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Exam 5: Competitive Rivalry and Competitive Dynamics

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Question 21

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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

A) realizes that he must understand competitors in order to predict their competitive actions and responses.
B) understands that he is the market leader in his niche and thus has a sustainable competitive advantage.
C) believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share.
D) realizes his firm has such lower resources than other competitors that his chain is "competitively invisible" to them.

E) None of the above
F) All of the above

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Question 22

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Companies in fast-cycle markets need to profit quickly from an innovative product for all of the following reasons EXCEPT

A) the technology used is not proprietary.
B) the prices of component parts tends to rise rapidly.
C) product prices fall quickly in fast-cycle markets.
D) counterattacks from rivals come quickly.

E) A) and C)
F) B) and C)

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Question 23

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Quality is

Firms with few competitive resources are more likely to

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

Mighty Mike's, a manufacturer of power tools for the home hobbyist, has seen its main competitor, MyTools, bring out a line of power tools that are smaller sized, lighter weight, and suitable for women and older hobbyists who have weaker hands than the typical male workshop hobbyist. Mighty Mike is waiting to see whether MyTool's new line is a success. Mighty Mike could be classified as a second mover.

Among the drivers of competitive actions and responses, motivation refers to the perceived gains that will result from a firm which initiates an attack. If a firm perceives that its position will improve, it is more likely to attack.

Which company below committed significant resources to enter the information services market and, given its success, was imitated by other competitors?

Which organization has the highest market dependence?

It is more likely that locally-owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.

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.

Without available resources (such as financial capital and people), the firm lacks the ability to attack a competitor or respond to its actions.

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

Without quality, the firm's products

First movers are

An organization's loyalty to its own product is a competitive disadvantage in a ____ market.

Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Wal-Mart'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.

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.

Competitive dynamics refers to the

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.