Ch 11 - Managing Global Competitive Dynamics

Question 1

competitive dynamics

Answer 1

Actions and responses undertaken by competing firms.

Question 2

collusion

Answer 2

Collective attempts between competing firms to reduce competition.

Question 3

tacit collusion

Answer 3

Firms indirectly coordinate actions by signaling their intention to reduce output and maintain pricing above competitive levels.

Question 4

explicit collusion

Answer 4

Firms directly negotiate output and pricing and divide markets.

Question 5

cartel

Answer 5

An output-fixing and price-fixing entity involving multiple competitors. AKA, trust.

Question 6

antitrust laws

Answer 6

Laws that make cartels (trusts) illegal.

Question 7

prisoners’ dilemma

Answer 7

In game theory, a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

Question 8

game theory

Answer 8

A theory that studies the interactions between two parties that compete and/or cooperate with each other.

Question 9

competitor analysis

Answer 9

The process of anticipating rivals’ actions in order to both revise a firm’s plan and prepare to deal with rivals’ response.

Question 10

concentration ratio

Answer 10

The percentage of total industry sales accounted for by the top four, eight, or twenty firms.

Question 11

price leader

Answer 11

A firm that has a dominant market share and sets “acceptable” prices and margins in the industry.

Question 12

capacity to punish

Answer 12

Sufficient resources possessed by the price leader to deter and combat defection.

Question 13

market commonality

Answer 13

The overlap between two rivals’ markets.

Question 14

multimarket competition

Answer 14

Firms engage the same rivals in multiple markets.

Question 15

mutual forbearance

Answer 15

Multimarket firms respect their rivals’ sphere of influence in certain markets and their ruals reciprocate, leading to tacit collusion.

Question 16

cross-market retaliation

Answer 16

Retaliatory attacks on a competitor’s other markets if this competitor attacks a firm’s original market.

Question 17

competition policy

Answer 17

Government policy governing the rules of the game in competition. Determines the institutional mix of competition and cooperation that gives rise. to the market system.

Question 18

antitrust policy

Answer 18

Government policy designed to combat monopolies and cartels.

Question 19

collusive price setting

Answer 19

Price setting by monopolists or collusion parties at a level higher than the competitive level.

Question 20

predatory pricing

Answer 20

An attempt to monopolize a market by setting prices below cost and intending to raise prices to cover losses in the long run after eliminating rivals.

Question 21

dumping

Answer 21

An exporter selling goods below cost.

Question 22

antidumping laws

Answer 22

Law that makes it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals.

Question 23

resource similarity

Answer 23

The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm.

Question 24

attack

Answer 24

An initial set of actions to gain competitive advantage.

Question 25

counterattack

Answer 25

A set of actions in response to attack.

Question 26

blue ocean strategy

Answer 26

Strategy that focuses on developing new markets ("blue ocean") and avoids attacking core markets defended by rivals, which is likely to result in a bloody price war or a "red ocean."

Question 27

defender strategy

Answer 27

Strategy that centers on local assets in areas in which MNEs are weak.

Question 28

extender strategy

Answer 28

Strategy that centers on leveraging homegrown competencies abroad.

Question 29

dodger strategy

Answer 29

Strategy that centers on cooperating through joint ventures withe MNEs and sell off to MNEs.

Question 30

contender strategy

Answer 30

Strategy that centers on a firm engaging in rapid learning and then expanding overseas.