Exam 5: Competitive Rivalry and Competitive Dynamics

In the Chapter 5 Strategic Focus, companies such as Amazon, Oracle, HP and Dell competing in the cloud computing market have been able to develop sustainable competitive advantages.

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

A second mover

According to the Chapter 5 Opening Case, in the video-on-demand market, Apple's iTunes service ________________.

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

Quality begins at the bottom of the organization where employees must create values for quality that permeate the entire organization.

On the whole there are more competitive responses to

Intensified rivalry within an industry results in

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

The benefits of being a first mover are most substantial in fast cycle markets.

In the Chapter 5 Strategic Focus, rivals such as Amazon, Oracle, HP and Dell in the cloud computing market are competing in a_________________.

Competition between candy makers (e.g., Hershey, Mars, Cadbury, Nestle, and Godiva) where firms package design (including package downsizing) and ease of availability is characteristic of a

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) Assume that you are a consultant and have been asked by the management at Romulac Inc. whether it should be a first mover with the new component technology. Romulac is leaning towards being a first mover because the general evidence is that first movers have greater survival rates than later market entrants. Is this true or false?

As noted in the Chapter 5 Opening Case, Apple opened a service called "Game Center" once it found that users were using its iPhone, iPad, and iPod platforms for videogames. This is an example of a strategic action by Apple which was followed by strategic responses by Nintendo and Sony.

Quality is a universal theme and is a necessary, but not a sufficient, condition for competitive success.

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?

The satellite dish at Faye's weekend home has malfunctioned. When she calls to have the dish repaired, the service representative tells her that the dish is obsolete and that parts for it are no longer made. Faye must replace the old dish with a new dish. This is an example of lack of firm loyalty to a product in a fast-cycle market.

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 provides an example of

Which of the following is TRUE of Southwest Airlines?

Competitors are more likely to respond to competitive actions that are taken by