Chapter 5 Flashcards
Canon’s desktop copiers and Apple’s iPhone are examples of _____________ that are ________ rivalry battles with competitors (Chapter 5 Opening Case).
disruptive innovations; winning
According to the Chapter 5 Opening Case, in the video-on-demand market, Apple’s iTunes service ________________.
might be disrupted by Walmart’s Vudu video streaming service
Competitive rivalry has the most effect on the firm’s ____ strategies than the firm’s other strategies.
business-level
Multimarket competition occurs when firms
compete against each other in several geographic or product markets.
Competitive dynamics refers to the
total set of actions and responses taken by all firms competing within a market.
Intensified rivalry within an industry results in
decreased average profitability across the industry.
Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus)
high market commonality and high resource siimilarity.
US-owned automobile companies have recently (2011) bolstered their fuel efficient offerings in part due to __________________ (Chapter 5 Strategic Focus)
knowing what had to be done and having the motivation to do it which came from the overlapping market commonality and resource similarity between global competitors.
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?
Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.
In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is
less competitive rivalry.
Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and _____ likely to respond aggressively when attacked.
less, more
Which pair of firms has the LEAST resource similarity?
Small, family-owned Italian restaurant; Olive Garden
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
are probably not engaged in intense competitive rivalry.
Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors.
high;high
In general, firms are more aware of competitors who have similar resources and who
compete against the firm in multiple markets.
____ and ____ describe the situation in which organizations are direct competitors and are fully aware of the competition.
High market commonality, high resource similarity
Firms with few competitive resources are more likely to
delay responding to competitive actions.
____ relates to the gains or losses a firm will experience if it attacks a rival or responds to an attack by a rival.
motivation
Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses.
market commonality, resource similarity
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.
slower
Wal-Mart 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 __________.
slow; lacked the ability to marshal resources
A competitive action can be one of two types, either ____ or ____.
strategic, tactical
Which of the following is an example of a strategic action?
entry into the European market by Home Depot
Which of the following is an example of a tactical action?
Netflix beginning to offer music DVDs in addition to movies.
Which of the following is the most strategic action by Wal-Mart?
Entering a new foreign market
On the whole there are more competitive responses to
tactical actions than to strategic actions.
First movers are
firms that take an initial competitive action.
The chief disadvantage of being a first mover is the
high degree of risk.
Which of the following statements is FALSE?
First movers have lower survival rates than second and late movers.
A second mover
attempts to provide a product with greater customer value than the first mover’s product.
Late movers are those firms that
respond to a competitive action a significant amount of time after the first mover’s action and the second mover’s response.
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 of these statements is most likely TRUE?
Bubble-Up’s smaller size may make it more flexible in introducing innovations than Mega-Toy.
A firm that is LEAST likely to launch competitive actions is one that has
large size
All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they
can launch competitive actions more quickly.
Which of the following is TRUE of Wal-Mart?
Wal-Mart has an unusual amount of flexibility for a large firm.
Which of the following is TRUE of Southwest Airlines?
Southwest’s advantage lies in its ability to “think small.”
Without quality, the firm’s products
lack credibility among customers.
Quality is
meeting or exceeding customer expectations in the goods and/or services offered.
Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will _____________ until ________________.
initiate fewer competitive actions; the quality problems are corrected
Competitors are more likely to respond to competitive actions that are taken by
market leaders
Which company below committed significant resources to enter the information services market and, given its success, was imitated by other competitors?
IBM
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?
lower its prices
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
respond aggressively because of high market dependence.
Which organization has the highest market dependence?
a company that specializes in making replacement tiles for the space shuttle
Sustained competitive advantage is most achievable in a ____ market.
slow-cycle
Walt Disney’s focus on ____ is typical of a slow-cycle market.
proprietary rights
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
believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share.
The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if
Disney’s cartoon characters became widely perceived as old-fashioned and unappealing.
Lawsuits over patent and copyright infringements are more common and intense in
slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage.
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.
standard; fast
Which industry can be LEAST described as a slow cycle market?
Cell phone provider
Reverse engineering is characteristic of
fast-cycle markets.
Companies in fast-cycle markets need to profit quickly from an innovative product for all of the following reasons EXCEPT
the prices of component parts tends to rise rapidly.
A company in a ____ industry is LEAST likely to make heavy use of patents and copyrights.
fast-cycle
____ markets are often described as volatile and innovative.
Fast-cycle
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(an)
standard cycle market.
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
standard cycle market.
Goods or services in standard-cycle markets reflect
organizations that serve a mass market.
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.
standard-cycle
The flat-panel television market where prices have come down and competition has become more stable is best characterized as
standard-cycle.
Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of
standard-cycle markets.
In the Chapter 5 Strategic Focus, rivals such as Amazon, Oracle, HP and Dell in the cloud computing market are competing in a_________________.
standard-cycle market
In the The Chapter 5 Strategic Focus, rivals (Amazon, Oracle, HP and Dell) in the cloud computing market have competitive advantages that are __________________.
not shielded from imitation
In order to compete effectively, standard-cycle firms need all of the following EXCEPT
rapid and continuous product introductions.
