HE WHO LASTS LAST LASTS BEST?

As discussed in the exercise, the improvemnets in technologies and business processes at one side expands the market but on the other hand also brings decay for several players in the market. With the decay deciding the exit / collude / compete strategy for any particular industry player becomes a crucial factor.
In this exercise we have two players – David & Goliath in the slingshot industry, which is one of the decaying industry. Based on theprevious quarter results of each other, both the players decide either to stay or to exit in the coming quarter without knowing each other’s choice. Since we know that slingshot industry will extinct by 1991, we need to come up with the exit strategy for the existing two firms.
To analyze a possible exit point we have used the „Elimination of Dominated Strategy“ with following steps: 1. Drawing the sequential decision tree for David & Goliath from 1988 to 1991 2. Working from backwards to eliminate non-credible options at each point 3. Finding a possible set of best strategy at each level 4. Taking the chosen set of strategy above to the previous level 5. Repeating steps 2 to 4 till we locate a possible exit point for one of the players | David | Qty | Revenue | Goliath | Qty | Revenue | David & | Qty | Revenue-D | Revenue - G | | Alone | | | Alone | | | Goliath | | | | | | | | | | | | | | | Jan. 1988 | 3 | 1 | 3 | 2 | 2 | 4 | 0.5 | 3 | 0.5 | 1 | Apr. | 2.75 | 1 | 2.75 | 1.75 | 2 | 3.5 | 0.25 | 3 | 0.25 | 0.5 | July | 2.5 | 1 | 2.5 | 1.5 | 2 | 3 | 0 | 3 | 0 | 0 | Oct. | 2.25 | 1 | 2.25 | 1.25 | 2 | 2.5 | -0.25 | 3 | -0.25 | -0.5 | | | | | | | | | | | | Jan. 1989 | 2 | 1 | 2 | 1 | 2 | 2 | -0.5 | 3 | -0.5 | -1 | Apr. | 1.75 | 1 | 1.75 | 0.75 | 2 | 1.5 | -0.75 | 3 | -0.75 | -1.5 | July | 1.5 | 1 | 1.5 | 0.5 | 2 | 1 | -1 | 3 | -1 | -2 | Oct. | 1.25 | 1 | 1.25 | 0.25 | 2 | 0.5 | -1.25 | 3 | -1.25 | -2.5 | | | | | | | | | | 0 | 0 | Jan. 1990 | 1 | 1 | 1 | 0 | 2 | 0 | -1.5 | 3 | -1.5 | -3 | Apr. | 0.75 | 1 | 0.75 | -0.25 | 2 | -0.5 | -1.75 | 3 | -1.75 | -3.5 | July | 0.5 | 1 | 0.5 | -0.5 | 2 | -1 | -2 | 3 | -2 | -4 | Oct. | 0.25 | 1 | 0.25 | -0.75 | 2 | -1.5 | -2.25 | 3 | -2.25 | -4.5 | | | | | | | | | | 0 | 0 | Jan. 1991 | 0 | 1 | 0 | -1 | 2 | -2 | -2.5 | 3 | -2.5 | -5 | Apr. | -0.25 | 1 | -0.25 | -1.25 | 2 | -2.5 | -2.75 | 3 | -2.75 | -5.5 | July | -0.5 | 1 | -0.5 | -1.5 | 2 | -3 | -3 | 3 | -3 | -6 | Oct. | -0.75 | 1 | -0.75 | -1.75 | 2 | -3.5 | -3.25 | 3 | -3.25 | -6.5 |

1988 - Jul | Goliath | David | | In | Out | | In | (-0.25,-0.5) | (2.5,0) | | Out | (0,3) | (0,0) |