Chapter 11 Flashcards
Antidumping law
Law that makes it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals
Antitrust law
Law that makes cartels (trusts) illegal.
Antitrust policy
Government policy designed to combat monopolies and cartels.
Attack
An initial set of actions to gain competitive advantage.
Blue ocean strategy
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”).
Capacity to punish
Sufficient resources possessed by a price leader to deter and combat defection.
Cartel (trust)
An output-fixing and pricefixing entity involving multiple competitors.
Collusion
Collective attempts between competing firms to reduce competition.
Collusive price setting
Price setting by monopolists or collusion parties at a level higher than the competitive level.
Competition policy
Government policy governing the rules of the game in competition.
Competitive dynamics
Actions and responses undertaken by competing firms.
Competitor analysis
The process of anticipating rivals’ actions in order to both revise a firm’s plan and prepare to deal with rivals’ response.
Concentration ratio
The percentage of total industry sales accounted for by the top four, eight, or twenty firms.
Contender strategy
Strategy that centers on a firm engaging in rapid learning and then expand overseas.
Counterattack
A set of actions in response to attack.
Cross-market retaliation
Retaliatory attacks on a competitor’s other markets if this competitor attacks a firm’s original market.
Defender strategy
Strategy that centers on local assets in areas in which MNEs are weak.
Dodger strategy
Strategy that centers on cooperating through joint ventures with MNEs and selloffs to MNEs.
Dumping
An exporter selling goods below
cost.
An exporter selling goods below cost
Explicit collusion
Firms directly negotiate output and pricing and divide markets.
Extender strategy
Strategy that centers on leveraging homegrown competencies abroad.
Game theory
A theory that studies the interactions between two parties that compete and/or cooperate with each other.
Market commonality
The overlap between two rivals’ markets.
Multimarket competition
Firms engage the same rivals in multiple markets.
Mutual forbearance
Multimarket firms respect their rivals’ spheres of influence in certain markets and their rivals reciprocate, leading to tacit collusion.
Predatory pricing
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.
Price leader
A firm that has a dominant market share and sets “acceptable” prices and margins in the industry.
Prisoners’ dilemma
In game theory, a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.
Resource similarity
The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount,to those of the focal firm.
Tacit collusion
Firms indirectly coordinate actions by signaling their intention to reduce output and maintain pricing
