Micro and Macro Economics of Strategy - Essay Example

Price is a major determinant of a firm and lowering it would mean that it has accepted the strengths of the competitive rivalry and thus economic rundowns are a major given under such settings.

2. Since clearly, this does not apply to perfect competition or monopoly, what does a firm in an oligopoly or monopolistic competition hope to gain? A firm in an oligopolistic competition has to face problems since there are chances for the small number of players to collide within the industrial levels.

The risk factor is pretty pertinent towards this collusion. The decision of one firm eventually influences the decisions taken by other firms under such oligopolistic levels. A firm hopes to gain little revenues and economic upheavals in the shortest time possible. It wants to save its face and earn its money in a quick manner. (Lebowitz, 2004) Within a monopolistic competition, since the firm is the only dominant player, it aims to build upon its strengths and exploit the opportunities which come its way. A firm would thus look to exponentially increase its economic levels whilst being in a state of monopoly.

3. How important is the perception of other firms' reactions in the planning process? It is very important to take note of the other firms’ reactions whilst going through the planning phase. This is because the firm finds out what weaknesses it could hit upon within the industrial levels and how it could exploit the opportunities that come its way within the competitive activity. The perception of other firms also becomes significant when there is strategic planning taking place – an aspect that has quintessential considerations for the economic ranks.

The perception is measured through the economic indicators as well as the pricing fluctuations that take place on the part of the dominant players in the market. Thus it is in the interest of this firm to keep a record of the other firms’ reactions so that this firm could exploit the weaknesses within the economic race which is present amongst all the firms in essence. (Milberg, 1994)

4. How do you know if you win? A firm might win if it receives the revenues that it has yearned for of late. It could mean that this firm would have to adjust its prices every now and so often as well as trigger sales through some steps which could mean success and growth in the long run.

A firm wins if it knows that it has done its best in the long run and when it has been able to play upon its strengths in an out and out manner. The economic alterations are significant since they comprehend the basis of the firm’s strategic direction all said and done.