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G2 - [BGS-2] Growth through Entry (game theory (Types of game (single…
G2 - [BGS-2] Growth through Entry
game theory
how
predict competitors' likely actions and reactions
tools
payoff matrices
An asymmetric game
A symmetric game
Prisoners' Dilemma
can be avoided by taking communication
decision trees
A sequential game
what
the analysis of conflict and cooperation among intelligent and rational decision makers
Types of game
Multi -period repeated games
auto industry (new generations of cars cars coming out.)
simultaneity in terms of when they're playing, but it's repeated over again
player industry(new gaming systems)
Multi -period sequential games
One takes a move, then another takes a move and so on
Apple and Samsung and the smartphone business
single-period simultaneous-move games
Mergers and acquisitions
Large capital investments
new facilities or new manufacturing plants
jumbo airplane business (Boeing versus Airbus )
Pre-entry Strategies
Deter
increase the cost and risk of entry
Reduce the quality of information on costs and demand
Make retaliation more credible
make structural barriers
Raise factor costs
Limit pricing
Accommodation strategy
if deterrence is simply too costly or impossible
limiting your ability or incentives to compete
organize to facilitate future coordination
commit to reduce competition after entry
Post-entry Strategies
fighting strategy
fight for your market position
pros
raise your market share
cons
can be counterproductive
Price Cutting
High network externalities
A firm has a niche position
A firm has an advantage in scale
Cooperate Strategy
help structure the game
create a long-term relationship
make commitments limiting your ability
impose costs on your rivals for non-cooperative action
build reputation for aggressive response
Tit for tat
restructure
it could change the nature of the game in a way that is advantageous for you
Consolidate market power through mergers and acquisition
acquire certain limited resources and capabilities
entering or creating new markets
Introduce new products or services
change laws and policies
entering into other lines of business