ECON: Industrial Organization Claim: “Following the entrance of a new coffee chain in a city, the incumbent coffee chain lowers its price by more than half. Thus, the incumbent is engaging in predatory pricing.” Do you agree with this claim? Explain. How would you determine whether predatory pricing indeed took place? Describe the analytical steps that are required.

ECON: Industrial Organization Claim: “Following the entrance of a new coffee chain in a city, the incumbent coffee chain lowers its price by more than half. Thus, the incumbent is engaging in predatory pricing.” Do you agree with this claim? Explain. How would you determine whether predatory pricing indeed took place? Describe the analytical steps that are required.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 1.10A

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In contrast, India’s Tata Motors was moving forward with a strategy focused on small inexpensive cars, even though thiswas a highly competitive market segment, dominated by Japanese auto makers. The company’s aim was to design a smallcar that would be significantly cheaper to make and buy than any other model, and thus to satisfy India’s mass marketdemand for low – cost transportation. The result was the Nano, with a sales price of 100, 000 rupees (US$2,500), whichwas half the price of its closest competitor in India. Tata Motors achieved this by designing everything from scratch, deletingfeatures that were taken for granted by other auto makers (for example air conditioning, power brakes, radios), usinglightweight steel and an aluminium engine, and building in fuel efficiency.The car’s other important feature was its modular design, enabling the Nano to be distributed across the country in kit formand assembled by local businesses. The global reaction to the Nano catapulted the Tata…
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