Question 1

Telecommunication equipment providers,Huawei and Nokia,have a high degree of ________ because they have patent rights to similar technologies,high-quality engineering staffs,and global sales forces.
A) dynamic capabilities
B) resource similarity
C) market commonality
D) equity funding

Accepted Answer

Resource similarity is the extent to which rivals draw from the same types of strategic resources.

Question 2

In competitive dynamics,new entrants may be forced to change their strategies or develop new ones to ________ competitive challenges by ________.
A) overcome; other new rivals
B) succumb; potential rivals
C) survive; incumbents
D) survive; former rivals

Accepted Answer

New entrants may be forced to change their strategies or develop new ones to survive competitive challenges by incumbent rivals.

Question 3

Aircraft makers Boeing and Airbus have a high degree of ________ because they make very similar products and have many buyers in common.
A) dynamic capabilities
B) first mover advantages
C) market commonality
D) equity funding

Accepted Answer

Market commonality is whether or not competitors are vying for the same customers and how many markets they share in common. For example, aircraft manufacturers Boeing and Airbus have a high degree of market commonality because they make very similar products and have many buyers in common.

Question 4

Walmart began offering low-priced extended warranties on home electronics after learning that its rivals such as Best Buy derived most of their profits from extended warranties.According to the Stalk and Lachenauer book,this is an example of the strategy to
A) plagiarize with pride.
B) deceive the competition.
C) devastate rivals profit sanctuaries.
D) unleash massive and overwhelming force.

Accepted Answer

While many hardball strategies are subtle and indirect, devastating a rival's profit sanctuaries is not. This is a full-frontal attack whereby a firm commits significant resources to a major campaign to weaken rival positions in certain markets. Firms must be sure they have the mass and stamina required to win before they declare war against a rival.

Question 5

All the following are examples of strategic actions a firm might take except
A) partner with competitors to reduce competition.
B) expand into neglected markets.
C) tie up raw materials sources.
D) change product packaging.

Accepted Answer

Strategic actions represent major commitments of distinctive and specific resources. Examples include launching a breakthrough innovation, building a new production facility, or merging with another company. Such actions require significant planning and resources and, once initiated, are difficult to reverse.

Question 6

BCG authors Stalk and Lachenauer published a book in which they listed competitive strategy for winning against incumbent rivals.Which of the following is not one of their suggested strategies?
A) devastate profit sanctuaries of rivals
B) lower competitor costs
C) unleash massive and overwhelming force
D) plagiarize with pride and deceive the competition

Accepted Answer

Competitive attacks come from many sources besides new entrants. Some of the most intense competition is among incumbent rivals intent on gaining strategic advantages. Winners in business play rough and do not apologize for it, according to Boston Consulting Group authors George Stalk, Jr. and Rob Lachenauer in their book Hardball:Are You Playing to Play or Playing to Win? Their five strategies are:devastate profit sanctuaries of rivals, plagiarize with pride, deceive the competition, unleash massive and overwhelming force, and raise costs of competitors.

Question 7

Competitors in a mature market typically find that a new entrant is threatening because
A) nearly all market need is already being met.
B) the new entrant might increase prices.
C) the new entrant offers the same product.
D) the new entrant is a pioneer.

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response.

Question 8

When any two firms have both a high degree of market commonality and highly similar resources,a ________ threat is present.
A) weaker competitive
B) successful marketing
C) stronger competitive
D) stronger marketing

Accepted Answer

When any two firms have both a high degree of market commonality and highly similar resource bases, a stronger competitive threat is present. Such a threat, however, may not lead to competitive action. On the one hand, a market rival may be hesitant to attack a company that it shares a high degree of market commonality with because it could lead to an intense battle. On the other hand, once attacked, rivals with high market commonality will be much more motivated to launch a competitive response.

Question 9

Which of the below best describes the competitive tendencies of small firms?
A) Small firms tend to signal their competitive actions long before they launch those actions because they lack legitimacy in the marketplace.
B) Small firms typically have more resources available as they undertake competitive attacks than do large firms.
C) Small firms are more nimble and can respond quickly to competitive attacks.
D) Small firms are more nimble and cannot respond quickly to competitive attacks.

Accepted Answer

Consider the role of firm age and size in calculating the ability of a company to respond. Most entrepreneurial new ventures start out small. The smaller size makes them more nimble compared to large firms so they can respond quickly to competitive attacks.

Question 10

Running Press launched the Miniature Editions line of books in 1993.Today it has sold over 20 million copies.Which of the following most closely represents their strategy?
A) differentiation
B) overall cost leadership
C) focus
D) combination

Accepted Answer

If a start-up enters a market with a broad or aggressive strategy, it is likely to evoke retaliation from a more powerful competitor. Young firms can often succeed best by finding a market niche where they can get a foothold and make small advances that erode the position of existing competitors. From this position, they can build a name for themselves and grow. As the Running Press example indicates, many new ventures are successful even though their share of the market is quite small. They use a focused strategy with a very narrow scope.

Question 11

Unilever has taken a dominant position (65 percent market share)in the Vietnamese laundry detergent market by employing an investment and marketing campaign that decimated the market position of the local,incumbent competitors.According to the Stalk and Lachenauer book,this is an example of ________ strategy.
A) plagiarize with pride
B) deceive the competition
C) raise competitor costs
D) unleash massive and overwhelming force

Accepted Answer

While many hardball strategies are subtle and indirect, this one is not. This is a full-frontal attack whereby a firm commits significant resources to a major campaign to weaken rival positions in certain markets. Firms must be sure they have the mass and stamina required to win before they declare war against a rival.

Question 12

The business-to-business cleaning supply company,Ecolab,encouraged a leading competitor,Diversity,to adopt a strategy to go after low-volume,high-margin customers.What Ecolab knew that Diversity did not is that the high servicing costs involved with the segment makes it unprofitable.Ecolab bid high enough to lose the contracts to Diversity but low enough to ensure that Diversity lost money.According to the Stalk and Lachenauer book,this is an example of the strategy to
A) plagiarize with pride.
B) deceive the competition.
C) raise competitor costs.
D) unleash massive and overwhelming force.

Accepted Answer

While many hardball strategies are subtle and indirect, raising competitor costs is not. This is a full-frontal attack whereby a firm commits significant resources to a major campaign to weaken rival positions in certain markets. Firms must be sure they have the mass and stamina required to win before they declare war against a rival.

Question 13

In designing its smartphones,Samsung copied the look,feel,and technological attributes of the Apple iPhone.By copying Apple,Samsung was able to improve its market position.According to the Stalk and Lachenauer book,this is an example of strategy to
A) plagiarize with pride.
B) deceive the competition.
C) raise competitor costs.
D) unleash massive and overwhelming force.

Accepted Answer

While many hardball strategies are subtle and indirect, plagiarizing with pride is not. This is a full-frontal attack whereby a firm commits significant resources to a major campaign to weaken rival positions in certain markets. Firms must be sure they have the mass and stamina required to win before they declare war against a rival.

Question 14

The Wall Street Journal and New York Times have seen the intensity of their rivalry increase.One factor driving this is that The Wall Street Journal has moved from financial news reporting to general national and global news reporting and finally,to adding local New York news.The rivalry of these two news providers has increased due to
A) increased dynamic capabilities.
B) erosion of first mover advantages.
C) increased market commonality.
D) the choice of tactical over strategic actions.

Accepted Answer

Market commonality is whether competitors are vying for the same customers and how many markets they share in common. Here, the changes to The Wall Street Journal reporting means the two newspapers are now competing for the same customers.

Question 15

The best example of a tactical action that a company might use in response to a competitive attack is to
A) acquire the competitor.
B) offer price discounts and rebates.
C) expand into new geographical areas.
D) target the markets of the rival.

Accepted Answer

Tactical actions include refinements or extensions of strategies. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.

Question 16

Casper Sleep makes mattresses,according to Strategy Spotlight 8.3 in the textbook.Which generic strategy most closely represents theirs?
A) differentiation
B) low-cost leadership
C) focus
D) combination

Accepted Answer

Compared to large firms, new ventures often have simple organizational structures that make decision making both easier and faster. The smaller size also helps young firms change more quickly when upgrades in technology or feedback from the marketplace indicate that improvements are needed. They are also able to make decisions at the time they are founded that help them deal with the issue of controlling costs. For example, they may source materials from a supplier that provides them more cheaply or set up manufacturing facilities in another country where labor costs are especially low. Thus, new firms have several avenues for achieving low-cost leadership. By taking a product that was typically sold in specialty stores with extremely high markups and, instead, allowing customers to order high quality products online at much lower prices, Warby Parker changed the eyeglass business. Casper Sleep aims to do the same thing in the mattress market.

Question 17

Southwest Airlines began its no frills,no meals strategy in the late 1960s as a direct assault on the major carriers of the day.What type of competitive action does this represent?
A) A strategic action because it includes a refinement of an existing strategy.
B) A tactical action because it is a refinement of an existing strategy.
C) A strategic action because it was a breakthrough innovative offer.
D) A guerrilla offensive because it is fast and will surprise its rivals.

Accepted Answer

This is a tactical action because it was a refinement of an existing strategy. Some competitive actions take the form of frontal assaults, that is, actions aimed directly at taking business from another company or capitalizing on industry weaknesses. This can be especially effective when firms use a low-cost strategy. The airline industry provides a good example of this head-on approach. When Southwest Airlines began its no-frills, no meals strategy in the late 1960s, it represented a direct assault on the major carriers of the day.

Question 18

Which of the following is not one of the reasons a company might launch new competitive actions?
A) to obtain first mover advantages
B) to improve market position
C) to find new sources of raw materials
D) to capitalize on growing demand

Accepted Answer

There are several reasons why companies launch new competitive actions, including improving market position, capitalizing on growing demand, expanding production capacity, providing an innovative new solution, or obtaining first mover advantages.

Question 19

________ is the intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace.
A) Competitive dynamics
B) Resource similarity
C) The threat of substitutes
D) Pioneering new entry

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response.

Question 20

New ventures may find it difficult to use differentiation strategies successfully because they lack ________ and ________.
A) sufficient funding; superior innovation
B) competitors; superior technology
C) sufficient funding; qualified entrepreneurs
D) innovative ideas; potential customers

Accepted Answer

There are several factors that make it more difficult for new ventures to be successful as differentiators. For one thing, the strategy is generally thought to be expensive to enact. Differentiation is often associated with strong brand identity, and establishing a brand is usually considered to be expensive because of the cost of advertising and promotion, paid endorsements, exceptional customer service, etc. Differentiation successes are sometimes built on superior innovation or use of technology.

Quiz 8: Entrepreneurial Strategy and Competitive Dynamics

Telecommunication equipment providers,Huawei and Nokia,have a high degree of ________ because they have patent rights to similar technologies,high-quality engineering staffs,and global sales forces.

In competitive dynamics,new entrants may be forced to change their strategies or develop new ones to competitive challenges by .

Aircraft makers Boeing and Airbus have a high degree of ________ because they make very similar products and have many buyers in common.

Walmart began offering low-priced extended warranties on home electronics after learning that its rivals such as Best Buy derived most of their profits from extended warranties.According to the Stalk and Lachenauer book,this is an example of the strategy to

All the following are examples of strategic actions a firm might take except

BCG authors Stalk and Lachenauer published a book in which they listed competitive strategy for winning against incumbent rivals.Which of the following is not one of their suggested strategies?

Competitors in a mature market typically find that a new entrant is threatening because

When any two firms have both a high degree of market commonality and highly similar resources,a ________ threat is present.

Which of the below best describes the competitive tendencies of small firms?

Running Press launched the Miniature Editions line of books in 1993.Today it has sold over 20 million copies.Which of the following most closely represents their strategy?

In designing its smartphones,Samsung copied the look,feel,and technological attributes of the Apple iPhone.By copying Apple,Samsung was able to improve its market position.According to the Stalk and Lachenauer book,this is an example of strategy to

The best example of a tactical action that a company might use in response to a competitive attack is to

Casper Sleep makes mattresses,according to Strategy Spotlight 8.3 in the textbook.Which generic strategy most closely represents theirs?

Southwest Airlines began its no frills,no meals strategy in the late 1960s as a direct assault on the major carriers of the day.What type of competitive action does this represent?

Which of the following is not one of the reasons a company might launch new competitive actions?

________ is the intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace.

New ventures may find it difficult to use differentiation strategies successfully because they lack and .