Multiple Point Competition and Competitive Signaling Essay Example for Free

Multiple Point Competition and Competitive Signaling Essay This paper is the pre-assignment number 5 for course TU-91.2040 Global Strategic Management. The task was to answer three questions based on articles by Karnani, A. Wenerfelt B. (Multiple Point Competition, 1985) and Heil, O. Robertson, T. (Toward a Theory of Competitive Market Signaling: A Research Agenda, 1991). The questions are as follows: 1) How would you define multiple market competition? 2) What are pros and cons of the four alternatives to respond to a competitive attack? 3) Why engage in competitive signaling? Multiple market competition means a situation where two companies compete with each other not only in one place with one product but in several locations and possibly with similar products which are substitutes to each other. A simple example would be two companies of the same industry operating in two countries with the same products. As Karnani and Wenerfelt put it: â€Å"The more obvious examples of multiple point competition refer to situations where firms compete simultaneously in different product markets or in different geographical markets for the same product.† Multiple market competition is characterized by four different situations: peace, limited war, mutual foothold and total war. Total peace is extremely rare if two companies operate in the same market. The more likely situation is limited competition where two companies for example suppress the prices of a single product but do not challenge the competitors on other areas, leading the competition to being limited and not total. Mutual foothold equilibrium means a situation where both companies have a small market share on each other’s home/core markets but their core markets are separate and they are not in a total war situation. Total war means a competition in (nearly) every market. This is often a result of an escalation from mutual foothold equilibrium. Total war is usually very costly for both companies and can also lead to weakening and destruction of both companies. If company A comes under a competitive attack by company B, there are basically four ways how company A can react. Say that B lowers the price of product P on a mutual market. The first option is to do nothing. This naturally leads to B getting what it wanted: market share on the product P. The positive side is that there is no competition but the downside is that B won. Doing nothing also indicates weakness which might lead B to attack A on other markets also. The second option is to defend by also lowering the price of product P. This way there is limited competition equilibrium when both companies try to gain market share by suppressing prices. However, this might lead eventually to unprofitability in this product-segment and thus do harm to both companies. The third option for company A is to counterattack by lowering the price of product Q which is also produced by company B. Another example would be that the companies gain new products and penetrate new markets with them to start competing with each other. This way both companies have a foothold in each other’s core markets and the situation is thus called mutual foothold equilibrium. Mutual foothold is quite stable as both companies can easily counterattack if another makes a move toward the other. If this happens, the companies are very near to total war which is the fourth option for company A. If the companies end up in total war the companies start to imitate each other with their product portfolio and market presence. The prices and costs are cut in all product lines which leads to lower profits for both companies. The only good thing resulting from a total war is for customers: the momentary price cut. However, a long lasting total war drains the companies’ cash and resources for RD which might make the products inferior and the companies vulnerable for new entrants with high-quality technology. Companies can also indicate their future intentions by signaling to other companies. There are basically two reasons for companies to engage in competitive signaling: conveying information or gaining information based on the reactions of the signal-receiving companies. Often the information delivered through different public signals would be illegal to directly communicate to competitors (e.g. a coming price increase) but the signals enable companies to exchange this kind of information. The usual reason for competitive market signaling is for the signal sender to get a pre-emption and to discourage the competitors for following. The message needs to be both clear and packed with a high level of perceived commitment in order for the target companies to take it seriously. The message could be for example an intention of increasing production capacity or expanding to other market. This way the signaling company can gain pre-emptions and read their competitors’ reactions and countersignals. Through competitive signaling, companies can exchange information that would otherwise be illegal to convey. One example of such information would be making agreements on price increases. According to Heil and Robertson, this has been evident in airline industry where competing companies agreed on certain types of tickets’ pricing by changing their own prices on these tickets. This way other companies could get clear indications for other companies’ intension and willingness to raise prices. Exchanging this kind of information would lead to sanctions if the companies were to get caught in it. This kind of information is referred to as competitive norms of conduct. To conclude this, by competitive market signaling, companies might gain important competitor information, pre-emption, mislead competitors or agree on norms of conduct with its competitors.

The Twenties And Thirties :: essays research papers

  Ã‚  Ã‚  Ã‚  Ã‚  The twenties and the thirties were very unusual time periods in American History. In some ways they are alike, but in most ways they are very different. The twenties were a time of fun and partying. This is probably the reason it is called the Roaring Twenties. All of the thirties were known as The Great Depression. It was probably called that because of the stock market collapse and the millions of people without jobs.   Ã‚  Ã‚  Ã‚  Ã‚  In the twenties, industry took a very big step. The automotive industry was the largest industry there was. The assembly line made mass production possible, and the industry boomed. Henry Ford’s assembly line, located in Detroit, Michigan, was the largest one in the country and possibly in the world. When Ford first started making cars, the only car he made was a black Model-T. Almost everybody in the United States had a car. Three-out-of-four families owned one or more cars. With the assembly line they made a lot more cars in one day than they did before. Instead of paying for the cars with cash, people could now use credit to purchase items. Since most families didn’t have the money, they would buy the car with credit and pay off the debt later.   Ã‚  Ã‚  Ã‚  Ã‚  The thirties was a bad time for the automotive industry. By now Ford had made a Model-A and had three new colors: tan, purple and black. All of the companies were making more cars than they could sell. Nobody had enough money to buy a car because of all of the banks going under. Millions of people lost whole fortunes. Since no one had the money for a car, the cars were not being sold. This caused a big problem. The dealers were very optimistic. They continued to make cars hoping that sales would go up.   Ã‚  Ã‚  Ã‚  Ã‚  The new credit law was a wonderful idea. It allowed people to purchase items like a television or radio. The invention of the radio united the nation. The news that was heard on the radio was heard by everyone that had a radio. It was the best form of entertainment of its time. Soon thereafter, the television was invented. Once again people took advantage of the credit and purchased televisions. The television still did not take place of the radio. The radio was still used for listening to music. Many people were spending more money than they had.   Ã‚  Ã‚  Ã‚  Ã‚  Even in the thirties the radio and television were top forms of entertainment. Although, some people did not have these accessories, they could still go the movies if they had the money. In the thirties, everyone watched a lot of television and listened to the radio. In contrast to the twenties, the thirties were very

Iphone 5C price decision Essay

The fist factor that important in the pricing decision of iPhone 5C is by considering costs. For instance, since Apple Inc. wants to maximize its profits through establishing new products, the price should be set at the point where marginal revenue equals to marginal cost. We know that iPhone 5C is in the perfectly competitive market, the company can reach its maximum profit at equilibrium at X* and P*. To determine the price, Apple Inc. needs to do the marginal analysis. According to profits (Ï€) equals to total revenues (TR) minus total costs (TC), which is Ï€=(P*X)-(fixed cost+variable costs per unit *X), X is the number of units sold by Apple Inc. Of course, manager needs to ask several departments and contractors to know the cost of their product and services. From online websites, I get to know that producing a 16Gbyte iPhone, total BOM and Manufacturing Cost is about $173.45, for a 32Gbyte iPhone 5C is approximately $182.85(which accounts only for hardware and manufacturing costs and does not include other expenses such as software, licensing, royalties or other expenditure)(Andrew, 2013). The manager can differentiating the fixed costs and variable costs based on cost behavior, and plug those numbers into the equation and get an equation between Ï€ and X. then differentiate the equation and set it to zero, the manager can get the number of units when profit maximizing. Finally, plug X into assuming demand function, the manager can get the price and make a decision. But, in the real world, it is not easy to implement the marginal analysis method. So, managers usually try to combine cost-based approaches and market-based approach to make a profit satisfying approach, for example full cost-plus target profits, variable costs-plus percentage markup can both assess to pricing decision. However, the common and basic factor for the methods is costs. The second factor that important in the pricing decision of iPhone 5C is product line and competitors. Strategy analysis is the company needs to consider about the Competitors as well as the whole industry, and then assess to firm’s plan. We can figure out that the competitions in the smartphone market are quite intense, there are numerous competitors and are almost equal size, such as Samsung, Microsoft. So, Apple Inc. has to investigate the cost leadership and the unique producers in order to make a competitive price in the smartphone market. The website take the example of Moto X, which has 18 kinds of colors and the functions are really similar to iPhone 5C (Darren, 2013). The price of Moto X is $599, so the manager should decide a lower price than it to gain a competitive advantage. In particular, the competition is not just from the external market, we know that Apple Inc. promoted iPhone 5C as well as iPhone 5S at the same time. To iPhone 5C, the manager needs to consider about the plastic case, which is $42 less than the metal case cost of iPhone5S (Ben, 2013). So manager should also compare the 5C’s price to 5S. It is an important thing to keep secret of the product’s price before they coming out. The manager of Apple Inc. can survey the expected price of the public, or conduct some historical sample tests before making the final price decision. The third factor that important in the pricing decision of iPhone 5C is the manager should estimate the demand. Assume that we are suffering a financial crisis, most people don’t have extra money to pay for new electronic devices. They have already owned iPhone 5 or iPhone 4S and do not want to pay for another similar product. Then the manager should decrease the price of iPhone 5C to fit for people’s expectation of low pricing, using the profit margin per unit to trade for higher quantities. As I mentioned above, the estimation of demand function is also important in the marginal analysis. In order to estimate the demand, the manager should also make market survey to analyze the targeted customers. According to Pew Internet’s report, Teens and Technology 2013, 37% of U.S. teenagers now own a smartphone (which compares to 23% in 2011). And the increases of U.S. wireless carriers’ family data plans, intensive the parents to buy smartphones for their kids (Jason, 2013). Because the iPhone5C is colorful, has proper functions and easy to control, it must a first-choice for kid’s cellphone. Aimed at attracting teenagers group, the Apple Inc. manager should make the price to a certain level. What’s more, we also have to consider whether buyers are sensitive to price. In economics, we call it price elasticity of demand, which means the percentage change in the numbers of units sod to the percentage change in the price of the product. Assume most people are price sensitive, if the price of iphone5C is much higher than they expected, they will not buy it, which decreases demand a lot. So, listen to the public opinions on price is quite important. Before iphone5C facing to the public, a lot of individuals forecast that the selling price should be low enough to satisfy the low-end customers needs. Somebody was kidding that iPhone 5C is iPhone for China or iPhone for cheap. Apple Inc. wants to occupy more market percentage in developing countries, so they advertised that to make a colorful low-end smartphone. However, the price of iPhone 5C is not as low as we expected. The data shows after releasing the iPhone for 72 hours, both in China, Australia, U.S., the sales of iPhone 5S is almost 4 times compare to iPhone 5C. Especially, the graph says in the â€Å"target† country China, where the 5s is outselling the 5c five to one (Christopher, 2013). So I think the price of iPhone 5C is not reasonable. There are several reasons to explain iPhone 5C price is not appropriate. Firstly, compare to iPhone 5S, people claim 5C just looks an iPhone 5 with a candy-colored plastic shell. According to a report published by UBS, the same memory for 16 Gigabyte iPhone, 5S costs $213 in materials, whereas a 5C costs $156IPhone 5S has metal shell, Touch ID fingerprint scanner, more advanced A7 chipset, Motion Coprocessor and True tone flash for camera. The different price due to plastic case of $42 and finger print sensor of $7. However, the price of iPhone 5C is only $100 less than iPhone 5S. The UBS also estimates the gross margins of iPhone 5S is 45-55% and for iPhone 5S is 48-54% (Ben, 2013). As a rational consumer, I will buy iPhone 5S instead of iPhone 5C, since 5S has much more functions, which is not at a so much higher price. Secondly, the factors of competitor also have huge effects. Samsung is the key part for apple to make its â€Å"retina display† screen, as well as apple use Sony’s sensor in its camera. We know that Samsung and Sony are competitors. Apple Inc. is hiring, relying and paying them. But if someday, Samsung or Sony stop providing essential parts to apple, what will happen? I think Apple Inc. has to produce all manufacturing parts by themselves under a big amount of fixed cost, which will have a big effect on Apple’s price decision. Thirdly, the price of iPhone 5C is not as low as rumored. It brings the question to us, who exactly is Apple targeting? We know that Samsung has galaxy series, which with large-screen and liked by fashion people and developing markets. In china, there are a lot of really cheap phones under 1000RMB, those phones have varieties function and beautiful looking. So when Apple Inc. can really open the market to low-end customers? The price decision and targeting customer is not clear and accurate. I am kind of thinking there must be some sailing strategy when apple promoted 5C and 5S at the same time, with a huge cost performance in my opinion. Maybe Apple Inc. just wants to stimulate the sales of 5S, after people comparing these two products.

Sex Education And Single Sex Essay - 1790 Words

Through the years, humans have endeavored to categorizing everything in their environment including themselves. By categorizing people or things that have a particular sharing characteristic, individuals pretend to make organization and interaction easier. In this case, schools segregated by sex. Before the 19th century single-sex education was very common. So, it can be seen as an old fashioned way of learning. The questions about if students really learn better in a school segregated by gender have brought many concerns; Although no firm point has been reached, ensuring that students learn better or not in a single-sex school, the arguments given by both opponents and supporters are worth listening to. While opponents assure that a single-sex school can seriously harm a student’s behavior, supporters argue that students segregated by sex learn better. A survey, called IYOLSCM, realized to 50 people at Lone Star College Montgomery, showed that most of respondents confused sex with gender. This seems to be normal, since the internet provides the same definition for single-sex education and single-gender education. Thus, taking into account that most of the individuals did not know what defines gender, it is inconvenient to continue without giving the exact definition of gender and sex. According to The World Health Organization, sex refers to the biological and physiological characteristics that define men and women, and gender refers to the socially constructedShow MoreRelatedSingle Sex Education : Single Gender Education1458 Words   |  6 PagesSingle-gender education has become more and more popular in the last few years. 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While co-ed schools allow students to develop socially, single-sex schools have the advantage in academic success. Single-sex schools provide a conducive learning environment for students, allow teachers to teach accordingRead MoreSingle Sex Education Is Beneficial For Females Than Males Essay897 Words   |  4 Pagesschools so switching to single-sex education was rather different for me. Four years at Academy of the Holy Names prepared me to be successful in my future endeavors and also to be confident in who I am. Although research shows that single-sex education is beneficial for both sexes, it indicates that single-sex education is more advantageous for females than males. Research and statistics explain that there is a mal e dominance in co-education schools, and that single-sex education provides girls a betterRead MoreSingle Sex Education Is Overall More Effective For Most People1274 Words   |  6 PagesSingle sex education is overall more effective for most people. It helps with multiple aspects of a person s personality. This specific education helps students gain confidence, feel comfortable, and lets students be themselves. It’s no surprise that boys and girls were educated separately in the colonial times (Kennedy). During the 1960s and the 1970s, the number of single sex schools began to decrease. The main reason for this decrease was out of respect for women s rights and equalityRead MoreEssay about Mona Lisa’s Smile: Single-sex Education for Girls1721 Words   |  7 PagesMona Lisa’s Smile: Single-sex Education for Girls â€Å"Men Are from Mars - Women Are from Venus,† it is the title of a bestseller book, which tells us how different boys and girls are. Single-sex education was introduced because of the huge differences, and it once flourished in the United States. Since the 1970s, however, it began to be regarded with a degree of suspicion. Many girls’ schools closed or amalgamated and the trend towards co-education continued to spread. Until nowadays, the debate