing should not be affected heavily by the outside environment. It is decided by the internal resource of the corporation. Different with it, if one of these conditions cannot reach, the corporations will choose the emergent strategy. This means the emergent strategy is decided by the outside environment of the corporation's (Harrigan, Porter 1983).

According to the driving market, the strategy of different corporations' establishing and implementing will affect other competitors and be affected by other competitors. If the affection if heavily, companies may adjust the planned strategy and promote out the emergent strategy; if the affection is very little, emergent strategy may still stay in the stable position (Bernard Jaworski, 2000).

5.0 Conclusion

Planned and strategy are two main approaches to strategy. Both of them have their own role and function in the competitive market for realizing the marketing aim. So corporations should find a balance in establishing strategy process and implementing strategy process. This balance can be found out with studying different frameworks. Game theory can help the corporations to find the balance between the outside environment and internal resource. Driving marketing can help the corporations to adjust its strategy according to different changing situation because of strategy itself playing its role.