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13637657
Firm strategy
Description
Mind Map on Firm strategy, created by Jia Jun Neo on 08/05/2018.
Mind Map by
Jia Jun Neo
, updated more than 1 year ago
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Created by
Jia Jun Neo
over 6 years ago
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Resource summary
Firm strategy
Pricing
Elasticities
PED
YED
XED
PES
Px taker
Accepting the Px mkt determines
e.g PC Firms
Price rigidity
↓ Px, rivals will follow suits, but when ↑ Px, rivals will not follow suit
Kink DD theory
e.g Oligopoly
Px setter
Limit pricing
below the short run profit-maximising price
To drive out competition
e.g monopoly
Predatory pricing
keep price below AC
Profit maximisation MC = MR
Non-Price
R & D
i.e Real differences
improve the quality and the features of the good
↑ price inelastic dd
↑ prices
A&P/Branding
i.e Imaginary differences
↑ awareness and the appeal
↑ DD of the good
Others
Output strategy
↑ output
↓ output
Produce at MC = MR
Alt Objs
LT profit maximisation
Growth maximisation
Corporate image
Collusion
Formal
Explicit price-fixing
Cartels
Act like 1 big monopoly
Tacit/Informal
Price leadership
Dominant firm establishes price/price changes
M&A
Cost adv
IEOS
Remove duplication
↓ Adv cost
Revenue adv
↑ DD
↑ Px Inelastic DD
R&D
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