Powergraph - a network-based approach to modelling and managing corporate strategic conflict and co-operation

Strategic relationships between companies are characterised by a combinatio n of conflict and co-operation. Often the behaviour of partner/rival compan ies will appear arbitrary, almost irrational because of the necessary limit ations on communication between the parties. Understanding, predicting and managing situations such as major project teamings or acquisition struggles is essential for the satisfactory governance of companies but existing con flict modelling has proven less than attractive to practitioners and their advisors. A network-based approach known as Powergraph is described in this study. It represents the corporate situation as a directed graph in which the nodes are the possible states of play. Connections between nodes are re presented by logical expressions deriving from the capacities of the player s individually or in coalition to bring about the transitions. By considera tion of the ordinal preferences of the participants, trajectories of the si tuation can be described and these trajectories form the basis for manageme nt action and intelligence gathering. The method is illustrated by means of a real case study of three defence companies competing for two major contr acts.