Tutorial 8

Question 1

Chapter 13

competitive dynamics

Answer 1

The actions and responses undertaken by competing firms.

Question 2

Chapter 13

perfect competition

Answer 2

A market with many small buyers and sellers.

Question 3

Chapter 13

monopoly

Answer 3

A market with only one seller.

Question 4

Chapter 13

monopsony

Answer 4

A market with only one buyer.

Question 5

Chapter 13

oligopoly

Answer 5

A market structure with only a handful of competing firms.

Question 6

Chapter 13

co-opetition

Answer 6

Simultaneous rivalry and cooperation between two firms.

Question 7

Chapter 13

attack

Answer 7

An initial set of actions to gain competitive advantage.

Question 8

Chapter 13

counterattack

Answer 8

A set of actions in response to an attack.

Question 9

Chapter 13

AMC framework

Answer 9

A conceptual framework of awareness, motivation, capability indicating when firms are likely to attack and counterattack each other.

Question 10

Chapter 13

competitor intelligence

Answer 10

The process of analyzing rival’s resources and strategies to be able to predict their future actions.

Question 11

Chapter 13

collusion

Answer 11

Collective attempts between competing firms to reduce competition.

Question 12

Chapter 13

explicit collusion

Answer 12

Firms directly negotiate output, fix pricing or division of markets.

Question 13

Chapter 13

cartel

Answer 13

An entity that engages in output- or price- fixing, involving multiple competitors.

Question 14

Chapter 13

tacit collusion

Answer 14

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

Question 15

Chapter 13

prisoners dilemma

Answer 15

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

Question 16

Chapter 13

game theory

Answer 16

A theory on how agents interact strategically to win.

Question 17

Chapter 13

tit for tat

Answer 17

A strategy of matching the competitors’ move being either aggressive or accommodative.

Question 18

Chapter 13

concentration ratio

Answer 18

The percentage of total industry sales accounted for by the top 4, 8 or 20 firms.

Question 19

Chapter 13

price leader

Answer 19

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

Question 20

Chapter 13

barries to entry

Answer 20

Costs or other obstacles that prevent new competitors from easily entering an industry or market segment.

Question 21

Chaoter 13

cross market retaliation

Answer 21

The ability of a firm to expand in a competitor’s market if the competitor attacks in its original market.

Question 22

Chapter 13

market commonality

Answer 22

The overlap between two rivals’ markets.

Question 23

Chapter 13

mutual forbearance

Answer 23

Behaviour of rivals respecting each other’s spheres of influence in certain markets, leading to tacit collusion.

Question 24

Chapter 13

signaling

Answer 24

Firms sending each other indirect messages about their intentions.

Question 25

# Chapter 13 anti trust policy

Answer 25

US term for competition policy.

Question 26

# Chapter 13 collusive price setting

Answer 26

Price setting colluding firms at a higher than competitive level.

Question 27

# Chapter 13 leniency programmes

Answer 27

Programmes that give immunity to members of a cartel that first report the cartel to the authorities.

Question 28

# Chapter 13 market division collusion

Answer 28

A collusion to divide markets among competitors.

Question 29

# Chapter 13 anti competitive practices

Answer 29

Business practices by a dominating firm that make it more difficult for competitors to enter or survive.

Question 30

# Chapter 13 predatory pricing

Answer 30

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

Question 31

# Chapter 13 dumping

Answer 31

An exporter selling below cost abroad and planning to raise prices after eliminating local rivals.

Question 32

# Chapter 13 patent race

Answer 32

A competition of R&D units where the first one to patent a new technology gets to dominate a market.

Question 33

# Chapter 13 survival strategies

Answer 33

A strategy designed to ensure survival by ensuring liquidity and positive cash flow.

Question 34

# Chapter 13 economic forecasting

Answer 34

A technique using econometric models to predict the likely future value of key economic variables.

Question 35

# Chapter 13 scenario planning

Answer 35

A technique generating multiple scenarios of possible future states of the industry.

Question 36

# Chapter 13 contingency planning

Answer 36

Plans devised for specific situations when things could go wrong.

Question 37

# Chapter 13 blue ocean strategy

Answer 37

A strategy of attack that avoids direct confrontation with incumbents.

Question 38

# Chapter 13 defender strategy

Answer 38

This strategy centres on leveraging local assets in areas in which MNEs are weak.

Question 39

# Chapter 13 extender strategy

Answer 39

This strategy centres on leveraging home-grown competencies abroad.

Question 40

# Chapter 14 global strategies

Answer 40

Strategies utilizing resources and operations spread across the world.

Question 41

# Chapter 14 economies of scale

Answer 41

Reduction in unit costs achieved by increasing volume.

Question 42

# Chapter 14 arbitrage

Answer 42

Exploitation of differences in prices in different markets.

Question 43

# Chapter 14 overseas listing

Answer 43

Raising capital by listing on a stock exchange abroad.

Question 44

# Chapter 14 centres of excellence

Answer 44

Specialized centres for innovation that serve the entire MNE.

Question 45

# Chapter 14 global key accounts

Answer 45

Customers served at multiple sites around the world, based on a centrally negotiated contract.

Question 46

# Chapter 14 risk diversification

Answer 46

Reduction of the risk profile of a company by investing in different countries and industries.

Question 47

# Chapter 14 organic growth

Answer 47

Setting up new operations by relying primarily on the existing resources of the firm.

Question 48

# Chapter 14 partnerships

Answer 48

Collaborations with other firms offering complementary resources.

Question 49

# Chapter 14 operational collaboration

Answer 49

A form of strategic alliance that includes collaboration in operations, marketing or distribution.

Question 50

# Chapter 14 cross border M&As

Answer 50

M&As involving companies based in different countries.

Question 51

# Chapter 14 carve-out acquisition

Answer 51

Acquisitions of parts of another company that previously were not clearly defined organizational units.

Question 52

# Chapter 14 synergies

Answer 52

Value created by combining two organizations that together are more valuable than the two organizations separately.

Question 53

# Chapter 14 hubris

Answer 53

A manager’s overconfidence in their capabilities.

Question 54

# Chapter 14 strategic fit

Answer 54

The effective matching of complementary strategic capabilities.

Question 55

# Chapter 14 organizational fit

Answer 55

The similarity in cultures, systems and structures.

Question 56

# Chapter 14 post-acquisition integration

Answer 56

The process that aims to integrate two formerly independent firms after an acquisition.

Question 57

# Chapter 14 input foreclosure

Answer 57

Practice of a vertically integrated firm to cut off a competitor from key suppliers.

Question 58

# Chapter 14 output foreclosure

Answer 58

Practice of a vertically integrated firm to cut off a competitor from key customers.

Question 59

# Chapter 14 acquisition premium

Answer 59

The difference between the acquisition price and the market value of target firms.

Question 60

# Chapter 14 divestments

Answer 60

Sales or closures of business units or assets.

Question 61

# Chapter 14 globalfocusing

Answer 61

A strategic shift from diversification to specialization which increases the international profile.

Question 62

# Chapter 14 static efficiency

Answer 62

Benefit to consumer without considering technological change or new entries.

Question 63

# Chapter 14 dynamic efficiency

Answer 63

Benefits created in the long run considering technological change and new entries.