Table 11-13 Two Rival Oligopolists in the Athletic Supplements Industry, the Power

question 253

Multiple Choice

Table 11-13
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Power Fuel's (P) Strategy }\\\text { Brawny Juice's (B) Strategy }\begin{array}{|c|c|c|} \hline& \text { High Price } & \text { Low Price } \\\hline{\text { High Price }} & \text { P: } \$ 12 \mathrm{~m} & \text { P: } \$ 16 \mathrm{~m} \\& \text { B: } \$ 12 \mathrm{~m} & \text { B: } \$ 4 m \\\hline {\text { Low Price }} & \text { P: } \$ 4 \mathrm{~m} & \text { P: } \$ 8 \mathrm{~m} \\& \text { B: } \$ 16 \mathrm{~m} & \text { B: } \$ 8 \mathrm{~m}\\\hline\end{array}\end{array}$
Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, have to decide on their pricing strategy.Each can choose either a high price or a low price.Table 11-13 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts.
-Refer to Table 11-13.If the firms act out of individual self-interest,which prices will they select?

• A)Both firms will select a high price.
• B)Brawny Juice will select a high price, Power Fuel will select a low price.
• C)Brawny Juice will select a low price, Power Fuel will select a high price.
• D)Both firms will select a low price.

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Definitions:

Narrow Span

Refers to a managerial structure where each manager oversees a small number of subordinates, allowing for more close-knit supervision and communication but potentially increasing organizational layers.

Cost Leadership

is a business strategy aimed at achieving the lowest operational costs in the industry to offer products or services at competitive prices, often resulting in a high market share.

Organic Structure

An organizational configuration that is flexible, adaptive, and decentralized, designed to enable rapid response to changes.

Organizational Strategy

A plan of action designed to achieve long-term or overall goals and objectives of an organization.