Question 1

Discuss the difference between a company's existing direct competitors and its substitutes and discuss the role substitutes play in an industry.

Accepted Answer

The answer of Discuss the difference between a company's existing...

Question 2

According to Bradenburger and Nalebluff,a firm's competitors help increase the size of a firm's markets while complementors divide this market among a set of firms.

Accepted Answer

According to Bradenburger and Nalebluff, complementors increase the value of a product or service by providing complementary goods or services, which can expand the overall market and benefit all firms involved. Competitors, on the other hand, divide the market among a set of firms.

Question 3

Describe the difference between a competitor and a complementor and identify the role complementors play in an industry.

Accepted Answer

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Question 4

The major opportunity facing firms in fragmented industries is
A)refining their current products and emphasizing an increase in service quality.
B)developing new products and technologies.
C)creating a first-mover advantage through technological leadership.
D)the implementation of strategies that began to consolidate the industry into a smaller number of firms.

Accepted Answer

Fragmented industries are characterized by the presence of numerous small firms, which often results in intense competition and low profit margins. Therefore, implementing strategies that consolidate the industry into a smaller number of firms, such as mergers and acquisitions, can provide significant opportunities for firms to increase their market power, achieve economies of scale, and improve their profitability. This can also lead to increased bargaining power with suppliers and customers and the ability to invest in research and development to develop new products and technologies.

Question 5

In general,first-mover advantages can arise from any of these sources except
A)technological leadership.
B)preemption of strategically valuable assets.
C)the creation of customer switching costs.
D)using an imitative strategy to introduce improved versions of competitors' new products.

Accepted Answer

Using an imitative strategy to introduce improved versions of competitors' new products may not provide first-mover advantages as the competitor has already established the market and potentially created customer loyalty. Technological leadership, preemption of strategically valuable assets, and the creation of customer switching costs can provide first-mover advantages.

Question 6

The most promising opportunity for a firm in a declining industry is to
A)establish itself as a first mover in the post-shakeout industry.
B)become a market leader in the pre-shakeout industry.
C)become a fast follower in the pre-shakeout industry.
D)merge with another firm.

Accepted Answer

The answer of The most promising opportunity for a firm...

Question 7

Sophisticated software can enhance the value that customers receive from a personal computer.Therefore,software can be said to be a complementor of a personal computer.

Accepted Answer

Software can provide additional functionality and enhance the user experience of a personal computer, making it more valuable to customers. This makes software a complementor of the personal computer.

Question 8

BidBuy is the world's leading online auction company. When BidBuy was founded ten years ago it was the first online auction company, and it has been the leader since it was founded. Although there are other firms in the industry, BidBuy controls over 75% of the market in the United States, and three additional firms control another 20% of the U.S. market. One of the aspects of BidBuy that keeps users from changing to other online auction companies is the large user base BidBuy has built and a feedback rating system that allows buyers and sellers to rate their satisfaction with each other following each transaction. This allows users to build a reputation for honesty and trustworthiness. Sellers with a high feedback rating tend to receive more bids on their auctions and a higher price for their goods. To help facilitate payment transfers between buyers and sellers following successful online auctions, companies such as DollarDog have been founded, and these companies have facilitated growth for BidBuy. Having attained a 75% market share in the U.S., BidBuy has begun expanding internationally, opening its own sites in some countries and purchasing incumbents in others. In its international expansion, BidBuy has allowed its individual companies to customize their offerings according to the needs and desires of the countries in which they operate and when these companies are successful, BidBuy works to transfer these successful capabilities throughout the firm. 
-BidBuy has a ________ advantage.
A)visionary
B)global
C)first-mover
D)comparative

Accepted Answer

BidBuy was the first online auction company, giving it a first-mover advantage in the industry.

Question 9

Identify the five most common threats facing firms from their local competitive environment that are represented in the five forces framework,and discuss under what conditions firms in a specific industry are most likely to earn an above average profit and when they are likely to earn a below average profit.

Accepted Answer

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Question 10

BidBuy is the world's leading online auction company. When BidBuy was founded ten years ago it was the first online auction company, and it has been the leader since it was founded. Although there are other firms in the industry, BidBuy controls over 75% of the market in the United States, and three additional firms control another 20% of the U.S. market. One of the aspects of BidBuy that keeps users from changing to other online auction companies is the large user base BidBuy has built and a feedback rating system that allows buyers and sellers to rate their satisfaction with each other following each transaction. This allows users to build a reputation for honesty and trustworthiness. Sellers with a high feedback rating tend to receive more bids on their auctions and a higher price for their goods. To help facilitate payment transfers between buyers and sellers following successful online auctions, companies such as DollarDog have been founded, and these companies have facilitated growth for BidBuy. Having attained a 75% market share in the U.S., BidBuy has begun expanding internationally, opening its own sites in some countries and purchasing incumbents in others. In its international expansion, BidBuy has allowed its individual companies to customize their offerings according to the needs and desires of the countries in which they operate and when these companies are successful, BidBuy works to transfer these successful capabilities throughout the firm. 
-Factors such as BidBuy's feedback rating system that are valuable to the company's customers but which are not useful on other online auction sites are examples of
A)first-mover advantages.
B)complementors.
C)substitutes.
D)customer-switching costs.

Accepted Answer

The feedback rating system that BidBuy has developed is an example of customer-switching costs. Customers are unlikely to switch to other online auction sites because they have already built up a reputation for honesty and trustworthiness on BidBuy, and would have to start from scratch on another site. This creates a cost to the customer in terms of time and effort that makes them less likely to switch to a competitor.

Question 11

An industry in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies is known as a(n)________ industry.
A)fragmented
B)consolidated
C)mature
D)emerging

Accepted Answer

A fragmented industry is characterized by a large number of small or medium-sized firms operating within it, with no one firm dominating the market share or creating dominant technologies. This type of industry usually has lower barriers to entry, which allows for more competition and innovation. Examples of fragmented industries include the restaurant industry, hair salons, and small retail shops.

Question 12

________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry.
A)Visionary advantages
B)First-mover advantages
C)Comparative advantages
D)Missionary advantages

Accepted Answer

First-mover advantages refer to benefits that accrue to firms that make important strategic and technological decisions early in the development of an industry. They can establish brand recognition, capture market share, and create competitive barriers for other firms entering the market.

Question 13

Firms in a declining industry that engage in a long,systematic phased withdrawal from the industry,extracting as much value as possible during the withdrawal period,are following a(n)________ strategy.
A)niche
B)expansion
C)divestment
D)harvest

Accepted Answer

The strategy being described is one of extracting as much value as possible during a phased withdrawal from a declining industry, which is known as a harvest strategy. Choice A, niche strategy, focuses on serving a specific, narrow market segment. Choice B, expansion strategy, aims to grow the company through various means such as increasing market share or entering new markets. Choice C, divestment strategy, involves selling off or spinning off businesses or assets that are not closely aligned with the core operations of the firm.

Question 14

Mature industries are characterized by
A)an increase in total industry demand.
B)faster increases in production capacity.
C)a slowdown in the introduction of new products or services.
D)a decrease in the amount of international competition.

Accepted Answer

Mature industries are those that have reached the peak of their growth and are no longer expanding at a rapid pace. In this stage, companies generally focus on improving efficiencies and cost structures, rather than introducing new products or services. This is because the market is saturated and consumer preferences are well-established, making it harder to introduce new products that will succeed.

Question 15

In the 1980s,the video cassette rental industry had a large number of small firms with no firm with a dominant market share.The video cassette rental industry in the 1980s was a(n)________ industry.
A)fragmented
B)mature
C)emerging
D)declining

Accepted Answer

The presence of a large number of small firms with no dominant market share indicates a fragmented industry.

Question 16

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.
A)first-mover
B)competitive
C)comparative
D)emerging

Accepted Answer

First-mover advantages refer to the benefits that a firm gains by being the first to enter a new market or industry. These advantages can include brand recognition, customer loyalty, economies of scale, and control of critical resources or distribution channels. By making strategic and technological decisions early, firms can establish themselves as leaders in the industry and gain a competitive edge over later entrants. Comparative advantages refer to the benefits that a firm gains by specializing in certain products or services, while emerging advantages refer to the benefits that arise from being part of a new and rapidly growing market. Competitive advantages refer to any factors that allow a firm to outperform its rivals in the market.

Question 17

If your customers value your products more when they have your product and another firm's product rather than when they have your product alone,the other firm is considered to be a
A)competitor.
B)complementor.
C)rival.
D)substitute.

Accepted Answer

A complementor is a company whose product or service enhances the value of your product or service when they are used together. Therefore, if your customers value your products more when they have your product and another firm's product, that other firm is considered a complementor.

Question 18

BidBuy is the world's leading online auction company. When BidBuy was founded ten years ago it was the first online auction company, and it has been the leader since it was founded. Although there are other firms in the industry, BidBuy controls over 75% of the market in the United States, and three additional firms control another 20% of the U.S. market. One of the aspects of BidBuy that keeps users from changing to other online auction companies is the large user base BidBuy has built and a feedback rating system that allows buyers and sellers to rate their satisfaction with each other following each transaction. This allows users to build a reputation for honesty and trustworthiness. Sellers with a high feedback rating tend to receive more bids on their auctions and a higher price for their goods. To help facilitate payment transfers between buyers and sellers following successful online auctions, companies such as DollarDog have been founded, and these companies have facilitated growth for BidBuy. Having attained a 75% market share in the U.S., BidBuy has begun expanding internationally, opening its own sites in some countries and purchasing incumbents in others. In its international expansion, BidBuy has allowed its individual companies to customize their offerings according to the needs and desires of the countries in which they operate and when these companies are successful, BidBuy works to transfer these successful capabilities throughout the firm. 
-For BidBuy,services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as
A)complementors.
B)substitutes.
C)rivals.
D)suppliers.

Accepted Answer

Services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as complementors. Complementors are companies that provide complementary products or services to another company, and they help increase the overall value proposition of the primary company's offering.

Question 19

It is possible for a single firm to be a complementor of one firm and a competitor of another.

Accepted Answer

This is true because a firm's position as a complementor or competitor depends on the nature of the products or services being offered and the relationships between the various firms involved. A firm may be a complementor to one firm if its product or service enhances the value of the other firm's product or service, while at the same time being a competitor to another firm if its product or service is a substitute for or is in direct competition with the other firm's product or service.

Question 20

Identify the four types of competition,the attributes of each type and the expected performance under each.

Accepted Answer

The answer of Identify the four types of competition,the attributes...

Quiz 2: Evaluating a Firms External Environment

Discuss the difference between a company's existing direct competitors and its substitutes and discuss the role substitutes play in an industry.

According to Bradenburger and Nalebluff,a firm's competitors help increase the size of a firm's markets while complementors divide this market among a set of firms.

Describe the difference between a competitor and a complementor and identify the role complementors play in an industry.

The major opportunity facing firms in fragmented industries is

In general,first-mover advantages can arise from any of these sources except

The most promising opportunity for a firm in a declining industry is to

Sophisticated software can enhance the value that customers receive from a personal computer.Therefore,software can be said to be a complementor of a personal computer.

An industry in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies is known as a(n) ________ industry.

________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry.

Firms in a declining industry that engage in a long,systematic phased withdrawal from the industry,extracting as much value as possible during the withdrawal period,are following a(n) ________ strategy.

Mature industries are characterized by

In the 1980s,the video cassette rental industry had a large number of small firms with no firm with a dominant market share.The video cassette rental industry in the 1980s was a(n) ________ industry.

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.

If your customers value your products more when they have your product and another firm's product rather than when they have your product alone,the other firm is considered to be a

It is possible for a single firm to be a complementor of one firm and a competitor of another.

Identify the four types of competition,the attributes of each type and the expected performance under each.