Exam 5: Competitive Rivalry and Competitive Dynamics

Large firms with significant market power who act like small firms (making strategic decisions and implementing them with speed) and are innovative, are typically strong competitors and are likely to earn above-average returns.

Case Scenario 2: Plasco. Plasco is a $3 billion U.S.-based manufacturer of flexible plastic products like trash cans, reheatable and freezable food containers, and a broad range of other plastic storage containers designed for home and office use. Historically, Plasco has been the category killer for most of its products and has devoted tremendous resources to new product development on an ongoing basis - this research intensity has allowed the company to release, on average, a new product every day over the past five years. Despite its past strength and high brand awareness, Plasco's profitability has been eroded by dramatic increases in the cost of plastic resin, the primary input into its plastic products. Moreover, the retail channel has experienced rapid consolidation resulting in a shift in the balance of power from branded manufacturers like Plasco, to strong retailers like Wal-Mart, who in turn have been unwilling to help Plasco absorb the higher resin costs. Enhancing Wal-Mart's power is the fact that it can always turn to alternative high-volume sources of consumer plastic products like Sterlite. Further hampering Plasco's recovery is the emergence of feisty little foreign competitors like Zig Industries, a $250 million Israeli firm that has begun to take part of Plasco's market share in plastic toolboxes. Ironically, Plasco was the first company to offer plastic toolboxes some 20 years ago. This innovation changed the market dramatically and Plasco's first mover strategy rewarded it with a rapidly growing new segment and a dominant market position. Today, Plasco's toolboxes are viewed as rather boring, while Zig's products are ingeniously designed to catch the customer's eye in the aisle (better merchandising the product) and capture their interest (and pocketbook) with many new and novel features. Zig is also able to provide this new line of toolboxes at between 10% to 15% less than Plasco. -(Refer to Case Scenario 2) How can a small player like Zig be such a successful competitor against a large, established firm like Plasco?

Multimarket competition refers exclusively to situations in which firms compete against each other simultaneously in several geographic markets.

____ relates to the gains or losses a firm will experience if it attacks a rival or responds to an attack by a rival.

Because Netflix uses only online and mail-based facilities, they have low market commonality with Blockbuster.

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

The success of HP's launch of a laptop computer sold through Best Buy with a main differentiating feature of the case being silver and white instead of the standard black is an indication of what?

Intensified rivalry within an industry results in decreased average profitability for the firms within it.

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is

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.

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 any one else does." The CEO

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

____ markets are often described as volatile and innovative.

"Competitive dynamics" indicates that firms and their strategic actions are independent.