Welcome to Competitive Strategy from the Auditorium Maximum of the University of Munich.

Thank you very much for being here. And I have to say, I'm very excited that so many of you signed up for this course, and I really look forward to going through the course with you. So, what are we going to do in these next six weeks? Well, we'll analyze situations using game theory. We'll analyze real life strategic situations using the tools of game theory. We'll learn, we'll practice how to make real life decisions using those tools and finally, we'll look at real firms and real strategies, real decisions, and we'll try to figure out why they did what they did. Now, the outline of this course is going to be attached as a file to this video, but let me give you a rough roundup of what we're going to be dealing with. In the first three weeks, we'll cover the basic tools of game theory, and we'll cover them to make sure that you can analyze and make better decisions. But, don't worry it's not going to be just theory, it's going to be plenty of examples, plenty of illustrations to make sure that these theories come alive for you. In the second part, we'll take the tools that we've learned and apply them to three of the most important decisions that firms will take throughout their existence. We'll look at entry, we'll look at research and development, and we'll look at product design. Each week is going to be structured in a very similar way. Each week is a module, and the start of each module is going to be an introductory video, very much like the one that you're seeing now. We'll then have a series of five to eight little video lectures that are going to cover one concept each. Within those video lectures, we're going to have small quizzes to make sure

that you've understood the concepts, right as we go. And these might be fairly challenging when you do them the first time, but once you go ahead, once you do them repeatedly, I think it's going to be much, much easier. So, do watch the videos again, and do make sure you get the in video quizzes. There's going to be a final quiz at the very end. And that final quiz is going to cover the whole course which means that you will have had to watch all the video lectures, you should have done all the weekly quizzes and then you can take the final exam. Now, how to best prepare for a course that's taken by a large number of people all across the world? Well, I would do it very much in the classic way, form study groups and work together. If you're lucky enough to have people around you, physically around you, that do the same course 'competitive strategy', then that's fine. You can get together and discuss the current contents of the course. If not, then there's the online forum, and you can get together and form groups by yourself virtually, and I think that's going to be very useful as well. Use the online forum for questions both to your fellow students and to us. It's a powerful, it's an easy tool to communicate throughout the course. Now, many of the concepts are based on some of the core readings in competitive strategy. There's lots and lots of very useful and fantastic textbooks on competitive strategy, however for this particular course you don't need to do any readings. But, if you got interested in particular topics, then the reading list given at the end of each lecture is going to be a useful starting point. So, we'll illustrate a lot of the contents of the course using real life examples, using real firms. So, these real firms of course make proper decisions, make real decisions and we'll try to analyze those. But keep one thing in mind, every time we use real firms as examples, these are just very strong simplifications of reality.

So these simplifications do not reflect reality necessarily. The numbers we use don't necessarily have to be the real numbers of profits and the revenues and so on. And one thing in particular, we don't want to praise or harm, we don't want to criticize or judge any particular firm throughout this course. So this week, we'll look at competitive situations in the form of gains. Now, we'll start out using two toothpaste manufacturers. We'll write down the actions that these two toothpaste manufacturers can take, in particular 'advertising' or 'not advertising' in a matrix, and we'll use that matrix to analyze what might be optimal strategies in this context. This is going to give us an introduction into two very, very important concepts of Game Theory. First of all, the concept of Nash Equilibrium and second of all, the concept of a Prisoner's Dilemma. We'll then go one step further and say, well, what's going to change if we change a game from two players making decisions at the same time, i.e. a simultaneous game. And then secondly a sequential game where one of the players moves first and the second player then follows. But before we start, I would like to say a couple of thank yous. Because this course is not just me, it's really very much a team effort. So, let's start at the very top. And I would like to thank the LMU executive board, most notably vice president Martin Wirsing who's been instrumental in making this all happen and starting getting LMU Munich involved in this entire project. Secondly, I'd like to thank the LMU Media Team around Armin Rubner and Erik Keller, who have been instrumental in helping us design the course, thinking about a course in particular and see, how we should go about using that course. Thirdly, I'd like to thank the AFK TV team in particular Chris, Florian and Miriam for putting together the video, doing the filming, doing the cutting and so on. I think the end product is really very nice. And finally, last but not least, I'd like to thank my team at the institute for

strategy, technology and organization. And most notably Daniel Oehling who's been instrumental and who's been working tirelessly in making this course happen. So, thank you, thank you, thank you very much to all of you for being such good supports and helping me along in this course. But, I'd also like to thank you for having signed up and for being part of this course, being part of this experiment I think is very exciting. Once we go and and start the course I'm sure you will see how the course is going to pan out, and it's going to be an exciting experience. So without further adieu, now, stay tuned and let's start with the first video. Thanks very much.