In this blog you will find the correct answer of the Coursera quiz Competitive Strategy Coursera week 4 Quiz mixsaver always try to bring the best blogs and best coupon codes
1. Imagine British Gas is the monopolist for electricity supply in the UK. Every day, 50,000 units of electricity are sold and consumed across the UK. British Gas charges GBP 6 for one unit of electricity.
Now a small company called London Power enters the market. London Power charges GBP 4 for one unit of electricity and limits its network to the Greater London area where 50% of the UK’s overall units of electricity are sold and consumed. London Power can convince British Gas that it will not extend its network further.
Assume that the electricity of British Gas and London Power have the same quality. All consumers will switch to the supplier with the lower prices. There are no switching costs. The companies cannot charge different prices for different regions.
Will British Gas attack London Power?
2. Imagine an incumbent faces the threat of a potential entrant in the coming period (t2). The incumbent can now decide whether to pre-empt the market or to accommodate the entry. The profits are indicated in the graphic below.
If the incumbent pre-empts the market, what would be the cumulative profits for the incumbent for the periods t1 to t4?
Assume that the interest rate is zero. Please type in a number, e.g. 3.
Enter math expression here
3. Which of the following are structural entry barriers? (There can be more than one correct choice)
- Brand loyalty
- Aggressive commitment
- Control over essential resources by incumbent
- Rationing by governments
- Experience curve effects
4. Assume Telefónica is the monopolist for mobile communication services in Spain.
– Vodafone considers entering the market.
– In the case of market entry, Telefonica can either accommodate the entry or retaliate.
– Vodafone can subsequently decide whether to stay in the market or exit.
The possible actions and payoffs are illustrated in the graphic below.
Imagine now that Vodafone implements a commitment strategy and builds a call centre in Spain that can only be used for the Spanish market. If Vodafone is not active in the Spanish market, the call centre occurs costs of 1mn. All other payoffs are not affected.
What will be the outcome of the game?
- Vodafone stays out of the market
- Vodafone enters the market and Telefonica does not retaliate
- Vodafone enters the market, Telefonica retaliates and Vodafone exits
- Vodafone enters the market, Telefonica retaliates and Vodafone stays
5. Which of the following are possible entry strategies? (There can be more than one correct choice)
- Value Chain Reconfiguration
- Limit Pricing
- Predatory Pricing
- Judo Economics
6. According to the Porter’s 5 Forces framework, a market tends to be more attractive if…
- …there are many buyers that each represent a small share of the market’s overall revenues.
- …buyers are powerful.
- …there is a low degree of competition within the market.
- …suppliers have little bargaining power.
- …there are close substitutes to the product.
- …the market is highly regulated by the government.
7. Imagine Kroger was the only supermarket chain in Los Angeles for the past 10 years. Safeway announces that they consider opening their own supermarkets in the area. Which of the following reactions by Kroger indicate a pre-emption strategy?
- Kroger adds a bakery and a butcher section to its supermarkets.
- Kroger starts building more supermarkets in the area.
- Kroger closes down less frequented supermarkets and focuses on hot spots.
- Kroger stops selling groceries and focuses on drugs resale.
- Kroger stops selling fresh veggies and fruits.
8. Structural entry barriers can arise from…
- …the incumbent’s action intended to keep the entrant out of the industry.
- …the nature of the industry.
- …the position of the incumbent within the industry.
9. Which of the following statements are true: (There can be more than one correct choice)
- Limit pricing works in presence of incomplete information only.
- Limit pricing is related to setting high prices to signal high quality of the product.
- Predatory pricing signals the potential entrant that there is a low level of demand in the market.
- Limit pricing needs to be implemented before the market entry of a potential competitor.
10. Charging prices below marginal costs in the current competition indicates a…
- Commitment Strategy
- Predatory Pricing Strategy
- Pre-Emption Strategy
- Limit Pricing Strategy