Deck 9: Competitive Analysis and Strategy

Question 1

A focused educational system is an example of a generalized factor.

Answer 1

False

Question 2

Firms paying high capital costs are frequently unable to stay in a market in which the competition comes from a nation with low capital costs.

Answer 2

True

Question 3

Competitive advantage may be created indirectly by nations that have selective factor disadvantages.

Answer 3

True

Question 4

Governments are not considered determinants but can exert their influence on determinants.

Question 5

Basic factors do not lead to sustainable international competitive advantage.

Question 6

One of the barriers that a new entrant to an industry might face is low switching costs.

Question 7

The downside of global competition is its impact on the producers of goods and services.

Question 8

According to Michael Porter, motivation is one of the local things that distant rivals will find hard to match.

Question 9

Competition works to drive down the rate of return on invested capital toward the rate that would be earned in a perfectly competitive industry.

Question 10

The availability of substitute products places limits on the prices market leaders can charge in an industry.

Question 11

A country's size and location are considered as its physical resources.

Question 12

New entrants in an industry push prices downward and squeeze margins, resulting in reduced industry profitability.

Question 13

Suppliers enjoy bargaining power when their products or services carry low switching costs.

Question 14

The effects of global competition have been highly disadvantageous for consumers around the world.

Question 15

The quantity of workers available in a country and their wage levels constitute a nation's knowledge resource factors.

Question 16

The presence of significant domestic rivalry will create complacency in home firms and will eventually cause them to become noncompetitive in the world markets.

Question 17

A buyer can exert power over a supplier when the supplier's products are highly differentiated.

Question 18

Chance events are occurrences that are beyond the control of firms, industries, and usually governments.

Question 19

Buyers enjoy bargaining power when they are willing to achieve backward vertical integration.

Question 20

Firms with high strategic stakes in achieving success in an industry generally are destabilizing because they may be willing to accept unreasonably low profit margins to establish themselves.

Question 21

The reluctance of U.S. manufacturers to produce small cars for smaller unit profits despite the growing preference of U.S. customers for small cars is a classic example of ________.

A) marketing myopia
B) vertical disintegration
C) diseconomies of scale
D) diseconomies of scope

Question 22

According to Porter, segmentation is the generic strategy used in access-based positioning.

Question 23

The uniqueness and magnitude of the customer value created by a firm's strategy are ultimately determined by the firm's management.

Question 24

According to Michael Porter, the suppliers in an industry enjoy bargaining power when ________.

A) there are many suppliers to choose from
B) their products or services are not differentiated
C) their products or services carry low switching costs
D) their businesses are not threatened by alternative products

Question 25

According to Michael Porter, one of the major forces influencing competition in an industry is the threat of ________.

A) Giffen goods
B) independent goods
C) Veblen goods
D) substitute goods

Question 26

Which of the following production concepts was invented in Japan and gave Japanese automobile companies a knockout advantage in world markets through lower costs and higher quality?

A) horizontal integration
B) vertical integration
C) lean manufacturing
D) mass customization

Question 27

Richard D'Aveni notes that in today's business environment, market stability is high due to long product life cycles.

Question 28

________ is a major entry barrier where industry leaders convince potential competitors that any market entry effort will be countered with vigorous and unpleasant responses.

A) Corporate narcissism
B) Brinkmanship
C) Gamesmanship
D) Chaotics

Question 29

According to Michael Porter, which of the following is a barrier to the entry of new companies into an industry?

A) vertical integration
B) horizontal integration
C) product differentiation
D) rapid manufacturing

Question 30

A narrow-focus strategy can be combined with differentiation-advantage strategies but not with cost-leadership strategies.

Question 31

________ refers to the decline in per unit product costs as the absolute volume of production per period increases.

A) Economies of scale
B) Economies of scope
C) Diseconomies of scale
D) Diseconomies of scope

Question 32

When a firm's product delivers unique value because of an actual or perceived uniqueness in a broad market, it is said to have a cost-leadership advantage.

Question 33

According to Michael Porter, which of the following refers to a country's endowment of resources?

A) factor conditions
B) dependent variables
C) cultural dimensions
D) value constructs

Question 34

The thesis that a firm's home-base country is the main source of core competencies and innovation was challenged by Michael Porter.

Question 35

A cost-focus strategy focuses on a narrow target segment.

Question 36

A market environment principally involves economic exchange whereas a nonmarket environment includes regulatory bodies.

Question 37

According to Hambrick and Fredrickson, which of the following elements of a strategy represents the competitive advantage of an organization?

A) arenas
B) vehicles
C) differentiators
D) economic logic

Question 38

The generic strategy used in variety-based positioning is product differentiation.

Question 39

Cost leadership is a sustainable source of competitive advantage only if barriers exist that prevents competitors from achieving the same low costs.

Question 40

According to Michael Porter, the buyers in an industry enjoy bargaining power when ________.

A) they are planning to integrate horizontally
B) they purchase in large quantities from supplier firms
C) supplier products represent a small portion of the buyers' costs
D) the supplier's products are highly differentiated

Question 41

Which of the following is scarcer in nature, requires sustained investment, and leads to sustainable international competitive advantage?

A) advanced factors
B) basic factors
C) human resources
D) physical resources

Question 42

Richard D'Aveni uses the term ________ to describe a dynamic, competitive world in which no action or advantage can be sustained for long.

A) hypercompetition
B) imperfect competition
C) interspecific competition
D) intraspecific competition

Question 43

According to Michael Porter, which of the following is true of differentiation as a generic strategy?

A) It is an effective strategy for obtaining above-average financial returns because unique products often command premium price.
B) It offers an opportunity for small, specialized companies to grow while retaining their narrow focus on highly differentiated products.
C) It requires companies to construct the most efficient facilities in terms of scale or technology and obtain the largest share of market.
D) It has become increasingly popular in recent years as a result of the popularization of the experience curve concept.

Question 44

According to Michael Porter, ________ is a generic strategy in which a company can offer lower prices than the competition to a narrow target market.

A) focused differentiation
B) product differentiation
C) cost leadership
D) cost focus

Question 45

According to Michael Porter, access-based positioning occurs when a company ________.

A) satisfies a broad set of needs of all the customers in a wide segment
B) limits its product offering in order to minimize its prices
C) uniquely or preferentially reaches a specific market
D) focuses on the cost leadership generic strategy alone

Question 46

According to Michael Porter, which of the following is a broad market strategy that can enable companies to offer lower prices to customers in the late, more competitive stages of the product life cycle?

A) focused differentiation
B) product differentiation
C) cost leadership
D) cost focus

Question 47

According to Porter, what are the generic strategies for creating competitive advantage?

Question 48

According to Michael Porter, ________ is based on a firm's decision to carry out a limited number of activities related to delivering a limited product or service.

A) needs-based positioning
B) variety-based positioning
C) access-based positioning
D) global network positioning

Question 49

________ are geographic concentrations of interconnected companies and institutions in a particular field, which constitute a critical mass.

A) Districts
B) Clusters
C) Mill towns
D) Creative cities

Question 50

Which of the following is true of the demand conditions described in Porter's diamond model?

A) Early market saturation puts extreme pressure on a company to expand, which leads to inappropriate establishment in foreign countries that destabilize the company.
B) Early home demand fails to anticipate international demand and hence gives foreign rivals the advantage of getting established in an industry sooner than local firms.
C) Slow home-market growth is an incentive for companies to invest in and adopt new technologies, and to build large, efficient facilities.
D) The size and pattern of growth of home demand are important only if the composition of the home demand is sophisticated and anticipates foreign demand.

Question 51

According to Porter, what are the different barriers that new entrants to an industry face?

Question 52

According to Michael Porter, which of the following is a narrow market strategy for creating competitive advantage?

A) vertical integration
B) horizontal integration
C) cost leadership
D) focused differentiation

Question 53

According to Hamel and Prahalad, which of the following approaches is being utilized by a company that refuses to follow the practices and regulations set by industry leaders and finds new ways to gain competitive advantage?

A) searching for loose bricks
B) changing the rules of engagement
C) collaborating
D) building layers of advantage

Question 54

According to Hamel and Prahalad, which of the following approaches is being utilized by a company that gains access to the know-how developed by other companies through licensing agreements, joint ventures, or partnerships?

A) collaborating
B) searching for loose bricks
C) building layers of advantage
D) changing the rules of engagement