Tutorial 8 Flashcards
Chapter 13
competitive dynamics
The actions and responses undertaken by competing firms.
Chapter 13
perfect competition
A market with many small buyers and sellers.
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monopoly
A market with only one seller.
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monopsony
A market with only one buyer.
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oligopoly
A market structure with only a handful of competing firms.
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co-opetition
Simultaneous rivalry and cooperation between two firms.
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attack
An initial set of actions to gain competitive advantage.
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counterattack
A set of actions in response to an attack.
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AMC framework
A conceptual framework of awareness, motivation, capability indicating when firms are likely to attack and counterattack each other.
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competitor intelligence
The process of analyzing rival’s resources and strategies to be able to predict their future actions.
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collusion
Collective attempts between competing firms to reduce competition.
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explicit collusion
Firms directly negotiate output, fix pricing or division of markets.
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cartel
An entity that engages in output- or price- fixing, involving multiple competitors.
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tacit collusion
Firms indirectly coordinate actions by signalling their intention to reduce output or maintain pricing above competitive levels.
Chapter 13
prisoners dilemma
In game theory, a type
of game in which the outcome depends on two parties deciding whether to cooperate or to defect.
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game theory
A theory on how agents interact strategically to win.
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tit for tat
A strategy of matching the competitors’ move being either aggressive or accommodative.
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concentration ratio
The percentage of total industry sales accounted for by the top 4, 8 or 20 firms.
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price leader
A firm that has a dominant market share and sets ‘acceptable’ prices and margins in the industry.
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barries to entry
Costs or other obstacles that prevent new competitors from easily entering an industry or market segment.
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cross market retaliation
The ability of a firm to expand in a competitor’s market if the competitor attacks in its original market.
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market commonality
The overlap between two rivals’ markets.
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mutual forbearance
Behaviour of rivals respecting each other’s spheres of influence in certain markets, leading to tacit collusion.
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signaling
Firms sending each other indirect messages about their intentions.
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anti trust policy
US term for competition policy.
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collusive price setting
Price setting colluding firms at a higher than competitive level.
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leniency programmes
Programmes that give immunity to members of a cartel that first report the cartel to the authorities.
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market division collusion
A collusion to divide markets among competitors.
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anti competitive practices
Business practices by
a dominating firm that make it more difficult for competitors to enter or survive.
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predatory pricing
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.
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dumping
An exporter selling below cost abroad and planning to raise prices after eliminating local rivals.
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patent race
A competition of R&D units where the first one to patent a new technology gets to dominate a market.
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survival strategies
A strategy designed to ensure survival by ensuring liquidity and positive cash flow.
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economic forecasting
A technique using econometric models to predict the likely future value of key economic variables.
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scenario planning
A technique generating multiple scenarios of possible future states of the industry.
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contingency planning
Plans devised for specific situations when things could go wrong.
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blue ocean strategy
A strategy of attack that avoids direct confrontation with incumbents.
Chapter 13
defender strategy
This strategy centres on leveraging local assets in areas in which MNEs are weak.
Chapter 13
extender strategy
This strategy centres on leveraging home-grown competencies abroad.
Chapter 14
global strategies
Strategies utilizing resources and operations spread across the world.
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economies of scale
Reduction in unit costs achieved by increasing volume.
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arbitrage
Exploitation of differences in prices in different markets.
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overseas listing
Raising capital by listing on a stock exchange abroad.
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centres of excellence
Specialized centres for innovation that serve the entire MNE.
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global key accounts
Customers served at multiple sites around the world, based on a centrally negotiated contract.
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risk diversification
Reduction of the risk profile of a company by investing in different countries and industries.
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organic growth
Setting up new operations by relying primarily on the existing resources of the firm.
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partnerships
Collaborations with
other firms offering complementary resources.
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operational collaboration
A form of strategic alliance that includes collaboration in operations, marketing or distribution.
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cross border M&As
M&As involving companies based in different countries.
Chapter 14
carve-out acquisition
Acquisitions of parts of another company that previously were not clearly defined organizational units.
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synergies
Value created by combining two organizations that together are more valuable than the two organizations separately.
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hubris
A manager’s overconfidence in their capabilities.
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strategic fit
The effective matching of complementary strategic capabilities.
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organizational fit
The similarity in cultures, systems and structures.
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post-acquisition integration
The process that aims
to integrate two formerly independent firms after an acquisition.
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input foreclosure
Practice of a vertically integrated firm to cut off a competitor from key suppliers.
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output foreclosure
Practice of a vertically integrated firm to cut off a competitor from key customers.
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acquisition premium
The difference between the acquisition price and the market value of target firms.
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divestments
Sales or closures of business units or assets.
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globalfocusing
A strategic shift from diversification to specialization which increases the international profile.
Chapter 14
static efficiency
Benefit to consumer without considering technological change or new entries.
Chapter 14
dynamic efficiency
Benefits created in the long run considering technological change and new entries.
