What tactical term best describes the capacity relationship between Toyota and Honda such that Toyota's response is to reduce production output of the Rav 4 if Honda were to first announce a large increase in the production of the CR-V that drove down prices?
A)Tough commitment
B)Strategic complement
C)Soft commitment
D)Strategic substitute
E)Duopoly

Question

Quizplus · Accepted Answer

This scenario describes a strategic substitute situation, where the products of the two firms are substitutes for each other, and an increase in one firm's output leads to a decrease in demand for the other firm's product. In this case, Toyota and Honda are competitors in the SUV market, with the Rav 4 and CR-V being direct substitutes. Therefore, an increase in Honda's production will lead to a decrease in demand for Toyota's Rav 4, causing them to reduce output.

What Tactical Term Best Describes the Capacity Relationship Between Toyota