Business environment - Research Paper Example

Under these marketing conditions, a 'Dominant Strategy' is a course of action which would be followed in response to any course of action taken by the other player. 3. Hiphop or Garries will earn a profit of 6,400 if the other one charge a priced 11 per piece and whoever charges 11 will get a margin of 1,800 because in that situation the other player will charge 10 and sell more units. Collusion between parties occurs when they act in common interest and trust each other. The best example for Collusion is the OPEC where the petroleum prices are fixed in consultation with all the member countries to the maximum advantage of the countries concerned.

In collusion there will be an interaction between the players who want to maximize their earnings. By colluding the players divide the total market among themselves and by charging the same price they also share the profits that the business offers. There are still first mover advantages, such as the chance to gain early market share, but without the backing of the right customers and constant innovation, it's always possible to loose the advantages. The advantages that the first entrant gets may not be available to the second one.

When both the companies Burger Binge and McDennys want t. Observation on Collusion from the Matrix:From the pay off matrix drawn the following observation is made for collusion:1. when both Hiphop and Garries charge same price of 11 each one make a profit of 4,5002. It may be observed this profit of 4,500 is in excess by 500 than what they made while they were selling 10 per pieceThis is the result of the agreement between both the players to sell the product at 11 and that is the effect of the retailer's collusion.

EXPLANATION FOR FIRST MOVER ADVANTAGE:"First Mover Advantage is a notion that being first in a market place gives the first mover an insuperable competitive edge." - David M Katz There are still first mover advantages, such as the chance to gain early market share, but without the backing of the right customers and constant innovation, it's always possible to loose the advantages. The advantages that the first entrant gets may not be available to the second one. I have made the pay off matrix for companies Burger Binge and McDennys with the help of the data provided.

Burger BingeMcDennysBegin OperationStay AwayBegin Operation - 100,000- 100,000 0 250,000Stay Away 250,0000 00Observation:When both the companies Burger Binge and McDennys want to operate their business it is not possible for both of them to earn any profit. This is what is observed from the matrix. Alternatively if one decides to stay away from the business the other one can earn a profit of 250,000. For example if Burger Binge does the business and McDennys do not enter the market then Burger Binge gets the first mover advantage and earns 250,000.

PART B PORTERS FIVE