Chapter 02 – Markets and Competitive Space
Chapter 02
Markets and Competitive Space
1. When modularization occurs, products become commodities.
2. The influence of competing brands becomes weaker with closer substitutability and more
direct competition.
3. The product-variant product-market structure includes a broad group of products that
satisfy a general, yet similar, need.
4. Customer function considers the role or purpose of the good or service.
5. It is important to focus on the distributor of a product when defining the market, since the
distributor drives demand for the product.
6. The value chain analysis considers the vertical network of firms involved in production.
7. A new competitor entering a market is likely to come from companies competing in other
geographical regions with similar products.
8. Sales forecasts, typically, fall short of market potential.
Chapter 02 – Markets and Competitive Space
9. In the initial stage of competition, the competitors concentrate on market share for end
products and profits.
10. In the final phase of competition, companies involve in partnering with the objective of
controlling industry standards.
11. _____ refers to firms using simpler and less costly ways to match the value requirements
offered by the products of incumbent firms serving the market.
A. Modularization
B. Commoditization of product designs
C. Disruptive innovation
D. Creating new market space
12. _____ changes products into commodities, making it difficult for companies to earn
anything more than subsistence returns from those products.
A. Disruptive innovation
B. Modularization
C. Cannibalization
D. Segmentation
13. The purpose of _____ is to target new opportunities where buyers’ value requirements are
not being satisfied by existing products.
A. disruptive innovation
B. commoditization of products
C. benchmarking
D. creating new market space
14. The _____ product-market includes a broad group of products that satisfy a larger
common need.
A. generic
B. product-type
Chapter 02 – Markets and Competitive Space
C. product-variant
D. larger-type
15. Which of the following is the first step in defining and analyzing product-markets?
A. Forecasting market size
B. Determining the boundaries of the market
C. Analyzing competition
D. Predicting rate of change of the market
16. Which of the following is the second step in analyzing product-markets?
A. Analyze competition
B. Form the product-market
C. Forecast market size and rate of change
D. Analyze end users
17. Which of the following is the final step in analyzing the competition?
A. Anticipating actions by competitors
B. Evaluating key competitors
C. Identifying and evaluating potential competitors
D. Identifying key competitors
18. Which of the following is the most direct type of competition?
A. Budget competition
B. Generic competition
C. Product-category competition
D. Product-variant competition
19. _____ analysis is horizontal and only covers similar types of firms and operating practices
of the firms.
A. Value chain
B. Industry
Chapter 02 – Markets and Competitive Space
C. Market segmentation
D. Customer profile
20. According to Porter’s five competitive forces, _____ recognizes that active competition
among industry members helps determine industry performance and it is the most direct and
intense form of competition.
A. rivalry among existing firms
B. threat of new entrants
C. threat of substitute products
D. bargaining power of suppliers
21. If critical inputs are in jeopardy or prices of those inputs are extraordinarily high,
companies may pursue vertical integration strategies or develop collaborative relationships to
reduce the:
A. rivalry among existing firms.
B. bargaining power of buyers.
C. threat of substitute products.
D. bargaining power of suppliers.
22. _____ is measured by comparing the share of the firm against the competitor with the
highest market share in the segment.
A. Market segmentation
B. Relative market position
C. Product differentiation
D. Customer segment
23. Market entry by a new competitor is likely under which of the following conditions?
A. When markets have matured and growth is slow
B. When major market-entry barriers are present
C. When competition is limited to one or a few competitors
D. When market incumbents’ profit margins have declined
Chapter 02 – Markets and Competitive Space
24. _____ is the maximum amount of product sales that can be obtained from a defined
product-market during a specified time period.
A. Market potential
B. Sales forecast
C. Market share
D. Modularization
25. Which of the following is a major source for new competitors?
A. Companies already targeting similar customer groups with other products.
B. Companies competing in the same regions with different products.
C. Companies competing in a different product-market.
D. Companies with advanced unrelated technologies.
26. _____ is the upper limit of sales that can be achieved by all firms for a specified product–
market over an indicated time period.
A. Market potential
B. Market share
C. Differential pressure
D. Absolute threshold
27. _____ refers to the expected sales for a defined product-market during a specified time
period.
A. Market potential
B. Sales forecast
C. Market share
D. Modularization
28. Company sales divided by the total sales of all firms for a specified product-market
determines the _____ of a particular firm.
A. market potential
B. absolute threshold
C. relative market position
D. market share
Chapter 02 – Markets and Competitive Space
29. Which of the following is an advantage of using the time-series analysis in sales
forecasting?
A. It utilizes historical data when forecasting.
B. It consumes the least amount of time in forecasting.
C. It is a very subjective type of analysis.
D. It is most effective when forecasting new or innovative products.
30. Which of the following is the final phase of competition?
A. Partnering of companies with the objective of controlling industry standards
B. Companies competing in identifying product concepts
C. Competitors concentrating on market share for end products and profits
D. Firms focusing on building competencies
31. Explain the competitive box. Why is there a need for strategic thinkers to “think outside
the competitive box”?
32. Discuss the differences between a generic product-market and a product-type product-
market.
33. Identify the three guidelines for defining a product-market.
34. Explain how buyers make choices in products and brands.
35. Identify Porter’s five competitive forces that impact industry performance.