Chapter 11 Managing G CompetitiveDynamic

actions and responses undertaken by competing firms

the process of anticipating rivals' actions to revise firm's plan and deal with rivals' response

collective attempts between competing firms to reduce competition

formal or informal cooperation among competitors

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

firms directly negotiate output & pricing and divide markets

an output-fixing and price-fixing entity involving multiple competitors

an output-fixing and price-fixing entity involving multiple competitors.

law that makes cartels (trust) illegal

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

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

the percentage of total industry sales accounted for by the top 4 firms

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

sufficient resources possessed by price leader to deter and combat defection

overlap between two rivals' markets

firms engage the same rivals in multiple markets

dominance acknowledged by competitors

multimarket firms respect rivals' spheres of influence in certain markets and rivals reciprocate, leading to tacit collusion

retaliatory attacks on a competitor's other markets if this competitor attacks a firm's original market

government policy governing rules of the game in competition

government policy to combat monopolies and cartels

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

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

an exporter selling goods below cost

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

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

an initial set of actions to gain competitive advantage

a set of actions in response to attack
- awareness
- motivation
- capability

A competitive dynamics framework that suggests that a competitor will not respond to an action unless it is aware of the action, motivated to react, and capable of responding

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").

ability to raise prices without the fear of losing customers

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