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Study Questions
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Questions about
Competition Demystified
By Bruce Greenwald and Judd Kahn
These questions are intended to help you test your understanding of the book.
Chapter 1: Strategy, Markets and Competition
1. What are the differences between strategy and tactics?
2. What is the most valuable resource in any business?
3. What is the most important feature of the competitive landscape in which a business operates? (hint: one of Porter’s five forces)
4. What are the three sources of competitive advantages?
5. If your success is based on your ability to dominate a local market, how can you grow and still maintain high levels of profitability?
Chapter 2: Competitive Advantages I: Supply and Demand
6. Is product differentiation a means to high profitability?
7. Can product differentiation create strategic opportunity? Why or why not?
8. Is efficiency easier for differentiated products than commodity products?
9. What is the strongest barrier to entry? Why?
10. What is customer captivity and what are the three sources of customer captivity?
Chapter 3: Competitive Advantages II: Economies of Scale and Strategy
11. When we talk about the "size" of economies of scale, what are some of the ways of thinking about this? Explain the interaction of economies of scale and customer captivity: in manufacturing, in advertising & marketing, in distribution .
12. What economic conditions create the potential for economies of scale advantages?
13. If a crucial ingredient for competitive advantage is customer captivity, what are five tactics for intensifying customer captivity?
14. Why is Coca Cola one of the most valuable brands in the world? Why is Mercedes-Benz not?
Chapter 4: Assessing Competitive Advantages
15. What are the tests for existence of competitive advantage? How do you perform these tests? What difficulties might you run into in assembling your data?
16. What are the markets in which Apple is competing? Does Apple have a competitive advantage in any market in which it competes? Does synergy play a role for Apple?
Chapter 5: Big Where it Counts: Wal-mart, Coors, and Local Economies of Scale
17. During Wal-Mart’s most profitable years, what were the operating characteristics of the company that were the basis for its success?
18. What changed when Wal-mart became first national and then international?
19. Describe Coors’ natural expansion strategy and how its centralized and vertically integrated business practices would have supported that expansion?
20. When Coors’ expanded nationally, what happened to its profit margins? Why?
Chapter 6: Niche Advantages and The Dilemma of Growth: Compaq and Apple in the Personal computer industry
21. What competitive advantages does Microsoft enjoy in the operating system industry?
22. Why have "box makers" not been able to establish a competitive advantage over other competitors?
Why was the enormous growth in the market for PCs such a problem for Compaq specifically? Did it have any alternatives that might have worked out better than its chosen strategy? Did Apple?
Chapter 7: Production Advantages Lost: Compact Discs, Data Switches and Toasters
23. Discuss first mover conditions that Phillips might have considered in entering the compact disk and compact disk player markets. Consider: market growth, establishment of standard specs, patents, customer captivity, economies of scale.
24. Why was Cisco able to dominate the router market in the 1980s and 1990s in a way that Philips was not in the compact disk market?
25. Explain the statement, "No matter how complex and unique products seem at the start, in the long run they are all toasters."
Chapter 8: Games Companies Play: A Structured Approach to Competitive Strategy, Part I: The Prisoner’s Dilemma Game
26. Describe in a few sentences the dynamics of a prisoner’s dilemma game (with two competitors of a similar size) and the likely equilibrium in the real world of Lowes and Home Depot.
27. When a competitor wants to be "deviant," how can others in the market control the deviant’s behavior?
Chapter 9: Uncivil Cola Wars: Coke and Pepsi Confront the Prisoner’s Dilemma
28. What are the sources of competitive advantages in the soda industry?
29. During the "statesmen" era of Pepsi and Coke, what actions did each of the companies take? Why did they help raise profitability?
Chapter 10: Into the Hen House: Fox Becomes a Network
30. Describe how the three networks (ABC, NBC and CBS) played the prisoner’s dilemma game in the 1960s and 1970s in regarding advertising pricing, advertising inventory, purchasing of shows, and hiring of talent.
31. How did Fox influence the other networks’ responses to its efforts to get behind the their barriers to enter their market
32. How effective was Fox’s strategy of having synergistic media businesses?
Chapter 11: Games Companies Play: A Structured Approach to Competitive Strategy, Part II Entry/Preemption Games
33. What are four characteristics of entry/preemption or "quantity" competitive situations that differ from pricing issues?
34. What can a potential entrant do to discourage incumbents from resisting its entrance?
35. You are faced with analyzing a competitive industry, and you want to understand what the players might do. Describe what techniques you might use to accomplish this analysis.
Chapter 12: Fear of Not Flying: Kiwi Enters the Airline Industry
36. Describe Kiwi’s entry strategy and explain why it was initially successful. Where did they go wrong and why?
37. What is the evidence that there were no existing barriers to entry in the airline industry in the 1980s?
Chapter 13: No Instant Gratification: Kodak Takes on Polaroid
38. Detail Polaroid’s competitive advantages in the instant photography market.
39. What were Polaroid’s responses to Kodak’s launch into the instant photography market?
40. Was there an alternative approach for Kodak that might have been more successful?
41. If you were running Kodak in the 1970s, what strategy would you have followed – given all the benefits of hindsight.
Chapter 14: Cooperation Without Incarceration: Bigger Pies, Fairly Divided
42. What are the three parts of the "fairness principle" needed to sustain cooperation?
43. What are the benefits in analyzing how an industry and its players could cooperate even when there is no chance that the companies in a particular industry can overcome their competitive behavior?
Chapter 15: Cooperation: The Dos and Don’ts
44. Describe the "virtuous circle" that Nintendo enjoyed when it dominated the 8-bit games market.
45. What were the major reasons Nintendo’s position as market leader deteriorated?
46. In the lead additive market, what were the four or five major reasons the competitors maintained high profits despite a continually shrinking market?
Chapter 16: Valuation from a Strategic Perspective: Improving Investment Decisions
47. What are the three major shortcomings of using the NPV approach to valuing companies?
48. In an earnings power calculation, what are the 6 adjustments you need to make to the current cash flow to arrive at an accurate estimate?
49. What are the two ways to value a company’s assets?
50. The difference between the asset value and the earnings power value is evidence of what?
Chapter 17: Corporate Development and Strategy: Mergers and Acquisition, New Ventures, and Brand Extensions
51. What synergies most reliably materialize after an M & A transaction? Explain.
52. How does an acquisition consideration changes when the transaction is done with stock?
53. What’s the difference between "brand value" and "economic value.?" Give examples.
Chapter 18: The Level Playing Field: Flourishing in a Competitive Environment
54. Explain the assertion: "The rewards from superior management that stresses efficiency and productivity can be comparable to those arising from structural competitive advantages."
55. What are the three underlying goals of strategy formulation?
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