MGMT 466 Exam 2 - FLASHCARDS - Chapter 5 Flashcards by Stu Diaz

True or false: firms interact with competitors as part of the broad context within which they operate while attempting to earn above-average returns?

TRUE

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True or false: Industries evolve through the competitive give and take of direct competitors as well as the actions of other firms within their ecosystems?

TRUE

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What describes competitive actions and competitive responses among firms as they maneuver for an advantageous market position?

Competitive rivalry

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What is the set of competitive actions and responses a firm takes to build or defend its competitive advantages and to improve its market position?

Competitive behavior

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What occurs when firms compete against each other in several product or geographic markets?

Multipoint competition

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What is the total set of competitive actions and responses taken by all firms competing within a market?

Competitive dynamics

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What is a strategy’s success a function of?

−the firm’s initial competitive actions.
−how well the firm anticipates competitors’ responses to them.
−how well the firm anticipates and responds to its competitors’
initial actions.

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True or false: a strategy’s success is a function of a firm’s initial competitive actions?

TRUE

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True or false: a strategy’s success is a function of how well a firm anticipates competitors’ responses to them?

TRUE

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True or false: a strategy’s success a function of how well a firm anticipates and responds to its competitors’ initial actions?

TRUE

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True or false: Competitive rivalry affects all types of strategies, but its dominant influence is on business-level strategy?

TRUE

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What is a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position?

Competitive action

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What is a strategic or tactical action the firm takes to counter the effects of a competitor’s competitive action?

Competitive response

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What is a market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse?

Strategic action or response

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What is a market-based move that firms take to fine-tune a strategy; these actions and responses involve fewer resources and are relatively easy to implement and reverse?

Tactical action or response

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What do non market strategies focus on?

Altering a firm’s institutional environment as part of its competitive strategy

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What does the institutional environment include?

− Government influences such as regulations that establish the “rules of thegame.”

− Informal rules or norms that are predominant within a market or industry

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What evolves from the pattern of actions and responses as one firm’s competitive actions have noticeable effects on competitors, eliciting competitive responses from them?

Competitive rivalry

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True or false: competitive rivalry suggests that firms are mutually interdependent?

TRUE

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True or false: competitive rivalry suggests that competitors’ actions and responses affect them?

TRUE

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What is marketplace success a function of?

individual strategies.
the consequences of their use

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What is a strategy’s success a function of?

• The firm’s initial competitive actions
• How well the firm anticipates competitors’ responses to them
• How well the firm anticipates and responds to its competitors’ initial actions

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True or false: A competitor analysis is the first step the firm takes to be able to predict its competitors’ actions and responses?

TRUE

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Competitor analysis is a technique firms use to understand their competitive environment by studying competitors’ what?

−Future objectives
−Current strategies
−Assumptions
−Capabilities

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True or false: When firms understand their competitors, they can use competitor analysis to predict competitors’ behavior in the form of their competitive actions and responses?

TRUE

What 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?

Market commonality

What do firms competing against one another in several markets engage in?

Multipoint competition

What is the extent to which the firm’s tangible and intangible resources compare favorably to a competitor’s in terms of type and amount?

Resource similarity

Do firms with similar types and amounts of resources have similar strengths and weaknesses?

Yes

What are the drivers of competitive behavior?

Awareness Motivation Ability

What is the extent to which competitors recognize the degree of their mutual interdependence?

Awareness

True or false: Awareness tends to be greatest when firms have highly similar resources?

TRUE

What is the firm’s incentive to take action or to respond to a competitor’s attack?

Motivation

True or false: A firm may not be motivated to engage in competitive rivalry if it perceives that its market position will neither improve nor suffer if it does not respond?

TRUE

What is the quality of the resources available to the firm to attack and respond?

Ability

True or false: The more significant the difference between resources, the longer is the delay by the firm with a resource disadvantage?

TRUE

True or false: Even when facing competitors with greater resources or more attractive market positions, firms should eventually respond, no matter how daunting the task seems?

True. Choosing not to respond can ultimately result in failure

What is a firm that takes an initial competitive action to build or defend its competitive advantages or to improve its market position?

First mover

First movers emphasize research and development (R&D) as a path to developing innovative products that customers will value

Are first-mover benefits often critical to a firm’s success in industries experiencing rapid technological developments?

Yes

Are first-mover benefits often critical to a firm’s success in industries with relatively short product life cycles?

Yes

In addition to earning above-average returns until its competitors respond to its successful competitive action, the first mover can gain what?

−the loyalty of customers. −market share

True or false: first movers tend to be aggressive?

TRUE

True or false: first movers tend to be willing to experiment with innovation?

TRUE

True or false: first movers tend to take higher yet reasonable levels of risk?

TRUE

To be a first mover, the firm must have the readily available resources to what?

−invest significantly in R & D. −rapidly and successfully produce and market a stream of innovative products

What makes it possible for firms to have the ability to be first movers?

Organizational slack

What is the buffer provided by actual or obtainable resources not in use currently and that exceed the minimum resources needed to produce a given level of organizational output?

Slack

What is a firm that responds to the first mover’s competitive action, typically through imitation?

Second mover

Who tries to find any mistakes the first mover made so that it can avoid them and the problems they created?

Second mover

True or false: a second mover has the time to develop processes and technologies that are more efficient than those the first mover used?

TRUE

Do the most successful second movers act too fast or too slow?

Rarely

What is a firm that responds to a competitive action a significant amount of time after the first mover’s action and the second mover’s response?

Late mover

True or false: late movers achieve considerably less success than do first and second movers?

TRUE

What does an organization’s size affect?

The likelihood it will take competitive actions as well as the types and timing of those actions

True or false: small firms are more likely to launch competitive actions more quickly?

TRUE

True or false: small firms have the capacity to be nimble and flexible competitors?

TRUE

True or false: small firms tend to rely on speed and surprise to defend their competitive advantages?

TRUE

True or false: Large firms typically have a greater amount of slack resources that allows them to initiate a larger total number of competitive actions and strategic actions during a given period?

TRUE

What exists when the firm’s products meet or exceed customers’ expectations?

Quality

Do customers perceive quality as doing the right things relative to performance measures that are important to them?

Yes

When is a firm likely to respond to a competitor’s action?

−the action leads to better use of the competitor’s capabilities to develop a stronger competitive advantage or an improvement in its market position. −the action damages the firm’s ability to use its core competencies to create or maintain an advantage. −the firm’s market position becomes harder to defend.

True or false: In general, the number of tactical responses firms take exceed the number of strategic responses they take?

TRUE

What is the firm taking an action or a response called?

Actor

What is the positive or negative attribute ascribed by one rival to another based on past competitive behavior?

Reputation

True or false: competitors are more likely to respond to strategic or tactical actions when market leaders take them?

TRUE

True or false: Competitors are less likely to respond to actions taken by a company with a reputation for risky, complex, and unpredictable competitive behavior?

TRUE

What denotes the extent to which a firm derives its revenues or profits from a particular market?

Market dependence

True or false: competitors with high market dependence are likely to respond strongly to attacks threatening their market position?

TRUE

What are markets in which competitors lack the ability to imitate the focal firm’s competitive advantages that commonly last for long periods, and where imitation would be costly?

Slow cycle markets

True or false: in a slow cycle market, firms may be able to sustain a competitive advantage over longer periods?

TRUE

True or false: in a slow cycle market, building a unique and proprietary capability produces a competitive advantage?

TRUE

True or false: in a slow cycle market, the competitive actions and responses a firm takes are oriented to protecting, maintaining, and extending a competitive advantage?

TRUE

True or false: in a slow cycle market, the firm launches a product it developed through a proprietary advantage?

TRUE

What are markets in which competitors can imitate the focal firm’s capabilities that contribute to its competitive advantages and where that imitation is often rapid and inexpensive?

Fast cycle markets

True or false: in a fast cycle market, the velocity of change places considerable pressure on top-level managers to make quick and effective strategic decisions?

TRUE

In a fast cycle market, is the technology firms use, protected by patents?

True or false: in a fast cycle market, companies focus on forming the capabilities and core competencies that will allow them to develop new competitive advantages continuously and rapidly?

TRUE

What are markets in which some competitors may be able to imitate the focal firm’s competitive advantages and where that imitation is moderately costly?

Standard cycle markets