I owned a web company and anytime an employee told me they had another job offer they were considering, I either let them go or started recruiting. I never wanted to keep someone on let alone give them a raise if they were considering leaving. If they came to me and wanted a change in their job or salary I'd work with them, but as soon as you considered my business "one of your options" instead of where you enjoyed working, it was time to move on.

This was a small company though. I'm sure larger companies where mid-level management is in charge of hiring, the strategy of taking competing offers to your boss works well.