BPS EXAM 1 QUESTIONS WITH
CORRECT ANSWERS
What indicates a Competitive Rivalry? - Answer-Competitive action and competitive
response
Strategic Action/Response - Answer-A market-based move that involves a significant
commitment of resources and is hard to reverse.
Tactical action/response - Answer-A Market-based move that firms take to fine-tune
strategy does not require heavy investment and can be easily undone.
First Mover Effect - Answer-The firm that takes the first action, which gives it an inherent
advantage, because it sets the pace of the rivalry. This carries high costs and allows
competitors to learn from your mistakes.
Second Mover Effect - Answer-The firm that takes action first doesn't act too fast or too
slow; they have better options and efficiency because they can learn from the First
Mover's mistakes.
What firms a firm likely to respond to competitor action? - Answer-> The action
emboldens the competitor's position
> The action damages the firm's own position
>The action makes the firm's market position harder to defend.
Competitive Reputation - Answer-A firm's past competitive behavior
Market Dependence - Answer-The level a firm derives it's revenues/profits from a
particular market.
The more dependent a firm is on a market, the more likely it is to defend it.
Speed of Action - Answer-How fast a competitor announces then initiates action
Type of Action - Answer-The categories of response/attack by function or capability:
Marketing, Pricing, New Products, Service Changes, and Operation Changes - all fall
into this category.
, Location of attack - Answer-Local, regional or global market level attack
Magnitude and Scope of Attack - Answer-The Extent, timing and nature of the
attack/response.
Slow Market Cycle - Answer-Markets where competitors lack the ability to imitate one
another, advantages last for long periods of time.
Fast Market Cycle - Answer-Markets where imitation is rapid and inexpensive. The high
Velocity of change means advantages are not sustainable.
Standard Cycle Markets - Answer-Markets where imitation is somewhat costly, but
some firms may choose to undergo imitation. Competition for market share is more
intense in this market type.
What is the purpose of Corporate Strategy? - Answer-Outlines the goals a firm has and
what actions they'll take via managing a group of different businesses.
What are the two main concerns of corporate-level strategy? - Answer-1. Deciding on
product markets and businesses the firm should compete in
2. Defining the role of corporate HQ
Levels of Diversification - Answer-Low: 70-100% of revenue comes from one source
Med: <70% of revenue comes from the dominant line of service.
High: <70% of revenue comes from mixed business
Unrelated: <70% of revenue comes from a single business
Strategic Competitiveness - Answer-Stage when firms have successfully formulated and
implemented a value creating strategy.
Strategy - Answer-Integrated and coordinated actions and goals that utilize a firm's core
competencies to gain an edge in the Market.
Competitive Advantage - Answer-When a firm creates superior value for it's customers
that is VERY DIFFICULT to imitate.
Above Average Returns (AAR) - Answer-Returns an investor would expect to earn in
excess of similar risk investments
Strategic Management Process - Answer-Full set of commitments, decisions and
actions firms take to achieve strategic competitiveness and AAR
Industrial Organization Model (I/O M) - Answer-5 Step Model that outlines how to get
Above Average Returns for a company in a manufacturing space.
I/O M - Step 1 - Answer-Scan the External Environment
CORRECT ANSWERS
What indicates a Competitive Rivalry? - Answer-Competitive action and competitive
response
Strategic Action/Response - Answer-A market-based move that involves a significant
commitment of resources and is hard to reverse.
Tactical action/response - Answer-A Market-based move that firms take to fine-tune
strategy does not require heavy investment and can be easily undone.
First Mover Effect - Answer-The firm that takes the first action, which gives it an inherent
advantage, because it sets the pace of the rivalry. This carries high costs and allows
competitors to learn from your mistakes.
Second Mover Effect - Answer-The firm that takes action first doesn't act too fast or too
slow; they have better options and efficiency because they can learn from the First
Mover's mistakes.
What firms a firm likely to respond to competitor action? - Answer-> The action
emboldens the competitor's position
> The action damages the firm's own position
>The action makes the firm's market position harder to defend.
Competitive Reputation - Answer-A firm's past competitive behavior
Market Dependence - Answer-The level a firm derives it's revenues/profits from a
particular market.
The more dependent a firm is on a market, the more likely it is to defend it.
Speed of Action - Answer-How fast a competitor announces then initiates action
Type of Action - Answer-The categories of response/attack by function or capability:
Marketing, Pricing, New Products, Service Changes, and Operation Changes - all fall
into this category.
, Location of attack - Answer-Local, regional or global market level attack
Magnitude and Scope of Attack - Answer-The Extent, timing and nature of the
attack/response.
Slow Market Cycle - Answer-Markets where competitors lack the ability to imitate one
another, advantages last for long periods of time.
Fast Market Cycle - Answer-Markets where imitation is rapid and inexpensive. The high
Velocity of change means advantages are not sustainable.
Standard Cycle Markets - Answer-Markets where imitation is somewhat costly, but
some firms may choose to undergo imitation. Competition for market share is more
intense in this market type.
What is the purpose of Corporate Strategy? - Answer-Outlines the goals a firm has and
what actions they'll take via managing a group of different businesses.
What are the two main concerns of corporate-level strategy? - Answer-1. Deciding on
product markets and businesses the firm should compete in
2. Defining the role of corporate HQ
Levels of Diversification - Answer-Low: 70-100% of revenue comes from one source
Med: <70% of revenue comes from the dominant line of service.
High: <70% of revenue comes from mixed business
Unrelated: <70% of revenue comes from a single business
Strategic Competitiveness - Answer-Stage when firms have successfully formulated and
implemented a value creating strategy.
Strategy - Answer-Integrated and coordinated actions and goals that utilize a firm's core
competencies to gain an edge in the Market.
Competitive Advantage - Answer-When a firm creates superior value for it's customers
that is VERY DIFFICULT to imitate.
Above Average Returns (AAR) - Answer-Returns an investor would expect to earn in
excess of similar risk investments
Strategic Management Process - Answer-Full set of commitments, decisions and
actions firms take to achieve strategic competitiveness and AAR
Industrial Organization Model (I/O M) - Answer-5 Step Model that outlines how to get
Above Average Returns for a company in a manufacturing space.
I/O M - Step 1 - Answer-Scan the External Environment
