【G4】Growth through Entry
Identifying Potential Rivalry
Pre-Entry
Post-Entry
Game Theory
To understand rivalry
To understand cooperation
Signaling
Commitment
The selective communication of information to rivals to influence their beliefs and change behavior.
Provide information to encourage coordination and restraint
Selective release of information to influence competitors
Analying games
Type of games
The irreversible elimination of strategic options to make threats credible.
Make large, specialized(sunk) investments(lock-in)
Forego short-term opportunities(lock-out)
Multi-period repeated
Multi-period sequential
Single-period
Deterrence Strategies
Accommodation Strategies
Strategies to increase the cost and risk of entry
Strategies to reduce the incentive to enter
Erect structural barriers (licenses, regulation)
Reduce the quality of information on costs and demand
Make retaliation more credible(and accommodation less credible)
Make large sunk investments, establish aggressive reputation, incur debt
Raise factor costs
Limit pricing, which works best when：
Considerations
Challenges
Mapping games
Incumbent holds a true cost advantage
Information about costs is poor
Incumbent has long time horizon & entry becomes harder over time
But be aware of predatory pricing-it is illegal
Accommodate entry if deterrence is too costly (or impossible)
Commit to a position that will soften competition after entry
Make commitments limiting your ability or incentives to compete aggressively
Organize to facilitate future coordination
Differentiate product to appeal to narrower segment, in hope that competitor will do the same
Make commitments that limit benefits of reducing price
Cooperative Strategies
Restructuring Strategies
Fighting Strategies
Price cutting
Intensive Advertising
Be aware of "outside firms" economic motivations
Firms with relevant capabilities and underutilized resources in stagnant or declining industries
Firms where value chain overlaps
Firms in the same vertical industry chain
Structure the game such that firms have shared incentives
Impose costs on rivals for non-cooperative actions
Tactics that in some cases destroy value can be beneficial when they raise market share rather than dissipate rents
High network externalities(winner-take-all markets)
Firm cutting price has a potential cost advantage(scale)
Firm is niche player relative to competitors (may not provoke response)
Payoff matrices
Decision trees
“Informative” advertising (prevents commoditization)
Early stage of product (public vs private good)
Prisoner's Dilemma
Establish long-term relationships (repeated game)
Make commitments limiting your ability or incentives to compete aggressively
Establish a reputation for aggressive response
Penalize malfeasance (tit-for-tat)
Restructuring refers to broad strategic actions that firms use to manager (or initiate) changes in competitive requirements
Why restructuring strategies are important
103214070 袁 丹
103212019 張 杰
104212053林仲佑
104212025 吳宛庭
104212050 邱奕明
106212504 游文隆
Firms may capitalize on transition points in an industry’s evolution to their advantage
To the extent that a form recognizes these ahead of rivals, and moves quickly, it may lock up rare and valuable assets or position
To the extent such strategic actions are irreversible the firm may preempt rivals