Exam 5: Competitive Rivalry and Competitive Dynamics.

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

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.

Patent laws and regulatory requirements such as required FDA (Food and Drug Administration)approval to launch new products shield pharmaceutical companies' positions in this slow-cycle market.

Which organization has the highest market dependence?

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

An organization's loyalty to its own product is a competitive disadvantage in a(n)______market.

A company in a______industry is LEAST likely to make heavy use of patents and copyrights.

Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

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(n)

Firms are likely to imitate the actions of a competitor that is noted for risky,complex,and unpredictable behavior because this is a way to imitate unobservable core competencies.

-------------and -----------describe the situation in which organizations are direct competitors and are fully aware of the competition.

Two firms,such as a small local,family-owned Italian restaurant and Olive Garden share few markets and have little similarity in resources,but are nonetheless direct and mutually acknowledged competitors.

Mighty Mike's,a manufacturer of power tools for the home hobbyist,has seen its main competitor,MyTools,bring out a line of power tools that are smaller sized,lighter weight,and suitable for women and older hobbyists who have weaker hands than the typical male workshop hobbyist. Mighty Mike is waiting to see whether MyTool's new line is a success. Mighty Mike could be classified as a second mover.

Which pair of firms has the LEAST resource similarity?

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 5 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 Walmart, who in turn have been unwilling to help Plasco absorb the higher resin costs. Enhancing Walmart'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 percent to 15 percent 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?

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

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

markets are often described as volatile and innovative.

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 hold back and be a second mover with the new technology.

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.