Deck 8: Global Competitive Dynamics

Question 1

Firms that have a high degree of resource similarity are likely to have similar strengths and weaknesses.

Answer 1

True

Question 2

If an attack is so subtle that rivals are not aware of it, the attacker's objectives are not likely to have been attained.

Answer 2

False

Question 3

Thrust makes use of military theory that the attacker needs to have at least a three-to-one advantage to overcome a well-defended position through a conventional frontal assault.

Answer 3

True

Question 4

An extender strategy is being used when local firms engage in rapid learning to approach the capabilities of the MNEs and then expand overseas.

Question 5

Multimarket competition occurs when firms engage the same rivals in multiple markets.

Question 6

Local firms' primary strengths lie in a deep understanding of local markets, and thus they would pursue a dodger strategy.

Question 7

An extender strategy may be appropriate in some industries where pressures for globalization are relatively low.

Question 8

The capability to attack in multiple markets throws the firm off balance leaving it vulnerable to rivals and thus reducing value.

Question 9

US courts have not sought to unilaterally punish non-US cartels (if they are legal elsewhere) simply because they may have a substantial adverse impact on US markets.

Question 10

Industry-based considerations are fundamentally concerned with the very first of the Porter five forces, interfirm rivalry.

Question 11

Critics of US policy on dumping at least agree that our policy on predatory pricing is consistent both domestically and internationally.

Question 12

If the attacked market is of marginal value, managers may decide not to counterattack.

Question 13

The "strategy as action" perspective highlights the power of creative destruction.

Question 14

Multimarket competition destroys mutual forbearance.

Question 15

Barriers for entrants with similar products and with substitute products are involved in the other two of the five forces.

Question 16

Under antitrust law a company can be in trouble for setting prices too high but not for setting them too low.

Question 17

A strategy that leverages local assets is called an extender strategy.

Question 18

Collusion survives because it does not have an incentive problem as is illustrated by the prisoner's dilemma.

Question 19

Strategy involves planning for actions rather than reactions or interaction.

Question 20

Bargaining can take place through signals and actions.

Question 21

Which of the following would not be considered an initial set of actions to gain competitive advantage:
a. Price cuts.
b. Advertising campaigns.
c. Market entries.
d. Counterattacks.
e. New product introductions.

Question 22

Firm A may be more successful in imitating Firm B if Firm B:
a. Is competitively aggressive.
b. Carries out complex actions.
c. Uses difficult to execute maneuvers.
d. All of the above.
e. None of the above.

Question 23

Which of the following aspects of U.S. competition/antitrust policy has been opposed by the EU?
a. Collusive price setting.
b. Predatory pricing.
c. Extraterritoriality.
d. Court decisions.
e. Changes in policy.

Question 24

Cartels:
a. Involvecollusion.
b. Are often outlawed.
c. A and B above.
d. Entail the "prisoner's dilemma for participants.
e. All of the above.

Question 25

Dumping is defined as:
a. Shipping hazardous waste to locations in other countries.
b. An exporter selling below cost abroad.
c. Unloading unsold inventory from the US in other countries.
d. Excessive criticism of international rivals.
e. Getting rid of unprofitable operations.

Question 26

"The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm" refers to similarity of:
a. Strategy.
b. Resources.
c. Markets.
d. Industry.
e. Economic environment.

Question 27

Local firms in emerging economies typically can at least match the ________ of MNEs.
a. Expertise
b. Experience
c. Endowments
d. A and B above
e. None of the above

Question 28

Industry-based considerations regarding strategy:
a. Focus on the nature of collusion.
b. Deal with the relationship between industry structures and firms' propensity to collude.
c. Deal with the relationship between industry structures and firms' propensity to collude to competing.
d. All of the above.
e. None of the above.

Question 29

The three drivers of counterattacks do not include:
a. Awareness.
b. Motivation.
c. Capability.
d. B and C above.
e. Vengeance.

Question 30

A firm's attack on a focal arena important to a competitor, but not the attacker's true target area, is referred to as:
a. Thrust.
b. Feint.
c. Gambit.
d. Miscalculation.
e. Practice attack.

Question 31

In some industries where pressures for globalization are relatively low, local firms may possess some skills and assets that are transferable overseas, thus leading to a/an_____strategy.
a. Defender
b. Extender
c. Dodger
d. Contender
e. Transfer

Question 32

Which is true of strategy?
a. Business strategy has similarities with military strategy.
b. Military principles cannot be completely applied in business.
c. Militaries fight over territories, waters, and air spaces, firms compete in markets.
d. All of the above.
e. None of the above.

Question 33

Which of the following will enable a firm to be competitive even if there is a lack of top management commitment and employee involvement?
a. Organizational structure.
b. Use of stealth attacks.
c. Rapid responses, and willingness to answer challenges.
d. All of the above.
e. None of the above.

Question 34

In developing a strategy regarding competition or cooperation, it would be useful to not:
a. Understand the nature of your industry.
b. Strengthen capabilities that more effectively compete and/or cooperate.
c. Understand the rules of the game governing competition.
d. "Look ahead, reason back
e. All of the above.

Question 35

The main types of attack include:
a. Thrust.
b. Feint.
c. Gambit.
d. All of the above.
e. None of the above.

Question 36

Which of the following are least likely to result in collusion?
a. High concentration ratio.
b. Heterogeneous products.
c. High entry barriers.
d. High market commonality.
e. Industry price leader exists.

Question 37

Explicit collusion is exemplified by:
a. Cartels.
b. Trusts.
c. Users of game theory.
d. All of the above.
e. None of the above.

Question 38

Issues affecting collaboration include:
a. Secrecy.
b. Exclusivity.
c. Informality.
d. All of the above.
e. None of the above.

Question 39

Which of the following is not a legal means of signaling?
a. Nonaggression or fat cat.
b. Direct discussion of reduced rivalry with competitors.
c. Truce seeking.
d. Communication via governments.
e. Strategic alliances.

Question 40

Which is not true concerning US anti trust policy today?
a. Legislation has legally permitted rivals to join hands in research and development (R&D).
b. There is increased permissiveness regarding mergers among rivals.
c. Clarity of policy has improved.
d. The legal standards for interfirm cooperation are no longer ambiguous in the United States.
e. The legal standards for interfirm cooperation are ambiguous in many other countries.

Question 41

Can national policies that seek to promote the well being of its citizens by its attempts to maintain competition actually have the opposite effect? Why or why not?

Question 42

The text points out that modern ideas of strategy, pioneered by Michael Porter, have turned IO economics "on its head." While IO economics attempts to prevent any firm from gaining sustained competitive advantage, the very purpose of strategy is to gain a sustainable advantage. Is that good or bad?

Question 43

In the interest of maintaining high standards for international trade, the U.S. has at various times attempted to legislate the behavior of U.S. based companies. It has even at times tried to apply U.S. standards to those from other countries. Does this make sense to you?

Question 44

In some of the discussions of strategy. It was suggested that a firm might attempt to mislead a rival as to the firm's true objective - i.e. feint. Is that unethical? Explain.

Question 45

Dumping involves selling something below cost. Using what you have learned in accounting or economics (or perhaps by talking to someone familiar with these courses) point out why it might sometimes be difficult to prove that a firm is selling below cost.