Deck 11: Managing Global Competitive Dynamics

Question 1

Fitnit and Fittin' are firms engaging in explicit collusion when they indirectly coordinate actions by signaling their intention to reduce output and maintain pricing above competitive levels.

Answer 1

False

Question 2

A low degree of market commonality suggests that if a firm attacks in one market,its rivals may engage in cross-market retaliation.

Answer 2

False

Question 3

Cartels are often labeled as anticompetitive and outlawed by antitrust laws.

Answer 3

True

Question 4

Tacit collusions typically lead to a cartel or trust.

Question 5

Price leader is a firm that sets the highest price in the industry.

Question 6

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

Question 7

Mutual forbearance refers to retaliatory attacks on a competitor's other markets if this competitor attacks a firm's original market.

Question 8

Market commonality refers to the degree of similarity between two rival's products.

Question 9

Competitive dynamics are the actions and responses undertaken by competing firms.

Question 10

Prisoners' dilemma is a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

Question 11

The price leader in a market possesses the capacity to punish.

Question 12

In order to win a predation case in the US,"an attempt to monopolize" must be proved against the accused.

Question 13

Antitrust policies aim to balance efficiency and fairness in trade.

Question 14

An industry without a price leader makes it easier for firms in that industry to form collusions.

Question 15

An industry with heterogeneous products,in which rivals are forced to compete on price,is likely to lead to collusion.

Question 16

The antitrust policies in the United States make it difficult for incumbents to raise entry barriers for new entrants.

Question 17

Low barriers to entry into an industry make collusion between firms difficult.

Question 18

Collusion is more difficult between firms with high market commonality than firms with low market commonality.

Question 19

The International Trade Administration investigates antidumping cases in the United States.

Question 20

Formal institutions governing domestic competition are broadly guided by competition policy.

Question 21

The strategy that centers on a firm expanding overseas is called the dodger strategy.

Question 22

The defender strategy centers on local assets in areas in which MNEs are weak.

Question 23

The United States has the world's oldest antitrust frameworks dating back to the 1890 Sherman Act.

Question 24

Antitrust laws are only applicable to foreign firms.

Question 25

Combining resource similarity and market commonality helps yield a framework of competitor analysis for any pair of rivals.

Question 26

Which of the following is a theory that studies the interactions between two parties that compete and/or cooperate with each other? 

A) Predatory pricing 
B) Game theory 
C) Prisoner's dilemma 
D) Cross-market retaliation

Question 27

The American antitrust policy is pro-incumbent and pro-producer.

Question 28

Firms with a high degree of resource similarity are likely to have similar competitive actions.

Question 29

_____ occurs when firms engage the same rivals in numerous markets.

A) Multimarket competition 
B) Explicit collusion 
C) Cross-border dumping 
D) Cross-market retaliation

Question 30

The lowest intensity of rivalry between competitors is the result of high resource similarity and low market commonality.

Question 31

"People of the same trade seldom meet together,even for merriment and diversion,but their conversation often ends in a conspiracy against the public." This quote from Adam Smith is referring to which of the following business relationship terms? 

A) Combination 
B) Cooperation 
C) Collusion 
D) Collaboration

Question 32

The price leader's _____ is defined as sufficient resources possessed to deter and combat defection.

A) capacity to collude 
B) capacity to imitate 
C) capacity to punish 
D) capacity to compete

Question 33

Blue ocean strategy focuses on attacking core markets defended by rivals.

Question 34

The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response is called _____.

A) mutual forbearance 
B) multimarket competition 
C) competitor analysis 
D) prisoners' dilemma

Question 35

Patenting adds value to a firm's resources when engaging with rivals.

Question 36

Collusive price setting refers to price setting by monopolists or collusion parties at a level lower than the competitive level.

Question 37

Making a rival aware of an attack makes it easier for the attacker to achieve its objective.

Question 38

Firms with strong patents can challenge rivals for infringements,making mutual forbearance impossible. 

Question 39

Firms are allowed to organize strategic alliances with rivals for cost reduction.

Question 40

Minimizing an opponent's awareness,motivation,and capabilities is more likely to result in successful attacks.

Question 41

_____ determines the institutional mix of competition and cooperation that gives rise to the market system and also seeks to balance efficiency and fairness.

A) Competition policy 
B) Antitrust policy 
C) Mutual forbearance 
D) Fairness policy

Question 42

Which of the following industrial characteristics makes a collusion difficult but leads to competition? 

A) Existence of few firms in the industry 
B) Existence of an industry price leader 
C) Lack of market commonality 
D) High barriers of entry

Question 43

Which of the following is defined as the degree of overlap between two rivals' markets? 

A) Cross-market retaliation 
B) Market commonality 
C) Multimarket competition 
D) Mutual forbearance

Question 44

Mutual forbearance is a type of _____.

A) cross-market retaliation 
B) multimarket competition 
C) explicit collusion 
D) tacit collusion

Question 45

_____ is designed to combat monopolies and cartels.

A) Competition policy 
B) Predatory pricing 
C) Cross-market retaliation 
D) Antitrust policy

Question 46

Which combination of resource similarity and market commonality results in the least intense competition? 

A) High resource similarity, low market commonality 
B) Low resource similarity, high market commonality 
C) Low resource similarity, low market commonality 
D) High resource similarity, high market commonality

Question 47

Which of the following industry characteristics contributes to collusion? 

A) Existence of an industry price leader 
B) Existence of many firms in the market 
C) Low barriers to entry 
D) Lack of market commonality

Question 48

_____ refers to price setting at a level higher than the competitive level by monopolists.

A) Collusive price setting 
B) Predatory pricing 
C) Dumping 
D) Mark-up pricing

Question 49

The act of setting prices below cost to eliminate rivals while intending to raise them in the long run to make up for the initial losses is known as _____.

A) dumping 
B) collusive price setting 
C) predatory pricing 
D) counterattack

Question 50

A _____ antirust policy would protect established firms that have already invested and nurtured an industry from new entrants.

A) pro-imitability 
B) pro-incumbent 
C) pro-competition 
D) pro-consumer

Question 51

____ is an attack on a competitor's other markets if this competitor attacks a firm's original market.

A) Cross-market retaliation 
B) Market commonality 
C) Multimarket dependency 
D) Mutual forbearance

Question 52

A price leader is a firm that ____ in the industry.

A) sets the highest prices and has a low market share 
B) sets the lowest prices 
C) sets acceptable prices and has a dominant market share 
D) sets the globally consistent price

Question 53

Which combination of resource similarity and market commonality results in the most intense competition? 

A) High resource similarity, low market commonality 
B) Low resource similarity, high market commonality 
C) Low resource similarity, low market commonality 
D) High resource similarity, high market commonality

Question 54

A high degree of _____ suggests that if a firm attacks in one market,its rivals may engage in cross-market retaliation.

A) market commonality 
B) explicit collusion 
C) multimarket competition 
D) predatory pricing

Question 55

Laws that make it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals are called _____ laws.

A) collusion 
B) antidumping 
C) antitrust 
D) anticartel

Question 56

_____ is defined as the extent to which a given competitor possesses strategic endowment comparable,in terms of both type and amount,to those of the focal firm.

A) Mutual forbearance 
B) Game theory 
C) Resource similarity 
D) Collusion

Question 57

The percentage of total industry sales accounted for by the top firms is called _____.

A) commonality ratio 
B) collusion index 
C) concentration ratio 
D) barriers to entry

Question 58

_____ is defined as a plan to raise prices after eliminating local rivals.

A) Dumping 
B) Dodging 
C) Collusion 
D) Forbearing

Question 59

The American antitrust policy is considered to be _____.

A) pro-incumbent 
B) pro-producer 
C) pro-collusion 
D) pro-consumer

Question 60

Dumping is defined as a(n) _____.

A) exporter selling below cost abroad 
B) company reducing prices after eliminating rivals 
C) firm engaging its rival in multiple markets 
D) domestic company selling above cost

Question 61

If globalization pressures for a firm are relatively low,and if the firm has skills and assets that are transferable overseas,which of the following is the best strategy for the firm to use? 

A) Defender strategy 
B) Extender strategy 
C) Dodger strategy 
D) Contender strategy

Question 62

Explain the three drivers of counterattacks.

Question 63

If a firm is operating in an environment that is customized to home market,which of the following is the most preferred strategy? 

A) Collusion strategy 
B) Dodger strategy 
C) Extender strategy 
D) Contender strategy

Question 64

Define predatory pricing.Why is it difficult to win a domestic predation case in the United States?

Question 65

Identify and describe two of the arguments that exist against the practice of imposing antidumping restrictions on foreign firms.

Question 66

Explain how firms signal their intention to cooperate with their rivals in order to reduce competitive intensity.

Question 67

____ centers on cooperating through joint ventures with MNEs and sell-offs to MNEs.

A) Defender strategy 
B) Extender strategy 
C) Dodger strategy 
D) Contender strategy

Question 68

Under what conditions would a firm adopt a dodger strategy?

Question 69

____ best suits situations where the pressures to globalize are relatively low,and local firms' strengths lie in a deep understanding of local markets.

A) Defender strategy 
B) Extender strategy 
C) Dodger strategy 
D) Contender strategy

Question 70

____ is the strategy that focuses on a firm engaging in rapid learning and then expanding overseas.

A) Defender strategy 
B) Extender strategy 
C) Dodger strategy 
D) Contender strategy

Question 71

Explain how interaction differs between tacit collusion and explicit collusion.

Question 72

_____ strategy centers on leveraging home-grown competencies abroad.

A) Contender 
B) Extender 
C) Defender 
D) Dodger

Question 73

Explain the possible outcomes of an antidumping investigation in the United States.

Question 74

What is resource similarity? How does it affect firm rivalries?

Question 75

Blue ocean strategy focuses on _____.

A) developing new markets 
B) attacking core markets defended by rivals 
C) attacking new markets explored by rivals 
D) leading a price war

Question 76

If a firm is operating in an environment with a high pressure for globalization,which of the following is the most preferred strategy? 

A) Defender strategy 
B) Extender strategy 
C) Dodger strategy 
D) Collusion strategy

Question 77

A thrust on rivals' core markets likely to result in a bloody price war is referred to as _____.

A) a red ocean 
B) a blue ocean 
C) mutual forbearance 
D) cross-market retaliation

Question 78

Which of the following sets of words describes the initial set of actions a firm uses to gain competitive advantage and the other firm's response to it? 

A) Tacit collusion, explicit collusion 
B) Competition, cooperation 
C) Attack, counterattack 
D) Cooperation, signaling