Global Business 2nd Edition by Mike Peng – Test Bank

Chapter 11—Managing Global Competitive Dynamics

TRUE/FALSE

1. Competitive dynamics are the interactions between two rivaling firms and include the initiating firm and the responding firm.

ANS: T PTS: 1 DIF: Easy REF: p. 354
OBJ: 11.1 NAT: AACSB: Tier 1 Communication; Tier 2 Group Dynamics

2. In a competitive situation, the initiating firm conducts competitor analysis when it predicts the competitor’s response, even before the firm initiates the plan.

ANS: T PTS: 1 DIF: Moderate REF: p. 354
OBJ: 11.1 NAT: AACSB: Tier 1 Analytic; Tier 2 Strategy

3. Tacit collusion, which exists when firms directly negotiate output, pricing, and markets, leads to a cartel or trust.

ANS: F PTS: 1 DIF: Easy REF: p. 355
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

4. Joint venture is a type of collusion.

ANS: F PTS: 1 DIF: Difficult REF: p. 355
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

5. Beyond antitrust laws, collusion often collapses because of its own problems, including prisoner’s dilemma.

ANS: T PTS: 1 DIF: Easy REF: p. 355
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

6. Prisoners’ dilemma is a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

ANS: T PTS: 1 DIF: Easy REF: p. 355
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

7. Cartel is an output- and price-fixing entity involving multiple competitors.

ANS: T PTS: 1 DIF: Easy REF: p. 355
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

8. It is widely agreed that with the new implementation of global “watch dogs,” international price-fixing cartels are no longer a threat to competition.

ANS: F PTS: 1 DIF: Moderate REF: p. 356
OBJ: 11.1 NAT: AACSB: Tier 1 Communication; Tier 2 Creation of Value

9. An industry that experiences one company as an industry price leader is more apt to collusion than another industry without an industry price leader.

ANS: T PTS: 1 DIF: Easy REF: p. 357
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

10. Price leader is a firm that sets the highest price in the industry.

ANS: F PTS: 1 DIF: Easy REF: p. 357
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy