Chapter 11

Which of the following is NOT a method used by competitors to signal their intention to reduce competitive intensity to other competitors?

*****a. Developing new markets where there is less competition b. Seeking mutual forbearance by entering new markets c. Organizing strategic alliances with rivals for cost reduction d. Sending an open signal for a truce through the media

Which of the following is NOT one of the factors that make an industry particularly conducive to collusion?

.*****a. Many firms in the industry b. One industry price leader c. High barriers to entry d. Homogeneous product

Which of the following is a type of attack?

Advertising campaign New product introduction Price reduction

If Google and Microsoft were to propose a joint venture to develop a new internet search engine, the US government would block them based on:

Antitrust Laws

Which of the following are example(s) of explicit collusion?

Creating a cartel and directly negotiating an agreement to fix prices

If a country's competition and antitrust policies are pro-incumbent and pro-producer, which of the following is a likely outcome?

Domestic consumers will most likely pay high prices.

Which of the following statement(s) about dumping are correct?

Exporter sells below cost abroad and exporter plans to raises prices after eliminating local competitors

Which of the following situation represents the LOWEST intensity of rivalry between two companies?

Low resource similarity and high market commonality

What are some drivers for counterattacks?

Motivation Capabilities Awareness

How do firms create value when engaging rivals?

Secure patents on key products. Launch products in multiple markets. Hold a dominant position in key markets.

Why do companies "dump" products in foreign markets?

To gain market share and establish the brand.

Firms in a multimarket competitive situation might want to avoid engaging in cross-market retaliation because:

a price war may be too costly for all involved.

Price setting by a monopolist at a level higher than the competitive price level is:

collusive price setting.

A Middle Eastern cosmetics company focused on regional sales is facing increasing competition from European and American cosmetics firms. In response, it refines its products and advertising messaging to emphasize its close ties to Middle Eastern cultural norms and values. This is an example of a(n):

defender strategy

Facing strong competition from MNE cosmetics firms, an Israeli firm focused on products with unique components extracted from the Dead Sea that couldn't be found in other parts of the world. This is an example of:

defender strategy

The owners of a small rice noodle manufacturing firm in Thailand are facing increasing competition from larger food manufacturers and distributors throughout Asia who wish to move into the Thai market. In response, they sell their company to one of these larger firms. This is an example of a(n):

dodger strategy

Imagine that that same electronics manufacturer exports the new smart phone to a foreign market for sale at an extremely low cost. Its intention is to eliminate its foreign rivals, after which it plans to significantly raise its prices. The firm is engaging in:

dumping

Local firms, in emerging economies, use a dodger strategy to respond to MNEs entry when:

industry pressures to globalize are high and assets are customized to home markets

Beyond the enforcement of antitrust laws, collusion often fails because:

it has incentive problems associated with the "prisoners' dilemma."

Which of the following industry characteristic makes collusion difficult?

low entry barriers

Imagine that an electronics manufacturer introduces a new smart phone in its home market at an extremely low cost. Its intention is to eliminate its domestic rivals, after which it plans to significantly raise its prices. The firm is engaging in:

predatory pricing

When firms indirectly coordinate actions by signaling their intentions, often in an attempt to reduce output and maintain pricing above competitive levels, they are engaging in:

tacit collusion