More and more Japanese companies are moving in on what once was an exclusive U.S. preserve: making and selling the complex equipment that makes semiconductors. World sales are between \($3\) billion and \($5\) billion annually. The U.S. equipment makers already have seen their share of the Japanese market fall to 30% recently from a dominant 70% in the late 1970s. Because sales in Japan are expanding as rapidly as 50% a year, Japanese concerns have barely begun attacking the U.S. market. But U.S. experts consider it only a matter of time.

a. What are the possible competitive responses of U.S. firms?

b. Which one(s) would you recommend to the head of a U.S. firm? Why?