Chapter 9
(9).jpg "Chapter 9 - Quiz")
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- 1.
What term describes a decision that has a long-term impact and is difficult to reverse?
- A.
Dedicated investment
- B.
Strategic commitment
- C.
Critical choice
- D.
Market investment
- E.
Firm commitment
Correct Answer
B. Strategic commitment -
- 2.
Given the following payoff diagram: Firm 2 Aggressive Passive Firm 1 Aggressive 40,10 55,15 Passive 50, 25 70, 20 How much can firm 1 improve its outcome by committing to a strategy thus transforming the simultaneous move game to a sequential move game?
- A.
5
- B.
10
- C.
15
- D.
20
- E.
20
Correct Answer
A. 5 -
- 3.
Which of the following characteristics must be satisfied for a commitment by one firm to generate the desired response from its competitors?
- A.
It must be visible
- B.
It must be understandable
- C.
It must be credible
- D.
A & c
- E.
All of the above
Correct Answer
E. All of the above -
- 4.
What key element of a competitive move adds credibility to a making it a "true" commitment?
- A.
Fund raising
- B.
Public announcement
- C.
Relatedness factor
- D.
Irreversibility
- E.
Capacity expansion
Correct Answer
D. Irreversibility -
- 5.
What type of contractual clause in a sales contract with a buyer provides a provision such that the seller is obligated to extend the same price terms to the buyer that it extends to other customers?
- A.
Indemnification clause
- B.
Most favored customer clause (MFCC)
- C.
Escape clause
- D.
Money back guarantee
- E.
Meet the competition clause (MCC)
Correct Answer
B. Most favored customer clause (MFCC) -
- 6.
Which of the following statements is true in general about firm actions that are strategic complements?
- A.
Reaction functions are downward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
- B.
Reaction functions are downward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
- C.
Reaction functions are upward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
- D.
Reaction functions are upward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
- E.
In the Cournot model, quantities are strategic complements
Correct Answer
C. Reaction functions are upward sloping & the more of the action one firm chooses, the more of the action the other firm chooses -
- 7.
What tactical term best describes the pricing relationship between Toyota and Honda such that Toyota’s response is to lower the price on the Camry if Honda were to first announce a large price cut on the Accord?
- A.
Tough commitment
- B.
Strategic complement
- C.
Soft commitment
- D.
Strategic substitute
- E.
Duopoly
Correct Answer
B. Strategic complement -
- 8.
Which of the following statements is true in general about firm actions that are strategic substitutes?
- A.
Reaction functions are downward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
- B.
Reaction functions are downward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
- C.
Reaction functions are upward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
- D.
Reaction functions are upward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
- E.
In the Cournot model, quantities are strategic substitutes
Correct Answer
E. In the Cournot model, quantities are strategic substitutes -
- 9.
What tactical term best describes the capacity relationship between Toyota and Honda such that Toyota’s response is to reduce production output of the Rav 4 if Honda were to first announce a large increase in the production of the CR-V that drove down prices?
- A.
Tough commitment
- B.
Strategic complement
- C.
Soft commitment
- D.
Strategic substitute
- E.
Duopoly
Correct Answer
D. Strategic substitute -
- 10.
What type of effect describes how a commitment impacts the present value of the firm’s profits, assuming the firm adjusts its own tactical decisions in light of their commitment and that it’s competitors behavior does not change?
- A.
Tactical effect
- B.
Financial effect
- C.
Direct effect
- D.
Strategic effect
- E.
Indirect effect
Correct Answer
C. Direct effect -
- 11.
What type of effect describes the competitive side effects of the commitment that alter the tactical decisions of rivals and, ultimately, the market equilibrium?
- A.
Tactical effect
- B.
Financial effect
- C.
Direct effect
- D.
Strategic effect
- E.
Indirect effect
Correct Answer
D. Strategic effect -
- 12.
Which of the following statements is true about a tough commitment?
- A.
It is good for competitors
- B.
It is bad for competitors
- C.
In Cournot competition, elimination of production facilities is an example a tough commitment
- D.
In Betrand competition, a commitment to increase prices is an example of a tough commitment
- E.
Tough commitments are always in the best interest of a firm
Correct Answer
B. It is bad for competitors -
- 13.
Which of the following statements is true about a soft commitment?
- A.
It is bad for competitors
- B.
It is good for competitors
- C.
In Cournot competition, capacity expansion is an example of a soft commitment
- D.
In Betrand competition, a commitment to reduce prices is an example of a soft commitment
- E.
Tough commitments are always in the best interest of a firm
Correct Answer
B. It is good for competitors -
- 14.
Which of the following commitment strategies involves tough commitment postures, strategic substitutes for the stage 2 tactical varibles, a make commitment action and an assertion of dominance forcing rivals to back off?
- A.
Top Dog
- B.
Learn and Hungry Look
- C.
Mad Dog
- D.
Puppy-Dog Ploy
- E.
Fat-Cat Effect
Correct Answer
A. Top Dog -
- 15.
Which of the following commitment strategies involves soft commitment postures, strategic complements for the stage 2 tactical variables, a refrain commitment action and an acceptance of the status quo out of fear thus waiting to follow the leader? (A: Eigentlich weak-kitten laut buch)
- A.
Top Dog
- B.
Lean and Hungry Look
- C.
Mad Dog
- D.
Puppy-Dog Ploy
- E.
Fat-Cat Effect
Correct Answer
E. Fat-Cat Effect -
- 16.
What is the most likely reason a firm would pursue the "mad-dog" commitment strategy of making a tough commitment when tactical variables are strategic complements, a strategy with harmful strategic effects?
- A.
For deterrence of new entrants by creating capacity competition
- B.
To exploit intangible weaknesses of other firms
- C.
To test the response of other market firms
- D.
For deterrence of new entrants by increasing price competition
- E.
They are following another firm
Correct Answer
D. For deterrence of new entrants by increasing price competition -
- 17.
What process involves using computer simulations to track the likely competitive implications of pricing and investment decisions over many years?
- A.
Regression testing
- B.
Virtual reality
- C.
War gaming
- D.
Commitment testing
- E.
Scenario testing
Correct Answer
C. War gaming -
- 18.
What type of option exists when a decision maker has the opportunity to tailor a decision to information that will be received in the future?
- A.
Real option
- B.
Commitment option
- C.
Project option
- D.
Decision option
- E.
Future option
Correct Answer
A. Real option -
- 19.
What step of Ghemawat’s framework for analyzing commitment intensive choices involves analyzing whether the firm’s commitment is likely to result in a product market position in which the firm delivers superior benefits to consumers or operates with lower costs than competitors?
- A.
Positioning analysis
- B.
Sustainability analysis
- C.
Flexibility analysis
- D.
Judgment analysis
- E.
Final Commitment analysis
Correct Answer
A. Positioning analysis -
- 20.
What step of Ghemawat's framework for analyzing commitment intensive choices involves analyzing potential responses to the commitment by competitors and potential entrants in light of the commitments that they have made and the impact of those responses on competition?
- A.
Positioning analysis
- B.
Sustainability analysis
- C.
Flexibility analysis
- D.
Judgement analysis
- E.
Final Commitment analysis
Correct Answer
B. Sustainability analysis -
- 21.
What step of Ghemawat’s framework for analyzing commitment intensive choices involves taking stock of the organizational and managerial factors that might distort the firm’s incentive to choose an optimal strategy?
- A.
Positioning analysis
- B.
Sustainability analysis
- C.
Flexibility analysis
- D.
Judgment analysis
- E.
Final Commitment analysis
Correct Answer
D. Judgment analysis -
- 22.
Which of the following is a way that Airbus significantly enhanced the credibility of its commitment to enter super jumbo jet market?
- A.
By announcing entrance into the market
- B.
By entering a market they had not been in previously
- C.
By projecting changes in air travel includes increased congestion in the traditional hub-and-spoke system
- D.
By war gaming how the A380 would accommodate growing numbers of passengers and relive airport slot congestion
- E.
By securing over 60 early orders for the Airbus A380
Correct Answer
E. By securing over 60 early orders for the Airbus A380 -
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