Question 1

Compared to strategic actions, tactical actions usually have a:

Accepted Answer

Tactical actions are short-term actions that have an immediate effect on achieving specific objectives. On the other hand, strategic actions are long-term actions that aim to achieve broader organizational goals. Therefore, compared to strategic actions, tactical actions have a more immediate effect.

Question 2

First movers are:

Accepted Answer

First movers are firms that take an initial competitive action, often by being the first to enter a market or develop a new product, gaining a competitive advantage.

Question 3

First movers are often critical to firm success in industries experiencing:

Accepted Answer

First movers refer to companies that are the first to enter a new market or introduce a new product or service. In industries with rapid technological developments and short product life cycles, being a first mover can be critical to firm success as it allows the company to establish brand recognition and customer loyalty before competitors enter the market. Additionally, the first mover may be able to set industry standards and influence the direction of future technological developments, giving them a competitive advantage.

Question 4

Competitive rivalry exists only when:

Accepted Answer

Competitive rivalry exists when two or more firms compete for an advantageous market position. Option A describes coexistence rather than competition, Option C involves international competition, and Option D is about a firm's willingness to accept its position without considering competition.

Question 5

A second mover is a(n):

Accepted Answer

A second mover is a firm that responds to a first mover's competitive action, often through imitation or a move designed to counter the effects of an action. This allows the second mover to benefit from the first mover's investments and learn from their mistakes, while still being competitive in the market.

Question 6

A benefit of being a second mover is:

Accepted Answer

Being a second mover allows a firm to observe and learn from the mistakes and successes of the first mover, thereby reducing the risks and development costs associated with introducing a new product or service. The second mover can also respond to the competitive actions of the first mover with a well-informed strategy. However, being a second mover does not mean that there is no risk involved, and it does not necessarily guarantee success in leading the industry into new areas of development or gaining customer loyalty.

Question 7

Awareness refers to:

Accepted Answer

Awareness in the context of competitive strategy refers to the extent to which companies recognize that they are interdependent with their competitors. This recognition affects how they perceive competitive actions and reactions within the market.

Question 8

The greater the resource imbalance between the acting firm and its competitors, the ________ the delay will be in the response of the firm with a resource disadvantage.

Accepted Answer

The greater the resource imbalance, the greater the delay in response from the firm with a resource disadvantage because it will take more time for that firm to mobilize the necessary resources to respond effectively.

Question 9

________ determine the extent to which two firms are competitors.

Accepted Answer

Market commonality and resource similarity are the two key factors in determining the extent to which two firms are competitors. Market commonality refers to the degree of overlap between the markets served by the two firms, while resource similarity refers to the extent to which the firms use similar resources to compete in these markets. By considering these factors, companies can determine the level of competition they face from other firms in the same industry. Relative size and market similarity, as well as speed of response and quality, are important factors in their own right, but do not directly determine the extent of competition between firms.

Question 10

Both ________ affect the awareness and motivation of a firm to undertake actions and responses.

Accepted Answer

Market commonality and resource similarity are two key factors that affect the awareness and motivation of a firm to undertake actions and responses. Market commonality refers to the extent to which two or more firms are competing in the same markets, while resource similarity refers to the extent to which a firm's tangible and intangible resources are comparable to those of its competitors. These factors determine the level of rivalry and the potential for competitive responses between firms. By considering market commonality and resource similarity, firms can better understand their competitive environment and make more effective strategic decisions.

Question 11

In addition to market commonality, resource similarity, awareness, motivation and ability, firms evaluate three other factors - ________ - to predict how a competitor is likely to respond to competitive actions.

Accepted Answer

The three additional factors firms evaluate to predict competitor responses are the type of competitive action, reputation, and market dependence. These factors help in understanding the dynamics of competitive behavior and the potential reactions from competitors based on their past actions, reputation in the market, and their dependence on the market for their revenues.

Question 12

Firms with few competitive resources are more likely to:

Accepted Answer

Firms with few competitive resources are more likely to respond to tactical actions because these actions require fewer resources and are less risky compared to strategic actions.

Question 13

The chief disadvantages of being a first mover is:

Accepted Answer

First movers often face a high degree of risk due to uncertainties in the new market, including unproven demand and the need for significant investment in research and development.

Question 14

A competitive response is a(n):

Accepted Answer

A competitive response is a strategic action taken by a firm to counteract the effects of a competitor's action in the marketplace. It may involve changes in pricing, product offerings, marketing strategies, or other aspects of the firm's operations. The goal of a competitive response is to protect the firm's current position or gain a strategic advantage over rivals.

Question 15

As ________ of new firms fail, learning how to select the markets in which to compete and how to best compete within them is highly important.

Accepted Answer

Research and statistics often indicate that a high percentage, around 80-90%, of new businesses fail within the first few years, making market selection and competition strategies crucial for success.

Question 16

Research suggests that a firm with greater multi-market contact is ________ likely to initiate an attack and ________ likely to move (respond) aggressively when attacked.

Accepted Answer

Research indicates that firms with greater multi-market contact are less likely to initiate attacks due to the mutual forbearance theory, which suggests that firms are more cautious in markets where they encounter the same competitors across multiple markets. However, if attacked, these firms are more likely to respond aggressively to defend their position across the various markets they share with the aggressor.

Question 17

Quality is ________ competitive rivalry.

Accepted Answer

Quality is positively related to competitive rivalry because improving quality can increase competitiveness and competition among companies. This means that companies will strive to continually improve their products or services, which leads to increased competition in the market.

Question 18

Quality exists when:

Accepted Answer

Quality is defined as meeting or exceeding customers' expectations, which directly relates to how customers perceive the value and effectiveness of a product or service.

Question 19

Which of the following is an example of a strategic action?

Accepted Answer

Boeing Corp's decision to commit its resources required to build the super-efficient 787 is an example of a strategic action as it involves a long-term plan to allocate resources and invest in a specific project that aligns with the company's overall goals and objectives. Price cuts by Blockbuster and price increases by Qantas are tactical actions aimed at achieving short-term objectives, whereas the use of product coupons by a local grocer is a promotional tactic.

Question 20

Competitive dynamics refers to a series of:

Accepted Answer

Competitive dynamics refer to the actions and responses taken by competing firms within a given industry. It involves a continuous cycle of actions and responses that shape the competitive landscape within an industry. Therefore, option C is the correct answer. Option A is incorrect because competitive dynamics involve more than one firm. Option B is incorrect because it only relates to the actions taken by the industry leader, which is just one of the many firms in the industry. Option D is incorrect because it is too broad and doesn't specifically mention the actions among firms within a particular industry.

Quiz 5: Competitive Rivalry and Competitive Dynamics