Pep Guardiola sees the Audi Cup as the perfect opportunity for Bayern Munich to put their DFL-Supercup defeat to Wolfsburg behind them.
Bayern were beaten on penalties by last season's Bundesliga runners-up on Saturday after Nicklas Bendtner struck after 89 minutes to make it 1-1.
Missing the chance to claim a first piece of silverware this season was a disappointment for Guardiola, so he is keen to come away from this week's friendly competition with morale restored ahead of their DFB Pokal clash with Nottingen on Sunday.
Bayern host the competition - which they have won twice - at the Allianz Arena and will face Milan in one semi-final on Tuesday, while Real Madrid are up against Tottenham in the other.
"It's an incredible tournament and a good test," said Guardiola. "The best sides in Europe are facing off.
"It is very important to play against teams of this stature, after the Supercup we now have to prepare better for the German Cup and the Bundesliga.
"AC Milan and Bayern were great rivals in the past and played many big matches in European Cups. It will be a wonderful tournament. It would be important to win it."
Milan coach Sinisa Mihajlovic is equally excited by the prospect of featuring in the competition, and hopes to see further improvements from his side ahead of the new season.
"We have worked together for a month and are well under way," he said. "In China [at the International Champions Cup], against Inter and Real Madrid, we had some good performances and I'm sure we can repeat that here in Munich."
Madrid arrive in Germany with a depleted squad after it was announced Ballon d'Or winner Cristiano Ronaldo and striker Karim Benzema had been left out of Rafael Benitez's squad due to niggling injuries.
The new Madrid boss revealed he had no intention of risking the duo for a friendly competition, ensuring they will be ready for the new Liga campaign.
"Cristiano Ronaldo and [Karim] Benzema are in some discomfort," he said. "We didn't want to risk them because the most important thing is their health.
"The rest of the squad are available, except [Fabio] Coentrao, who will be out for some time."
Meanwhile, Mauricio Pochettino is prepared for one final test for his Tottenham side ahead of their Premier League opener with Manchester United on Saturday.
He added: "Real Madrid will be a big test for us because they are one of the best teams in the world.
"This is a great opportunity to show our qualities as we prepare for the start of the Premier League season. The games here will be very competitive and that's important for us."