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Summary In the statement, it is considered that game theory is hard to use in developing and implementing international business strategy. In the following parts, by analyzing the standpoint of the statement and the definition of game theory, I would critically assess the statement. In the following parts, some general examples would be provided to discuss whether or not game theory is suitable for international business strategy and why the statement is considering that in international business game theory is hard to be developed. In addition, the effects of globalization on game theory in international business strategy will be considered as an additive factor. Finally a conclusion would be made that although game theory cannot be used in international business strategy as simply as it is used in domestic firm strategy, it can be expected that game theory can be well used in regions and blocs development in the future. Analysis on the statement Firstly why the statement indicates that game theory is too hard to use in international business strategy thinking should be discussed, and before this, the definition of game theory can explain some questions. Game theory can be defined that under some situations and rules, depending on the information they hold, individuals take their own strategies and acts at the same time or in some sequence, to get their own goals (Norton, 1995, P36). Here some key words related to the statement can be discussed. Rules: although players in the game would make a rule as soon as they reach equilibrium, previously they must have a rule to start the game. In the general business strategy, because firms are under the same policies and laws, the final equilibrium is easy to reach. But, when the business is taking place between different blocs or different regions, not only economic factor but also policy or other factors always affect the final equilibrium (Besley & Case, 2003, P7). For example, American is the most powerful country in the world, and it can set up tariff wall to protect its domestic firms. If a developing country set up a same tariff wall in the game, although the game can reach equilibrium, the developing country would be hurt more in the game. In addition, American can also use other strategies to inflict press on the developing country. So, it is can be said that game rules in international business are more complicated. Information: the flow of information affects the structure of the game. In a general game, it is easier for players to get perfect and complete information, and when they choose a strategy there is less uncertainty. However, in international games, it is harder for players to get perfect and complete information because they have to face a much larger market. Moreover, in international business, players must consider some information for example, exchange rate, which they cannot meet in other games. Such information affects all the players in international business, and affects the final equilibrium of the game. Although the more complicated information is not relative to the result that the game can reach equilibrium, it is can be imagined that different players have different ability to deal with the same information. If the information was more complicated, the final equilibrium would be moved (Mulford, 2000, P388). Sequence: the order in which players take their strategies and choose their acts depends on the players¡¯ ability to deal with the information. Mostly the powerful player in the game would choose strategy and act at first and in other time all the players choose strategies and act at the same time. However, sometimes the player who is less powerful must take previous act because of the press from others. This situation would be explained by example in the following parts. It is can be said that the orders in which players act is not only a process to equilibrium; it is also can be imagined as a part of strategy. In addition, in international business, orders are more important in games. Goals: in most texts authors work in ¡°payoff¡± instead of ¡°goal¡±, because they are different. Payoff means the level of reward that players receive from a given outcome, while goal means the level of reward that players expect to receive from a given outcome (Grabowski, 1994, P3).
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