Chapter 11

Question 1

Antidumping law

Answer 1

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 2

Antitrust law

Answer 2

Law that makes cartels (trusts) illegal.

Question 3

Antitrust policy

Answer 3

Government policy designed to combat monopolies and cartels.

Question 4

Attack

Answer 4

An initial set of actions to gain competitive advantage.

Question 5

Blue ocean strategy

Answer 5

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 (“red ocean”).

Question 6

Capacity to punish

Answer 6

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

Question 7

Cartel (trust)

Answer 7

An output-fixing and pricefixing entity involving multiple competitors.

Question 8

Collusion

Answer 8

Collective attempts between competing firms to reduce competition.

Question 9

Collusive price setting

Answer 9

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

Question 10

Competition policy

Answer 10

Government policy governing the rules of the game in competition.

Question 11

Competitive dynamics

Answer 11

Actions and responses undertaken by competing firms.

Question 12

Competitor analysis

Answer 12

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

Question 13

Concentration ratio

Answer 13

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

Question 14

Contender strategy

Answer 14

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

Question 15

Counterattack

Answer 15

A set of actions in response to attack.

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

Defender strategy

Answer 17

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

Question 18

Dodger strategy

Answer 18

Strategy that centers on cooperating through joint ventures with MNEs and selloffs to MNEs.

Question 19

Dumping
An exporter selling goods below
cost.

Answer 19

An exporter selling goods below cost

Question 20

Explicit collusion

Answer 20

Firms directly negotiate output and pricing and divide markets.

Question 21

Extender strategy

Answer 21

Strategy that centers on leveraging homegrown competencies abroad.

Question 22

Game theory

Answer 22

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

Question 23

Market commonality

Answer 23

The overlap between two rivals’ markets.

Question 24

Multimarket competition

Answer 24

Firms engage the same rivals in multiple markets.

Question 25

Mutual forbearance

Answer 25

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

Question 26

Predatory pricing

Answer 26

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 27

Price leader

Answer 27

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

Question 28

Prisoners’ dilemma

Answer 28

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

Question 29

Resource similarity

Answer 29

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 30

Tacit collusion

Answer 30

Firms indirectly coordinate actions by signaling their intention to reduce output and maintain pricing