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Exam 5: Competitive Rivalry and Competitive Dynamics

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Question 41

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Which of the following is an example of a strategic action?

A) a "two movies for the price of one" campaign by Blockbuster Video
B) use of product coupons by a local grocer
C) entry into the European market by Home Depot
D) fare increases by Southwest Airlines

E) A) and D)
F) A) and C)

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Question 42

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Lawsuits over patent and copyright infringements are more common and intense in

A) fast-cycle markets because the market is innovation-driven.
B) standard-cycle markets because the firm's brand name is such an important competitive advantage.
C) slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage.
D) standard-cycle markets because innovation is rare, and so gives the innovating firm a significant competitive advantage.

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

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Question 43

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According to the Strategic Focus about Wal-Mart, the only way that Wal-Mart's competitors can survive is to further reduce their low-cost position.

Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies.

Define awareness, motivation and ability in reference to competitive behavior.

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

____ markets are often described as volatile and innovative.

Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses.

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?

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

A competitive action can be one of two types, either ____ or ____.

Competitors are more likely to respond to strategic or tactical actions when they are taken by a market leader.

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

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

A lack of awareness leads to a reduction in competition.

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 ) Members of the pet food industry are likely to experience

The drivers of competitive behavior are awareness of the competitor, motivation to take action or respond, and the organization's ability in terms of resources and flexibility.

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

Quality affects the degree of rivalry in that firms lacking quality are likely to me more aggressive in their competitive actions until the quality problems are corrected.

Competitive dynamics refers to the total set of actions and responses taken by all firms competing within a market.