Question 1

Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.

Accepted Answer

When firms have highly similar resources, they are more likely to be aware of each other's capabilities and strategies, leading to stronger competition and higher awareness. Additionally, competing in multiple markets can increase exposure and awareness among consumers and industry players. Therefore, the statement is true.

Question 2

Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and mutually acknowledged competitors.

Accepted Answer

Direct and mutually acknowledged competitors are firms that compete in the same market with similar resources and strategies. Fed Ex and UPS both provide shipping and logistics services, making them direct competitors in the market.

Question 3

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.

Accepted Answer

Market commonality refers to the extent to which a firm and its competitor(s) are competing in the same markets or serving the same customers. It is concerned with the number of markets where the firms are jointly involved and the degree of importance of each market to them. Therefore, the statement is true.

Question 4

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

Accepted Answer

This is the correct definition of competitive rivalry. It is the ongoing competition and jockeying for position between firms in a particular industry, as they try to gain a competitive advantage over one another.

Question 5

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.

Accepted Answer

High market commonality with Walmart means that the small retailers are in direct competition with Walmart, and not responding to its competitive actions could lead to a loss of market share, regardless of resource similarity.

Question 6

Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

Accepted Answer

Building the 787 was a strategic decision, not just a tactical action. It involved long-term planning and significant investment in technology, resources, and supply chain partnerships. It aimed to address a market gap and meet the changing needs of customers by offering better fuel efficiency, more comfort, and more range.

Question 7

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.

Accepted Answer

Anticipating and responding to competitors' actions is an important aspect of formulating and implementing a successful strategy. Failing to do so can lead to unexpected outcomes that may put the firm at a disadvantage. Thus, a strategy's success is not solely dependent on the firm's initial competitive actions, but also on how well it navigates the competitive landscape.

Question 8

Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more likely to respond aggressively when attacked.

Accepted Answer

This statement is a generally accepted finding in the field of strategic management and is supported by empirical evidence. Multimarket contact, or the degree to which a firm competes against the same rivals in multiple markets, is believed to create familiarity, trust, and reputation effects between firms that reduce the likelihood of conflict escalation. However, if an attack does occur, the firm with greater multimarket contact may feel compelled to defend its reputation and deter future attacks by responding aggressively, rather than backing down or settling.

Question 9

Extensive market commonality guarantees intense competition in an industry.

Accepted Answer

The answer of Extensive market commonality guarantees intense competition in...

Question 10

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.

Accepted Answer

Bayou Belle Water, being a small regional company with a single source, does not have high resource similarity with large international firms like Coca-Cola, Nestle, and PepsiCo, which have diverse resources and global operations.

Question 11

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

Accepted Answer

The answer of First movers can gain a sustained competitive...

Question 12

Under the framework of competitive action and response, "ability" refers to an attacking or responding firm's knowledge of the competitive market characteristics.

Accepted Answer

The answer of Under the framework of competitive action and...

Question 13

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.

Accepted Answer

The statement correctly highlights that Coca Cola and PepsiCo compete across multiple product categories and geographic markets, indicating market commonality between the two companies. Therefore, the answer is A.

Question 14

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

Accepted Answer

Competitive rivalry refers to the intense competition among existing players in a market. It does not necessarily involve being the first mover in an international market. Being a first mover may provide an advantage in some cases, but it is not the same as competitive rivalry.

Question 15

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

Accepted Answer

Firms with high market commonality (i.e. serving the same customer needs in a given market) and highly similar resources (i.e. competing on the same basis with similar products, technologies, or capabilities) are likely to be in direct competition with each other and recognize each other as competitors. This is because they are both trying to satisfy the same customer needs with very similar offerings, which creates a zero-sum game in which one firm's gain is the other's loss.

Question 16

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

Accepted Answer

Firms that are in the same market and offer similar products are often trying to win over the same customers, making them competitors.

Question 17

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.

Accepted Answer

The answer of Two firms, such as a small local,...

Question 18

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

Accepted Answer

Competitive dynamics suggests that firms and their strategic actions are interdependent and influence each other in the marketplace.

Question 19

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

Accepted Answer

The answer of A tactical competitive action involves a significant...

Question 20

Walmart's aggressive pricing strategy is a strategic action that plays a major role in how it competes.

Accepted Answer

The answer of Walmart's aggressive pricing strategy is a strategic...

Quiz 5: Competitive Rivalry and Competitive Dynamics