Exam 7: The Dynamics Competing Across Time

Suppose a firm has $50 million to invest in a new market.Given market uncertainties,the firm forecasts a high-scenario where the present value of the investment is $200 million and a low-scenario where the present value of the investment is $20 million.Suppose that by waiting a year,the firm can learn with certainty which scenario will arise.Assume a 10% annual discount rate.If the firm waits one year and learns that the high-scenario will happen,what is the firm's expected net present value of the investment?

Suppose that a firm offers secret discounts to 200 customers in a particular industry to attract those customers from a competitor firm.If there is a 2% probability that any one of those customers will disclose the pricing,what is the probability that the firms competitors will hear from one of those 200 customers? Suppose there are instead 20 buyers to which discounts are offered.What is the probability then that the competitors may find out about one of the discounts?

What term describes a decision that has a long-term impact and is difficult to reverse?

What term describes a policy in which a firm is prepared to match whatever change in strategy a competitor makes?

What process involves using computer simulations to track the likely competitive implications of pricing and investment decisions over many years?

Which of the following is an example of a market where barometric price leadership occurs?

What term refers to situations in which firms can sustain prices in excess of those that would arise in a non-cooperative single-shot price or quantity-setting game?

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?

What type of clause is a provision in a sales contract that promises a buyer that it will pay the lowest price the seller charges?

How much revenue a firm brings in by improving the quality of a product such that more consumers want to buy it depends on which two factors?

What type of option exists when a decision maker has the opportunity to tailor a decision to information that will be received in the future?

Suppose Firm #1 dominates a market for widgets priced at $100/unit with a marginal cost of $60/unit.If Firm #2 enters the market and offers comparable widgets at a 3% discount,extending a price umbrella optimal as long as Firm #1 loses no more than what portion of its market share?

What term refers to the situation in the used car market where owners are more anxious to sell low-quality cars than high-quality cars?

Why might a firm not be able to react quickly to competitors' pricing moves?

Which of the following practices can help firms facilitate cooperative pricing?

Which of the following statements is true about a soft commitment?

What is a grim trigger strategy in a two firm repeated game?

Which set of advice below should a manager disregard when seeking pricing stability that is least likely to suffer from antitrust legislation?

What step of Ghemawat's framework for analyzing commitment intensive choices involves analyzing whether the firm's commitment is likely to result in a product market position in which the firm delivers superior benefits to consumers or operates with lower costs than competitors?

Which of the following commitment strategies involves soft commitment postures,strategic complements for the stage 2 tactical variables,a refrain commitment action and an acceptance of the status quo out of fear thus waiting to follow the leader?