Question 1

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 marketposition 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 2

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

A stronger competitive threat is present when two firms have both a high degree of market commonality (competing in the same markets) and highly similar resources (similar products or services, capabilities, and strengths). This is because they are likely to be fighting for the same customers and resources, which can intensify competition and make it harder for either firm to gain a sustainable competitive advantage.

Question 3

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

Small firms are often more nimble and able to quickly respond to competitive attacks due to their smaller size and less bureaucratic structure. They may not have as many resources as larger firms, but they can act quickly and adapt to changes in the market. Option A is incorrect because small firms may not have established legitimacy but this does not necessarily mean they signal their actions early. Option B is incorrect because small firms typically have fewer resources than large firms. Option D is incorrect because the answer in the explanation contradicts itself.

Question 4

________ 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

Competitive dynamics refers to the actions and responses of firms competing for the same customers. It involves intense rivalry among similar competitors, as each firm tries to gain an advantage over its rivals. This can include price wars, advertising battles, and other aggressive tactics aimed at capturing market share. Resource similarity, the threat of substitutes, and pioneering new entry are related concepts, but do not capture the full range of dynamics that occur when firms compete for customers in a marketplace.

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

Changing product packaging is a tactical action, not a strategic one. Strategic actions involve big picture decisions that impact the overall direction and success of the company, such as partnerships, market expansion, and raw materials acquisition.

Question 6

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. Accordingto 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

The strategy of offering low-priced extended warranties on home electronics after learning that rivals such as Best Buy derived most of their profits from extended warranties is an example of devastating rivals' profit sanctuaries. This strategy involves targeting and disrupting the areas where competitors are making the most profit, thereby reducing their effectiveness and competitive advantage. Walmart identified a lucrative area of business for Best Buy (extended warranties), and introduced a low-priced alternative to erode Best Buy's profits in that area.

Question 7

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. Accordingto 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 8

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

Finding new sources of raw materials is not a reason for a company to launch new competitive actions. The other three options (obtaining first mover advantages, improving market position, and capitalizing on growing demand) are common reasons for companies to take competitive actions in order to stay ahead of their competitors.

Question 9

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 refers to the degree of overlap between two firms in terms of the markets they serve. Boeing and Airbus have a high degree of market commonality because they both make similar products (airplanes) and have many buyers in common (airlines and other transportation companies).

Question 10

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 11

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.

Question 12

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

Offering price discounts and rebates is a tactical action that can help a company respond to a competitive attack. By lowering prices, the company can attract customers who might otherwise choose the competitor. This strategy can be effective in the short-term, but it may not be sustainable in the long-term. Other possible tactical actions include improving product quality, offering better customer service, and increasing advertising and promotional efforts. However, the best choice among the given options is B.

Question 13

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 14

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

Accepted Answer

Resource similarity refers to firms having similar strategic resources and capabilities, which can lead to competition and rivalry. The fact that Huawei and Nokia both have patent rights to similar technologies, high-quality engineering staffs, and global sales forces indicates a high degree of resource similarity between them.

Question 15

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 16

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 Lachenauerbook, 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

Ecolab's strategy is to raise the competitor costs by encouraging Diversity to pursue unprofitable low-volume, high-margin customers. Ecolab bids high enough to ensure that Diversity wins the contracts but loses money in servicing them. This makes Diversity's operations more costly, giving Ecolab an advantage in the market.

Question 17

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 18

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

Running Press's strategy is focus, as they specialize in producing miniature editions of books.

Question 19

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

The question is asking about how new entrants may respond to competitive challenges. Option C suggests that new entrants may need to change their strategies or develop new ones to survive against incumbents (existing companies in the market). This makes the most sense as incumbents are likely to have established brand recognition, loyal customers, and economies of scale that can pose significant challenges for new entrants to overcome. Option A is incorrect because new rivals would not likely force new entrants to change their strategies - they would be facing similar challenges. Option B is incorrect because potential rivals are not yet in the market and would not pose challenges to new entrants. Option D is incorrect because former rivals are no longer in the market and would not be posing any challenges.

Question 20

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

In a mature market, nearly all market needs are already being met by existing competitors. Therefore, a new entrant may be seen as a threat as it may take away market share from existing competitors. Options B, C and D are not accurate as they do not accurately reflect the nature of a new entrant in a mature market.

Quiz 8: Entrepreneurial Strategy and Competitive Dynamics

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?

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

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

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. Accordingto the Stalk and Lachenauer book, this is an example of the strategy to

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. Accordingto the Stalk and Lachenauer book, this is an example of strategy to

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

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

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?

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

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

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?

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

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

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

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