SEVI 3013 EXAM REVIEW QUESTIONS
AND ANSWERS
Standard-Cycle - Answer-Markets in which some competitors may be able to imitate the
focal firm's competitive advantages and where that imitation moderately costly
Corporate Strategy - Answer-Specifies actions a firm takes to gain a competitive
advantage by selecting and managing a group of different business competing in
different product markets
What is Diversification? - Answer-The process of a business enlarging or varying its
range of products or field of operation
Resource Similarity - Answer-The extent to which the firm's tangible and intangible
resources compare favorably to a competitor's in terms of type and amount
What are the Drivers of Competitive Behavior? - Answer-Awareness
Motivation
Ability
Awareness - Answer-Refers to the extent to which competitors recognize the degree of
their mutual interdependence that results from market commonality and resource
similarity
Prerequisite to any competitive action or response taken by a firm
Motivation - Answer-Concerns the firm's incentive to take action or to respond to a
competitor's attack, relates to perceived gains and losses
Thus, a firm may be aware of competitors but may not be motivated to engage in rivalry
with them if it perceives that its market position will neither improve nor suffer if it does
not respond
Ability - Answer-Relates to each firm's resources and the flexibility they provide
Without available resources (such as financial capital and people), the firm is not able to
attack a competitor or respond to its actions
First Move Advantage - Answer-A firm that takes an initial competitive action to build or
defend its competitive advantages or to improve its market position
In addition to earning above-average returns until its competitors respond to its
successful competitive action:
, -the loyalty of customers who may become committed to the products of the firm that
first made them available
-market share that can be difficult for competitors to take when engaging in competitive
rivalry
Second Move Advantage - Answer-A firm that responds to the first mover's competitive
action, typically through imitation
By evaluating the first mover's product, customers' reactions to it, and the responses of
other competitors to the first mover, the second mover may be able to avoid the early
entrant's mistakes and find ways to improve upon the value created for customers by
the first mover's product
Late Move Advantage - Answer-A firm that responds to a competitive action a
significant amount of time after the first mover's action and the second mover's
response
Commonly are lower performers and less competitive
Fast-Cycle - Answer-Markets in which competitors can imitate the focal firm's
capabilities that contribute to its competitive advantages and where that imitation is
often rapid and inexpensive
Slow-Cycle - Answer-Markets in which competitors lack the ability to imitate the focal
firm's competitive advantages that commonly last for long periods, and where imitation
would be costly
What are the Types of Diversification? - Answer-Low Levels:
-Single business
-Dominant business
Moderate to High Levels:
-Related constrained
-Related linked (mixed related and unrelated)
Very High Levels:
-Unrelated
Single Business Diversification - Answer-A corporate-level strategy wherein the firm
generates 95% or more of its sales revenue from its core business area
Dominant Business Diversification - Answer-The firm generates between 70 and 95% of
its total revenue within a single business area
AND ANSWERS
Standard-Cycle - Answer-Markets in which some competitors may be able to imitate the
focal firm's competitive advantages and where that imitation moderately costly
Corporate Strategy - Answer-Specifies actions a firm takes to gain a competitive
advantage by selecting and managing a group of different business competing in
different product markets
What is Diversification? - Answer-The process of a business enlarging or varying its
range of products or field of operation
Resource Similarity - Answer-The extent to which the firm's tangible and intangible
resources compare favorably to a competitor's in terms of type and amount
What are the Drivers of Competitive Behavior? - Answer-Awareness
Motivation
Ability
Awareness - Answer-Refers to the extent to which competitors recognize the degree of
their mutual interdependence that results from market commonality and resource
similarity
Prerequisite to any competitive action or response taken by a firm
Motivation - Answer-Concerns the firm's incentive to take action or to respond to a
competitor's attack, relates to perceived gains and losses
Thus, a firm may be aware of competitors but may not be motivated to engage in rivalry
with them if it perceives that its market position will neither improve nor suffer if it does
not respond
Ability - Answer-Relates to each firm's resources and the flexibility they provide
Without available resources (such as financial capital and people), the firm is not able to
attack a competitor or respond to its actions
First Move Advantage - Answer-A firm that takes an initial competitive action to build or
defend its competitive advantages or to improve its market position
In addition to earning above-average returns until its competitors respond to its
successful competitive action:
, -the loyalty of customers who may become committed to the products of the firm that
first made them available
-market share that can be difficult for competitors to take when engaging in competitive
rivalry
Second Move Advantage - Answer-A firm that responds to the first mover's competitive
action, typically through imitation
By evaluating the first mover's product, customers' reactions to it, and the responses of
other competitors to the first mover, the second mover may be able to avoid the early
entrant's mistakes and find ways to improve upon the value created for customers by
the first mover's product
Late Move Advantage - Answer-A firm that responds to a competitive action a
significant amount of time after the first mover's action and the second mover's
response
Commonly are lower performers and less competitive
Fast-Cycle - Answer-Markets in which competitors can imitate the focal firm's
capabilities that contribute to its competitive advantages and where that imitation is
often rapid and inexpensive
Slow-Cycle - Answer-Markets in which competitors lack the ability to imitate the focal
firm's competitive advantages that commonly last for long periods, and where imitation
would be costly
What are the Types of Diversification? - Answer-Low Levels:
-Single business
-Dominant business
Moderate to High Levels:
-Related constrained
-Related linked (mixed related and unrelated)
Very High Levels:
-Unrelated
Single Business Diversification - Answer-A corporate-level strategy wherein the firm
generates 95% or more of its sales revenue from its core business area
Dominant Business Diversification - Answer-The firm generates between 70 and 95% of
its total revenue within a single business area
