Question 1

The key insight from the "prisoners' dilemma" game is:

Accepted Answer

A) Competitive behavior can create an outcome that is inferior for all involved in a situation 
B) The principle of "honor among thieves" is inapplicable either to thieves or to business executives 
C) In every social interaction,the inability to communicate effectively always results in an inferior outcome 
D) Trust can play a critical role in creating favorable outcomes form both crime and business

Question 2

Video game consoles and video games are complementary products: the availability of one increases the value of the other.In the past the suppliers of consoles were able to appropriate most of the profits generated by video game systems because:

Accepted Answer

A) Video game consoles cost more to develop than video games. 
B) The consoles were more powerful determinant of the consumer experience than the games. 
C) The console suppliers controlled technology and distribution giving them more bargaining power than the suppliers of video games. 
D) The console makers-Nintendo,Sony and Microsoft-had bigger revenues and greater market capitalization than the suppliers of video games.

Question 3

In supplying video game systems,the suppliers of consoles are no longer in such a strong position to appropriate the major profits because of increasingly intense competition among the three of them (Sony,Microsoft and Nintendo),and the growing size and power of the suppliers of video games.

Accepted Answer

A) True 
 B)False

Question 4

The aim of competitive intelligence is to predict competitor behavior on the basis of verifiable facts.Attempts to "get inside the heads of your rivals" are inherently unreliable and should be avoided.

Accepted Answer

A) True 
 B)False

Question 5

Competitive intelligence,the systematic collection and analysis of information about rival firms,is:

Accepted Answer

A) A practice which,though legal in most countries,is unethical. 
B) Likely to distract firms from their efforts to establish positions of competitive advantage based upon their distinctive strengths. 
C) An important component of a firm's environmental scanning and strategic analysis. 
D) A useful activity because it can help firms imitate the strategies of their more successful competitors.

Question 6

In the world of business,competition and cooperation seldom coexist.

Accepted Answer

A) True 
 B)False

Question 7

Strategic groups consist of:

Accepted Answer

A) Firms that follow similar generic strategies (e.g.focus or differentiation) 
B) Firms within an industry that have similar strategies 
C) Firms that occupy the same industry segment 
D) Firms that target the same customer groups

Question 8

To attempt to predict competitive behaviors,Porter suggests a four-step framework,where analysts must identify:

Accepted Answer

A) The competitor's current strategy,its objectives,its assumptions about the industry and itself,and its available resources and capabilities 
B) The competitor's current strategy,its future strategy,its assumptions,and its vulnerabilities 
C) The competitor's assumptions about the industry,its available resources and competencies,its objectives,and its competitive advantage 
D) The competitor's available resources and competencies,its objectives,then its competitive advantage,and finally its performance

Question 9

Industry segmentation is always horizontal-it is based upon the products an industry suppliers and the customers to which they are supplied.The notion of vertical segmentation-segmenting an industry along its value chain is attractive in principle but impossible in practice.

Accepted Answer

A) True 
 B)False

Question 10

To divide an industry into segments it is always preferable to focus on the characteristics of different customers rather than the characteristics of different products.

Accepted Answer

A) True 
 B)False

Question 11

The more variables that are deployed to segment a market,the more useful is the resulting segmentation likely ot be.

Accepted Answer

A) True 
 B)False

Question 12

The main usefulness of strategic group analysis is in analyzing interfirm profitability
differences within an industry; it is less useful as a tool for describing the strategic positioning of firms within an industry.

Accepted Answer

A) True 
 B)False

Question 13

A key limitation of Porter's five forces model of competition is that:

Accepted Answer

A) It looks only at single industries not at relationships between industries 
B) Competitors' strategies may shape industry structure,rather than structure shaping competition 
C) Industries are more complexity than can be reduced to five competitive forces 
D) The different levels of industry analysis that the five forces model can be applied to

Question 14

Industry membership is the single most important source of profitability differences between firms.

Accepted Answer

A) True 
 B)False

Question 15

The principal value of game theory to the field of strategic management is in:

Accepted Answer

A) Generating more accurate predictions from competitive situations 
B) Extending the theory of competition behavior to embrace cooperation 
C) Extending the analysis of competitive behavior to the realms of politics,diplomacy,and social behavior 
D) Permitting a more rigorous framing of competitive situations and strategic decisions

Question 16

While the profitability of supplying a product tends to be reduced by availability of close substitutes,the effect of complements on profitability is less clear: it depends upon how value is shared among the suppliers of the different complements.

Accepted Answer

A) True 
 B)False

Question 17

In a market where Firm A and Firm B are leading suppliers,if Firm A initiates a price cut,the likelihood that Firm B responds with an identical price cut will be greater:

Accepted Answer

A) If Firm B's medium term goal is to maximize profit. 
B) If Firm B's medium term goal is to maximize market share. 
C) If Firm B is a private rather than a public (listed)company. 
D) If the market is growing.

Question 18

When products A and B are complements,the division of profit between the supplier of A and the supplier of B will depend upon which builds the stronger market position and is better able to reduce the value contributed by the other.

Accepted Answer

A) True 
 B)False

Question 19

Empirical studies on hypercompetition show unanimously that industries are becoming increasingly turbulent and competitive advantage increasingly short-lived

Accepted Answer

A) True 
 B)False

Question 20

Industries are the central arenas in which competition takes place.Disaggregating industries into segments and groups of firms add little to our understanding of competition.

Accepted Answer

A) True 
 B)False

Exam 4: Further Topics in Industry and Competitive Analysis

The key insight from the "prisoners' dilemma" game is:

Video game consoles and video games are complementary products: the availability of one increases the value of the other.In the past the suppliers of consoles were able to appropriate most of the profits generated by video game systems because:

In supplying video game systems,the suppliers of consoles are no longer in such a strong position to appropriate the major profits because of increasingly intense competition among the three of them (Sony,Microsoft and Nintendo),and the growing size and power of the suppliers of video games.

The aim of competitive intelligence is to predict competitor behavior on the basis of verifiable facts.Attempts to "get inside the heads of your rivals" are inherently unreliable and should be avoided.

Competitive intelligence,the systematic collection and analysis of information about rival firms,is:

In the world of business,competition and cooperation seldom coexist.

Strategic groups consist of:

To attempt to predict competitive behaviors,Porter suggests a four-step framework,where analysts must identify:

Industry segmentation is always horizontal-it is based upon the products an industry suppliers and the customers to which they are supplied.The notion of vertical segmentation-segmenting an industry along its value chain is attractive in principle but impossible in practice.

To divide an industry into segments it is always preferable to focus on the characteristics of different customers rather than the characteristics of different products.

The more variables that are deployed to segment a market,the more useful is the resulting segmentation likely ot be.

The main usefulness of strategic group analysis is in analyzing interfirm profitability differences within an industry; it is less useful as a tool for describing the strategic positioning of firms within an industry.

A key limitation of Porter's five forces model of competition is that:

Industry membership is the single most important source of profitability differences between firms.

The principal value of game theory to the field of strategic management is in:

While the profitability of supplying a product tends to be reduced by availability of close substitutes,the effect of complements on profitability is less clear: it depends upon how value is shared among the suppliers of the different complements.

In a market where Firm A and Firm B are leading suppliers,if Firm A initiates a price cut,the likelihood that Firm B responds with an identical price cut will be greater:

When products A and B are complements,the division of profit between the supplier of A and the supplier of B will depend upon which builds the stronger market position and is better able to reduce the value contributed by the other.

Empirical studies on hypercompetition show unanimously that industries are becoming increasingly turbulent and competitive advantage increasingly short-lived

Industries are the central arenas in which competition takes place.Disaggregating industries into segments and groups of firms add little to our understanding of competition.