Global Theories become practical Interaction – BERTRAMS |COORDINATING COMPLEXITY|

“Scientific theories are proving in our projects with many customers an enhanced decision-making, increased innovation, and ultimately a sustainable competitive advantage in the global situation which we are all facing.”

BERTRAMS’s App development Business Unit is in progress (Domain: “bertrams.app” is reserved):

If you like to read more about our App Development results with ai-managed equilibriums, please press button below or read a chapter about another practical example at the bottom of this page!

Project Management Methodology

Key components include:

Phase	Activities	Outcomes
Initiation	Business case development Vision alignment	Project charter with defined success criteria
Planning	Phased roadmap creation Stakeholder analysis	Resource allocation matrix Communication protocols
Execution	Responsibility mapping Progress monitoring	Measurable milestone achievements

App Development Section

Global Theories become practical Interaction in global technology driven enterprises

Practical Example:

Situation:

Your company faces downward-sloping demand curves, while pricing is effected and obviously a function of total quantity produced.

This implies that your output affects not only the sales price of your product in one regional sales area with a certain demand, but also the price of both friendly ‘competing’ Sales Units in each region.

Solution:

The theoretical model we use to analyze such situations was first introduced by French economist Antoine Augustin Cournot in 1838 and interestingly, the solution of the Cournot model is the same as the more general Nash equilibrium concept introduced by John Nash in 1949 and used to solve for equilibrium in non-cooperative games.

Strategic environment:

We assume that your global company has at least two sales regions in the same market but you are competing in different countries with identical products and cost functions, which creates a strategic environment where your overall profit-maximizing target is at risk:

What happens next? – Probably each of your sales regions decide independently- without knowing the other’s demand – the quantity of their products to be produced for the coming weeks or months. We might also assume that the total demand for your products is changing for the total production volume next planning circle, which will have impact on many of your own facilities, but also on your partners.

Volume Control becomes the Strategic Component

Our recommendation is, to align your regional production volumes regularly between all parties. – We propose the implementation of S&OP and later of advanced IBP meetings, to install an environment where your company’s overall “profit maximizing strategy” is clearly understood in all of your collaborating departments. Our expertise is coming from sometimes unbelievable fast increase of financial figures through the interlocking capabilities of S&OP/IBP.

With a few figures your decision to take advantage of such processes might grow:

Let us assume you are a global electronics manufacturer selling Notebooks in two regions: Europe and Asia. Both regions sell almost identical products but compete in different countries.

Initial Situation

Europe production: 1 million units
Asia production: 1.2 million units
Total production: 2.2 million units
Global demand curve: P = 1000 – 0.2Q (where P is price and Q is quantity)
Production cost per unit: $300

What happens when Coordination through S&OP is missing?

– Europe and Asia independently decide their production volumes:

Europe increases production to 1.2 million units
Asia maintains 1.2 million units
Total production: 2.4 million units
Resulting price: 1000 – 0.2(2.4 million) = $520 per unit
Profit per unit: $520 – $300 = $220
Total profit: 2.4 million × $220 = $528 million

With Coordination something else will occur:

Within S&OP/IBP meetings, your regions will be asked to align their production volumes in the best interest of your company strategies:

Europe reduces production to 0.9 million units
Asia reduces production to 1.1 million units
Total production: 2 million units
Resulting price: 1000 – 0.2(2 million) = $600 per unit
Profit per unit: $600 – $300 = $300
Total profit: 2 million × $300 = $600 million

Learning effect

By strategically coordinating production volumes, the company increases its total profit in this special situation by $72 million.
This demonstrates how symbiotic collaboration between regions can lead to a more profitable equilibrium, benefiting the entire organization.

Key Takeaways:

Volume control as a strategic component: Coordinating production volumes across regions can significantly impact overall profitability.
Interdependence of decisions: Actions in one market affect outcomes in others, highlighting the need for global coordination.
Stable equilibrium through collaboration: By aligning regional strategies, the company achieves a more profitable and stable outcome.