63. 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.
64. 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.
65. 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.
66. 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.
67. 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.
68. 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.
69. 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.
70. 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.
71. Which of the following is TRUE of Walmart?
a. Walmart has an unusual amount of flexibility for a large firm.
b. Walmart’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. Walmart’s advantage lies in its ability to “think big.”
72. 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.”
73. 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 United States or developed
countries.
d. are associated with predatory competition.
74. 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.
75. 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.
76. Competitors are more likely to respond to competitive actions that are taken by
a. differentiators.
b. larger companies.
c. first movers.
d. market leaders.
77. A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT when
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.
78. 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
79. 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
80. 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.
81. 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
82. Sustained competitive advantage is most achievable in a market.
a. slow-cycle
b. medium-cycle
c. standard-cycle
d. fast-cycle
83. Walt Disney’s focus on is typical of a slow-cycle market.
a. innovation
b. total quality
c. proprietary rights
d. economies of scale
84. 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.
85. 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.
86. 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.
87. 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
88. 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
89. Reverse engineering is characteristic of
a. first movers.
b. fast-cycle markets.
c. market leaders.
d. price predators.
90. 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.
91. 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
92. markets are often described as volatile and innovative.
a. Slow-cycle
b. Fast-cycle
c. Standard-cycle
d. Sheltered
93. An organization‘s loyalty to its own product is a competitive disadvantage in a(n) market.
a. slow-cycle
b. standard cycle
c. intermediate cycle
d. fast-cycle
94. 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(n)
a. slow-cycle market
b. standard-cycle market.
c. fast-cycle market.
d. intermediate-cycle market.
95. 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(n)
a. slow-cycle market
b. standard–cycle market.
c. fast-cycle market.
d. intermediate-cycle market.
96. 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.