Week 2

Commitment II
Cooperative Commitment
 Reputation Building
Make the company known as a reliable cooperator
Make it known that you treat others fairly
 Self-Binding Commitment
Make an investment that convinces potential partners that one is
committed to act cooperatively
 Most Favored Customer Clause
Provision in sales contracts
Promises the customer that it will get refunded if another customer is
charged a lower price in the future
This way, it will be costly to compete for certain customers with heavy
price cuts
Competitive Strategy
Tobias Kretschmer
Professor of Management, LMU Munich

2013 LMU Munich