Exam 5: Competitive Rivalry and Competitive Dynamics

All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a wide-spread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of these statements is most likely TRUE?

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.

A firm that is LEAST likely to launch competitive actions is one that has

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

A firm can expect that every launch of a successful new product will be followed by a counterattack by competitors, even in a slow-cycle market.

Define competitive actions and responses and explain the two types of competitive actions and responses.

The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors.

Case Scenario : 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 the above Case Scenario) How can a small player like Zig be such a successful competitor against a large, established firm like Plasco?

Case Scenario : 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 the above Case Scenario) Is the toolbox business a slow-, standard-, or fast-cycle business?

Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus)

Define slow-cycle, fast-cycle and standard cycle markets.

Carl has just graduated with a management degree. He has a good understanding of his personal strengths and weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target firms in slow-cycle markets.

The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if

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

Sustained competitive advantage is most achievable in a ____ market.

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

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

Toyota's hybrid power train (e.g., the Prius) has been dominant for a number of years but rivals such as Porche, Chrysler, Hyundai and GM have all developed competing hybrid systems. The developments aimed at improving fuel efficiency illustrate competitive rivalry or "actions and responses" by firms in the global automobile industry (Chapter 5 Strategic Focus).