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business environment - Research Paper Example
Pages 12 (3012 words)
The dominant strategy usually arises in oligopolistic market situation where each player takes into account the expected reaction of the rivals. There are normally two forces that determine the competition among the firms and each one tries to excel in these two forces; one is the price and the second is the differentiation - this may relate to quality, distribution or branding…
Under these marketing conditions, a 'Dominant Strategy' is a course of action which would be followed in response to any course of action taken by the other player.
3. Hiphop or Garries will earn a profit of 6,400 if the other one charge a priced 11 per piece and whoever charges 11 will get a margin of 1,800 because in that situation the other player will charge 10 and sell more units.
Collusion between parties occurs when they act in common interest and trust each other. The best example for Collusion is the OPEC where the petroleum prices are fixed in consultation with all the member countries to the maximum advantage of the countries concerned. In collusion there will be an interaction between the players who want to maximize their earnings. By colluding the players divide the total market among themselves and by charging the same price they also share the profits that the business offers.
There are still first mover advantages, such as the chance to gain early market share, but without the backing of the right customers and constant innovation, it's always possible to loose the advantages. The advantages that the first entrant gets may not be available to the second one.
When both the companies Burger Binge and McDennys want t ...
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