Discuss the Strategic planning a company should have in order to practice the policies that
it should adopt and pursue over its long-term period to ensure growth and prosperity?
Strategic planning determines the company’s commercial and other practices & policies that it
should adopt and pursue over its long-term period to ensure growth and prosperity. These
policies are mostly challenging for a business to a business to achieve both in the short run or
long run period but they are attainable (Hill & Jones, 2010).
1a). The statement is false as in perfectly competitive environment all the prices are the same and
no company can charge more or influence the prices or the profits that the company can earn.
1b). The statement is true as the players in oligopolistic markets mostly recognize that they have
to cooperate for they are mutually interdependent and the consequences of non-cooperation are
very high (Wells, 1998). They cooperate tacitly to avoid risks involved and the penalties of direct
1c). Yes the statement is also true as the goal of all business people is to maximize profits.
2). The payoff in simultaneous decision making games is arrived at after considering all the
factors and information that the traders can get. But the decisions of the rival competitor are not
Strategic Management 2
known but they have an impact on both businesses. For example, if A decides to increase his
prices for coffee and B decides to reduce his prices then more customers will move from A to B.
But his profits will also be affected. If both businesses decide to increase their prices
simultaneously at the same rate then the effect would be minimal to both businesses. The
businesses are always aware of the profits each can make if they make certain decisions but they
are always not aware what decisions there rival competitor would make hence the payoff
dilemma (Thompson, Peteraf, Gamble & Strickland III, 2010)
3). Gates and Dell are in a prisons dilemma as they are not aware what decision the other party
would make. However, it’s clear that if they both cooperate they stand to gain a lot and if they
don’t cooperate they would lose more. If they both cooperate each would end up with $600 and
$400 respectively but if they fail to cooperate each would get $75 and $100 respectively. They
are in a prisoner’s dilemma as they are not aware if their rival would cooperate. If one fails to
cooperate they lose even if they cooperated as they can’t predict the others decision and which
affects the outcome of both cases.
Strategic Management 3
Hill, C. W., & Jones, G. R. (2010). Strategic Management:An Integrated Approach. Mason,
Ohio: South-Western, Cengage Learning.
Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. J. (2010). Crafting and
Executing Strategy:Concepts and Readings (18th ed.). New York: McGraw-Hill/Irwin.
Wells, S. (1998). Choosing the Future:The Power of Strategic Thinking. Boston: Butterworth-