Test Bank Chapter 11 Competitive Strategy and Sustainability

Package Title: Chapter 11, Testbank

Course Title: Dyer, SM 2e

Chapter Number: 11

Question type: Multiple Choice

1) 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

Difficulty: Easy

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

2) 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.

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Analysis

Standard 1 : AACSB || Reflective Thinking

3) 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

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Application

Standard 1 : AACSB || Analytic

4) 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.

Difficulty: Medium

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

5) 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.

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Analysis

Standard 1 : AACSB || Reflective Thinking

6) 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

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Application

Standard 1 : AACSB || Analytic

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

Difficulty: Medium

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

8) 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

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Application

Standard 1 : AACSB || Analytic

9) 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

Difficulty: Hard

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Application

Standard 1 : AACSB || Analytic

10) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

11) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

12) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

13) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

14) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

15) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

16) 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

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

17) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

18) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

19) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

20) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

21) 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.

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

22) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

23) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

24) 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.

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

25) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

26) 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

Difficulty: Hard

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Application

Standard 1 : AACSB || Analytic

27) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

28) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

29) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

30) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

31) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

32) 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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

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

Difficulty: Hard

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Application

Standard 1 : AACSB || Analytic

34) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

36) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

37) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

38) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

39) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

40) 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

Difficulty: Hard

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

41) 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

Difficulty: Medium

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

42) 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.

Difficulty: Medium

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

43) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

44) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

45) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

46) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

47) 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

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

48) 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.

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

49) 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.

Difficulty: Medium

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

50) 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.

Difficulty: Medium

Section Reference 1: Principles of Competitive Strategy

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

51) 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

Difficulty: Medium

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

52) 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

Difficulty: Medium

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

53) 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.

Difficulty: Medium

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

54) 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.

Difficulty: Medium

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

55) 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.

Difficulty: Medium

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Question type: Text Entry

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

Difficulty: Easy

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

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

Difficulty: Easy

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

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

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

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

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile. Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

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

Difficulty: Easy

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Question type: Essay

61) Write a note on strategic groups and mobility barriers.

Difficulty: Easy

Section Reference 1: Understanding the Competitive Landscape

Learning Objective 1: Create a strategic group map and a strategy canvas of a competitive landscape.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: An analysis that breaks down the structure of a market or industry into its constituent groups is called a strategic group analysis. Visualizing this group structure is an important component of competitive analysis because it identifies the major arenas of competition and who competes directly with whom.

Companies find that switching strategic groups is difficult once they have built a history in one. The reason is that companies in specific strategic groups choose particular ways to configure their activities and these activity systems do not change quickly or easily. This creates a barrier to mobility between groups. Once a firm is in a particular group, it is not mobile and can’t simply leap to a different group.

62) Briefly describe the game theory.

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: The word “game” in game theory refers to strategic interaction among competitors and the word “theory” refers to a set of predictions about how competitors play games. In most games, rivals are expected to make moves that deliver the greatest profit, called a pay-off. Firms typically make their choices with this objective in mind. But rivals have choices, too. With both firms facing choices, each must consider what the other will do in order to reach their own best outcome. This logic of anticipating what is in a rival’s best profit interest before making your own move is central in game theory. Game theory is especially useful in contexts in which only a few rivals exist and these rivals are considering such moves as price changes, capacity adjustments, or new product features, and are wondering how competitors are likely to respond.

63) Briefly describe the Nash equilibrium.

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Analyze a company’s competitors to identify the likely ways they will respond to a company’s strategic moves using a competitor response profile.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: John Nash, a famous game theorist, developed an equilibrium concept in games that has come to be known as the Nash equilibrium. The Nash equilibrium is represented by a set of moves in a game that: (1) maximizes each firm’s payoff given the choices of rivals and (2) removes incentive to defect in the sense that no player can improve his payoffs by changing his choice.

64) What are the principles that strengthen a company’s ability to compete?

Difficulty: Easy

Section Reference 1: Evaluating the Competition

Learning Objective 1: Describe the different types of competitive strategies that can be deployed contingent on the environment in which a company operates.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: The following principles, when applied, strengthen a company’s ability to compete:
- Know your strengths and weaknesses
- Bring strength against weakness
- Protect and neutralize vulnerabilities
- Develop strategies that cannot be easily imitated or copied (go where the competitor is not)

65) Briefly describe competition under monopoly.

Difficulty: Easy

Section Reference 1: Competitive Actions for Different Market Environments

Learning Objective 1: Choose or create a competitive strategy suitable to a company’s competitive situation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: Monopoly is a market of one firm or one highly dominant firm. The basic strategic objective of a monopolist is to reinforce its monopoly. It does so in several ways, such as by: (1) raising entry barriers, (2) limiting competitive access to scarce resources, (3) innovating and patenting, and (4) introducing new products frequently. If a monopolist has new competitors threatening to enter its market, these are among the competitive actions they should consider taking as a response. On the flipside, the competitor attempting to enter the monopolist’s market can expect these kinds of retaliatory actions from the monopolist.