Comments on: Competitive Strategy Game http://www.philhuang.com/2005/10/23/competitive-strategy-game/ Personal Website of Philip Huang Tue, 06 Jan 2009 04:09:09 +0000 http://wordpress.org/?v=2.6.5 By: Philip http://www.philhuang.com/2005/10/23/competitive-strategy-game/#comment-139 Philip Mon, 19 Dec 2005 22:41:53 +0000 http://www.philhuang.com/2005/10/23/competitive-strategy-game/#comment-139 Market D has the largest cash flow/profit potential however the entry costs and capacity costs are very high and requires you to borrow heavily initially. In our game, 2 firms joined Market D and built way too much capacity. Then one of them priced at marginal cost trying to force the other competitor out. This went on for much of the game, until near the end when both of them started raising prices, but at that point, I think it was too late to recoup their losses. My advice would be to use the public statements to try and make your competitors do something favorable to you. Although Market D is price sensitive, you don't want to end up competing on price because of the substantial costs involved. For example, if your competitors are pricing low to force you out, make it known that you have absolutely no intention of leaving the market and pricing low will only hurt everyone. In our game, we were not allowed to explicitly collude but we could make general statements that would elicit some cooperation like "The current price levels cannot sustain the market, we believe an appropriate price level should be at approximately 400." There are various strategies which depend on your costs and your competitors actions which you'll have to figure out which is the point of the game. Good luck. Market D has the largest cash flow/profit potential however the entry costs and capacity costs are very high and requires you to borrow heavily initially. In our game, 2 firms joined Market D and built way too much capacity. Then one of them priced at marginal cost trying to force the other competitor out. This went on for much of the game, until near the end when both of them started raising prices, but at that point, I think it was too late to recoup their losses.

My advice would be to use the public statements to try and make your competitors do something favorable to you. Although Market D is price sensitive, you don’t want to end up competing on price because of the substantial costs involved. For example, if your competitors are pricing low to force you out, make it known that you have absolutely no intention of leaving the market and pricing low will only hurt everyone. In our game, we were not allowed to explicitly collude but we could make general statements that would elicit some cooperation like “The current price levels cannot sustain the market, we believe an appropriate price level should be at approximately 400.”

There are various strategies which depend on your costs and your competitors actions which you’ll have to figure out which is the point of the game. Good luck.

]]> By: Cool http://www.philhuang.com/2005/10/23/competitive-strategy-game/#comment-138 Cool Mon, 19 Dec 2005 16:01:51 +0000 http://www.philhuang.com/2005/10/23/competitive-strategy-game/#comment-138 Dear Philip, Your "Lemon" theory is interesting. I am a student studying management in Hong Kong and have to participate the Competitive Strategy Game this week. I wonder if you can share your experiences as my teammates try to go Market D with hugh borrowings. Thanks a lot. Dear Philip,

Your “Lemon” theory is interesting. I am a student studying management in Hong Kong and have to participate the Competitive Strategy Game this week. I wonder if you can share your experiences as my teammates try to go Market D with hugh borrowings.

Thanks a lot.

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