What is the dominant strategy for coffee bean

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Reference no: EM133282405

Case Study - There are two competing companies: Starbucks and Coffee Bean. Both companies want to determine whether they should launch a new advertising campaign for their coffee shops. If both companies start advertising, Starbucks will attract 4 new customers, while Coffee Bean will attract 3 new customers. However, if both companies decide not to advertise, Starbucks will attract only 3 new customers and 2 new customers for Coffee Bean. If only Starbucks decides to advertise, it will attract 5 new customers, while Coffee Bean will attract only 1 new customer for not advertising. While if only Coffee Bean decides to advertise, it will attract 5 new customers, and Starbucks will only attract 2 new customers for not advertising.

Questions -

1. What is the optimal strategy for Coffee Bean if Starbucks chooses to Advertise?

2. In relation to that, if Coffee Bean chooses to Advertise, the Payoff is?

3. In relation to that, if Coffee Bean chooses Not to Advertise, the Payoff is?

4. What is the optimal strategy for Coffee Bean if Starbucks chooses not to Advertise?

5. In relation to that, if Coffee Bean chooses to Advertise, the Payoff is?

6. In relation to that, if Coffee Bean chooses Not to Advertise, the Payoff is?

7. What is the Dominant Strategy for Coffee Bean regardless of what Starbucks decides to do? Explain your findings.

Reference no: EM133282405

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