Chapter 5 MC

____ and ____ describe the situation in which organizations are direct competitors and are fully aware of the competition. a. High market commonality, high resource similarity b. High market commonality, low resource similarity c. Low market commonality, high resource similarity d. Low market commonality, low resource similarity

a. High market commonality, high resource similarity

____ relates to the gains or losses a firm will experience if it attacks a rival or responds to an attack by a rival. a. Motivation b. Awareness c. Responsiveness d. Ability

a. Motivation

Which pair of firms has the LEAST resource similarity? a. Small, family-owned Italian restaurant; Olive Garden b. Target; Wal-Mart c. HP; Dell d. FedEx; UPS

a. Small, family-owned Italian restaurant; Olive Garden

Which of the following is TRUE of Wal-Mart? a. Wal-Mart has an unusual amount of flexibility for a large firm. b. Wal-Mart's success is largely due to the fact it has little market commonality with other industry firms. c. Decision-making responsibility is centered at its Arkansas headquarters which allows the firm to respond quickly to competitive attacks. d. Wal-Mart's advantage lies in its ability to "think big."

a. Wal-Mart has an unusual amount of flexibility for a large firm.

Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies. a. business-level b. corporate-level c. acquisition d. international

a. business-level

The chief disadvantage of being a first mover is the a. high degree of risk. b. high level of competition in the new marketplace. c. inability to earn above-average returns unless the production process is very efficient. d. difficulty of obtaining new customers.

a. high degree of risk.

Quality is a. meeting or exceeding customer expectations in the goods and/or services offered. b. only a major factor in the production of luxury goods, such as BMW cars. c. an assured way to gain competitive advantage. d. a viable trade-off with product cost in gaining a competitive advantage.

a. meeting or exceeding customer expectations in the goods and/or services offered.

Goods or services in standard-cycle markets reflect a. organizations that serve a mass market. b. numerous first mover advantages. c. an inability to sustain a competitive advantage except for brief periods of time. d. competitive advantages that are shielded from imitation.

a. organizations that serve a mass market.

Late movers are those firms that a. respond to a competitive action a significant amount of time after the first mover's action and the second mover's response. b. respond to a first mover's competitive action often through imitation or a move designed to counter the effects of the action. c. take an initial competitive action (either strategic or tactical). d. typically achieve higher-than-average returns because they can imitate the most efficient actor.

a. respond to a competitive action a significant amount of time after the first mover's action and the second mover's response.

Sustained competitive advantage is most achievable in a ____ market. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

a. slow-cycle

The competitive actions and responses in __________ markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm's operations in order to consistently provide the same positive experience for customers. a. standard-cycle b. fast-cycle c. slow-cycle d. intermediate-cycle

a. standard-cycle

The flat-panel television market where prices have come down and competition has become more stable is best characterized as a. standard-cycle. b. fast-cycle. c. slow-cycle. d. competitive rivalry.

a. standard-cycle.

A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT a. the attack is by a price predator. b. the attack makes the firm's market position less defensible. c. the attack damages the firm's ability to use its capabilities. d. the attack improves the competitor's market position.

a. the attack is by a price predator.

Which company below committed significant resources to enter the information services market and, given its success, was imitated by other competitors? a. Compaq b. IBM c. HP d. Dell

b. IBM

A second mover a. is typically ineffective in its response to the first mover. b. attempts to provide a product with greater customer value than the first mover's product. c. usually incurs higher expenses than the first mover since it must engage in reverse engineering. d. typically has a higher survival rate than first movers which typically take greater risks.

b. attempts to provide a product with greater customer value than the first mover's product.

All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they a. are more likely to have organizational slack. b. can launch competitive actions more quickly. c. have more loyal and diverse workforces. d. can wait for larger firms to make mistakes in introducing innovative products.

b. can launch competitive actions more quickly.

Canon's desktop copiers and Apple's iPhone are examples of _____________ that are ________ rivalry battles with competitors (Chapter 5 Opening Case). a. incremental innovations; winning b. disruptive innovations; winning c. new products; intensifying d. disruptive innovations; reducing

b. disruptive innovations; winning

Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will _____________ until ________________. a. initiate more competitive actions; the firm returns to profitability b. initiate fewer competitive actions; the quality problems are corrected c. initiate more competitive actions; the quality problems are corrected d. advertise more; customers believe the quality had improved

b. initiate fewer competitive actions; the quality problems are corrected

US-owned automobile companies have recently (2011) bolstered their fuel efficient offerings in part due to __________________ (Chapter 5 Strategic Focus) a. the high exit barriers in the industry. b. knowing what had to be done and having the motivation to do it which came from the overlapping market commonality and resource similarity between global competitors. c. low market commonality which prevented retaliation from competitors in key markets. d. reduced rivalry in the segment of the industry producing fuel efficient cars.

b. knowing what had to be done and having the motivation to do it which came from the overlapping market commonality and resource similarity between global competitors.

Without quality, the firm's products a. can compete effectively on the basis of low price. b. lack credibility among customers. c. must be exported to developing countries, because they are not competitive in the U.S. or developed countries. d. are associated with predatory competition.

b. lack credibility among customers

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is a. similar competitive rivalry. b. less competitive rivalry. c. more competitive rivalry. d. no competitive rivalry.

b. less competitive rivalry.

Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and _____ likely to respond aggressively when attacked. a. more; more b. less; more c. less; less d. more; less

b. less; more

Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages, corporate size b. market commonality, resource similarity c. management capabilities, competitive analysis d. speed of management decisions, management actions

b. market commonality, resource similarity

Wal-Mart initially used a focused cost leadership strategy to compete only in small communities by using sophisticated logistics systems and efficient purchasing practices to gain a competitive advantage. The response of local competitors was _______ because they __________. a. rapid; were nimble and flexible b. slow; lacked the ability to marshal resources c. rapid; perceived gains from responding to Wal- Mart's attack d. rapid; had the resources and flexibility compete against Wal-Mart

b. slow; lacked the ability to marshal resources

Competition between candy makers (e.g., Hershey, Mars, Cadbury, Nestle, and Godiva) where firms package design (including package downsizing) and ease of availability is characteristic of a a. slow-cycle market b. standard cycle market. c. fast-cycle market. d. intermediate-cycle market.

b. standard cycle market

Because Coca-Cola, Nestle, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is most likely that the bottled water market is a(an) a. slow-cycle market b. standard cycle market. c. fast-cycle market. d. intermediate-cycle market.

b. standard cycle market.

In the Chapter 5 Strategic Focus, rivals such as Amazon, Oracle, HP and Dell in the cloud computing market are competing in a_________________. a. fast-cycle market b. standard-cycle market c. incremental-cycle market d. slow-cycle markets

b. standard-cycle market

Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of a. fast-cycle markets. b. standard-cycle markets. c. incremental-cycle markets. d. slow-cycle markets.

b. standard-cycle markets.

On the whole there are more competitive responses to a. strategic actions than to tactical actions. b. tactical actions than to strategic actions. c. buyer pressures than to supplier pressures. d. the demands of the top management team than to industry structural pressures.

b. tactical actions than to strategic actions.

Companies in fast-cycle markets need to profit quickly from an innovative product for all of the following reasons EXCEPT a. the technology used is not proprietary. b. the prices of component parts tends to rise rapidly. c. product prices fall quickly in fast-cycle markets. d. counterattacks from rivals come quickly.

b. the prices of component parts tends to rise rapidly.

Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and in the market segments in which they compete. Hilliard, the number two firm in the industry, has undertaken a major strategic attack upon Ahrens, the market leader. Which of the following statements is most likely to be TRUE? a. Ahrens will not respond aggressively since this is a strategic move and not a tactical action. b. As the market leader, Ahrens has little to fear from an attack by Hilliard and will not expend organizational slack on a major response. c. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens. d. Ahrens will respond after a long delay as the nutrition supplement industry is a slow-cycle industry.

c. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a wide-spread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of these statements is most likely TRUE? a. The owners of Bubble-Up are unconcerned about Mega-Toy's entry to the market because of the resource dissimilarity between the firms. b. Bubble-Up's greater organizational slack will allow it to aggressively attack Mega-Toy. c. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy. d. Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent on the educational toy market.

c. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy.

Which of the following statements is FALSE? a. First movers tend to take higher risks than second and later movers. b. First movers tend to have significantly higher revenues than second movers. c. First movers have lower survival rates than second and late movers. d. First movers tend to have more organizational slack than later movers.

c. First movers have lower survival

Which of the following is an example of a tactical action? a. Wal-Mart's launch of Sam's Club stores. b. Continental Airlines exit from a hub airport in Denver. c. Netflix beginning to offer music DVDs in addition to movies. d. Dell's launch of a new line of high performance, custom-made PCs.

c. Netflix beginning to offer music DVDs in addition to movies.

The CEO of the Wholesome Food retail grocery chain, which specializes in organic and natural produce and meat, has stated, "The key to success is to find your niche and focus on it, regardless of what anyone else does." The CEO a. realizes that he must understand competitors in order to predict their competitive actions and responses. b. understands that he is the market leader in his niche and thus has a sustainable competitive advantage. c. believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share. d. realizes his firm has such lower resources than other competitors that his chain is "competitively invisible" to them.

c. believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share.

Intensified rivalry within an industry results in a. increased hiring across the industry. b. increased total revenues across the industry. c. decreased average profitability across the industry. d. increased entries into the industry.

c. decreased average profitability across the industry.

Firms with few competitive resources are more likely to a. not respond to competitive actions. b. respond quickly to competitive actions. c. delay responding to competitive actions. d. respond to strategic actions, but not to tactical actions.

c. delay responding to competitive actions.

Which of the following is an example of a strategic action? a. a "two movies for the price of one" campaign by Blockbuster Video b. use of product coupons by a local grocer c. entry into the European market by Home Depot d. fare increases by Southwest Airlines

c. entry into the European market by Home Depot

First movers are a. entrepreneurs who lead in the establishment of new industries. b. firms that are first to exit a declining industry. c. firms that take an initial competitive action. d. individuals who move frequently as employment opportunities change in a locale.

c. firms that take an initial competitive action.

Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus) a. lack of awareness and motivation. b. high market commonality and low resource similarity. c. high market commonality and high resource siimilarity. d. reduced rivalry, especially in the production of fuel efficient cars.

c. high market commonality and high resource siimilarity.

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors. a. low; high b. low; low c. high; high d. high; low

c. high; high

Walt Disney's focus on ____ is typical of a slow-cycle market. a. innovation b. total quality c. proprietary rights d. economies of scale

c. proprietary rights

Rapid-Built Homes specializes in low-cost prefabricated, modular homes that can be erected in a matter of days anywhere in the country. Rapid-Built focuses on entire subdivisions of homes developed by real estate speculators. ModernModular Homes (ModMod) specializes in modular homes designed by architects which can be built anywhere in the country. The buyers usually build the home themselves from kits on their own lots. ModMod sells fewer than 100 house kits per year. ModMod is run by two professors of architecture as a sideline business. According to the "Framework of Competitive Analysis," we can say that Rapid-Built and ModMod a. are direct mutually-acknowledged competitors. b. have high resource similarity. c. have high market commonality. d. are probably not engaged in intense competitive rivalry.

d. are probably not engaged in intense competitive rivalry.

Multimarket competition occurs when firms a. sell different products to the same customer. b. have a high level of awareness of their competitors' strategic intent. c. simultaneously enter into an attack strategy. d. compete against each other in several geographic or product markets.

d. compete against each other in several geographic or product markets.

In general, firms are more aware of competitors who have similar resources and who a. have low market dependence. b. are late movers. c. have low market commonality. d. compete against the firm in multiple markets.

d. compete against the firm in multiple markets.

A company in a ____ industry is LEAST likely to make heavy use of patents and copyrights. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

d. fast-cycle

An organization's loyalty to its own product is a competitive disadvantage in a ____ market. a. slow-cycle b. standard cycle c. intermediate cycle d. fast-cycle

d. fast-cycle

A firm that is LEAST likely to launch competitive actions is one that has a. organizational slack. b. advanced research and development. c. recently improved the quality of its products. d. large size.

d. large size.

Akamai Technologies is a dominant player in the content delivery network (CDN) market. Akamai is not very diversified (i.e., is dependent on the CDN market). If rival CDN providers such as Limelight Networks and Level 3 Communications lower their basic CDN service prices, what would be Akamai's likely response? a. raise its prices b. do nothing since it is the market leader c. exit the industry d. lower its prices

d. lower its prices

In order to compete effectively, standard-cycle firms need all of the following EXCEPT a. large market share. b. customer loyalty through brand name. c. careful control of operations to preserve consistency for customers. d. rapid and continuous product introductions.

d. rapid and continuous product introductions.

Traditionally, the music industry signed multi-year contracts with artists and sold copyright protected music through established distribution channels. A shift to the digital format and the rise of Internet technology has resulted in the sharing of music over peer-to-peer networks, a practice the industry called "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a ____ to a ____ cycle market. a. slow; fast b. slow; standard c. standard; slow d. standard; fast

d. standard; fast

____ markets are often described as volatile and innovative. a. Slow-cycle b. Fast-cycle c. Standard-cycle d. Sheltered

b. Fast-cycle

Reverse engineering is characteristic of a. first movers. b. fast-cycle markets. c. market leaders. d. price predators.

b. fast-cycle markets.

The larger the resources of a firm taking a competitive action compared with the resources of the other firms in the industry, the ____ the response will be of these other firms. a. more fragmented b. slower c. larger d. more tactical

b. slower

Lawsuits over patent and copyright infringements are more common and intense in a. fast-cycle markets because the market is innovation-driven. b. standard-cycle markets because the firm's brand name is such an important competitive advantage. c. slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage. d. standard-cycle markets because innovation is rare, and so gives the innovating firm a significant competitive advantage.

c. . slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage.

Which industry can be LEAST described as a slow cycle market? a. Freight railroads b. Pharmaceuticals c. Cell phone provider d. Private ownership of highways and bridges

c. Cell phone provide

Lobelia's Nursery and Garden Resource Center has long provided high quality, typical types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to a. be unmotivated to respond because their market position is not threatened by a new competitor from out-of-town. b. respond with fierce attacks because of resource dissimilarity. c. respond aggressively because of high market dependence. d. take no competitive response because of the lack of mutual interdependence among the nurseries.

c. respond aggressively because of high market dependence.

A competitive action can be one of two types, either ____ or ____. a. aggressive, defensive b. quality-based, cost-based c. strategic, tactical d. market-based, resource-based

c. strategic, tactical

Competitive dynamics refers to the a. circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. b. set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. c. total set of actions and responses taken by all firms competing within a market. d. ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

c. total set of actions and responses taken by all firms competing within a market.

The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if a. theme parks with alternative cartoon characters were built in large numbers. b. numerous lawsuits against copyright thieves tainted the reputation of the company. c. Disney attempted to move beyond its traditional industry. d. Disney's cartoon characters became widely perceived as old-fashioned and unappealing.

d. Disney's cartoon characters became widely perceived as old-fashioned and unappealing.

Which of the following is the most strategic action by Wal-Mart? a. Aggressive pricing to ensure they are a price leader b. Aggressively pricing toys and electronics during the holiday season c. Aggressively pricing school-related items in the back-to-school season d. Entering a new foreign market

d. Entering a new foreign market

Which of the following is TRUE of Southwest Airlines? a. Southwest has an unusually low amount of flexibility for a large firm. b. Southwest's success is largely due to the fact it has little market commonality with other airlines. c. Decision-making responsibility is centered at its Dallas headquarters, which allows the firm to respond quickly to competitive attacks. d. Southwest's advantage lies in its ability to "think small."

d. Southwest's advantage lies in its ability to "think small."

Which organization has the highest market dependence? a. a chain of rapid-service oil change shops b. a manufacturer of chemicals for the international pharmaceutical industry c. a regional department store having 26 locations in the Northwest d. a company that specializes in making replacement tiles for the space shuttle

d. a company that specializes in making replacement tiles for the space shuttle

Competitors are more likely to respond to competitive actions that are taken by a. differentiators. b. larger companies. c. first movers. d. market leaders.

d. market leaders.

According to the Chapter 5 Opening Case, in the video-on-demand market, Apple's iTunes service ________________. a. is shielded from competition by Apple's superior technology b. is an example of an incremental innovation c. has no current rivals d. might be disrupted by Walmart's Vudu video streaming service

d. might be disrupted by Walmart's Vudu video streaming service

In the The Chapter 5 Strategic Focus, rivals (Amazon, Oracle, HP and Dell) in the cloud computing market have competitive advantages that are __________________. a. shielded from imitation b. partially shielded from imitation c. sustainable for long periods of time d. not shielded from imitation

d. not shielded from imitation