Exam 5: Competitive Rivalry and Dynamics

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 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 Case Scenario 2) How can a small player like Zig be such a successful competitor against a large, established firm like Plasco?

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

What is market commonality? What is resource similarity? How are these concepts combined to identify the level of competition between two firms?

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is

Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies.

What factors contribute to the likelihood of a response to a competitive action?

Even if the effects of a competitor's strategic action on the focal firm are significant (e.g., loss of market share), little response is likely from that firm.

Sustained competitive advantage is most achievable in a ____ market.

An organization's loyalty to its own product is a competitive disadvantage in a ____ market.

On the whole there are more competitive responses to

Multimarket competition occurs when firms

It is more likely that locally-owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.

The global automobile producing industry has high market commonality and high resource similarity, and are aware, motivated, and have the ability to compete for market share in each segment and country they have entered (Chapter 5 Strategic Focus).

Competitive rivalry is the set of competitive actions and responses that occur among firms as they maneuver for an advantageous market position.

Canon's desktop copiers and Apple's iPhone are examples of _____________ that are ________ rivalry battles with competitors (Chapter 5 Opening Case).

Because of the demanding technology development required, disruptive innovations such as the iPhone are usually confined to a single industry where it can focus on competing against a few rivals (Chapter 5 Opening Case).

In general, small firms are more likely than large firms to launch competitive actions and tend to do it more quickly.

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

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

Quality affects the degree of rivalry in that firms lacking quality are likely to me more aggressive in their competitive actions until the quality problems are corrected.