Deck 10: Competitive Rivalry & Competitive Dynamics

Question 1

First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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.

Answer 3

True

Question 4

It is much easier for a competitor to implement strategic actions than tactical actions.

Question 5

Intensified rivalry within an industry results in decreased average profitability for the firms within it.

Question 6

Competitive rivalry is the contest to be the first mover in an international market.

Question 7

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.

Question 8

Competitive rivalry often increases during recessions and some selected businesses in particular industries experience heightened demand.

Question 9

The benefits of being a first mover are most substantial in fast cycle markets.

Question 10

Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.

Question 11

Low levels of competition may be caused by high fixed costs.

Question 12

"Competitive dynamics" indicates that firms and their strategic actions are independent.

Question 13

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.

Question 14

Competitive rivalry is the set of competitive actions and responses that occur among firms as they maneuver for an advantageous market position.

Question 15

A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.

Question 16

Competitive dynamics refers to the total set of actions and responses taken by all firms competing within a market.

Question 17

Competitive tactics are concerned with how the firm intends to position itself to create value for its customers.

Question 18

The two primary drivers of hypercompetition are the emergence of the global economy and technology.

Question 19

Firms operating in the same market,offering similar products and targeting similar customers are competitors.

Question 20

A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive advantage or improve its market position.

Question 21

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

Question 22

A cooperative strategy:

A) Is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
B) Is a strategy in which firms work together to achieve a shared objective
C) Is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets
D) Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets

Question 23

A disadvantage to being a first mover is that a company moves down the experience curve and loses the benefits from its experiences.

Question 24

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

Question 25

Often,successful imitation of the first mover's innovations allows the second mover to avoid the mistakes and major investments of the first mover.

Question 26

Being a first mover in an industry or market guarantees that a company will develop a sustainable strategic position.

Question 27

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

Question 28

Competitors are more likely to respond to competitive actions that are taken by:

A) Differentiators
B) Larger companies
C) First movers
D) Market leaders

Question 29

In general,small firms are more likely than large firms to launch competitive actions and tend to do it more quickly.

Question 30

A competitive action can be one of two types,either ____ or ____.

A) Aggressive, defensive
B) Strategic, tactical
C) Quality-based, cost-based
D) Market-based, resource-based

Question 31

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

Question 32

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

Question 33

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

Question 34

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

Question 35

Offensive competitive tactics include:

A) Threat of retaliation
B) Creating barriers to imitation
C) Seeking first-mover advantages
D) Collaborative tactics

Question 36

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

Question 37

A strategy in which firms work together to achieve a shared objective is a:

A) Functional-level strategy
B) Business-level strategy
C) Corporate-level strategy
D) Cooperative strategy

Question 38

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

Question 39

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

Question 40

Large firms are likely to initiate more competitive actions along with more strategic actions during a given period.

Question 41

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) None of the above

Question 42

Identify the competitive risks associated with cooperative strategies.

Question 43

In Japan and the EU,crisis cartels:

A) Involve firms in an industry facing a severe crisis
B) Are legally allowed
C) A and B above
D) Are cartels that are creating a crisis

Question 44

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 manoeuvres
D) None of the above

Question 45

Explicit collusion is exemplified by:

A) Cartels
B) Trusts
C) Users of game theory
D) All of the above

Question 46

What factors contribute to the likelihood of a response to a competitive action?

Question 47

Define competitors,competitive rivalry,competitive behavior,and competitive dynamics.

Question 48

What are the advantages and disadvantages of being a first mover,second mover,and late mover?

Question 49

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

Question 50

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

Question 51

What are some methods for gathering competitive intelligence?

Question 52

The global airline industry is one in which:

A) National political interests prevent airlines from making international alliances
B) The fast-cycle nature of the industry mandates heavy use of alliances
C) Most alliances tend to be vertical complementary
D) Alliance versus alliance competition dominates firm versus firm competition

Question 53

Define competitive actions and responses and explain the two types of competitive actions and responses.

Question 54

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 one country in others
D) Excessive criticism of international rivals

Question 55

How do financial statements help us determine whether or not a firm holds a sustainable competitive advantage in the marketplace?

Question 56

Identify the three types of corporate-level cooperative strategies.

Question 57

Explain the rationales for a cooperative strategy under each of the three types of basic market situations (i.e.,slow,standard,and fast cycles).

Question 58

Having classified companies broadly,one can examine the closest competitors for more specific characteristics. Which of the following is a characteristic that should be closely scrutinized?

A) Management behaviour patterns
B) Relative market position
C) Financial situation
D) All of the above

Question 59

Why are cooperative strategies often used when firms pursue international strategies and what are the advantages and disadvantages of international cooperative strategies?

Question 60

Why are alliances in the airline industry unstable?

A) Unstable industries make for unstable alliances
B) The alliances require cooperation among firms that must also compete with one another
C) The potential for firms to take opportunistic actions is too widespread
D) The industry is declining and profits are not sufficient to divide among alliance partners

Question 61

Under what conditions does it make sense to cooperate with one or more other companies?

Question 62

Identify the four types of business-level cooperative strategies and the advantages and disadvantages of each.