Chapter 18

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Questions and Answers

What is the primary goal of competitive advantage?

To increase market share regardless of quality

To offer consumers greater value (correct)

To eliminate all competitors

To lower prices than competitors

Competitor analysis only involves evaluating current competitors in the market.

False

What term describes the tendency of companies to overlook potential future competitors?

competitor myopia

Companies define their competitors at a narrow level as those offering similar products and services at similar __________.

prices Signup and view all the answers

Match the following companies with their competitive focus:

Pepsi = Soft drink brands Kodak = Digital camera makers Bottled water companies = Thirst-quenching Energy drink brands = Satisfying customer needs Signup and view all the answers

Which aspect is NOT typically assessed during competitor analysis?

Competitors' marketing budgets Signup and view all the answers

When identifying competitors, a company should consider those that satisfy the same customer need.

True Signup and view all the answers

What is one common mistake companies make regarding their competitors?

Ignoring latent competitors Signup and view all the answers

Which objective is likely to be prioritized by a company pursuing low-cost leadership?

Cost-reducing manufacturing breakthroughs Signup and view all the answers

Strategic groups consist of companies that follow significantly different strategies.

False Signup and view all the answers

What is benchmarking?

Comparing the company's products and processes to those of competitors to identify best practices. Signup and view all the answers

A group of firms in an industry following the same or a similar strategy is known as a __________.

strategic group Signup and view all the answers

Match the objectives to their descriptions:

Current profitability = Focus on immediate financial returns Market share growth = Increase in sales compared to competitors Cash flow = Liquidity management for operations Technological leadership = Innovation and advancements in technology Signup and view all the answers

Which of the following sources is commonly used to learn about competitors' strengths and weaknesses?

Secondary data Signup and view all the answers

Estimating competitors' reactions does not depend on understanding their internal culture.

False Signup and view all the answers

What is one way companies assess their competitors' strategies?

By studying the details of each competitor's product quality, pricing policy, and marketing strategies. Signup and view all the answers

What type of marketing is most commonly used by start-ups and small businesses?

Entrepreneurial Marketing Signup and view all the answers

Clear strategies include overall cost leadership, differentiation, and market segmentation only.

False Signup and view all the answers

What is the primary goal of intrapreneurial marketing?

To regain creativity and innovation within large companies. Signup and view all the answers

Companies that pursue a __________ strategy typically aim to offer highly differentiated products.

differentiation Signup and view all the answers

Match the following companies with their competitive strategy focus:

Carrefour = Overall cost leadership Bose = Focus Mercedes = Differentiation Tesco = Middle-of-the-road Signup and view all the answers

Which company is an example of overall cost leadership?

Aldi Signup and view all the answers

Middle-of-the-roaders typically do the best among competitive strategies.

False Signup and view all the answers

Give one example of a company that has used intrapreneurial marketing.

Glasses Direct Signup and view all the answers

Which of the following strategies can market leaders use to expand their market?

Develop new users Signup and view all the answers

Market leaders should fix their weaknesses to protect their position.

True Signup and view all the answers

What is the primary goal of a market challenger?

Increase market share Signup and view all the answers

Market leaders can encourage more usage of their products by running ads containing new ______.

recipes Signup and view all the answers

What is a potential risk for market challengers when attacking the market leader?

High-risk but potentially high-gain strategy Signup and view all the answers

Market challengers should ignore the successes of market leaders.

False Signup and view all the answers

Name one method a market leader can use to protect its market share.

Continuous innovation Signup and view all the answers

Match the following terms with their definitions:

Market leader = The firm with the largest market share Market challenger = A firm trying to increase its market share by competing with the leader Market follower = A firm that does not aggressively compete with the market leader Second-mover advantage = An advantage gained by observing and improving upon a competitor's success Signup and view all the answers

Which value discipline focuses on providing superior value through low pricing and convenience?

Operational excellence Signup and view all the answers

Customer intimacy involves segmenting markets and tailoring products to meet customer needs.

True Signup and view all the answers

Name one company known for its focus on product leadership.

Apple Signup and view all the answers

Companies that excel in both operational excellence and customer intimacy, like FedEx, are considered _____ due to their ability to provide value in multiple disciplines.

rare Signup and view all the answers

Match the following companies with their value discipline:

Ikea = Operational excellence British Airways = Customer intimacy Apple = Product leadership McDonald's = Market leader Signup and view all the answers

What is a common consequence for companies attempting to be good at all value disciplines?

They may end up being best at none Signup and view all the answers

The leading firm in an industry typically benefits the least when total market demand expands.

False Signup and view all the answers

What is the primary focus of companies that practice operational excellence?

Reducing costs and creating an efficient value delivery system. Signup and view all the answers

What is a key strategy for market challengers when targeting competitors?

Choose opponents carefully and attack weaknesses Signup and view all the answers

Market followers typically try to overtake the market leader by launching new products.

False Signup and view all the answers

What primary advantage does a market follower gain from the market leader's experiences?

Learning opportunities Signup and view all the answers

Market nichers target small segments that other firms in the industry __________.

overlook Signup and view all the answers

Match the strategy with its description:

Market Challenger = Targets competitors directly and may launch full-frontal attacks Market Follower = Holds market share without aggressive competition Market Nicher = Serves overlooked small segments with specialized offerings Direct Attack = Attacks a competitor's strengths rather than weaknesses Signup and view all the answers

Why is niching often profitable for small firms?

They know their target customer group exceptionally well Signup and view all the answers

Market challengers benefit from taking on larger competitors in a frontal attack.

False Signup and view all the answers

What is a significant disadvantage that smaller firms may face when competing in the market?

Underfinancing Signup and view all the answers

Study Notes

Competitive Advantage

Competitive advantage is the advantage a company has over its competitors.
It's achieved by providing greater value to consumers.
Competitor analysis is key to gaining competitive advantage.

Competitor Analysis

Competitor analysis involves identifying key competitors, assessing their objectives, strategies, strengths, weaknesses, and reaction patterns.
It also includes selecting which competitors to attack or avoid.
Companies need to consider both direct and indirect competitors.

Identifying Competitors

Companies can define competitors by those offering similar products/services to the same customers at similar prices.
A wider range of competitors encompasses firms within the same product category/class.
Avoid "competitor myopia," where companies only consider their immediate competitors, potentially overlooking more significant threats.

Assessing Competitors

Identifying competitors' objectives (profitability, growth, market share, etc.) is crucial.
Determine the strategies, strengths, weaknesses, and potential reactions competitors will have.
Understanding competitor's motivations is essential for effective strategic planning.

Identifying Competitors' Strategies

Strategic groups are firms within an industry following similar strategies.
Identifying strategic groups is essential to pinpoint key competitors.

Assessing Competitors' Strengths & Weaknesses

Understanding competitors' goals, strategies, and past performances.
Utilizing secondary data, personal experience, and word-of-mouth to gather information about competitors.
Benchmarking your company's products and processes against competitors' to identify best practices and areas for improvement.

Estimating Competitors' Reactions

Competitor's philosophy, internal culture, and beliefs heavily influence their reactions.
Anticipating competitors' reactions is essential when analyzing their responses to strategic movements.

Selecting Competitors

Businesses must choose which competitors to vigorously fight
Evaluating competitors, choosing which ones to compete against strongly.

Competitive Strategies

Effective strategies increase competitiveness.
Competitive strategies may involve overall cost leadership, differentiation, or focus.

Competitive Strategies (continued)

Overall cost leadership involves striving for the lowest production and distribution costs.
Differentiation involves producing a unique and highly valued product, unlike anything competitors are offering.
Focus involves serving a specific market niche with special attributes.

Market Positions & Roles

Market leaders, challengers, followers, and nichers have distinct roles and strategies.

Maintaining market share involves avoiding potential weaknesses and responding effectively to competitor actions.

Expanding market share is crucial in growing businesses and generating higher profits.

Studying That Suits You

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Description

This quiz delves into the concepts of competitive advantage and competitor analysis within business strategy. Explore how companies can identify and assess their competitors to gain a strategic edge. Understand the importance of recognizing both direct and indirect competitors for effective market positioning.

Chapter 18

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Questions and Answers

What is the primary goal of competitive advantage?

Competitor analysis only involves evaluating current competitors in the market.

What term describes the tendency of companies to overlook potential future competitors?

Companies define their competitors at a narrow level as those offering similar products and services at similar __________.

Match the following companies with their competitive focus:

Which aspect is NOT typically assessed during competitor analysis?

When identifying competitors, a company should consider those that satisfy the same customer need.

What is one common mistake companies make regarding their competitors?

Which objective is likely to be prioritized by a company pursuing low-cost leadership?

Strategic groups consist of companies that follow significantly different strategies.

What is benchmarking?

A group of firms in an industry following the same or a similar strategy is known as a __________.

Match the objectives to their descriptions:

Which of the following sources is commonly used to learn about competitors' strengths and weaknesses?

Estimating competitors' reactions does not depend on understanding their internal culture.

What is one way companies assess their competitors' strategies?

What type of marketing is most commonly used by start-ups and small businesses?

Clear strategies include overall cost leadership, differentiation, and market segmentation only.

What is the primary goal of intrapreneurial marketing?

Companies that pursue a __________ strategy typically aim to offer highly differentiated products.

Match the following companies with their competitive strategy focus:

Which company is an example of overall cost leadership?

Middle-of-the-roaders typically do the best among competitive strategies.

Give one example of a company that has used intrapreneurial marketing.

Which of the following strategies can market leaders use to expand their market?

Market leaders should fix their weaknesses to protect their position.

What is the primary goal of a market challenger?

Market leaders can encourage more usage of their products by running ads containing new ______.

What is a potential risk for market challengers when attacking the market leader?

Market challengers should ignore the successes of market leaders.

Name one method a market leader can use to protect its market share.

Match the following terms with their definitions:

Which value discipline focuses on providing superior value through low pricing and convenience?

Customer intimacy involves segmenting markets and tailoring products to meet customer needs.

Name one company known for its focus on product leadership.

Companies that excel in both operational excellence and customer intimacy, like FedEx, are considered _____ due to their ability to provide value in multiple disciplines.

Match the following companies with their value discipline:

What is a common consequence for companies attempting to be good at all value disciplines?

The leading firm in an industry typically benefits the least when total market demand expands.

What is the primary focus of companies that practice operational excellence?

What is a key strategy for market challengers when targeting competitors?

Market followers typically try to overtake the market leader by launching new products.

What primary advantage does a market follower gain from the market leader's experiences?

Market nichers target small segments that other firms in the industry __________.

Match the strategy with its description:

Why is niching often profitable for small firms?

Market challengers benefit from taking on larger competitors in a frontal attack.

What is a significant disadvantage that smaller firms may face when competing in the market?

Study Notes

Competitive Advantage

Competitor Analysis

Identifying Competitors

Assessing Competitors

Identifying Competitors' Strategies

Assessing Competitors' Strengths & Weaknesses

Estimating Competitors' Reactions

Selecting Competitors

Competitive Strategies

Competitive Strategies (continued)

Market Positions & Roles

Protecting Market Share

Expanding Market Share

Studying That Suits You

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