Chapter 11: Dealing with Competition

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment. Which of the following would NOT be among Porter’s five forces?

a. Industry competitors

b. Technological partners

c. Substitutes

d. Buyers

e. Potential entrants

2. Which of the following would be the most likely threat that is associated with potential new entrants in Porter’s segment structural attractiveness model?

a. Threat of positioning

b. Threat of response

c. Threat of delayed action

d. Threat of role reversal

e. Threat of mobility

3. A segment is unattractive when there are actual or potential ________ for the product.

a. contenders

b. competitors

c. substitutes

d. unclear demand

e. profit fluctuation

4. Wal-Mart is perhaps one of the best illustrations of the threat of ________ found in Porter’s model.

a. intense segment rivalry

b. new entrants

c. substitute products

d. buyers’ growing bargaining power

e. suppliers’ growing bargaining power

5. A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. Which of the following is the best illustration of the threat of suppliers’ growing bargaining power?

a. Wal-Mart has almost no competitors in its market space.

b. Oil companies must purchase a significant amount of their product from OPEC.

c. McDonald’s is the largest fast food franchise and is still growing.

d. The U.S. Post Office has merged package operations with FedEx.

e. Sears unsuccessfully attempted to compete with Wal-Mart and Kmart.

6. A(n) ________ is a group of firms that offer a product or class of products that are close substitutes for one another.

a. industry

b. cartel

c. cooperative

d. monopoly

e. demand field

7. When only one firm provides a certain product or service in a certain country or area a ________ exists.

a. duopoly

b. monopoly

c. oligopoly

d. monopolistic competition

e. pure competition

8. Which of the following would be the best illustration of a pure oligopoly?

a. Autos

b. Cameras

c. Steel

d. Pharmaceuticals

e. High fashion clothing

9. Which of the following is often considered to be a good illustration an industry structure type known as pure competition?

a. Oil

b. Plastics

c. Pharmaceuticals

d. High fashion clothing

e. Stock market

10. All of the following are considered to be major entry barriers in markets EXCEPT ________.

a. high capital requirements

b. economies of scale

c. patents and licensing requirements

d. product or service line

e. reputation requirements

11. If a marketer is facing government restrictions, high vertical integration, emotional barriers, low asset-salvage value due to obsolescence, and legal obligations to creditors, the marketer is most likely facing what are called ________ barriers in a marketplace.

a. exit

b. entrance

c. competitive

d. virtual

e. contrived

12. Major oil producers carry on oil exploration, oil drilling, oil refining, chemical manufacture, and service-station operation. When an organization does all of these separate tasks within a distribution channel they can be said to have achieved what is called ________.

a. vertical integration

b. horizontal integration

c. concentric integration

d. parallel marketing

e. conglomerate marketing

13. Using the market approach, ________ are companies that satisfy the same customer need.

a. partners

b. competitors

c. entrepreneurs

d. innovators

e. followers

14. A group of firms following the same strategy in a given target market is called ________.

a. cartel

b. cabal

c. cooperative

d. informal alliance

e. strategic group

15. An example of a strategic group in the appliance industry would be one where ________.

a. there was a large franchised dealer system

b. a common promotional theme used

c. competitors had broad lines, medium manufacturing costs, low service responsibility, and low prices

d. multinational operations are mandated

e. a value orientation rather than a cost orientation

16. Once a company has identified its main competitors and their strategies, it must next ask: ________?

a. What are the competitors’ objectives

b. What are the competitive brand attributes

c. What are the competitive promotion schemes

d. What is the attrition rate in the market

e. What are the subtle market entrance requirements

17. In general, a company should monitor the following variables when analyzing competitors: ________, share of mind, and share of market.

a. share of demand

b. share of profits

c. share of promotion

d. share of universe

e. share of heart

18. ________ is the percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.”

a. Share of market

b. Share of mind

c. Share of heart

d. Share of competitive space

e. Share of psychological field

19. Most companies aim their competitive shots at ________ competitors, because this requires fewer resources per share point gained.

a. strong

b. weak

c. distant

d. “good”

e. unacknowledged

20. ________ competitors try to buy market share rather than earn it; take large risks; invest in overcapacity; and upset industrial equilibrium.

a. “Bad”

b. “Good”

c. Distant

d. Close

e. Strong

21. In general, a market leader will have about ________ of the total market in relation to other competitors.

a. 60 percent

b. 50 percent

c. 40 percent

d. 30 percent

e. 75 percent

22. The market nicher serves small market segments not being served by larger firms. Nichers account for about ________ of the market in relation to other competitors.

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