Discussion Questions - Essay Example

Que How does this firm generate economies of scale in terms of sourcing?  Answer In CPC, the IT managers have chosen the options that are best suitable for business promotions amongst the various sourcing options available. This strategy aligned the obvious choices of IT managers with the rest of business wings ensuring the optimal utilization and management of various sources available. Today as there are lots of sourcing options available before the IT managers, the IT managers are evaluated by their efficiency to handle the brokerage and management of sourcing options along with their obvious technical skills.

And CPC has applied this strategy in order to optimize its sourcing endeavors and gain optimized economics of scale in terms of sourcing. Que 2 - Why is the (a) situation Nash equilibrium? Answer:While considering the facts given in situation (a), we came to know that both the firms (our firm as well as competitor’s firm) have revealed their strategies openly and both the firms can calculate their own benefits while taking other’s production quantity and other strategies into account. This situation offers the optimal benefits that are driven by the strategies applied by our competitor therefore it indicates that there is a Nash Equilibrium condition (James Brickley, Clifford Smith, Jerold Zimmerman 9-5).

While on other hand when we don’t know exactly the strategies of our competitor and still set our preference for optimal benefits then the condition refers to dominant strategies. Dominant strategies always lead to maximum profit whether we know our competitor’s strategies or not. This particular condition may be a case of dominant strategies because here we are dedicated for optimal profits (James Brickley, Clifford Smith, Jerold Zimmerman 9-5). However, since some dominant strategies fall under Nash Equilibrium and the situation satisfies the required aspects of Nash Equilibrium we can say that this is a Nash Equilibria Condition.

References:1. James Brickley, Clifford Smith, Jerold Zimmerman. Managerial Economics and Organizational Architecture. USA: McGraw Hill, 2000. Print.