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Functional Influence Diagrams

Global Tycoon treads a fine line between realism and manageability. Making sense of the scope of available decisions and possible outcomes is a big challenge.

Influence diagrams can help you understand which decisions affect which outcomes. The timing of decisions and their outcomes is also important.

For each diagram below, the decisions are shown as squares and outcomes as ovals.

ClosedProduction decisions and their effects ...

Production's objective is to provide enough finished goods, of a sufficient quality, at a reasonable cost. Supplying those goods is, first, a make-or-buy decision. If you decide to buy them, you can get goods from competitors by contract. If you decide to make them, nearly unlimited resources are available in the long-term. In the short-term, your company is constrained ultimately by line speed. This chart details all decisions that impact production capacity.

These sourcing and assembly process calculations are made each quarter for each market, independently.

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ClosedMarketing decisions and their effects ...

The objective of marketing is creating enough demand for finished goods, at a price high enough to yield a reasonable profit margin.

Factors outside your control determine 'Customer Demand' (far-right of diagram). Additional factors, some of which you and your competitors influence, in aggregate, determine the 'Market Growth' (center-right). These two determine the size of the market.

The third area, those marketing decisions that affect 'Market Share', is the most complex. All factors are equally important. For some, you can benchmark how well your company is doing versus competitors by inspecting the quarterly marketing reports. For others, you must do as well as you can to avoid giving up competitive advantage.

For instance, notice that there are many possible paths to quality. Under-investing in one or two factors can more than offset advantages from optimally investing in others; however, if you can identify which factors are under-invested, the return on marginal (remedial) investment for those factors will be far higher - a bigger bang for the buck!

These market share calculations are made each quarter for each market, independently.

 (mouse-over to view image;
right-click then Save As... for full-size JPG)