True / False
1. Firms operating in the same market, offering similar products and targeting similar customers are competitors.
a. True
b. False
2. Competitive rivalry is the contest to be the first mover in an international market.
a. True
b. False
3. Competitive rivalry is the set of competitive actions and responses that occur among firms as they maneuver for an
advantageous market position.
a. True
b. False
4. “Competitive dynamics” indicates that firms and their strategic actions are independent.
a. True
b. False
5. A strategy’s success is determined not only by the firm’s initial competitive actions but also by how well it
anticipates competitors‘ responses to them and by how well the firm anticipates and responds to its competitors
initial actions.
a. True
b. False
6. Firms with high market commonality and highly similar resources are direct and mutually acknowledged
competitors.
a. True
b. False
7. Market commonality is concerned with the number of markets with which the firm and a competitor are jointly
involved and the degree of importance of the individual markets to each.
a. True
b. False
8. Coca Cola and PepsiCo compete across a number of products (e.g., soft drinks, bottled water) and geographic
markets (U.S. and foreign markets) indicating that both companies have market commonality.
a. True
b. False
9. Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more likely to
respond aggressively when attacked.
a. True
b. False
10. Extensive market commonality guarantees intense competition in an industry.
a. True
b. False
11. Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has a loyal
following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do, Bayou
Belle has high resource similarity with these international firms.
a. True
b. False
12. Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and
mutually acknowledged competitors.
a. True
b. False
13. Two firms, such as a small local, family-owned Italian restaurant and Olive Garden share few markets and have
little similarity in resources, but are nonetheless direct and mutually acknowledged competitors.
a. True
b. False
14. Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.
a. True
b. False
15. Under the framework of competitive action and response, “ability” refers to an attacking or responding firm‘s
knowledge of the competitive market characteristics.
a. True
b. False
16. Walmart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing
not to respond to Walmart‘s competitive actions is a viable long-term option, because although the companies have
high market commonality they have little resource similarity. These small retailers are correct in their decision.
a. True
b. False
17. A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.
a. True
b. False
18. Boeing‘s decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of
a tactical action.
a. True
b. False
19. Walmart‘s aggressive pricing strategy is a strategic action that plays a major role in how it competes.
a. True
b. False
20. First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.
a. True
b. False
21. To be a first mover, the firm must have readily available resources to invest in R&D as well as to rapidly and
successfully produce and market a stream of innovative products.
a. True
b. False
22. An organization with high profitability, such as Walmart, will be able to develop high organizational slack.
a. True
b. False
23. Mighty Mike’s, a manufacturer of power tools for the home hobbyist, has seen its main competitor, MyTools, bring
out a line of power tools that are smaller sized, lighter weight, and suitable for women and older hobbyists who have
weaker hands than the typical male workshop hobbyist. Mighty Mike is waiting to see whether MyTool’s new line
is a success. Mighty Mike could be classified as a second mover.
a. True
b. False
24. Firms that are typically late movers usually have little organizational slack.
a. True
b. False
25. Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but
who remain flexible and act like small firms (i.e., are able to launch a variety of actions) will be more successful
against rivals.
a. True
b. False
26. The need for quality products and services is so high that quality alone can assure a firm that it will achieve
strategic competitiveness and earn above-average returns.
a. True
b. False
27. Quality begins at the bottom of the organization where employees must create values for quality that permeate the
entire organization.
a. True
b. False
28. A firm can predict that a competitor whose products suffer from poor quality is likely to be less aggressive in its
competitive actions until those quality problems are corrected.
a. True
b. False
29. In general, strategic actions elicit fewer competitive responses than do tactical actions.
a. True
b. False
30. Even if the effects of a competitor’s strategic action on the focal firm are significant (e.g., loss of market share),
little response is likely from that firm.
a. True
b. False
31. It is more likely that locally owned, one-location cafes in a small town will respond more rapidly to tactical actions
by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.
a. True
b. False
32. A firm with a reputation as a price predator (an actor that frequently reduces prices to gain or maintain market
share) generates few responses to its pricing tactical actions.
a. True
b. False
33. Firms are likely to imitate the actions of a competitor that is noted for risky, complex, and unpredictable behavior
because this is a way to imitate unobservable core competencies.
a. True
b. False
34. The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.
a. True
b. False
35. Disney is an example of a firm in a slow-cycle market because its animated characters are shielded from imitation
by copyrights and trademarks.
a. True
b. False
36. Patent laws and regulatory requirements such as required FDA (Food and Drug Administration) approval to launch
new products shield pharmaceutical companies’ positions in this slow-cycle market.
a. True
b. False
37. Carl has just graduated with a management degree. He has a good understanding of his personal strengths and
weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target
firms in slow-cycle markets.
a. True
b. False
38. Fast-cycle markets are characterized by “generational products,” which start out with a substantial technological
advance in the performance of a product category followed by incremental technological advances as new
generations of products are introduced.
a. True
b. False
39. The satellite dish at Faye’s weekend home has malfunctioned. When she calls to have the dish repaired, the service
representative tells her that the dish is obsolete and that parts for it are no longer made. Faye must replace the old
dish with a new dish. This is an example of lack of firm loyalty to a product in a fast-cycle market.
a. True
b. False
40. Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate.
a. True
b. False
Multiple Choice
41. 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
42. 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.
43. 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.
44. 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.
45. 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.
46. 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.
47. Research suggests that a firm with greater multimarket contact is
likely to respond aggressively when attacked.
a. more; more
b. less; more
c. less; less
d. more; less
likely to initiate and attack, and
48. Which pair of firms has the LEAST resource similarity?
a. small, family-owned Italian restaurant; Olive Garden
b. Target; Walmart
c. HP; Dell
d. FedEx; UPS
49. 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.
50. Firms with
competitors.
a. low; high
b. low; low
c. high; high
d. high; low
market commonality and resource similarity are direct and mutually acknowledged
51. 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.
52. and
competition.
describe the situation in which organizations are direct competitors and are fully aware of the
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
53. 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.
54. 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
55. 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
56. 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
57. Walmart 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 Walmart‘s attack.
d. rapid; had the resources and flexibility compete against Walmart.
58. 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
59. 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
60. Which of the following is an example of a tactical action?
a. Walmart‘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
61. Which of the following is the most strategic action by Walmart?
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
62. 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.