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Indicate whether the statement is true or false.
1. Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.
a.
True
b.
False
2. The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.
a.
True
b.
False
3. 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representative tells her that the dish is obsolete and that parts for it are no longer made.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
4. 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
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. 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
7. 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
8. 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
9. Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate.
a.
True
b.
False
10. Boeing’s decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a
tactical action.
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a.
True
b.
False
11. Bayou Belle Water sells water drawn only from a single artesian well in Southern Louisiana. It has a loyal following
in its region. Because 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. 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
13. 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
14. 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
15. “Competitive dynamics” indicates that firms and their strategic actions are independent.
a.
True
b.
False
16. 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
17. An organization with high profitability, such as Walmart, will be able to develop high organizational slack.
a.
True
b.
False
18. 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
19. In general, strategic actions elicit fewer competitive responses than do tactical actions.
a.
True
b.
False
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20. 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
21. Extensive market commonality guarantees intense competition in an industry.
a.
True
b.
False
22. 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
23. 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
24. Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.
a.
True
b.
False
25. 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
26. 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
27. 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
28. 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
29. 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
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b.
False
30. Firms that are typically late movers usually have little organizational slack.
a.
True
b.
False
31. Walmart’s aggressive pricing strategy is a strategic action that plays a major role in how it competes.
a.
True
b.
False
32. 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
33. First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.
a.
True
b.
False
34. Competitive rivalry is the contest to be the first mover in an international market.
a.
True
b.
False
35. Mighty Mike’s, a manufacturer of power tools for the home hobbyist, has seen its main competitor, MyTools,
introduce 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 MyTools’ new line is
a success. Mighty Mike could be classified as a second mover.
a.
True
b.
False
36. A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.
a.
True
b.
False
37. Quality begins in marketing an organization where employees must create a perceived value of quality.
a.
True
b.
False
38. 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
39. Firms operating in the same market, offering similar products and targeting similar customers are competitors.
a.
True
b.
False
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40. 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
Indicate the answer choice that best completes the statement or answers the question.
41. 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.
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. 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.
44. 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
45. 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.
46. 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.
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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.
47. 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.
48. 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.
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. 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
51. 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
52. Sustained competitive advantage is most achievable in a ____ market.
a.
slow-cycle
b.
medium-cycle
c.
standard-cycle
d.
fast-cycle
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53. Reverse engineering is characteristic of:
a.
first movers.
b.
fast-cycle markets.
c.
market leaders.
d.
price predators.
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. 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
56. 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.
57. 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.”
58. 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.
59. 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.
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60. 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.
61. 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
62. 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.
63. 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.
64. 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 tend to rise rapidly.
c.
product prices fall quickly in fast-cycle markets.
d.
counterattacks from rivals come quickly.
65. 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
66. 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
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d.
advertise more; customers believe the quality had improved
67. 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
68. 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.“
69. 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.
70. ____ 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
71. 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
72. 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.
73. 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):
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a.
slow-cycle market
b.
standard-cycle market.
c.
fast-cycle market.
d.
intermediate-cycle market.
74. 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 in addition to movies
d.
Dell’s launch of a new line of high performance, custom-made PCs
75. 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.
76. 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.
77. 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
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. 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
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c.
Aggressively pricing school-related items in the back-to-school season
d.
Entering a new foreign market
80. 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.
81. ____ markets are often described as volatile and innovative.
a.
Slow-cycle
b.
Fast-cycle
c.
Standard-cycle
d.
Sheltered
82. 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.
83. 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
84. 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
85. Which of the following is an example of a strategic action?
a.
A “two movies for the price of one” campaign by Redbox
b.
Use of product coupons by a local grocer
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c.
Entry into the European market by Home Depot
d.
Fare increases by Southwest Airlines
86. Competitors are more likely to respond to competitive actions that are taken by:
a.
differentiators.
b.
larger companies.
c.
first movers.
d.
market leaders.
87. Walt Disney’s focus on ____ is typical of a slow-cycle market.
a.
innovation
b.
total quality
c.
proprietary rights
d.
economies of scale
88. 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 one 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.
89. 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
90. 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
91. 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.
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92. 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.
93. 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
94. 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.
95. 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.
96. 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.
97. Competitive rivalry has the most effect on a firm’s ____ strategies than the firm’s other strategies.
a.
business-level
b.
corporate-level
c.
acquisition
d.
international
98. Lawsuits over patent and copyright infringements are more common and intense in:
a.
fast-cycle markets because the market is innovation-driven.
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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.
99. 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.
100. 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.
101. What factors contribute to the likelihood of a response to a competitive action?
102. Define slow-cycle, fast-cycle, and standard cycle markets.
103. Define awareness, motivation, and ability in reference to competitive behavior.
104. Define competitive actions and responses and explain the two types of competitive actions and responses.
105. What is market commonality? What is resource similarity? How are these concepts combined to identify the level of
competition between two firms?
106. Define competitors, competitive rivalry, competitive behavior, and competitive dynamics.
107. What are the advantages and disadvantages of being a first mover, second mover, and late mover?
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