Market and Competitive Analysis - Dynamics: Competing Across Time

7 important questions on Market and Competitive Analysis - Dynamics: Competing Across Time

What is the difference between strategic commitments and tactical commitments?

Tactical commitments are more or less the opposite of strategic commitments, because tactical commitments can be adapted to each circumstance.

Give 2 exemples of tactical commitment? 

1. Setting a price
2. Quantity to produce in a certain period. 

Name 3 characteristics for a commitment to get a desirable response from rivals? 

1. Visible 
2. Credible
3. Understandable
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Why is credibility important in relation with relationship-specific assets?

Because when large invenstments are made to create relationship-specific assets, these assets can't be used for other purposes. 

Name an example that can simplify a commitment?

A MFCC (most favored customer clause). This means that when a buyer has such a clause, it is assured that it gets for example the lowest price (if the price has dropped).

When are firms strategic complements?

When firm 2 decreases its price when firm 1 announces a massive cut in its price. (Bertrand model)

When are firms strategic substitutes?

If firm 2 decreases its production because firm 1 increases its production, driving down prices to a percentage below current level. (Cournot model)

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