Deck 11: Competitive Strategy

Question 1

Lucy, a researcher, wants to identify the main differences in different healthcare firms competing to deliver value. She studies the relative price, product line breadth, and geographic placement to identify the differences. Which of the following is Lucy likely to rely on to identify how the firms compete?

A)A strategic group map
B)A workflow analysis
C)An employee survey
D)A quality control measure

Answer 1

A

Question 2

An organization studies the strategies of its competitors closely. At the current stage, it studies factors such as geographic location, characteristics of business model, services provided, and time management. At this stage, the organization is identifying the competitor's __________.

A)resources and capabilities
B)objectives
C)organizational structure
D)goals and achievements

Answer 2

A

Question 3

An organization wants to maximize its payoff given the choices of rivals and remove incentive to defect in the sense that no organization can improve its payoffs by changing its choice. Which of the following concepts will help the organization create such a structure?

A)D'Aveni's hypercompetition
B)Strategic group map
C)Strategic canvas
D)Nash equilibrium

Answer 3

D

Question 4

Fuchsia Inc., a cosmetics manufacturer, decides to change how it competes in the market. With this objective in mind, it decides to target a different market segment with its existing set of products. However, Fuchsia takes a long time to reconfigure its activities and systems to meet these changes. Which of the following is being exemplified in this case?

A)Mobility barrier
B)Product differentiation
C)Customer bias
D)Tasks disintermediation

Question 5

An airline service provider watches its rivals closely. It studies the potential for reliable, timely, and service-oriented international travel offered by its competitors. In this case, the firm is focusing on the competitors' __________.

A)resources and capabilities
B)objectives
C)organizational structure
D)market risks

Question 6

Copper Enterprises manufactures industrial machinery. It decides to identify the characteristics of a new firm that offers the same products as Copper. In order to assess how it might respond in the face of rival actions, Copper must develop a(n)__________.

A)organizational chart
B)structural graph
C)strategic application
D)competitor response profile

Question 7

Ryan, a researcher, wants to indicate whether companies in one group appeal to the primary markets of another group. Which of the following is likely to help Ryan in his research?

A)Mobility barriers
B)Quality analyses
C)Strategic group maps
D)Product measurements

Question 8

A research firm creates a graph to represent how companies compete with each other. The X-axis represents the competitive offerings and Y-axis represents performance. Which of the following is does the graph represent?

A)A strategy canvas
B)A structural analysis
C)A strategic group map
D)A workflow analysis

Question 9

Alex, the CEO of a manufacturing company, is asked by the board if he will consider switching strategic groups. However, Alex thinks it might not be advisable. Which of the following statements strengthens Alex's belief?

A)Marketers will be more able to identify rivals if they switch to another strategic group.
B)The customers of his company are not brand conscious and loyal.
C)His company has tough competition from firms outside their strategic group.
D)His company has rigid systems, which have been in place for many years.

Question 10

A simple game has two players; each player has two choices. Assume that the players make their moves at the same time and they only play the game once. Which of the following is exemplified in this case?

A)Linear change game
B)Infinitely repeated game
C)Consecutive shift game
D)Simultaneous move game

Question 11

Marcel, the owner and president of a three-star hotel, believes that only competitors within the same strategic group need to be analyzed. Nina, the chief of client services, believes that other groups must also be considered in order to stay ahead of competition. Which of the following situations strengthens Nina's argument?

A)A new café on the same lane as Marcel's hotel is being frequented by business people.
B)A grocery store close to Marcel's hotel has all the ingredients required for her restaurant.
C)The customers of Marcel's hotel are class conscious and do not prefer routine services available elsewhere.
D)The hotel owned by Marcel enjoys monopoly as it is located in a suburb with few similar service providers.

Question 12

The word "theory" in game theory refers to __________.

A)the strategic interaction among competitors
B)a set of predictions
C)a competitor's objectives
D)the resources and capabilities of a competitor

Question 13

A research institute plans to build a competitor response profile for a study. Which of the following is the first step to build such a profile?

A)Identifying the assumptions
B)Studying the strategic ideas of competitors
C)Creating a structural chart
D)Focusing on productivity

Question 14

An organization wants to compete at an international level. It sets the company objectives and the assumptions to reinforce the objectives. Which of the following is being exemplified in this case?

A)Organizational chart
B)Structural graph
C)Strategic application
D)Competitor response profile

Question 15

An organization has few rivals in the industry. These rivals are considering such moves as price changes, capacity adjustments, or new product features. Which of the following will help the organization predict the strategic actions most likely to be taken by its rivals?

A)Structural analysis
B)Game theory
C)Strategic canvas
D)Study of productivity

Question 16

Nash equilibrium is represented by a set of moves in a game that ________.

A)improves the firms' payoffs by changing the choice
B)sustains an incentive to defect by changing the choice
C)minimizes each firm's input based on the number of rivals
D)maximizes each firm's payoff given the choices of rivals

Question 17

Zara, a research analyst, is studying the business decisions of some restaurant owners. During the data analysis stage, she employs a strategic canvas. Which of the following is likely to be her primary reason to employ this tool?

A)To understand the pricing strategy used for different dishes within each restaurant
B)To study the differences in the ways the restaurants compete with each other
C)To identify the combined target audience of strategic groups as a whole
D)To observe the similarities in the employees' views of their respective organizations

Question 18

Which of the following statements is true about strategic groups?

A)They identify allies in business groups.
B)The firms within each group are unlikely to target the same customer segment.
C)The firms within each group compete in similar ways.
D)They exclude rivals who share a similar business model.

Question 19

Gia Inc., a healthcare company, aims to create a competitor response profile. It has identified its objectives and assumptions. The next step is to __________.

A)identify the competitors' resources and capabilities
B)study the price range of its own products lines
C)create a structural chart
D)focus on productivity

Question 20

A set of companies that compete in similar ways with similar business models pursuing similar sets of customers is called a __________.

A)strategic group
B)joint venture
C)supplier group
D)strategic alliance

Question 21

Noah, a researcher, identifies various resources and capabilities of an organization that are subjected to rapid obsolescence, easy imitation, and high cost not recouped by value. In this case, Noah is ________.

A)learning the organization's weaknesses
B)bringing strength against weakness
C)neutralizing vulnerability
D)developing strategies that cannot be easily copied

Question 22

Zeal Inc., an electronic goods manufacturer, launches an air conditioner that contributes to the downfall of Ochre Corp., a company struggling to stay in the market amidst bankruptcy. Which of the following concepts is exemplified in this scenario?

A)Knowing the strengths and weaknesses
B)Bringing strength against weakness
C)Neutralizing vulnerability
D)Developing strategies that cannot be easily copied

Question 23

A company wants to form the foundation of a competitive strategy. It decides to assess its strengths and weaknesses. In this case, the company should first assess its __________.

A)resources and capabilities
B)organizational structure
C)structural chart
D)competitors' strategies

Question 24

Which of the following statements is true about the Nash equilibrium?

A)It is the solution concept used in games that are played forever.
B)It reduces the possibility of compromise.
C)It is the solution concept used to predict the outcome of competitive interaction.
D)It is a set of moves in a game that simultaneously minimize each firm's payoff.

Question 25

A successful chain of restaurants is successful in securing the most advantageous geographic positions. This effectively bars competition. Which of the following is exemplified in this case?

A)A tit-for-tat strategy
B)A limited competitive access to scarce resources
C)A low-end disruptive innovation
D)The Nash equilibrium

Question 26

Most companies are in competition with their rivals each and every day, month, or year with no certain end date. This is an example of __________.

A)a parallel game
B)an infinitely repeated game
C)a simultaneous game
D)the Nash equilibrium

Question 27

A well-established manufacturing firm decides to set the market price of a product just low enough so that a new firm cannot pay the cost of entering a market and eventually be profitable. Which of the following is exemplified in this case?

A)A tit-for-tat strategy
B)An entry barrier
C)A strategic canvas
D)The Nash equilibrium

Question 28

Peach Line Inc., manufacturers of furniture, identifies that its choice of suppliers is its weakness and makes this irrelevant by standardizing the production process irrespective of the source of raw materials. This way, its choice of suppliers does not become the target of competitors. Which of the following is exemplified in this case?

A)Knowing the strengths and weaknesses
B)Bringing strength against weakness
C)Neutralizing vulnerability
D)Developing strategies that cannot be easily copied

Question 29

An organization watches it rivals closely and chooses actions that mimic what its rivals are doing. This is an example of a __________.

A)structural analysis
B)tit-for-tat strategy
C)parallel game
D)simultaneous game

Question 30

A manufacturing firm maintains its price unless it observes its rival choosing to lower price. Any time the rival lowers price, the firm responds by lowering its own price. This is an example of a __________.

A)structural analysis
B)tit-for-tat strategy
C)strategic canvas
D)complementary game

Question 31

An insurance firm decides to recognize its resources and capabilities. It observes that a few resources and capabilities deliver unique value, but others are subjected to easy imitation. In this case, the organization is __________.

A)learning its strengths and weaknesses
B)bringing strength against weakness
C)neutralizing vulnerability
D)developing strategies that cannot be easily copied

Question 32

Lieme Inc. and Pola Inc. are oligopolistic rivals in the automobile industry. Lieme has staked out a price position that is slightly higher than that of Pola. Even so, if Pola raises its price, Lieme would too, in order to maintain the differential. Which of the following is being exemplified in this case?

A)Implementing an entry barrier
B)Limiting competitive access to scarce resources
C)Introducing new products frequently
D)Monitoring and mimicking rival behaviour

Question 33

A restaurant chain serves common dishes that are also available in other restaurants. As it does not offer any unique dishes, it introduces other options to customize the products such as the choice of cheese, bread, and spices. It also promises a short waiting time for take-away and free home deliveries. In this case, the restaurant chain is __________.

A)learning its strengths and weaknesses
B)bringing strength against weakness
C)neutralizing vulnerability
D)developing strategies that cannot be easily copied

Question 34

Laser Tech., a leading printing firm, launches a new printing technique to meet the changing demands of the market. Blue Corp., its prime competitor, had been rigid in adapting to the changes in the market and is put out of business because of the launch of the new technique by Laser. Which of the following is exemplified in this case?

A)Knowing the strengths and weaknesses
B)Bringing strength against weakness
C)Neutralizing vulnerability
D)Developing strategies that cannot be easily copied

Question 35

Plateus Inc., a food manufacturing company, has brand equity worth a billion dollars that has been accomplished through consistent delivery of quality products and long-term advertising. These strategies make entering the industry a formidable task for any other firm. Which of the following is exemplified in this case?

A)An entry barrier
B)A tit-for-tat strategy
C)A complementary strategy
D)The Nash equilibrium

Question 36

An automobile manufacturing firm has dominated its market by consistently releasing automobile upgrades and enhancements. Which of the following is being exemplified in this case?

A)Implementing a tit-for-tat strategy
B)Limiting competitive access to scarce resources
C)Introducing new products frequently
D)Representing the Nash equilibrium

Question 37

A researcher wants to study an organization that strives at achieving the best outcome and ensures that the outcome is stable. In this case, the organization has developed the concept of __________.

A)D'Aveni's hypercompetition
B)infinitely repeated game
C)strategic canvas
D)Nash equilibrium

Question 38

Which of the following statements is true about an infinitely repeated game?

A)In this game, players always believe there is a future.
B)In this game, each player's best choice is to implicate the rivals.
C)It is the solution concept used to predict the outcome of competitive interactions.
D)It removes incentive to defect in the sense that no firm can improve its payoffs.

Question 39

An insurance company has procured all the capacity available in its market for $100 million. Thus, the company has placed a lock on the resources that other firms may require to develop their products. Which of the following is being exemplified in this case?

A)A tit-for-tat strategy
B)A limited competitive access to scarce resources
C)A low-end disruptive innovation
D)The Nash equilibrium

Question 40

Walden Inc., a well-established finance company, hires the most valuable scientists and experts. Hence, start-ups and other small businesses find it difficult to compete with Walden. Which of the following is exemplified in this case?

A)A tit-for-tat strategy
B)A limited competitive access to scarce resources
C)A parallel game strategy
D)The Nash equilibrium

Question 41

Any factor that increases the costs, lowers the profit margins, or limits the market share of entrants to a market is called a(n)___.

Question 42

Which of the following statements is true about the principles of competitive strategy?

A)A company's strengths are the resources and capabilities that deliver unique value.
B)A company's strengths are the resources and capabilities that are subject to rapid obsolescence.
C)A company's weaknesses should always be masqueraded as strengths so that companies are afraid of attacking competitive strengths.
D)A company's own weaknesses must be strengthened instead of being neutralized.

Question 43

What does market structure mean in the simplest terms?

A)The number of competitive actions that are effective for a certain environment
B)The structure of a rival's objectives and assumptions
C)The structure of a rival's resources and capabilities
D)The number of rivals in a particular market

Question 44

In the context of game theory, implicate is also what is called a dominant strategy because ________.

A)it gives one of the players incentives to change their choices
B)it is the best choice under every alternative choice of a rival
C)it is a set of actions that are played as a reaction to a rival's choices
D)it is a choice that adds incentive to defect

Question 45

Why is the upper bound of oligopolies difficult to define?

A)The designation depends on whether firms in these markets are monitoring and reacting to specific rival behavior.
B)The firms must make their moves carefully, knowing that rivals will detect their actions and respond accordingly.
C)The firms in oligopolies are locked in tight competition with only a few other firms.
D)The number of firms in these markets in some cases can be up to 100 or 150.

Question 46

In the context of a competitor response profile, the identification of a competitor's objectives and assumptions mostly helps a company understand ________.

A)what the competitor is doing or is capable of doing
B)what drives the competitor
C)how its employees view the competitor
D)how its own vulnerabilities can be protected and neutralized

Question 47

Any factor that limits the ability of a company to move between strategic groups is called a(n)___.

Question 48

The Nash equilibrium is represented by a set of moves in a game that __________.

A)minimizes each firm's input based on the number of rivals
B)minimizes each firm's payoff given the choices of rivals
C)improves players' payoffs when they change their choices
D)removes incentive to defect

Question 49

Identify a feature of a monopoly.

A)It is a market of one highly dominant firm.
B)It is typically a market of 2 to 5 firms.
C)It is a market of up to 8 or 10 firms.
D)It is a market with hundreds of firms.

Question 50

In the context of game theory, what is a pay-off?

A)The greatest profit that is delivered when rivals make moves
B)A choice that rivals have to consider to reach their best outcome
C)The logic of anticipating what is in a rival's best profit interest
D)A strategy that cannot be easily imitated or copied

Question 51

Which of the following is a response that a monopolist should consider when it has new competitors threatening to enter its market?

A)Encouraging access to scarce resources
B)Introducing new products rarely
C)Innovating and patenting
D)Lowering entry barriers

Question 52

Which of the following is a characteristic of markets with perfect competition?

A)They are markets with one highly dominant firm.
B)Attempts to use price strategically are not effective in these markets.
C)Dropping price increases total margin by more than it increases sales.
D)The firms in these markets are price setters.

Question 53

In order to compete effectively, a firm must ________.

A)neutralize its strengths and weaknesses
B)devise and use the same competitive action across all market environments
C)understand the structure of the competitive environment in which it operates
D)generate only reactive strategies

Question 54

In the context of a competitor response profile, the identification of a competitor's resources and capabilities usually helps a company understand ________.

A)how the company can device a universal competitive action
B)how it is perceived by its competitors
C)what drives the competitor
D)what the competitor is doing or is capable of doing

Question 55

An analysis that breaks down the structure of a market or industry into its constituent groups is called a(n)___.

Question 56

A ___ profile identifies characteristics of a competitor in order to assess how it might respond in the face of rival actions.

Question 57

Which of the following is a feature of infinitely repeated games?

A)They are literally played forever.
B)The ending period is known.
C)The competitors interact over and over again.
D)The competitors engage in a one-shot game.

Question 58

In game theory, a set of actions that are always played no matter what a rival chooses to do is referred to as the ___.

Question 59

Identify a feature of the tit-for-tat strategy.

A)It is generally used to take a cooperative stance.
B)It always ends in a collusion.
C)It responds in kind to the moves of rivals.
D)It is used to do the exact opposite of what a company's rivals are doing.

Question 60

Why is visualizing strategic group structure an important component of competitive analysis?

A)It eliminates any potential changes in the competitive landscape.
B)It identifies the major arenas of competition.
C)It focuses on the indirect competitors in an industry.
D)It helps companies retain only their old and loyal consumers.

Question 61

What are the principles that strengthen a company's ability to compete?

Question 62

Write a note on strategic groups and mobility barriers.

Question 63

Briefly describe the Nash equilibrium.

Question 64

Briefly describe competition under monopoly.

Question 65

Briefly describe the game theory.