Exam 5: Competitive Rivalry and Competitive Dynamics.

Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each.

Reverse engineering is characteristic of

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

Firms operating in the same market,offering similar products and targeting similar customers are competitors.

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

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

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?

Case Scenario 3: The Pet Food Industry. The pet food industry is composed 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 Case Scenario 3). The pet food industry provides an example of

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

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.

A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT when

The need for quality products and services is so high that quality alone can assure a firm that it will achieve strategic competitiveness and earn above-average returns.

Walmart's aggressive pricing strategy is a strategic action that plays a major role in how it competes.

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

Lobelia's Nursery and Garden Resource Center has long provided high-quality,typical types of seasonal bedding plants to customers in the Mobile,Alabama,metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently,Lobelia has opened a branch in Fairfax,Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to

Case Scenario 3: The Pet Food Industry. The pet food industry is composed 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 Case Scenario 3). Members of the pet food industry are likely to experience

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?

Extensive market commonality guarantees intense competition in an industry.

Case Scenario 1: 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 percent of U.S. industry sales. Paralleling this trend, its customers-composed 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 percent 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 Case Scenario 1). Develop an argument as to why RI should try to be a first-mover with this new technology.