ABILITY OF EFFICIENT EVALUATION OF KNOWLEDGE-BASED MANAGEMENT STRATEGIES Developments In Business Simulation & Experiential Learning, Volume 24, 1997 128 ABILITY OF EFFICIENT EVALUATION OF KNOWLEDGE-BASED MANAGEMENT STRATEGIES Edward M. Pogossian, Academy of Sciences and American University of Armenia Abstract The problem of efficient evaluation of knowledge- based management strategies in oligopoly simulating games is considered. In general, this problem seems computationally intractable. The conditions under which the solution may be found with available computational resources are formulated and their substantiation is discussed. Introduction We study Strategic Planning (SP) problems in supposition of the presence of adequate computer models allowing to test different strategies to select the best of them, Here we refer only to the Value War model, Chussil and Reibstein, (1994), aimed to simulate oligopoly market strategies and evaluate their performance for variety of possible scenarios. Value War’s sample of strategies employed by the competitive companies to run all your company’s prospective ones to find the best. The important problem is in the methodology of comparison of the results of strategies competition or in the effective strategy search. The evaluation methods of the control strategies are most studied in the field of gaming, particularly in chess,. Very promising approach in assessing the SP skill in business education is being developed in Thavicilwat (1996) However the united approach to the strategy evaluation does not exist yet. The links between different evaluation models are not established. The used models are often not formalized and not adequate enough. No common approach to the criteria analysis and development exists. The criteria which adequately evaluate the control or management efficiency need as a rule large computing resources (time and/or space). Therefore the important problem is in building criterion which could evaluate with maximal possible precision provide by the given resources. Our Idea in strategies evaluation is based on the organization of special type of tournaments of tested strategies. It has been analyzed in two person’s antagonistic finite game with perfect information, Pogossian (1983) Here we try to progress in the computationally plausible methods of evaluation of SP effectiveness for management problems presented by their simulation models like Value War. EVALUATION OF STRATEGIES BY LOCAL MEASUREMENTS Strategy evaluation is a “Global” measurement in a sense that it depends on the values of all terminal nodes of the strategy. At the same time in practice we are able to make only local measurements. Thus, to be effective it is necessary to restrict the problem, considering the additional properties of the strategies. We discuss on of such attempts below. Let us consider the problem of optimal strategy search for some company in oligopolistic competition like the one in the frame of Value War. Assuming that companies make decisions simultaneously we can represent strategies by finite AND/OR tree, where moves from OR nodes refer to our company and moves form AND nodes allow to distinct the resulting influence of all other competitive companies in current market situation Each branch of the tree, a game, is interpreted as a description of the process of competition for some fixed combination of the companies’ strategies. For selected evaluation criterion each game is associated with corresponding number as the value of competitive strategies performances in that game. Given criterion, say profit, the efficiency of each of our company’s strategies ideally might be quantitatively evaluated using the share of values (profits) of that strategy’s all possible game sin the robin-round tournament with all possible combinations of the competitors strategies. Developments In Business Simulation & Experiential Learning, Volume 24, 1997 129 Introducing in some natural way a concept strategy f wins (loses to) strategy g we could (ideally) order all our strategies and distinct their strength by their location in that linear ordering. Given pair of our strategies, f and g, is it possible to determine their interdisposition in that linear (global) ordering using only local, computationally available resources? We describe some natural sufficient conditions when the answer is positive. We say that strategies in our linear ordering are essentially improvable, if for some evaluation operator they satisfy the following condition: it is possible to indicate a constant b (small enough compared to the number m of all strategies in the ordering) such that for any i, 0 < i < m +1, all strategies located to the left of the segment [i+b, i-b] win the games against samples of competitors’ strategies, which were won by the strategy with location i; the strategies located to the right lose; the strategies within the segment may both win and lose. The following theorem is true. THEOREM. Given a class F of essentially improvable strategies and strategies f and g from F, if there are b samples of competitors’ strategies such that f wins and g loses games against each of them, then f is stronger than g, i.e. the location of f is better than g in that linear ordering. Thus, given the strategy f, the question of its strength relative to the strategy g is reduced to the construction of the special tournament and estimation of the parameter b. Even without such estimation of b it is possible to state that with increasing the number of testing samples the probability that f is stronger than g increases too. This statement supplies also the necessary basis for an experimental investigation of the above assumption and complete justification of the idea. CONCLUSION How acceptable for management strategies is the demand to be essentially improvable? The complete and direct justification of the idea we think is possible by constructing the class of such strategies for selected management problems. We work now in this way. Here we can only express our expectation of the positive result by the following arguments. First, management strategies are essentially knowledge-based. It is evident when we analyze the methodology of the business or marketing plans construction. So experienced manager differs from a novice by an amount of knowledge he has gained before. Second., the skill of a manager is determined not only by the amount of acquired homogeneous knowledge but primarily by the hierarchy of abstractions such that each new level is possible on the base of some categories of the previous ones. Just this property seems correlates maximally with an ability to be essentially improvable. And at last, in the real management practice there are graduation and classification of the manager’s skill which are reflected directly by the system of their payment. REFERENCES Chussil M., Reibstein) (1994). Strategy Analysis with Value War The Scientific Press. Pogossian E. (1983) The Adaptation of Combinatorial Algorithms The Academy of Sciences of Armenia, Yerevan, (in Russian) Thavikulwat P. (1996) GEO: A Progressively Integrating Gaming Simulation For International Business Towson State University,. Table of Contents Volume 24, 1997 Incorporating Computer Telephony into the MIS Course A Learner Oriented Infrastructure for videoconferencing Based Distance Education Courses The Identification of Temporally Related Structural Elements of the Experiential Component of Electronic Spreadsheet Tasks Does Involvement Influence Learning from Simulation Participation? Some Relationships with Helpfulness and Performance Outcomes Musings on Business Garne Performance Evaluation Performance on a TE Simulation: What does it represent? The Business Policy Game: An International Simulation - An Assessment Tool Students in Free Enterprise as Experiential Learning The Role of Computer Models in Wargames: A Practitioner's view Using Focus Groups as a Tool to Research Learning: A Demonstration and a Discussion Using Medical Simulations to Teach Multi-Cultural Diversity Using the World Game to Internationalize International Exchange Game Community Services Needs Assessment: An Innovative Approach Introducing Students to Potential Total Quality Management Ethical Dilemmas Privacy in the Workplace: A Situational Analysis Antecedents of Learning in Simulations Demonstrating the Learning Effectiveness of Simulation: Where we are and Where we need to go The Use of Computer Simulations as a Pedagogical Aid in Teaching Management Information Systems Evaluating Simulation Learning in a Distant Learning Instructional Model Financial Engineering of Global Investments The Labor History Game: Playing with the Past Perks Participation Assessing Negotiator's Proficiency with a Negotiation role-play The Art of Negotiating Enhancing Learning and Employee Development through the Assessment of Learning Pedagogy Preferences across selected Dimensions of Culture: A Preliminary Investigation Cooperative Learning: What are we Learning? Effective Use of Mastery Based Experiential learning in a Project Course to improve skills in system analysis and Design Simulations and Learning: Can we prove a relationship? (Seminar) Predicting and Reviewing NYSE Stock Prices by use of Basic Statistical Analysis and Logic Toy Car Depreciation Exercise ABSEL as Home Community: An Interactive Exploration Service Learning: Linking Academic Study to Community Development and Business Enhancement Ability of Efficient Evaluation of Knowledge-Based Management Strategies Corporate Ethics Training Programs Modeling Attributes in Demand Functions of Computerized Business Simulations: An Extension of Teach's Gravity Flow Algorithm Expert Systems Combined with Neutral Networks: Tools to Benefit the Marketing Researcher Computer Game Design: New Directions for Intercultural Simulation Game Designers Consistency in Simulation Performance over Time and Across Simulation Games The Impact of an Artificial Market Leader on Simulation Competitor's Strategies Business Plans, Case Studies, and Total Enterprise Simulations: A Natural Co-existence An Exploration into the Non-Use of Business Simulations The Market Game: Interactive Learning Through Market Simulation Plotting Brand Trajectories with the COMPLETE PPM package: A Market Segmentation Analysis and Positioning Tool Me and Mine Inc: An Exercise in Management Theory Learning to Differentiate Leadership from Managerial Position Business Ethics Survey: A Perspective from the Retail Industry Experiential Learning in Demand Analysis for an Agricultural Commodity Marketing on the Internet: A Pedagogical Exercise College Students Need Simple Computer Simulations, Especially for International Business Courses An Analysis of Student Attitudes, Performance, and Strategies in a Simulation Competition Based on a Controlled Product-Market-Entry Game Structure The Crystal Enterprise: Application of a Non-Computerized Simulation Model in a Process of Organizational Change Threshold: A Windows-Based Behaviorally Oriented Total Enterprise Simulation Coaching Business Game Teams Using a Decision Variable Optimizer Rock and Roll is here to Stay: Enhancing Experiential Pedagogy with Musical Exercises An Example of Business Process Analysis Simulation for Customer Software Support The Use of Business Gaming in Hong Kong Academic Institutions Using the Integrative International Simulation INTOPIA Mark 2000 in a Concentrated MBA Curriculum A Group Experience as an Integrated Part of the Core Management Course Empowered Learning in the Classroom The Inter-Group Interaction: An Innovative Approach to Cooperative Learning Courses that Utilize Student Team: An Approach to enhancing their Effectiveness Thoughts about the Measurement of Learning: The Case for Guided Learning and Associated Measurement Issues Measuring Student Learning Using Business Simulations: A Theory Based Perspective On the Use of PC Fingame in an Undergraduate Finance Course How Managers get Things Done: A Virtual Soundbite Internet Experiential learning in the Principals of Marketing Classroom: A Pedagogical Approach Current Student Perceptions Relative to Business Simulations Beyond Capitalism: Designing Business Policy and Social Justice The Use of Boards of Directors to Evaluate Reports and Presentations in an Undergraduate Business Policy Course Beacon Lumber: An Experiential Introduction to Financial Accounting The Application of Organizational Motivation Principles: The Experiential Business Simulation Motus Manufacturing Avoiding a Bogey: Grading Case Discussions Scientifically Communicating Consumer Behavior II: A Modified Exercise Using Personal Consumption Journals in Condensed Courses Designing Instruments for Assessing the Effectiveness of Simulations, (Seminar) 360º Performance Feedback: Appraisal vs. Assessment The Cafeteria Approach to Managing an Academic Career: Remaining Non-Perishable while Doing Your Own Thing An Experiential Exercise Related to Person-Organization Fit and it's Consequences For Today's Dynamic and Changing World, Business Simulations need to be expanded to encompass Much Greater Complexity: A Demonstration The Incident Process: A Case in Reverse Contextually-Anchored Business Simulations The Energy Factor: Building Motivation in the Simulation Gaming Environment The Design of an Internet Game