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Exam 5: Competitive Rivalry and Competitive Dynamics

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Question 21

True/False

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Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and mutually acknowledged competitors.

A) True
B) False

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Question 22

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The form of competition described in the Chapter 5 Strategic Focus on competition between candy makers (e.g., Hershey, Mars, Cadbury, and Godiva) is characteristic of a

A) slow-cycle market
B) standard cycle market.
C) fast-cycle market.
D) intermediate-cycle market.

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

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Question 23

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A company in a ____ industry is LEAST likely to make heavy use of patents and copyrights.

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.

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

Goods or services in standard-cycle markets reflect

Firms in a slow-cycle market are shielded from imitators for long periods of time.

Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.

A firm with a reputation as a price predator (an actor that frequently reduces prices to gain or maintain market share) generates few responses to its pricing tactical actions.

Which of the following is TRUE of Southwest Airlines?

Firms that are typically late movers usually have little organizational slack.

As discussed in the Chapter 5 Strategic Focus, Wal-Mart's aggressive pricing strategy is a strategic action that plays a major role in its success.

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.

Sustained competitive advantage is most achievable in a ____ market.

Walt Disney's focus on ____ is typical of a slow-cycle market.

In order to compete effectively, standard-cycle firms need all of the following EXCEPT

What factors contribute to the likelihood of a response to a competitive action?

Case Scenario : Romulac, Inc. Romulac Inc. (RI), a subsidiary of a large successful manufacturing conglomerate, supplies a key component in the assembly of residential cooling systems (air conditioning units, etc.). There has been tremendous consolidation in RI's industry, to the point where only five suppliers of this particular component account for nearly 90% of U.S. industry sales. Paralleling this trend, its customers - comprised of makers of branded residential air conditioning units like Carrier and Trane - have seen similar levels of consolidation in their own industry. Half of these firms produce all their components in-house, while the balance purchases them from specialized component manufacturers like RI. RI's business is extremely capital intensive, and their 40% share of the market allows them to also be the most profitable domestic player. Strong competitors exist in Europe and Asia. Although like RI, these foreign players' strongholds are their home regions, with negligible presence outside of the region. Some of the larger Asian manufacturers have signaled an interest in more aggressively pursuing the lucrative U.S. market. RI is presently considering a $400 million dollar investment in a new plant, which will create a component that is much quieter, more efficient, and is likely to satisfy future regulatory standards. While the core technology for the new component is very old, RI's engineering and design skills have allowed them to retain their low cost-advantage, even though the component will represent a significant improvement over products currently provided by its competition. -(Refer to the above Case Scenario ) Develop an argument as to why RI should hold back and be a second mover with the new technology.

To be a first mover, the firm must have readily available resources to invest in R&D as well as to rapidly and successfully produce and market a stream of innovative products.

It is much easier for a competitor to implement strategic actions than tactical actions.