Entrepreneurship and Leadership

  Dynamic games In the remainder of this chapter we will briefly discuss dynamic games, and in particular the difference between static and dynamic games. Dynamic games are, put simply, games with a time aspect in them. For example, if one firm acts before the other, this has quite important implications for playing the game: the second firm can play the game knowing what the first firm has done, whereas the first firm has to make its decision without the requisite knowledge about the follower. Some games simply don’t make much sense to play sequentially – paper/scissor/ stones, for example, would not be very exciting if one player knew what the other player has chosen.3 Some games, on the other hand, could be played either simultaneously or sequentially. Setting prices, for example, will be done without knowledge of rivals’ prices some of the time (making it a simultaneous game), but in other situations sequential moves might be more relevant. Representing a sequential game is usu...

 Content: Prisoner’s dilemma • Dominant/dominated strategies • Iterated elimination of dominated strategies • Nash equilibrium • Backward induction • Normal and extensive form games • Sub-game perfect equilibrium.  Anticipating rivals’ moves  In strategic analysis, it seems important to be able to figure out what one’s rival is going to do, that is, to anticipate a rival’s moves. How can we do this? Strategists (both professional ones (i.e. managers and consultants) and ‘strategists in the making’ (i.e. students)) often assign probabilities to the different actions a rival might take. But can we do better than this? Game theory tells us we can (most of the time)! Let us use an example to illustrate this. Prisoner’s dilemma – Advertising wars Consider the following situation. P&G and Colgate Palmolive sell competing brands of toothpaste – Crest and Colgate – in a market. The brands share the market equally, that is, both firms have a 50 per cent market share. The overa...

 https://www.youtube.com/watch?v=JMq059SAQXM&ab_channel=JacobClifford The prisoner's dilemma is the "rubber bone" of game theory-it can  be chewed over forever. Thousands of mathematicians, psychologists,  political scientists, philosophers, and economists have thought about  it, trying to find a solution. Yet it remains as mysterious and baffling  as in 1950, when Merrill Flood and Melvin Drescher first proposed it.  The name prisoner's dilemma was given by Albert W Tucker, who in  1951 wrote the first paper about it. Tucker presented the problem in  the form of a short detective story. Here is one version:  Let's summarize the situation in a table: The first number in each cell, the one in boldface, indicates what the first accomplice gains, while the second number shows the gain of the other accomplice. Since it is worse to be jailed for ten years than for five, years of imprisonment must be considered a negative gain, whence the minus...

 Sensitivity vs. Scenario Analysis In finance, a sensitivity analysis is created to understand the impact a range of variables has on a given outcome. It is important to note that a sensitivity analysis is not the same as scenario analysis. As an example, assume an equity analyst wants to do a sensitivity analysis and a scenario analysis around the impact of earnings per share (EPS) on a company's relative valuation by using the price-to-earnings (P/E) multiple. The sensitivity analysis is based on the variables that affect valuation, which a financial model can depict using the variables' price and EPS. The sensitivity analysis isolates these variables and then records the range of possible outcomes. On the other hand, for scenario analysis, the analyst determines a certain scenario such as a stock market crash or change in industry regulation. He then changes the variables within the model to align with that scenario. Put together, the analyst has a comprehensive picture. He ...

 Payback method Under payback method, an investment project is accepted or rejected on the basis of payback period. Payback period means the period of time that a project requires to recover the money invested in it. It is mostly expressed in years. Unlike net present value and internal rate of return method, payback method does not take into account the time value of money. According to the payback method, the project that promises a quick recovery of initial investment is considered desirable. If the payback period of a project is shorter than or equal to the management’s maximum desired payback period, the project is accepted, otherwise rejected. For example, if a company wants to recoup the cost of a machine within 5 years of purchase, the maximum desired payback period of the company would be 5 years. The purchase of machine would be desirable if it promises a payback period of 5 years or less.  Payback period formula for even cash flow: When net annual cash inflow is eve...

 

 https://www.youtube.com/watch?v=7tdKkeNClPE&ab_channel=ConservationStrategyFund What Is a Cost-Benefit Analysis (CBA)? A cost-benefit analysis is a systematic process that businesses use to analyze which decisions to make and which to forgo. The cost-benefit analyst sums the potential rewards expected from a situation or action and then subtracts the total costs associated with taking that action. Some consultants or analysts also build models to assign a dollar value to intangible items, such as the benefits and costs associated with living in a certain town. What is the formula for CBA? The output of cost benefit analysis will show the net benefit (benefits minus cost) of a project decision.  For example: Project A:  Build a new product will cost 100,000 with expected sales of 100,000 per unit (unit price = 2). The sales of benefits therefore are 200,000.  The simple calculation for CBA for this project is 200,000 monetary benefit minus 100,000 cost equals a n...

  What Is Net Present Value (NPV)? Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project. NPV is the result of calculations used to find today’s value of a future stream of payments. For example, an investor could receive $100 today or a year from now. Most investors would not be willing to postpone receiving $100 today. However, what if an investor could choose to receive $100 today or $105 in one year? The 5%  rate of return  (RoR) for waiting one year might be worthwhile for an investor unless another investment could yield a rate greater than 5% over the same period. If an investor knew they could earn 8% from a relatively safe investment over the next year, they would choose to receive $100 today and not the $105 in a year, with the 5% rate of return. In t...

 https://www.youtube.com/watch?v=0yHwUp87xcI&ab_channel=CommuterLearningTV     What is Business Strategy To be clear, professionals think about strategy in different ways, so there isn’t a single clear definition of strategy. However, Michael Porter defines strategy as a competitive position, “deliberately choosing a different set of activities to deliver a unique mix of value.” In other words, you need to understand your competitors and the market you’ve chosen to determine how your business should react. Michael Porter and the industrial organisation paradigm After relabelling the field ‘strategic management’ in the late 1970s, the  focus moved towards industrial organisation economics in both theory and  method. At this time research was aiming to develop and test hypotheses  derived from the structure-conduct-performance (SCP) paradigm. The  basic idea of this paradigm is that the performance of a firm is determined by the industry in which it ...

  Income and marginal costs Marginal analysis of income and costs allows the entrepreneur to visualize how total income or costs, depending on the case, are affected when it is sold or produced. Marginal revenue is the change in total revenue due to a unit change in the quantity sold, while marginal cost is presented as the change in total cost when there is a variation of one unit in the rate of production. Very close to these definitions are diminishing returns, which guide the entrepreneur to answer questions such as: should it be better to hire more units of a certain factor of production, such as labor, considering the same level of the other current productive factors? According to the law of diminishing returns, when more labor is hired to increase production - holding constant the acquisitions of the other factors of production such as machines, physical space or materials - the marginal effect on the cost of production of a unit additional increases, as people who are hire...

  https://youtu.be/mW6dGqp4YYQ The entrepreneurship ecosystem 1. What is an entrepreneurship ecosystem? 2. Stability 3. Activity  4. Entrepreneurs 1. What is an entrepreneurship ecosystem? An entrepreneurship ecosystem is an economic, social, and cultural environment comprising multiple stakeholders involved in or benefitting from concentrated activities related to entrepreneurship. These stakeholders are individuals, organizations and institutions across the private and the public sector such as entrepreneurs, investors, government, military, aid agencies, universities, research centres, professional services firms, local communities, and many more. The activities carried out by the stakeholders are largely geared towards facilitating entrepreneurship in a wider sense. Although these activities are not following a concerted approach they are interrelated. Entrepreneurs and investors represent the nucleus of an entrepreneurship ecosystem around which everything revolves. 2. St...

  Entrepreneurial culture https://www.youtube.com/watch?v=pPu2ZKakLuI&ab_channel=EverydayEasyChinese A further important element of an entrepreneurship ecosystem is a healthy entrepreneurial culture. TV programmes such as The Tigers of Money (マネーの虎) in Japan and its many local variations such as Shark Tank in the US, El Mashrou3 ( المشروع) in Egypt, or Dragon’s Den in the UK are emblematic. It is very important to nurture an entrepreneurial culture as it reflects a society that values entrepreneurship. It serves as a beacon of light for new entrants and as an affirmative framework for its stakeholders. Entrepreneurial culture can be fostered through conferences and similar events, TV shows, public recognition, and in many more ways. The key objective is to raise the awareness for entrepreneurship as a career path just like any other profession. In the US entrepreneurial culture is very much at the core of its meritocratic society which is reflected in the popular American Dream...

   Benefits of being affiliated to IESS When a worker is affiliated with the IESS, immediately, he begins to have the right to a series of benefits, especially related to the field of health protection that, in several cases, can be affected by the exercise of labor activity you have been hired for. Among the main obligations that must begin to be fulfilled, in a timely manner, from the moment a worker joins the IESS are: payment of personal contributions, payment of employer contributions and payment of reserve funds. Employer contributions It is the additional payment to the worker's compensation that the employer must make on a monthly basis. In the case of private sector workers, who are in a dependency relationship, the contribution is equal to 11.15% that must be paid to the IESS during the first 15 days of each month. Hence, this item must be part of the monthly budget of costs and expenses required by the operation of the business that has been created by the entrepren...