Question 1

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

Accepted Answer

In the competitive action and response framework, "ability" refers to a firm's resources and capabilities to engage in competitive actions or responses, not just knowledge of market characteristics.

Question 2

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 the companies have market commonality.

Accepted Answer

Market commonality refers to the degree to which companies compete in the same markets with similar products, which is true for Coca-Cola and PepsiCo as they both offer a wide range of similar products across various geographic markets.

Question 3

By definition, to be engaged in multimarket competitions, two or more firms must compete against each other in more than one product area and in multiple geographic markets.

Accepted Answer

False

Question 4

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.

Accepted Answer

Market commonality refers to the extent to which firms compete in the same markets and the significance of these markets to each firm, influencing competitive dynamics.

Question 5

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

Accepted Answer

Research indicates that firms with greater multimarket contact tend to avoid initiating attacks to prevent mutual forbearance, but they respond aggressively to protect their market position when attacked.

Question 6

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

Accepted Answer

Competitive dynamics suggests that firms and their strategic actions are interdependent, as they often respond to each other's moves in the market.

Question 7

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

Accepted Answer

Reverse engineering alone does not guarantee a sustained competitive advantage, as competitors can also adopt similar cost-reduction strategies.

Question 8

Walmart recently opened a store in Alsatia, Missouri.Several local small retailers have decided that choosing not to respond to Walmart'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.

Accepted Answer

Choosing not to respond to Walmart's competitive actions is risky because Walmart's significant resources and market influence can overshadow small retailers, regardless of resource similarity.

Question 9

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.

Accepted Answer

The answer of Two firms, such as a small local,...

Question 10

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

Accepted Answer

Competitive rivalry involves firms continuously engaging in strategic actions and reactions to gain or maintain a favorable position in the market.

Question 11

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

Accepted Answer

A tactical action is typically short-term and involves specific, immediate actions. Boeing's decision to build the 787 jetliner is a strategic action, as it involves long-term planning and resource commitment to achieve competitive advantage and market positioning.

Question 12

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

Accepted Answer

When firms have highly similar resources and compete in multiple markets, they are more aware of each other's actions and strategies, leading to increased competitive awareness.

Question 13

Extensive market commonality guarantees intense competition in an industry.

Accepted Answer

Extensive market commonality can lead to intense competition, but it does not guarantee it. Other factors like resource similarity and strategic actions also play a role in determining competition intensity.

Question 14

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

Accepted Answer

A tactical competitive action typically involves less significant resources and is easier to implement and reverse compared to strategic actions, which require a significant commitment of resources.

Question 15

The set of both competitive actions and responses that a firm takes to build or defend its competitive advantages and to improve its position in the market makes up competitive behavior.

Accepted Answer

Competitive behavior refers to the actions and responses a firm undertakes to maintain or enhance its market position and competitive advantages.

Question 16

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

Accepted Answer

Firms with high market commonality and similar resources often target the same customers and markets, leading to direct competition and mutual recognition of each other as competitors.

Question 17

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

Accepted Answer

Two firms with similar resources and common markets are likely to be direct competitors as they vie for the same customer base and market share, leading to mutual acknowledgment of each other as competitors.

Question 18

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.

Accepted Answer

A strategy's success depends on both proactive and reactive measures, including anticipating and responding to competitors' actions and reactions.

Question 19

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

Accepted Answer

The answer of Walmart's aggressive pricing strategy is a strategic...

Question 20

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

Accepted Answer

Bayou Belle Water, being a local company with a single source, does not have high resource similarity with international firms like Coca-Cola, Nestle, and PepsiCo, which have diverse resources and global operations.

Quiz 5: Competitive Rivalry and Competitive Dynamics