Chapter 9

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

It is bad for competitors

It is good for competitors

In Cournot competition, capacity expansion is an example of a soft commitment

In Betrand competition, a commitment to reduce prices is an example of a soft commitment

Tough commitments are always in the best interest of a firm

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

Dedicated investment

Strategic commitment

Critical choice

Market investment

Firm commitment

3. What type of contractual clause in a sales contract with a buyer provides a provision such that the seller is obligated to extend the same price terms to the buyer that it extends to other customers?

Indemnification clause

Most favored customer clause (MFCC)

Escape clause

Money back guarantee

Meet the competition clause (MCC)

4. Which of the following statements is true about a tough commitment?

It is good for competitors

It is bad for competitors

In Cournot competition, elimination of production facilities is an example a tough commitment

In Betrand competition, a commitment to increase prices is an example of a tough commitment

Tough commitments are always in the best interest of a firm

5. Given the following payoff diagram:

Firm 2

Aggressive Passive

Firm 1 Aggressive 40,10 55,15

Passive 50, 25 70, 20

How much can firm 1 improve its outcome by committing to a strategy thus transforming the simultaneous move game to a sequential move game?

5

10

15

20

6. 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?

Real option

Commitment option

Project option

Decision option

Future option

7. 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?

Tough commitment

Strategic complement

Soft commitment

Strategic substitute

Duopoly

8. Which of the following commitment strategies involves tough commitment postures, strategic substitutes for the stage 2 tactical varibles, a make commitment action and an assertion of dominance forcing rivals to back off?

Top Dog

Learn and Hungry Look

Mad Dog

Puppy-Dog Ploy

Fat-Cat Effect

9. Which of the following characteristics must be satisfied for a commitment by one firm to generate the desired response from its competitors?

It must be visible

It must be understandable

It must be credible

A & c

All of the above

10. What key element of a competitive move adds credibility to a making it a "true" commitment?

Fund raising

Public announcement

Relatedness factor

Irreversibility

Capacity expansion

11. What tactical term best describes the pricing relationship between Toyota and Honda such that Toyota's response is to lower the price on the Camry if Honda were to first announce a large price cut on the Accord?

Tough commitment

Strategic complement

Soft commitment

Strategic substitute

Duopoly

12. 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?

Positioning analysis

Sustainability analysis

Flexibility analysis

Judgment analysis

Final Commitment analysis

13. Which of the following statements is true in general about firm actions that are strategic complements?

In the Cournot model, quantities are strategic complements

14. What type of effect describes how a commitment impacts the present value of the firm's profits, assuming the firm adjusts its own tactical decisions in light of their commitment and that it's competitors behavior does not change?

Tactical effect

Financial effect

Direct effect

Strategic effect

Indirect effect

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

Regression testing

Virtual reality

War gaming

Commitment testing

Scenario testing

16. What step of Ghemawat's framework for analyzing commitment intensive choices involves analyzing potential responses to the commitment by competitors and potential entrants in light of the commitments that they have made and the impact of those responses on competition?

Positioning analysis

Sustainability analysis

Flexibility analysis

Judgement analysis

Final Commitment analysis

17. What type of effect describes the competitive side effects of the commitment that alter the tactical decisions of rivals and, ultimately, the market equilibrium?

Tactical effect

Financial effect

Direct effect

Strategic effect

Indirect effect

18. Which of the following is a way that Airbus significantly enhanced the credibility of its commitment to enter super jumbo jet market?

By announcing entrance into the market

By entering a market they had not been in previously

By projecting changes in air travel includes increased congestion in the traditional hub-and-spoke system

By war gaming how the A380 would accommodate growing numbers of passengers and relive airport slot congestion

By securing over 60 early orders for the Airbus A380

19. 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? (A: Eigentlich weak-kitten laut buch)

Top Dog

Lean and Hungry Look

Mad Dog

Puppy-Dog Ploy

Fat-Cat Effect

20. What step of Ghemawat's framework for analyzing commitment intensive choices involves taking stock of the organizational and managerial factors that might distort the firm's incentive to choose an optimal strategy?

Positioning analysis

Sustainability analysis

Flexibility analysis

Judgment analysis

Final Commitment analysis

21. What is the most likely reason a firm would pursue the "mad-dog" commitment strategy of making a tough commitment when tactical variables are strategic complements, a strategy with harmful strategic effects?

For deterrence of new entrants by creating capacity competition

To exploit intangible weaknesses of other firms

To test the response of other market firms

For deterrence of new entrants by increasing price competition

They are following another firm

22. Which of the following statements is true in general about firm actions that are strategic substitutes?

In the Cournot model, quantities are strategic substitutes

		Firm 2
		Aggressive	Passive
Firm 1	Aggressive	40,10	55,15
Firm 1	Passive	50, 25	70, 20

Chapter 9

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

2.

What first name or nickname would you like us to use?

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

3. What type of contractual clause in a sales contract with a buyer provides a provision such that the seller is obligated to extend the same price terms to the buyer that it extends to other customers?

4. Which of the following statements is true about a tough commitment?

5. Given the following payoff diagram: Firm 2 Aggressive Passive Firm 1 Aggressive 40,10 55,15 Passive 50, 25 70, 20 How much can firm 1 improve its outcome by committing to a strategy thus transforming the simultaneous move game to a sequential move game?

6. 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?

7. 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?

8. Which of the following commitment strategies involves tough commitment postures, strategic substitutes for the stage 2 tactical varibles, a make commitment action and an assertion of dominance forcing rivals to back off?

9. Which of the following characteristics must be satisfied for a commitment by one firm to generate the desired response from its competitors?

10. What key element of a competitive move adds credibility to a making it a "true" commitment?

11. What tactical term best describes the pricing relationship between Toyota and Honda such that Toyota's response is to lower the price on the Camry if Honda were to first announce a large price cut on the Accord?

12. 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?

13. Which of the following statements is true in general about firm actions that are strategic complements?

14. What type of effect describes how a commitment impacts the present value of the firm's profits, assuming the firm adjusts its own tactical decisions in light of their commitment and that it's competitors behavior does not change?

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

16. What step of Ghemawat's framework for analyzing commitment intensive choices involves analyzing potential responses to the commitment by competitors and potential entrants in light of the commitments that they have made and the impact of those responses on competition?

17. What type of effect describes the competitive side effects of the commitment that alter the tactical decisions of rivals and, ultimately, the market equilibrium?

18. Which of the following is a way that Airbus significantly enhanced the credibility of its commitment to enter super jumbo jet market?

19. 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? (A: Eigentlich weak-kitten laut buch)

20. What step of Ghemawat's framework for analyzing commitment intensive choices involves taking stock of the organizational and managerial factors that might distort the firm's incentive to choose an optimal strategy?

21. What is the most likely reason a firm would pursue the "mad-dog" commitment strategy of making a tough commitment when tactical variables are strategic complements, a strategy with harmful strategic effects?

22. Which of the following statements is true in general about firm actions that are strategic substitutes?

5. Given the following payoff diagram:

Firm 2

Aggressive Passive

Firm 1 Aggressive 40,10 55,15

Passive 50, 25 70, 20

How much can firm 1 improve its outcome by committing to a strategy thus transforming the simultaneous move game to a sequential move game?