Deck 5: Competing With Rivals

Question 1

Oligopoly theory describes relatively passive or benign competition among a limited number of firms.

Answer 1

True

Question 2

Pure competition has many players, but no sustainable advantage or profit potential.

Answer 2

True

Question 3

Many companies are located in competitive environments that can be classified as either a monopoly or as pure competition.

Answer 3

False

Question 4

Hypercompetition exists when a significant number of rivals compete intensely and less predictably for competitive advantage.

Question 5

Industrial-organization (IO) economics investigates the relationship between the behavior of firms and market structure.

Question 6

Buyers are more powerful if the input they are buying is important to their processes, or if the cost of switching to other inputs is high.

Question 7

Both suppliers and buyers will have more power if they are relatively fragmented, lack information about production and its costs, and are unable to coordinate activities among themselves.

Question 8

Suppliers are least powerful when they are few in number.

Question 9

Suppliers are powerful if their buyers cannot produce needed inputs themselves.

Question 10

Asymmetries are differences among firms that explain differences in profitability.

Question 11

A strategist involved in a hypercompetitive environment who attempts to play an oligopoly game (e.g., erect entrance barriers, tacitly collude with rivals) is destined to fail.

Question 12

A focus strategy concentrates on achieving cost or differentiation advantages with a unique subset of the overall market.

Question 13

In most markets, multiple firms compete for the same set of buyers with similar goods or services.

Question 14

The Bell System company is an example of a regulated monopoly.

Question 15

Rivalry decreases (and profits tend to go down) when industry growth is slow, there are high fixed costs in doing business, and the market lacks differentiated products.

Question 16

Substitutes do not have the potential to disrupt the patterns of industry rivalry.

Question 17

Complementary products or services can enhance the value of the product or service provided by a group of rivals in a competitive setting.

Question 18

Changes in the macro environment can be considered by potential sources of competitive advantage and of erosion of competitive advantage.

Question 19

Large firms always have advantages over small firms.

Question 20

Most firms have the resources to pursue multiple strategies at once.

Question 21

Which of the following reduces buyer power?

A) Consumers have very limited information about production and costs.
B) There are a fewer number of buyers.
C) There are higher switching costs for the buyer.
D) Buyer unable to coordinate activities.

Question 22

Which of the following increases supplier power?

A) There are a greater number of suppliers.
B) Supplies constitute a large proportion of the inputs for the buyer
C) Buyers are able to produce the inputs themselves.
D) Buyers face low switching costs.

Question 23

Which of the following is the best example of a strategic group?

A) Brooks, Puma, Sketchers
B) Wholefoods, Central Market, Trader Joe's
C) Jared's, a pawn shop, Bailey, Banks & Biddle
D) AirTran, American Airlines, Southwest

Question 24

Which of the following is not a generic strategy identified by Porter?

A) Differentiation
B) Overall Cost Leadership
C) Hybrid
D) Focus

Question 25

Which of the following is not true about IKEA's Klippan couch?

A) Low-cost
B) Hard-wearing
C) Retails for more than its original price
D) Supplies and manufacturing sourced from around the world

Question 26

Which of the following statements are true about Orange County Choppers?

A) Example of a low-cost strategy
B) Highest market share in motorcycle manufacturing industry
C) Example of a differentiation strategy

Question 27

Which of the following characteristics is not true of hypercompetition?

A) Temporary sustainability of competition advantage
B) Avoid competition
C) Disequilibrium/instability of marketplace
D) Focus is internal - on the firm
E) Source of competitive advantage is internal to the firm
F) Strategy is to attack, disrupt rivals

Question 28

Which of the following characteristics is not true of an oligopoly?

A) Long-lasting sustainability of competitive advantage
B) Focus is external - on the market
C) Avoid competition
D) Characterized by unstable marketplace
E) Source of competitive advantage is external to the firm
F) Strategy is to defend/cooperate

Question 29

____________ describes a situation in which rivals compete fiercely in some markets while they cooperate in other areas.

A) Competition
B) Collaboration
C) Coopetition
D) Collusion

Question 30

In a ______ competitive environment, there are many players but none has a sustainable advantage or profit potential.

A) Monopoly
B) Oligopoly
C) Hyper
D) Pure

Question 31

____________ exists when actors coordinate their activities to their advantage.

A) Competition
B) Collaboration
C) Coopetition
D) Collusion

Question 32

The basic idea of industry analysis is to understand how each of the competitive forces influences _____________.

A) Competitors
B) Customers
C) Profitability
D) Rivalry

Question 33

The ___________ environment describes the role of regional and national differences in credit availability, growth rates, foreign exchange rates and trade balances.

A) Demographic
B) Political/Legal
C) Technological
D) Economic

Question 34

The ____________ strategy focuses on an industry-wide target and the uniqueness perceived by the customer.

A) Combination
B) Differentiation
C) Focus
D) Overall Cost Leadership

Question 35

Which of the following firms does not pursue a cost leadership strategy?

A) Orange County Choppers
B) Ikea
C) Wal-Mart
D) Southwest Airlines

Question 36

Differentiation is:

A) Providing value at a lower cost than competitors.
B) Offering one or more unique attributes that buyers are willing to pay a premium for.
C) Focusing on a unique segment of the overall market.
D) Simultaneously trying to implement more than one generic strategy.

Question 37

IKEA's combinational strategy employs which set of generic strategies?

A) Cost leadership, differentiation
B) Cost leadership, focus
C) Focus, differentiation
D) Cost leadership, cannibalization

Question 38

____________ strategies drop currently profitable products to produce improvements ahead of market demand.

A) Hypercompetition
B) Oligopoly
C) Cannibalization
D) Collaborative

Question 39

Which of the following is not an example of a collaborative agreement?

A) Lobbying coalition
B) Research consortia
C) Closed bid
D) Co-branding alliance

Question 40

Which of the following is true of rivals?

A) Larger firms take the risk of developing new innovations.
B) Smaller firms have the resources to quickly adopt proven ideas.
C) Overcapacity and high barriers to exist can increase profit potential.
D) The most stable rivalry structure is a few large companies with somewhat overlapping but distinct methods of operating.

Question 41

How do asymmetries help explain competitive advantage?

Question 42

What are some of the characteristics of hypercompetition? Provide an example.

Question 43

When and why might competitors collaborate? Provide three examples.

Question 44

What is a strategic group? Provide an example of three strategic groups within an industry and sample characteristics and firms.

Question 45

What is a switching cost? Provide two examples of a switching cost.

Question 46

What are the five macroeconomic forces that influence competitive conditions? Choose an industry and provide an example of each.

Question 47

What is a focus strategy? Provide an example of a firm that pursues a focus strategy.

Question 48

What is a cannibalization strategy? Provide an example of a firm that provides a cannibalization strategy.

Question 49

How would you characterize the current environment of the GEMAYA (Google, ebay, MSN, Amazon, Yahoo, AOL) firms? Do you expect this to change in the next five years? Why?

Question 50

Identify the six competitive forces and explain how they impact industry profitability.