Leonard H. Stern School of Business


Game Theory – Sales: Answers *


  1. “What is TWQ’s best strategy?” 
    1. TWQ’s best strategy is to make a false announcement that it is not going to set up a cross-platform selling unit because it (secretly) wants FOZ to say Yes and announce first while TWQ secretly prepares to set up a unit.
    2. While it is vital for TWQ to keep its plans secret from VVY, it should quietly let FOZ know by signaling in some way of its plans in hopes that FOZ will announce Yes and, thus, create the maximum advantage (Box 2, YNY, 6,1,2) for TWQ, because if FOZ says Yes, then VVY will say No.
    3. If FOZ announces first, VVY will say No and not follow FOZ because of pride and the animosity between the CEOs.  As soon as FOZ announces, then TWQ announces its cross-platform unit immediately to get the most favorable outcome (Box 2, YNY, 6,1,2).  Even though a YNN outcome (Box 3, YNN, 6,2,1) has the same advantage for TWQ (6), it would prefer FOZ had the second best outcome (2) rather than for VVY to have it because FOZ is weaker of the two. 
    4. If FOZ says Yes first, then TWQ has to say Yes to avoid either a NNY (Box 7, 2,1,6) or a NYN (Box 8, 1,4,4), as both are very bad outcomes for TWQ. 
    5. If either VVY or FOZ says Yes to cross-platform selling, TWQ must say Yes, so it must prepare now for the eventuality.
    6. TWQ must say Yes because it has the most to gain (25 vs. 23,21) by saying Yes and the most to lose by saying No (5 vs. 4,3).
    7. If FOZ does not announce that it is setting up a cross-platform sales unit by March 1, TWQ must announce its unit on that date in order to have two-and-a-half months to contact major advertisers and their agencies to do big cross-platform deals before the upfront market breaks and television network budgets, the biggest chunk of major advertisers’ budgets, are spent.
    8. If FOZ announces before March 1, then TWQ must announce the next day so it can get on the street and begin selling cross-platform deals at the same time that FOZ does so that FOZ doesn’t make any deals before TWQ can.  TWQ will be able to make the biggest deals because it has the most assets, especially a huge Interactive presence in the market, which gives it a decided advantage in cross-platform deals.


  1. “What is VVY’s best strategy?”
    1. VVY must announce first, if at all possible, knowing that FOZ won’t copy it because of the CEO competitiveness and hope that TWQ will not be able to get its act together in time for the upfront market, which will give VVY its best advantage (Box 4, NYN, 2,6,1).
    2. Even if TWQ has announced No and VVY suspects it’s a false announcement and will announce Yes as soon as one of the other companies does, VVY will have its second-best outcome (Box 6, YYN, 4,4,1) if FOZ says No.
    3. If VVY announces first and TWQ does get its act together and announce soon after and FOZ doesn’t announces, as expected, VVY would have its second-best advantage (Box 6, YYN, 4,4,1).
    4. VVY has the second most to gain by saying Yes and the second most to lose by saying No.  So, VVY must announce Yes.


  1. “What is FOZ’s best strategy?”
    1. FOZ must announce Yes immediately in order to block the possibility of VVY saying Yes and potentially put itself in its best position (Box 7, NNY, 2,1,6) and hope that TWQ can’t get its act together in time for the upfront market.
    2. By announcing Yes immediately, FOZ gets out on the street with the weakest assets, but the first to offer cross-platform deals, thus giving it an advantage. 
    3. If TWQ announces Yes soon after FOZ announces Yes, FOZ doesn’t gain a big advantage (Box 2, YNY, 6,1,2) but it is still better off than with any decision combination if it says No.


          In all of the above strategies, speed, nimbleness, and flexibility are of the utmost importance.  If TWQ doesn’t begin to organize a cross-platform team immediately, it won’t be ready for the network television upfront market.  It has to start now because of its inherent bureaucracy.  Even it if decides on a false announcement strategy, TWQ must start organizing immediately.  If VVY hesitates, it will let FOZ, which is a smaller and more nimble, steal its thunder, which means FOZ won’t organize a cross-platform team, and it will lose the upfront opportunity.  Eventually, VVY will have to sell cross-platform deals, and if it waits, its CEO will lose faith and look like a follower, which he hates.  Speed is most critical for FOZ so it can trump the possibility of VVY announcing a cross-platform unit and get the biggest jump on the upfront market.  He who hesitates is lost in this game. 


* Prepared by Charles Warner