Investment Choice with Managerial Incentive Schemes

International Game Theory Review ◽

10.1142/s0219198920500164 ◽

2020 ◽

pp. 2050016

Author(s):

Shubhro Sarkar ◽

Suchismita Tarafdar

Keyword(s):

Nash Equilibrium ◽

Marginal Cost ◽

Market Competition ◽

Product Market Competition ◽

Strategic Delegation ◽

Managerial Incentive ◽

Simultaneous Protocol ◽

Investment Choice ◽

Unique Nash Equilibrium ◽

Asymmetric Equilibrium

In this paper, we show that firms might get an additional strategic benefit from using marginal-cost-reducing investments in conjunction with strategic delegation. While both these instruments allow firms to “aggressively” participate in product market competition, we show that they act as substitutes or complements depending on whether they are chosen simultaneously or sequentially. Given that the use of such instruments is inseparably linked with a Prisoner’s Dilemma kind of situation, our analysis shows a way to mitigate at least to some extent such effects, through their simultaneous use. We find that the unique Nash equilibrium of the game with commitment comprises both players choosing the instruments simultaneously. In case the instruments are chosen without commitment, an asymmetric equilibrium is shown to exist in addition to the simultaneous protocol, yielding unequal payoffs.

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Evaluating the Financial Performance Through ‘Consumer Centric Decision’ Approach in Pharmaceutical Companies of Bangladesh: a Business Planning Perspective

European Journal of Economics and Business Studies ◽

10.26417/ejes.v9i1.p168-183 ◽

2017 ◽

Vol 9 (1) ◽

pp. 168

Author(s):

Md Mostafizur Rahman ◽

Mahmud Uz Zaman

Keyword(s):

Market Share ◽

Swot Analysis ◽

Financial Analysis ◽

Pharmaceutical Companies ◽

Short Term ◽

The Public ◽

Investment Choice ◽

Good Investment ◽

Business Analysis

Pharmaceuticals agglomerations consistently use their brand image and versatile product portfolios to consolidate their position in the financial sector, which is evident in their continuous profit making and expansion in market share. This paper explores the short-term and long-term investment attractiveness through ‘consumer centric decision’ approach in two selected pharmaceutical companies, Renata Limited and Orion Pharma Limited, of Bangladesh over the last three years’ period. This research adopts a systematic approach which primarily addresses the various concerns of investors to illustrate the decision-making process of the existing and future investors. Using primarily domestic transaction data, this study explores how the leading pharmaceuticals companies of Bangladesh effectively use the wide array of drug portfolios mix with appropriate branding techniques to increase their financial profit and market share simultaneously. Both SWOT analysis and Porters Five Forces Model explore the business analysis of Renata Limited in compare to Orion Pharma Limited that provides a conclusion regarding investors’ decision to invest in Renata Limited. Considering the financial analysis, Renata’s financial liquidity is not very satisfactory and could have been improved further if management is prudent on financial strategy settings. Findings of the business analysis indicate that Renata Limited would be a good investment choice for existing and prospective shareholders based on its opportunities for long term and short term growth and further expansion in developing the market. The results suggest that even lower liquidity coupled with higher interest borrowings can be balanced by posing positive picture to the public shareholders by returning the positive dividend to them.

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