Deck 5: Competitive Rivalry and Competitive Dynamics

Question 1

A strategy's success is determined not only by the firm's initial competitive actions but also by how well it anticipates competitors' responses to them and by how well the firm anticipates and responds to its competitors initial actions.

Answer 1

True

Question 2

Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has a loyal following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do, Bayou Belle has high resource similarity with these international firms.

Answer 2

False

Question 3

Competitive rivalry is the set of competitive actions and responses that occur among firms as they maneuver for an advantageous market position.

Answer 3

True

Question 4

Competitive dynamics refers to the total set of actions and responses taken by all firms competing within a market.

Question 5

Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each.

Question 6

Intensified rivalry within an industry results in decreased average profitability for the firms within it.

Question 7

Two firms that have similar resources, but do not share markets would not be direct and mutually acknowledged competitors.

Question 8

Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.

Question 9

Firms operating in the same market, offering similar products and targeting similar customers are competitors.

Question 10

Competitive rivalry is the contest to be the first mover in an international market.

Question 11

According to the Chapter 5 Strategic Focus, the global automobile producing industry has high market commonality but low resource similarity.

Question 12

Toyota's hybrid power train (e.g., the Prius) has been dominant for a number of years but rivals such as Porche, Chrysler, Hyundai and GM have all developed competing hybrid systems. The developments aimed at improving fuel efficiency illustrate competitive rivalry or "actions and responses" by firms in the global automobile industry (Chapter 5 Strategic Focus).

Question 13

Coca Cola and PepsiCo compete across a number of products (e.g., soft drinks, bottled water) and geographic markets (U.S. and foreign markets) indicating that both companies have market commonality.

Question 14

Because of the demanding technology development required, disruptive innovations such as the iPhone are usually confined to a single industry where it can focus on competing against a few rivals (Chapter 5 Opening Case).

Question 15

The global automobile producing industry has high market commonality and high resource similarity, and are aware, motivated, and have the ability to compete for market share in each segment and country they have entered (Chapter 5 Strategic Focus).

Question 16

Extensive market commonality guarantees intense competition in an industry.

Question 17

Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more likely to respond aggressively when attacked.

Question 18

"Competitive dynamics" indicates that firms and their strategic actions are independent.

Question 19

Canon's desktop copier was a disruptive innovation for the then larger photocopier industry dominated by Xerox (Chapter 5 Opening Case).

Question 20

Canon's desktop copiers couldn't collate, enlarge, or do grayscale replication and as such failed as a disruptive innovation (Chapter 5 Opening Case).

Question 21

First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.

Question 22

Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Wal-Mart's competitive actions is a viable long-term option, because although the companies have high market commonality they have little resource similarity. These small retailers are correct in their decision.

Question 23

Among the drivers of competitive actions and responses, motivation refers to the perceived gains that will result from a firm which initiates an attack. If a firm perceives that its position will improve, it is more likely to attack.

Question 24

Often, successful imitation of the first mover's innovations allows the second mover to avoid the mistakes and major investments of the first mover.

Question 25

Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.

Question 26

A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive advantage or improve its market position.

Question 27

The benefits of being a first mover are most substantial in fast cycle markets.

Question 28

Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

Question 29

A lack of awareness leads to a reduction in competition.

Question 30

To be a first mover, the firm must have readily available resources to invest in R&D as well as to rapidly and successfully produce and market a stream of innovative products.

Question 31

Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and mutually acknowledged competitors.

Question 32

A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.

Question 33

Without available resources (such as financial capital and people), the firm lacks the ability to attack a competitor or respond to its actions.

Question 34

Wal-Mart's aggressive pricing strategy is a strategic action that plays a major role in how it competes.

Question 35

Under the framework of competitive action and response, "ability" refers to an attacking or responding firm's knowledge of the competitive market characteristics.

Question 36

Two firms, such as a small local, family-owned Italian restaurant and Olive Garden share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors.

Question 37

An organization with high profitability, such as Wal-Mart, will be able to develop high organizational slack.

Question 38

The drivers of competitive behavior are awareness of the competitor, motivation to take action or respond, and the organization's ability in terms of resources and flexibility.

Question 39

As noted in the Chapter 5 Opening Case, Apple opened a service called "Game Center" once it found that users were using its iPhone, iPad, and iPod platforms for videogames. This is an example of a strategic action by Apple which was followed by strategic responses by Nintendo and Sony.

Question 40

It is much easier for a competitor to implement strategic actions than tactical actions.

Question 41

Firms in a slow-cycle market are shielded from imitators for long periods of time.

Question 42

Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but who remain flexible and act like small firms (i.e., are able to launch a variety of actions) will be more successful against rivals.

Question 43

Mighty Mike's, a manufacturer of power tools for the home hobbyist, has seen its main competitor, MyTools, bring out a line of power tools that are smaller sized, lighter weight, and suitable for women and older hobbyists who have weaker hands than the typical male workshop hobbyist. Mighty Mike is waiting to see whether MyTool's new line is a success. Mighty Mike could be classified as a second mover.

Question 44

Even if the effects of a competitor's strategic action on the focal firm are significant (e.g., loss of market share), little response is likely from that firm.

Question 45

Firms that are typically late movers usually have little organizational slack.

Question 46

The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.

Question 47

Patent laws and regulatory requirements such as required FDA (Food and Drug Administration) approval to launch new products shield pharmaceutical companies' positions in this slow-cycle market.

Question 48

Large firms are likely to initiate more competitive actions along with more strategic actions during a given period.

Question 49

The need for quality products and services is so high that quality alone can assure a firm that it will achieve strategic competitiveness and earn above-average returns.

Question 50

A firm with a reputation as a price predator (an actor that frequently reduces prices to gain or maintain market share) generates few responses to its pricing tactical actions.

Question 51

A firm can predict that a competitor whose products suffer from poor quality is likely to be less aggressive in its competitive actions until those quality problems are corrected.

Question 52

Quality is a universal theme and is a necessary, but not a sufficient, condition for competitive success.

Question 53

Quality begins at the bottom of the organization where employees must create values for quality that permeate the entire organization.

Question 54

In general, strategic actions elicit fewer competitive responses than do tactical actions.

Question 55

It is more likely that locally-owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.

Question 56

Competitors are more likely to respond to strategic or tactical actions when they are taken by a market leader.

Question 57

In general, small firms are more likely than large firms to launch competitive actions and tend to do it more quickly.

Question 58

Firms are likely to imitate the actions of a competitor that is noted for risky, complex, and unpredictable behavior because this is a way to imitate unobservable core competencies.

Question 59

Quality affects the degree of rivalry in that firms lacking quality are likely to me more aggressive in their competitive actions until the quality problems are corrected.

Question 60

Disney is an example of a firm in a slow-cycle market because its animated characters are shielded from imitation by copyrights and trademarks.

Question 61

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors.

A) low; high
B) low; low
C) high; high
D) high; low

Question 62

Carl has just graduated with a management degree. He has a good understanding of his personal strengths and weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target firms in slow-cycle markets.

Question 63

In the Chapter 5 Strategic Focus, companies such as Amazon, Oracle, HP and Dell competing in the cloud computing market have been able to develop sustainable competitive advantages.

Question 64

Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus)

A) lack of awareness and motivation.
B) high market commonality and low resource similarity.
C) high market commonality and high resource siimilarity.
D) reduced rivalry, especially in the production of fuel efficient cars.

Question 65

According to the Chapter 5 Opening Case, in the video-on-demand market, Apple's iTunes service ________________.

A) is shielded from competition by Apple's superior technology
B) is an example of an incremental innovation
C) has no current rivals
D) might be disrupted by Walmart's Vudu video streaming service

Question 66

Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and in the market segments in which they compete. Hilliard, the number two firm in the industry, has undertaken a major strategic attack upon Ahrens, the market leader. Which of the following statements is most likely to be TRUE?

A) Ahrens will not respond aggressively since this is a strategic move and not a tactical action.
B) As the market leader, Ahrens has little to fear from an attack by Hilliard and will not expend organizational slack on a major response.
C) Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.
D) Ahrens will respond after a long delay as the nutrition supplement industry is a slow-cycle industry.

Question 67

Competitive dynamics refers to the

A) circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity.
B) set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position.
C) total set of actions and responses taken by all firms competing within a market.
D) ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

Question 68

Rapid-Built Homes specializes in low-cost prefabricated, modular homes that can be erected in a matter of days anywhere in the country. Rapid-Built focuses on entire subdivisions of homes developed by real estate speculators. ModernModular Homes (ModMod) specializes in modular homes designed by architects which can be built anywhere in the country. The buyers usually build the home themselves from kits on their own lots. ModMod sells fewer than 100 house kits per year. ModMod is run by two professors of architecture as a sideline business. According to the "Framework of Competitive Analysis," we can say that Rapid-Built and ModMod

A) are direct mutually-acknowledged competitors.
B) have high resource similarity.
C) have high market commonality.
D) are probably not engaged in intense competitive rivalry.

Question 69

A firm can expect that every launch of a successful new product will be followed by a counterattack by competitors, even in a slow-cycle market.

Question 70

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is

A) similar competitive rivalry.
B) less competitive rivalry.
C) more competitive rivalry.
D) no competitive rivalry.

Question 71

Canon's desktop copiers and Apple's iPhone are examples of _____________ that are ________ rivalry battles with competitors (Chapter 5 Opening Case).

A) incremental innovations; winning
B) disruptive innovations; winning
C) new products; intensifying
D) disruptive innovations; reducing

Question 72

Multimarket competition occurs when firms

A) sell different products to the same customer.
B) have a high level of awareness of their competitors' strategic intent.
C) simultaneously enter into an attack strategy.
D) compete against each other in several geographic or product markets.

Question 73

Fast-cycle markets are characterized by "generational products" which start out with a substantial technological advance in the performance of a product category followed by incremental technological advances as new generations of products are introduced.

Question 74

Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate.

Question 75

Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies.

A) business-level
B) corporate-level
C) acquisition
D) international

Question 76

Intensified rivalry within an industry results in

A) increased hiring across the industry.
B) increased total revenues across the industry.
C) decreased average profitability across the industry.
D) increased entries into the industry.

Question 77

Which pair of firms has the LEAST resource similarity?

A) Small, family-owned Italian restaurant; Olive Garden
B) Target; Wal-Mart
C) HP; Dell
D) FedEx; UPS

Question 78

Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and _____ likely to respond aggressively when attacked.

A) more; more
B) less; more
C) less; less
D) more; less

Question 79

US-owned automobile companies have recently (2011) bolstered their fuel efficient offerings in part due to __________________ (Chapter 5 Strategic Focus)

A) the high exit barriers in the industry.
B) knowing what had to be done and having the motivation to do it which came from the overlapping market commonality and resource similarity between global competitors.
C) low market commonality which prevented retaliation from competitors in key markets.
D) reduced rivalry in the segment of the industry producing fuel efficient cars.

Question 80

The satellite dish at Faye's weekend home has malfunctioned. When she calls to have the dish repaired, the service representative tells her that the dish is obsolete and that parts for it are no longer made. Faye must replace the old dish with a new dish. This is an example of lack of firm loyalty to a product in a fast-cycle market.