Exam 5: Competitive Rivalry and Dynamics

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).

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 When she calls to have the dish repaired, the service representative tells her that the dish is obsolete and that parts for it are no longer made.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.

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

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% 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 Case Scenario 1) 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?

Which organization has the highest market dependence?

Competitive dynamics refers to the

Which pair of firms has the LEAST resource similarity?

A second mover

Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.

What are the advantages and disadvantages of being a first mover, second mover, and late mover?

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

Late movers are those firms that

A strategy's success is determined not only by the firm's initial competitive actions but also by how well it anticipates competitors' responses to them and by how well the firm anticipates and responds to its competitors initial actions.

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.

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

Without available resources (such as financial capital and people), the firm lacks the ability to attack a competitor or respond to its actions.

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.

Coca Cola and PepsiCo compete across a number of products (e.g., soft drinks, bottled water) and geographic markets (U.S. and foreign markets) indicating that both companies have market commonality.

A company in a ____ industry is LEAST likely to make heavy use of patents and copyrights.

A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.