For multipoint competition to lead to mutual forbearance,
A) the threat of retaliation must be substantial and the firms pursuing this strategy must have strong linkages among their diversified businesses.
B) the threat of retaliation must be low and the firms pursuing this strategy must have strong linkages among their diversified businesses.
C) the threat of retaliation must be low and the firms pursuing this strategy must have weak linkages among their diversified businesses.
D) the threat of retaliation must be substantial and the firms pursuing this strategy must have weak linkages among their diversified businesses.

Question

Quizplus · Accepted Answer

For multipoint competition to lead to mutual forbearance, the threat of retaliation must be substantial, which means that the firms must have the resources and capabilities to respond effectively to any aggressive moves made by their competitors. Additionally, the firms pursuing this strategy must have strong linkages among their diversified businesses, which can help them coordinate their actions and prevent them from engaging in destructive price wars that could harm everyone involved. Thus, option A is the best choice.

For Multipoint Competition to Lead to Mutual Forbearance