Question 1

What is a switching cost? Provide two examples of a switching cost.

Accepted Answer

Switching costs are incurred when a buyer changes suppliers. One possible example is a frequent flyer program; once you begin to accumulate miles within a program, flying on another airline imposes the costs of missing out on potential benefits.

Question 2

Pure competition has many players, but no sustainable advantage or profit potential.

Accepted Answer

A) True 
 B)False  True

Question 3

Asymmetries are differences among firms that explain differences in profitability.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is not true about IKEA's Klippan couch?

Accepted Answer

A)  Low-cost 
B)  Hard-wearing 
C)  Retails for more than its original price 
D)  Supplies and manufacturing sourced from around the world 
A)  Low-cost 
B)  Hard-wearing 
C)  Retails for more than its original price 
D)  Supplies and manufacturing sourced from around the world

Question 5

In most markets, multiple firms compete for the same set of buyers with similar goods or services.

Accepted Answer

A) True 
 B)False

Question 6

How do asymmetries help explain competitive advantage?

Accepted Answer

Different asymmetries can beco

Question 7

Industrial-organization (IO) economics investigates the relationship between the behavior of firms and market structure.

Accepted Answer

A) True 
 B)False

Question 8

Changes in the macro environment can be considered by potential sources of competitive advantage and of erosion of competitive advantage.

Accepted Answer

A) True 
 B)False

Question 9

What is a focus strategy? Provide an example of a firm that pursues a focus strategy.

Accepted Answer

Focus strategies concentrate on achievin

Question 10

Which of the following reduces buyer power?

Accepted Answer

A)  Consumers have very limited information about production and costs. 
B)  There are a fewer number of buyers. 
C)  There are higher switching costs for the buyer. 
D)  Buyer unable to coordinate activities. 
A)  Consumers have very limited information about production and costs. 
B)  There are a fewer number of buyers. 
C)  There are higher switching costs for the buyer. 
D)  Buyer unable to coordinate activities.

Question 11

The ____________ strategy focuses on an industry-wide target and the uniqueness perceived by the customer.

Accepted Answer

A)  Combination 
B)  Differentiation 
C)  Focus 
D)  Overall Cost Leadership 
A)  Combination 
B)  Differentiation 
C)  Focus 
D)  Overall Cost Leadership

Question 12

Differentiation is:

Accepted Answer

A)  Providing value at a lower cost than competitors. 
B)  Offering one or more unique attributes that buyers are willing to pay a premium for. 
C)  Focusing on a unique segment of the overall market. 
D)  Simultaneously trying to implement more than one generic strategy. 
A)  Providing value at a lower cost than competitors. 
B)  Offering one or more unique attributes that buyers are willing to pay a premium for. 
C)  Focusing on a unique segment of the overall market. 
D)  Simultaneously trying to implement more than one generic strategy.

Question 13

Identify the six competitive forces and explain how they impact industry profitability.

Accepted Answer

The six forces are the power of compleme

Question 14

Which of the following is not a generic strategy identified by Porter?

Accepted Answer

A)  Differentiation 
B)  Overall Cost Leadership 
C)  Hybrid 
D)  Focus 
A)  Differentiation 
B)  Overall Cost Leadership 
C)  Hybrid 
D)  Focus

Question 15

Which of the following firms does not pursue a cost leadership strategy?

Accepted Answer

A)  Orange County Choppers 
B)  Ikea 
C)  Wal-Mart 
D)  Southwest Airlines 
A)  Orange County Choppers 
B)  Ikea 
C)  Wal-Mart 
D)  Southwest Airlines

Question 16

Many companies are located in competitive environments that can be classified as either a monopoly or as pure competition.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not an example of a collaborative agreement?

Accepted Answer

A)  Lobbying coalition 
B)  Research consortia 
C)  Closed bid 
D)  Co-branding alliance 
A)  Lobbying coalition 
B)  Research consortia 
C)  Closed bid 
D)  Co-branding alliance

Question 18

____________ exists when actors coordinate their activities to their advantage.

Accepted Answer

A)  Competition 
B)  Collaboration 
C)  Coopetition 
D)  Collusion 
A)  Competition 
B)  Collaboration 
C)  Coopetition 
D)  Collusion

Question 19

What is a strategic group? Provide an example of three strategic groups within an industry and sample characteristics and firms.

Accepted Answer

Strategic groups are subsets of firms in

Question 20

Both suppliers and buyers will have more power if they are relatively fragmented, lack information about production and its costs, and are unable to coordinate activities among themselves.

Accepted Answer

A) True 
 B)False

What is a switching cost? Provide two examples of a switching cost.

Pure competition has many players, but no sustainable advantage or profit potential.

Asymmetries are differences among firms that explain differences in profitability.

Which of the following is not true about IKEA's Klippan couch?

In most markets, multiple firms compete for the same set of buyers with similar goods or services.

How do asymmetries help explain competitive advantage?

Industrial-organization (IO) economics investigates the relationship between the behavior of firms and market structure.

Changes in the macro environment can be considered by potential sources of competitive advantage and of erosion of competitive advantage.

What is a focus strategy? Provide an example of a firm that pursues a focus strategy.

Which of the following reduces buyer power?

The ____________ strategy focuses on an industry-wide target and the uniqueness perceived by the customer.

Differentiation is:

Identify the six competitive forces and explain how they impact industry profitability.

Which of the following is not a generic strategy identified by Porter?

Which of the following firms does not pursue a cost leadership strategy?

Many companies are located in competitive environments that can be classified as either a monopoly or as pure competition.

Which of the following is not an example of a collaborative agreement?

____________ exists when actors coordinate their activities to their advantage.

What is a strategic group? Provide an example of three strategic groups within an industry and sample characteristics and firms.

Both suppliers and buyers will have more power if they are relatively fragmented, lack information about production and its costs, and are unable to coordinate activities among themselves.

Defining Strategy

Developing Resources

Serving Customers

Seeking Opportunity

Specifying a Business Model

Considering Corporate Strategy

Thinking Globally

Acting Responsibly

Ensuring Execution

Managing Knowledge

Providing Leadership

Filters

Exam 5: Competing With Rivals

What is a switching cost? Provide two examples of a switching cost.

Pure competition has many players, but no sustainable advantage or profit potential.

Asymmetries are differences among firms that explain differences in profitability.

Which of the following is not true about IKEA's Klippan couch?

In most markets, multiple firms compete for the same set of buyers with similar goods or services.

How do asymmetries help explain competitive advantage?

Industrial-organization (IO) economics investigates the relationship between the behavior of firms and market structure.

Changes in the macro environment can be considered by potential sources of competitive advantage and of erosion of competitive advantage.

What is a focus strategy? Provide an example of a firm that pursues a focus strategy.

Which of the following reduces buyer power?

The ____________ strategy focuses on an industry-wide target and the uniqueness perceived by the customer.

Differentiation is:

Identify the six competitive forces and explain how they impact industry profitability.

Which of the following is not a generic strategy identified by Porter?

Which of the following firms does not pursue a cost leadership strategy?

Many companies are located in competitive environments that can be classified as either a monopoly or as pure competition.

Which of the following is not an example of a collaborative agreement?

____________ exists when actors coordinate their activities to their advantage.

What is a strategic group? Provide an example of three strategic groups within an industry and sample characteristics and firms.

Both suppliers and buyers will have more power if they are relatively fragmented, lack information about production and its costs, and are unable to coordinate activities among themselves.

Defining Strategy

Developing Resources

Serving Customers

Seeking Opportunity

Specifying a Business Model

Considering Corporate Strategy

Thinking Globally

Acting Responsibly

Ensuring Execution

Managing Knowledge

Providing Leadership

Filters