Question 1

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

Accepted Answer

When firms have high market commonality and highly similar resources, they are likely to be targeting the same customers and competing directly with each other. Therefore, they are direct and mutually acknowledged competitors.

Question 2

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

Accepted Answer

Direct and mutually acknowledged competitors share the same market and compete for the same customers. If two firms do not share markets, they are not direct competitors, even if they have similar resources.

Question 3

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

This statement is true, as research has shown that firms with greater multimarket contact have more to lose from initiating an attack and risking retaliation in multiple markets. However, they are also more likely to respond aggressively when attacked as they have a greater incentive to protect their position in multiple markets.

Question 4

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

Accepted Answer

Intense rivalry often leads to price competition and decreased margins for firms, resulting in lower average profitability.

Question 5

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.

Accepted Answer

The statement is true as Coca Cola and PepsiCo are competitors in multiple product categories and geographical markets, indicating market commonality between the two companies.

Question 6

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

Accepted Answer

Competitive rivalry refers to the competition and struggle between firms in the same industry, who are trying to gain a larger market share, increase profits, or acquire more customers. It does not necessarily involve being the first mover in an international market.

Question 7

Competitive rivalry often increases during recessions and some selected businesses in particular industries experience heightened demand.

Accepted Answer

During a recession, businesses often struggle to maintain their revenue and profitability, leading to increased competition among firms in the same industry. However, some industries experience an increase in demand during a recession, such as healthcare and discount retailers, which leads to increased competition within those industries as well.

Question 8

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 is a concept used in strategic management and refers to the extent to which a firm competes with other firms in the same markets. It takes into account both the number of markets in which the firms compete and the importance of these markets to each firm. Therefore, the statement is true.

Question 9

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

Anticipating and responding to competitor actions is a crucial aspect of successful strategy implementation. Firms must be able to predict how competitors will react to their moves and be prepared to adapt accordingly.

Question 10

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.

Accepted Answer

The statement is true. Awareness of competitors, motivation to take action, and the organization's ability to respond are all drivers of competitive behavior.

Question 11

A Nielsen survey revealed that pasta, candy, and beer were relatively immune from the negative effects of a recession.

Accepted Answer

According to the Nielsen survey, pasta, candy, and beer were found to be relatively immune from the negative effects of a recession.

Question 12

Extensive market commonality guarantees intense competition in an industry.

Accepted Answer

The answer of Extensive market commonality guarantees intense competition in...

Question 13

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 14

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

Accepted Answer

This statement is true. Competitors are firms that operate in the same market, offering similar products or services and targeting the same customers. They compete against each other to gain market share and customers.

Question 15

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.

Accepted Answer

Bayou Belle Water may be in the same industry (beverage manufacturing) as Coca-Cola, Nestle, and PepsiCo, but they do not have high resource similarity as Bayou Belle draws water from a single artesian well while the other companies draw water from a variety of sources, have larger production facilities, and have more diversified product lines.

Question 16

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

Accepted Answer

Competitive dynamics refers to the interactions, actions, and responses of all competitors within a market.

Question 17

Movie studios and theaters, and videogame developers and distributors are examples of businesses that do poorly during recessionary times.

Accepted Answer

Movie studios and theaters, and videogame developers and distributors have actually been shown to do well during recessionary times, as people tend to seek out entertainment as a means of escape and distraction from financial hardships.

Question 18

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

Accepted Answer

Competitive rivalry is the term used to describe the competitive interactions between firms in a market. These interactions include actions and responses taken by firms to gain an advantage over their competitors, such as price cuts, advertising campaigns, or product innovations.

Question 19

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

Accepted Answer

Direct and mutually acknowledged competitors are firms that offer similar products or services, operate in the same market, and have similar resources. Therefore, Fed Ex and UPS are direct and mutually acknowledged competitors as they operate in the same package delivery market and have similar resources.

Question 20

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

Accepted Answer

Competitive dynamics refers to how firms interact with each other in a competitive environment. Firms and their strategic actions are not independent, but rather are influenced by the actions of their competitors. Therefore, option B is correct.

Quiz 5: Competitive Rivalry and Competitive Dynamics