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Exam 5: Competitive Rivalry and Competitive Dynamics

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Question 1

Multiple Choice

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Goods or services in standard-cycle markets reflect

A) organizations that serve a mass market.
B) numerous first mover advantages.
C) an inability to sustain a competitive advantage except for brief periods of time.
D) competitive advantages that are shielded from imitation.

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A

Question 2

Multiple Choice

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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.

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Question 3

Multiple Choice

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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)

Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has a loyal following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do, Bayou Belle has high resource similarity with these international firms.

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

Case Scenario : The Pet Food Industry. The pet food industry is comprised primarily of six market segments: dry dog food, dry cat food, moist dog food, moist cat food, canned dog food, and canned cat food. Five large firms dominate the market and each has some market share in all segments, and the leading share in at least one segment. The largest firm participates solely in the pet food industry, while the next four firms are actually subsidiaries of some of the world's largest food and consumer products companies. Top management of these larger firms have made public statements that suggest they each see themselves as future leaders of the pet food industry. All five have acquired comparable skills in terms of manufacturing and marketing. Two small firms also participate in the industry, but these players are relatively weak and compete in just two of the six segments; the pet food industry is the only industry in which they operate. Inputs to the industry are basic commodities and there is no real threat of substitute products except across segments and price points. The industry is growing slowly, barely keeping up with the rate of inflation. Barriers to entry are enormous when pet food companies can gain scale economies in production coupled with aggressive marketing, though even then these coordinated actions may only yield average industry profitability. Any firm can increase its market share only to the extent that another firm's share is decreased -(Refer to the above Case Scenario) The pet food industry is best characterized as an example of

In general, firms are more aware of competitors who have similar resources and who

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

Which of the following is TRUE of Wal-Mart?

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.

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

____ markets are often described as volatile and innovative.

US-owned automobile companies have recently (2011) bolstered their fuel efficient offerings in part due to __________________ (Chapter 5 Strategic Focus)

Two firms that have similar resources, but do not share markets would not be direct and mutually acknowledged competitors.

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?

Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of

Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but who remain flexible and act like small firms (i.e., are able to launch a variety of actions) will be more successful against rivals.

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

Which of the following is the most strategic action by Wal-Mart?

____ and ____ describe the situation in which organizations are direct competitors and are fully aware of the competition.