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In a sequential-move game the players (entrant and incumbents), observe the actions of each other in order to make the best decisions; this is done by the method of looking ahead by reasoning back (1). This meant, that each player is anticipating what action to take forward (tomorrow) based on what occurred in the present (today) (1). This is very important to each player since no one knows the outcome of tomorrow. Can, and how does, the entrant succeed? In analyzing the game in figure 15.1, the entrant coming into the game can succeed based on how determined the entrant is in achieving its goal. Although fear may deter entry, once the entrant makes the initial move and enter in the incumbent has the option to either accommodate or fight the entrant. Whichever direction incumbent chooses there is an outcome to face whether it is profitable or not for both players. An entrant can succeed, as mentioned before, by determination and not backing out. Based on the illustration given, if the incumbent accommodates the entrant both will make a profit of $5M. so, here the entrant action with allow $5M profit, which is success in itself. However, if the incumbent decides to put up a fight, for example, lower price to increase competition or having some unbelievable sales promotion, then both stands to lose $5M. If the entrant gets cold feet and decides to give up and withdraw, then that would be $0 profit and a big loss for all the time and cost invested in entering the market(game). This will allow the incumbent to make $10M profit. There has to be a change in how the entrant plays the game to succeed as a newbie because backing out should never be an option. By analyzing the profit if accommodated by the incumbent, or the loss resulted by the incumbent fight, the entrant needs to compare it with the loss if the entrant back out. The only option the entrant has, as a means of succeeding is stay in whether making a profit of $5M or a loss of $5M because there is still a possibility of making a change which will turn the market around. Backing out is $0 profit for the entrant and the incumbent will have $10 profit. Is the incumbent ever in control of this game? The incumbent does not have control of the game because they cannot stop anyone from entering the market even if they introduce lower price or unbelievable sales. Reason be incumbents will be affected by not making a profit when they put up fight preventing enter in the game(market). The entrant that is willing to stay the course will cause more loss for the incumbent. The long-term effect of fighting or blocking entrance can cost the incumbent a lot. Since both players will be affected, the commonsense thing to do is share the profit. What is the Nash equilibrium? Froeb define Nash Equilibrium as, “a pair of strategies, one for each player, in which each strategy is a best response to the other” (1). Froeb, is saying an equilibrium occurred when each player does their

best base on each other individual decision; that is cooperating with each other and sharing the wealth. In the case of the entrant succeeding, when the incumbent accommodates the entrant, both make a profit of $5M each. It means both benefited from the decision made by both players. The bottom line is, in observing the movement of each player and whatever action taken by the individual player, both can benefit if the dominant strategy is chosen that will give the best outcome for both players without focusing primarily on the highest profit made by the individual players.

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