Deck 8: Managing Global Competitive Dynamics

Question 1

The capability to attack in multiple markets throws the firm off balance leaving it vulnerable to rivals and thus reducing value.

Answer 1

False

Question 2

Slow-moving firms have better organization and more committed employees, which enable them to respond quickly to competitive attacks.

Answer 2

False

Question 3

Firms with a strong sphere of influence in responding to rival actions are better able to defend their core markets.

Answer 3

True

Question 4

According to game theory, two competitors who have agreed to cooperate no longer have incentive to cheat.

Question 5

The "strategy as action" perspective highlights the power of creative destruction.

Question 6

The effects of action and response on competitive interaction are what is needed for competitive advantage and performance.

Question 7

Strategy involves planning for actions rather than reactions or interaction.

Question 8

Bargaining can take place through signals and actions.

Question 9

Industry-based considerations are fundamentally concerned with the very first of the Porter five forces, interfirm rivalry.

Question 10

Under antitrust law, a company can be in trouble for setting prices too high but not for setting them too low.

Question 11

If an attack is so subtle that rivals are not aware of it, the attacker's objectives are not likely to have been attained.

Question 12

In the prisoners' dilemma, the maximum joint payoff comes if both prisoners confess.

Question 13

Market commonality may lead to tacit collusion.

Question 14

Multimarket competition destroys mutual forbearance.

Question 15

A price leader in a market has a great deal of control of the level of tacit collusion by competitors in the market.

Question 16

Multimarket competition occurs when firms engage the same rivals in multiple markets.

Question 17

Collusion survives because it does not have an incentive problem as is illustrated by the prisoner's dilemma.

Question 18

If the attacked market is of marginal value, managers may decide not to counterattack.

Question 19

Firms that have a high degree of resource similarity are likely to have similar strengths and weaknesses.

Question 20

Multimarket competitors can respond to a firm's action in any of the markets where the firms meet.

Question 21

An extender strategy may be appropriate in some industries where pressures for globalization are relatively low.

Question 22

In general, stronger, pro-consumer antitrust laws result in greater competitive forces and lower prices in that country.

Question 23

Complexity and unpredictability are not helpful in dealing with firms' attacks and counterattacks.

Question 24

Rivals within strategic alliances can legally reduce cost through price fixing.

Question 25

Anticompetitive actions can easily be distinguished from competitive actions.

Question 26

Understanding the framework for competitor analysis between a pair of rivals can help managers allocate resources in proportion to the degree of threat from each rival.

Question 27

For MNEs, initial dominance means that they will be able to stay on top in a given market.

Question 28

An extender strategy is being used when local firms engage in rapid learning to approach the capabilities of the MNEs and then expand overseas.

Question 29

A firm's choice of competing/cooperating with rivals depends on industry conditions and the nature of competitive assets.​

Question 30

All countries treat incumbents who fix prices and raise entry barriers to new entrants as engaging in antitrust actions.

Question 31

U.S. courts have not sought to unilaterally punish non-U.S. cartels (if they are legal elsewhere) simply because they may have a substantial adverse impact on U.S. markets.

Question 32

Two of the three drivers for counterattacks are motivation and concentration.

Question 33

Antitrust laws were mostly created primarily in response to the realities of domestic competition.​

Question 34

To reduce competitive intensity, firms can send an open signal for a truce.

Question 35

When faced with a competitor that could take away a firm's current customers, the firm should immediately launch a price war.

Question 36

A gambit move can be regarded as exchange of firm's spheres of influence.

Question 37

A strategy that leverages local assets is called an extender strategy.

Question 38

Critics of U.S. policy on dumping at least agree that our policy on predatory pricing is consistent both domestically and internationally.

Question 39

Thrust makes use of military theory that the attacker needs to overcome a well-defended position through a conventional frontal assault.

Question 40

Local firms' primary strengths lie in a deep understanding of local markets, and thus they would pursue a dodger strategy.

Question 41

A firm that answers yes to the question, "If I set up a low-cost business, will it generate synergies with my existing business?" its next action should probably be to:

A)​Watch out for rivals but not take them on.
B)​Switch to selling solutions.
C) ​Merge with or take over rivals.
D) ​Merge with or take over rivals.

Question 42

In essence, strategy is interaction in which:

A)​Performance is not the goal.
B)​Action and reactions lead to competitive advantage.
C) ​Mutual forbearance is the goal.
D) ​Competitive performance is the result of collusion.

Question 43

The main types of attack include:

A)Defender.
B)Dodger.
C) Gambit.
D) Mutual forbearance.

Question 44

Cartels:

A)Involve collusion.
B)Are seldom outlawed.
C) Are common across all industries.
D) Bypass the "prisoners' dilemma" for participants.

Question 45

Which of the following factors is not involved in determining whether an industry is conducive for collusion?

A)​Concentration ratio.
B)​Homogeneity of products.
C) ​Game theory.
D) ​Entry barriers.

Question 46

In developing a strategy regarding competition or cooperation, it would be useful to:

A)Employ aggressive language, such as "Let's beat all rivals."
B)Strengthen capabilities that more effectively compete and/or cooperate.
C) Engage rivals in a prisoners' dilemma type of context.
D) "Look back, reason ahead."

Question 47

A comprehensive model of global competitive dynamics involves:

A)​Resource-based considerations.
B)​Institution-based considerations.
C) ​Industry-based considerations.
D) ​All of the above.

Question 48

Explicit collusion is exemplified by:

A)Cartels.
B)Trusts.
C) Users of game theory.
D) All of the above.

Question 49

Industry-based considerations regarding strategy:

A)Focus on gaining a geographical or organizational advantage.
B)Deal with the relationship between industry structures and firms' propensity to collude.
C) Involve decisions about dumping.
D) Indicate whether to engage in predatory pricing.

Question 50

Which of the following will enable a firm to be competitive even if there is a lack of top management commitment and employee involvement?

A)Organizational structure.
B)Use of stealth attacks.
C) Rapid responses, and willingness to answer challenges.
D) None of the above.

Question 51

Cross-market retaliation:

A)Seldom occurs among rivals.
B)Occurs in markets where rivals have little overlap.
C) Is more common in situations with greater market commonality.
D) None of the above.

Question 52

Which of the following are least likely to result in collusion?

A)High concentration ratio.
B)Heterogeneous products.
C) High entry barriers.
D) Presence of an industry price leader.

Question 53

"The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm" refers to similarity of:

A)Strategy.
B)Resources.
C) Markets.
D) Industry.

Question 54

Firm A indirectly coordinates a limit on price increases on its products that compete with Firm B's products. Firm A is engaging in:

A)​Tacit collusion.
B)​Explicit collusion.
C) ​A prisoner's dilemma.
D) ​A prisoner's dilemma.

Question 55

The extraterritoriality aspects of U.S. competition/antitrust policy have:

A)Been primarily directed at the EU.
B)Generally become more permissive since the 1980s.
C) Significantly curtailed strategic alliances since the 1980s.
D) Benefited U.S. firms much more than foreign firms.

Question 56

A mechanical approach to determining whether antitrust activities are taking place:

A)​Has been abandoned.
B)​Is widely used in all developed economies.
C) ​Is used in emerging economies but not in developed ones.
D) ​Provide a detailed assessment of collusion.

Question 57

Which is true of strategy?

A)Business strategy has few similarities with military strategy.
B)Military principles can be completely applied in business.
C) Militaries fight over territories, waters, and air spaces, firms compete in markets.
D) None of the above.

Question 58

Firm A may be more successful in imitating Firm B if Firm B:

A)Is not competitively aggressive.
B)Carries out complex actions.
C) Uses difficult to execute maneuvers.
D) All of the above.

Question 59

The resource similarity of two firms:

A)Indicates how likely they are to have similar competitive actions.
B)​Means that the firms will eventually end of colluding.
C) ​Is unimportant if the firms have little market commonality.
D) ​All of the above.

Question 60

A firm's ability to attack in multiple markets is a(n):

A)​Industry-based consideration.
B)​Resource-based consideration.
C) ​Institution-based consideration.
D) ​Sign of collusion.

Question 61

In some industries where pressures for globalization are relatively low, local firms may possess some skills and assets that are transferable overseas, thus leading to a(n) _____ strategy.

A)Defender
B)Extender
C) Dodger
D) Contender

Question 62

A local firm has built a successful business but acknowledges it would be difficult to continue to compete with a large MNE. The MNE makes an offer to buy the local firm's interests, and the local firm accepts the offer. It is following the:

A)​Contender strategy.
B)​Extender strategy.
C) ​Dodger strategy.
D) ​Defender strategy.

Question 63

A local firm finds it cannot compete head-to-head against a MNE in its market, so it decides the best strategy to use in this situation is the:

A)​Defender strategy.
B)​Extender strategy.
C) ​Dodger strategy.
D) ​Contender strategy.

Question 64

To make an attack more likely to succeed, a firm needs to:

A)​Make sure the rival is aware of the attack.
B)​Attack only strong rivals.
C) ​Follow a blue ocean strategy.
D) ​Go after rivals' core markets.

Question 65

Dumping is defined as:

A)Shipping hazardous waste to locations in other countries.
B)An exporter selling below cost abroad.
C) Unloading unsold inventory from the United States in other countries.
D) Getting rid of unprofitable operations.

Question 66

Which is NOT true concerning US anti trust policy today?

A)Legislation has legally permitted rivals to join hands in research and development (R&D).
B)There is increased permissiveness regarding mergers among rivals.
C) Clarity of policy has improved.
D) The legal standards for interfirm cooperation are no longer ambiguous in the United States.

Question 67

Which of the following would not be considered an initial set of actions to gain competitive advantage:

A)Price cuts.
B)Advertising campaigns.
C) Market entries.
D) Counterattacks.

Question 68

Firm A produces soccer equipment and softball/baseball equipment, as does Firm B. Firm A discontinued its softball/baseball line to focus entirely on its soccer line. This move is known as a:

A)​Feint.
B)​Gambit.
C) ​Thrust.
D) ​Collusion.

Question 69

A local firm possesses an extensive understanding of an aspect of a market an MNE is not particularly strong in. Therefore, the local firm should probably pursue a(n):

A)​Extender strategy.
B)​Defender strategy.
C) Dodger strategy.
D) ​Contender strategy.

Question 70

Which of the following can be considered a form of "dumping"?

A)​Selling a product "below cost."
B)​Coupons.
C) ​Putting backlog of inventory on the market.
D) ​All of the above.

Question 71

Which of the following is NOT one of the major influences in antitrust law in the United States?

A)​Sherman Act of 1890.
B)​Clayton Act of 1914.
C) ​Glass-Steagall Act of 1934.
D) ​Hart-Scott-Rodino Act of 1976.

Question 72

A defender strategy is best employed in which of the following situations?

A)When local firms' understanding of the market is greater than the MNE's knowledge of it.
B)When the pressure to globalize is high.
C) When a local firm prefers to cooperate through a joint venture.
D) When the goal is rapid learning and then global expansion.

Question 73

The goal of competition policies and antitrust policies is to:

A)​Prevent domestic firms from gaining market share against foreign firms.
B)​Prevent foreign firms from gaining market share against domestic firms.
C) ​Allow most favorable status to domestic firms.
D) ​Balance efficiency and fairness.

Question 74

When considering strategic actions for global competition, the first step for a strategist is to

A)​Thoroughly understand the nature of your industry.
B)​Strengthen the resources and capabilities that help you compete more effectively.
C) ​Understand the rules of the game for domestic and international competition.
D) ​Determine whether collusion or competition is the best course of action.

Question 75

A firm's attack on a focal arena important to a competitor, but not the attacker's true target area, is referred to as:

A)Thrust.
B)Feint.
C) Gambit.
D) Miscalculation.

Question 76

Rather than illegally colluding to raise their prices 20%, two firms can work together to cut their prices 20% through:

A)​Dumping.
B)​Game theory.
C) ​A feint.
D) ​Strategic alliance.

Question 77

The three drivers of counterattacks do not include:

A)Awareness.
B)Vengeance.
C) Capability.
D) Motivation.

Question 78

Which of the following is not a legal means of signaling?

A)Strategic alliances.
B)Direct discussion of reduced rivalry with competitors.
C) Truce seeking.
D) Communication via governments.

Question 79

Predatory pricing is more than just setting prices below cost. To qualify, it must:

A)​Take place in a market with numerous rivals.
B)​Be anti-consumer in outcome.
C) Be followed by a price increase after rivals are eliminated.
D) ​None of the above.

Question 80

Which of the following arguments is NOT among those offered by management scholars to explain in part why firms such as AT&T, IBM, and Microsoft faced antitrust accusations for engaging in the same activities that made them successful in the first place?

A)​Antitrust laws were often created in response to the old realities of mostly domestic competition.
B)​The same actions labeled as anticompetitive may actually be highly competitive.
C) ​U.S. antitrust laws create strategic confusion.
D) ​U.S. antitrust laws are unfair because they discriminate against foreign firms.