7. Strategic Substitutes and Complements

This session has been considered the most difficult material in the course by students in past years.

Assigned Reading

Central Idea: Some strategies reinforce each other; other strategies hamper each other.

Antithesis: If one person escalates, the other must follow his example.

Topics That Might be Discussed in Class

Important Terms

Strategic Substitutes and Complements, Direct Effect and Strategic Effect, Irreversibility, Tough vs. Soft Firms, Puppy-Dog Strategy, Fat-Cat Effect, Top-Dog Strategy, Lean-and-Hungry Look.

Additional Material

For Next Time: Signalling

Return to the Thinking Strategically Home Page at http://pacioli.bus.indiana.edu/erasmuse/g570/g570.htm.

Send comments to Prof. Rasmusen. Last updated: March 27, 2002.