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Analyzing Strategic Interaction

Strategic Business Wargaming: Verstehen wie der Wettbewerb tickt

Berlin, 7 July 2016

http://www.straint.de

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Personal Introduction

Prof. Dr. Hagen Lindstädt

Institute of Management,

Karlsruhe University / Karlsruhe Institute of Technology (KIT)

Contact: lindstaedt@ibu.uni-karlsruhe.de lindstaedt@straint.de

Studies in Business and Mathematics

Professional consulting since 1992

(5 years with McKinsey & Company)

Professor for Strategic Management since 2001

Advisor to leading German and European companies

(incl. DAX 30) and the German Federal Government

Experience in working with senior management client teams

Leading expert for strategy in oligopolies, competitive intelligence,

pricing, and strategy simulation

Operating experience and expert knowledge in strategic wargaming

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Strategic interaction and interdependencies are more than uncertain scenarios

SCENARIO ANALYSISDeciding to adapt to future uncertainty

Option A

Option B

Option C

Option D

Option E

SCENARIOS

WARGAMING & STRATEGIC INTERACTIONTaking action-reaction patterns into account

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All sorts of players can be analyzed – players don’t have to be assumed

acting as rational value maximizers but on ranked subjective preference

Supplier

Regional

Competitor

NGOs

XY RegulatorsCompetitor 1 Competitor 2

European

Customers

North American

CustomersCompany

Interdependencies between selected stakeholders in a market

Most important interdependencies

Other interdependencies Focus of

analysis

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Issues often tackled with wargaming

M&A, divestitures,

industry landscaping

Portfolio

management

Introduction of a new

product or technology

Market exit and

industry consolidation

Market entrance

and new competitors

Forward and

backward integration

Negotiations

strategy and tactics

Dynamic pricing stra-

tegy, commoditization

Capacity

investments

Competitive

positioning

Joint ventures and

strategic alliances

Regulatory and

environmental affairs

• Complex battlefield, multiple types of actors

• High strategic importance• Focused tactical decisions.

• Clearer battlefield, few types of actors

EXAMPLES

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For all players, we identify strategic options and rank strategy

combinations in heatmaps

Heatmap

interpretation:

State is more attractive than the status quo

State is as attractive as the status quo

State is less attractive than the status quo

CLIENT EUROPEAN COMPETITOR

CHINESE COMPETITOR MAJOR CUSTOMER

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Projects typically require 6 to 12 weeks and 35 to 60 man-days

Build consensus

about each players’

preferences

Workshop (1 day)

Identify stable

and likely outcome

scenarios

Analysis

Derive

management

recommendation

Core team analysis

RE

SU

LT

FO

RM

AT

Define the issue,

identify key

players and their

strategic options

Workshop

Interviews

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DELIVERABLES OF PROJECT

Stable and likely

states for key

players’ strategic

options.

Derivation of an

action-reaction-

pattern of com-

petitive dynamics

Commonly de-

veloped strategy

recommendation.

Four deliverables are developed

Identification of

strategic break-

points triggering

changes in strategy.