MGMT 211 Study Guide - Midterm Guide: Boltbus, Walgreens, Price War
Document Summary
The number of firms that survive determine how market share is divided. Production function tells you the costs of doing something, which determines what output you should choose. Firms use wages and high powered incentives to achieve higher effort from employees. Tacit collusion- recognition of mutual interdependence, often leading to a variety of price enhancing opportunities. Timing of entrance can exploit increasing returns early. Preemption- you can move first to capture market share. Scope of the firm and when/how you move matters. You want to innovate early or imitate to get ahead. American slightly raises prices for non-loyalty customers. Other companies can now increase prices, because the customers they lose, they would have lost to american anyway due to the number of miles they have. Works because you can segment customers based on wtp. Works because purchases are (relatively) frequent: cvs v. walgreens. Customers are more inclined to stick with one brand because of the discounted prices and benefits.
