Chapter 5—Competitive Rivalry and Competitive Dynamics
TRUE/FALSE
1. HP and Dell are mutually interdependent organizations.
ANS: T PTS: 1 DIF: Easy REF: 127-128 | 130-131
OBJ: 05-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
2. Firms operating in the same market, offering similar products and targeting similar customers are
competitors.
ANS: T PTS: 1 DIF: Easy REF: 128
OBJ: 05-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
3. Competitive rivalry is the contest to be the first mover in an international market.
ANS: F PTS: 1 DIF: Easy REF: 128
OBJ: 05-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
4. The description of firms’ strategic actions as dynamic in nature suggests that actions taken by one
firm cause responses from competitors.
ANS: T PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
5. “Competitive dynamics” indicates that firms and their strategic actions are independent.
ANS: F PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
6. Expanding geographic scope in the global economy allows competitive rivalry to ease because of the
larger potential customer base.
ANS: F PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
7. Intensified rivalry within an industry results in decreased average profitability for the firms within it.
, ANS: T PTS: 1 DIF: Medium REF: 130
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
8. The availability of daily newspapers on the Internet is an example of increased market commonality
between traditional newsstands and newspaper publishers.
ANS: T PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
9. The relationship of Burger King and McDonald’s is an example of multimarket competition where
market commonality exists.
ANS: T PTS: 1 DIF: Medium REF: 132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
10. Multimarket competition refers exclusively to situations in which firms compete against each other
simultaneously in several geographic markets.
ANS: F PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
11. Extensive market commonality guarantees intense competition in an industry.
ANS: F PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
12. Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has
a loyal following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and
PepsiCo do, Bayou Belle has high resource similarity with these international firms.
ANS: F PTS: 1 DIF: Hard REF: 132-133
OBJ: 05-02 TYPE: application
NOT: AACSB: Reflective Thinking Skills | Management: Strategy | Dierdorff & Rubin: Managing
strategy & innovation
13. Two firms that have similar resources, but do not share markets would not be direct and mutually
acknowledged competitors.
ANS: T PTS: 1 DIF: Hard REF: 133 (Figure 5.3)
, OBJ: 05-02 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
14. The drivers of competitive behavior are awareness of the competitor, motivation to take action or
respond, and the organization’s ability in terms of resources and flexibility.
ANS: T PTS: 1 DIF: Easy REF: 133-134
OBJ: 05-03 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing decision-making processes
15. Under the framework of competitive action and response, “ability” refers to an attacking or
responding firm’s knowledge of the competitive market characteristics.
ANS: F PTS: 1 DIF: Easy REF: 133
OBJ: 05-03 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing decision-making processes
16. Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided
that choosing not to respond to Wal-Mart’s competitive actions is a viable long-term option, because
although the companies have high market commonality they have little resource similarity. These
small retailers are correct in their decision.
ANS: F PTS: 1 DIF: Hard REF: 133-134
OBJ: 05-03 TYPE: comprehension
NOT: AACSB: Reflective Thinking Skills | Management: Strategy | Dierdorff & Rubin: Managing the
task environment
17. Because Netflix uses only online and mail-based facilities, they have low market commonality with
Blockbuster.
ANS: F PTS: 1 DIF: Easy REF: 135 | 131-132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
18. A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive
advantage.
ANS: T PTS: 1 DIF: Easy REF: 136
OBJ: 05-04 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
19. A tactical competitive action involves a significant commitment of specific and distinctive
organizational resources.
ANS: F PTS: 1 DIF: Medium REF: 136
TRUE/FALSE
1. HP and Dell are mutually interdependent organizations.
ANS: T PTS: 1 DIF: Easy REF: 127-128 | 130-131
OBJ: 05-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
2. Firms operating in the same market, offering similar products and targeting similar customers are
competitors.
ANS: T PTS: 1 DIF: Easy REF: 128
OBJ: 05-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
3. Competitive rivalry is the contest to be the first mover in an international market.
ANS: F PTS: 1 DIF: Easy REF: 128
OBJ: 05-01 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
4. The description of firms’ strategic actions as dynamic in nature suggests that actions taken by one
firm cause responses from competitors.
ANS: T PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
5. “Competitive dynamics” indicates that firms and their strategic actions are independent.
ANS: F PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Strategic & systems skills
6. Expanding geographic scope in the global economy allows competitive rivalry to ease because of the
larger potential customer base.
ANS: F PTS: 1 DIF: Medium REF: 128
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
7. Intensified rivalry within an industry results in decreased average profitability for the firms within it.
, ANS: T PTS: 1 DIF: Medium REF: 130
OBJ: 05-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
8. The availability of daily newspapers on the Internet is an example of increased market commonality
between traditional newsstands and newspaper publishers.
ANS: T PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
9. The relationship of Burger King and McDonald’s is an example of multimarket competition where
market commonality exists.
ANS: T PTS: 1 DIF: Medium REF: 132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
10. Multimarket competition refers exclusively to situations in which firms compete against each other
simultaneously in several geographic markets.
ANS: F PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
11. Extensive market commonality guarantees intense competition in an industry.
ANS: F PTS: 1 DIF: Hard REF: 131-132
OBJ: 05-02 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
12. Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has
a loyal following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and
PepsiCo do, Bayou Belle has high resource similarity with these international firms.
ANS: F PTS: 1 DIF: Hard REF: 132-133
OBJ: 05-02 TYPE: application
NOT: AACSB: Reflective Thinking Skills | Management: Strategy | Dierdorff & Rubin: Managing
strategy & innovation
13. Two firms that have similar resources, but do not share markets would not be direct and mutually
acknowledged competitors.
ANS: T PTS: 1 DIF: Hard REF: 133 (Figure 5.3)
, OBJ: 05-02 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing the task environment
14. The drivers of competitive behavior are awareness of the competitor, motivation to take action or
respond, and the organization’s ability in terms of resources and flexibility.
ANS: T PTS: 1 DIF: Easy REF: 133-134
OBJ: 05-03 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing decision-making processes
15. Under the framework of competitive action and response, “ability” refers to an attacking or
responding firm’s knowledge of the competitive market characteristics.
ANS: F PTS: 1 DIF: Easy REF: 133
OBJ: 05-03 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing decision-making processes
16. Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided
that choosing not to respond to Wal-Mart’s competitive actions is a viable long-term option, because
although the companies have high market commonality they have little resource similarity. These
small retailers are correct in their decision.
ANS: F PTS: 1 DIF: Hard REF: 133-134
OBJ: 05-03 TYPE: comprehension
NOT: AACSB: Reflective Thinking Skills | Management: Strategy | Dierdorff & Rubin: Managing the
task environment
17. Because Netflix uses only online and mail-based facilities, they have low market commonality with
Blockbuster.
ANS: F PTS: 1 DIF: Easy REF: 135 | 131-132
OBJ: 05-02 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
18. A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive
advantage.
ANS: T PTS: 1 DIF: Easy REF: 136
OBJ: 05-04 TYPE: knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin:
Managing strategy & innovation
19. A tactical competitive action involves a significant commitment of specific and distinctive
organizational resources.
ANS: F PTS: 1 DIF: Medium REF: 136
