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One key to predicting a competitor's strategies

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New post Updated on: 06 Aug 2019, 03:48
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GMATPrep EP2 New RC

One key to predicting a competitor's strategies is understanding how much that competitor resembles your company. Within a market, companies that resemble each other tend to pursue similar business strategies—called symmetric competition. Companies that have different assets, resources, capabilities, and positions within a market will likely also have different responses to market conditions—called asymmetric competition.

In the fast-food industry, for example, two players faced the same market trends, resulting from the public's concerns about high-fat diets, but responded in markedly different ways. The dominant player, as the target of consumer backlash, introduced a variety of foods It promoted as healthy. The other, foreseeing this move, saw an opportunity to find market share in the less health-conscious fast-food segment and so introduced high-fat, high-calorie sandwiches supported by aggressive, defiant ads.

Your company can anticipate competitors' actions by using a resource-based view of strategy: the idea that companies protect, extend, build, or acquire resources and capabilities that are valuable, rare, and successfully exploitable. Applying this view in a systematic way helps identify the options competitors will likely consider for any strategic Issue. However, determining which options competitors are likeliest to choose also requires moving beyond resource analysis to understanding the personal perceptions and Incentives of competitors' decision makers.


1)The passage refers to the public's concerns about high-fat diets primarily to

A) provide an example of a type of market trend that affects some companies more than others
B) suggest that these concerns have increased competition in the fast-food industry
C) provide evidence that symmetric competition does not typically exist in the fast-food market
D)help provide an example of how companies within an industry reacted to the same market trend
E)suggest that market trends are sometimes altered by the marketing strategies of the companies reacting to them

OA:D





2)The primary purpose of the passage is to

A) take a stand on a debate regarding business competition
B) offer recommendations on business strategies to company managers
C) describe the reactions of two companies to a particular market trend
D) analyze a type of business strategy used by companies
E) call into question prevailing beliefs within the marketing industry

OA:B




3)The passage suggests most strongly that the company mentioned In the highlighted text

A) was less concerned with prevailing market trends than was its dominant competitor
B) was in a position to take over the leading market position from its dominant competitor
C) understood which strategy Its dominant competitor was likely to follow
D) received little negative feedback based on concerns about high-fat diets
E) refrained from developing a comprehensive resource-based view of marketing strategy

OA:C


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Originally posted by NandishSS on 11 Apr 2018, 19:51.
Last edited by SajjadAhmad on 06 Aug 2019, 03:48, edited 2 times in total.
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New post 13 Jun 2018, 23:14
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bubbly2010 wrote:
can someone tell me why option D is not correct for question number 2 ?


I'll b glad to help-

One key to predicting a competitor's strategies is understanding how much that competitor resembles your company. Within a market, companies that resemble each other tend to pursue similar business strategies—called symmetric competition. Companies that have different assets, resources, capabilities, and positions within a market will likely also have different responses to market conditions—called asymmetric competition. --meaning-- existing strategy has been introduced.

In the fast-food industry, for example, two players faced the same market trends, resulting from the public's concerns about high-fat diets, but responded in markedly different ways. The dominant player, as the target of consumer backlash, introduced a variety of foods It promoted as healthy. The other, foreseeing this move, saw an opportunity to find market share in the less health-conscious fast-food segment and so introduced high-fat, high-calorie sandwiches supported by aggressive, defiant ads.-- meaning-- This paragraph is just an example of the last sentence of the 1st paragraph(Companies that have different assets, resources, capabilities, and positions within a market will likely also have different responses to market conditions)

Your company can anticipate competitors' actions by using a resource-based view of strategy: the idea that companies protect, extend, build, or acquire resources and capabilities that are valuable, rare, and successfully exploitable. Applying this view in a systematic way helps identify the options competitors will likely consider for any strategic Issue. However, determining which options competitors are likeliest to choose also requires moving beyond resource analysis to understanding the personal perceptions and Incentives of competitors' decision maker-- meaning-- author's POV, recommending a different strategy.


2)The primary purpose of the passage is to

A) take a stand on a debate regarding business competition - no stand

B) offer recommendations on business strategies to company managers -- Correct- This is the main idea of the passage. The author just introduces the current strategy exemplifies it and then provides his recommendations for a new one. So the recommendation is the main idea.

C) describe the reactions of two companies to a particular market trend - useless

D) analyze a type of business strategy used by companies--your probable reasoning--You summarised 1st para>>summarised 2nd para> summarised 3rd para. Your reasoning must have been that the author introduces a topic , exemplifies it and then suggests a new one. What you did not understand is that the significance of second paragraph as a whole is not worthy. The 2nd para is just an example of a phenomenon. Exclude the 2nd para and the passage still makes sense. You wouldnt have chosen this option if the second para was itself a part of the 1st para . Then you wouldve understood the insignificance of it. If you exclude the 2nd para and then read the entire passage you will understand the ACTUAL MAIN POINT of passage.Remember that examples are provided by the author only to strengthen his main idea .( a small tip--when u see the word ANALYSE in the ans choice make sure the passage is talking about the advantages and disadvantages of a topic and then providing his conclusion about that topic)

E) call into question prevailing beliefs within the marketing industry. - no limitations of the current one are mentioned.

hope this clears your doubt.
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New post 13 Jun 2018, 11:08
Which highlighted text does question 3 refer to? Can someone please help.
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New post 13 Jun 2018, 17:55
can someone tell me why option D is not correct for question number 2 ?
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New post 13 Jun 2018, 23:28
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Nived wrote:
Which highlighted text does question 3 refer to? Can someone please help.


highlighted text " the other " in second paragraph
In the fast-food industry, for example, two players faced the same market trends, resulting from the public's concerns about high-fat diets, but responded in markedly different ways. The dominant player, as the target of consumer backlash, introduced a variety of foods It promoted as healthy. The other, foreseeing this move, saw an opportunity to find market share in the less health-conscious fast-food segment and so introduced high-fat, high-calorie sandwiches supported by aggressive, defiant ads.

Basically "the other " company understood what strategy the initial company has implemented towards the market trend and hence the "the other company " implements a strategy to enter into opposite market that is the market where consumers are less health conscious. Summary- "the other" company understood the initial company's probable strategy and used this knowledge wisely. And this entire paragraph tries to show how companies react differently to the same market trend.

The passage suggests most strongly that the company mentioned In the highlighted text

A) was less concerned with prevailing market trends than was its dominant competitor - it was actually concerned
B) was in a position to take over the leading market position from its dominant competitor-- it entered a different market so no point of comptition.
C) understood which strategy Its dominant competitor was likely to follow - Correct.
D) received little negative feedback based on concerns about high-fat diets - we do not know what feedback it received.
E) refrained from developing a comprehensive resource-based view of marketing strategy-- irrelevant.(the author suggests the resource strategy in later para)



hope this helps
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New post 15 Jun 2018, 00:47
bubbly2010 wrote:
can someone tell me why option D is not correct for question number 2 ?


reading the passage we see that the main topic is to predict competitors stratergy. there is also an example showing how two companies reacted differently. para 3 tells us the ways to predict. we can easily eliminate a,c and e. now option d states that the primary purpose is to analyse business stratergy used by companies , this is a generalised statement ie it doesn't points to the whole passage which is specifically about predicting a competitor's strategies and how to do it.
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New post 05 Jul 2018, 09:23
Thanks AdityaHongunti and goofytiwari69 for the explanations!

To post additional questions not already addressed in this thread, feel free to use the request verbal experts' reply button.
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New post 25 Sep 2018, 15:40
Easy Passage! Took 8 min in total but got 3/3 correct.
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New post 30 May 2019, 04:13
Hi,

I got the third question incorrect. I choose option A as the answer to this question. And the reason I did that was because company A responded by introducing a number of high fat products as opposed to the market trends.
So it looked it its response was more dependent on the strategy followed by the dominant company. Which means it was less concerned with prevailing market trends than was its dominant competitor. ( I interpreted this as it was less concerned with the prevailing market trends as compared to how concerned it was about its compitetors strategy)


And for a moment I thought that Answer C was the correct answer choice. But since C used the word likely I rejected the same. The company already knew which strategy its compitetor is following so why use the word likely.

Please let me know where am I going wrong in my reasoning. I am ready to accept that Answer A is a incorrect choice however I need a reason to select choice C. Please guide.
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New post 04 Jun 2019, 08:27
givinggmat wrote:
Hi,

I got the third question incorrect. I choose option A as the answer to this question. And the reason I did that was because company A responded by introducing a number of high fat products as opposed to the market trends.
So it looked it its response was more dependent on the strategy followed by the dominant company. Which means it was less concerned with prevailing market trends than was its dominant competitor. ( I interpreted this as it was less concerned with the prevailing market trends as compared to how concerned it was about its compitetors strategy)


And for a moment I thought that Answer C was the correct answer choice. But since C used the word likely I rejected the same. The company already knew which strategy its compitetor is following so why use the word likely.

Please let me know where am I going wrong in my reasoning. I am ready to accept that Answer A is a incorrect choice however I need a reason to select choice C. Please guide.

Question #3 asks what the passage suggests about the non-dominant company facing a market trend of public concern about high fat diets.

Let's first take a look at (A):
Quote:
A) was less concerned with prevailing market trends than was its dominant competitor

On a surface level, this option is tempting -- after all, the company responded to a health-conscious market trend by offering high fat sandwiches. It seems like they don't care too much about the trend, right?

Except look at how the company made this strategic decision: it foresaw that its competitor would offer a variety of healthy (or seemingly healthy) new options, and then "saw an opportunity to find market share in the less health-conscious fast-food segment." So, even though the non-dominant company reacts to the trend in a surprising way, its decision was still a reaction to the trend. Far from being less concerned about the trend, the non-dominant company is highly concerned about the trend, its competitor's reaction to the trend, and how it can use these conditions to increase its market share.

Note: Interpreting (A) to say that the non dominant company was "less concerned with the prevailing market trends as compared to how concerned it was about its competitor's strategy" significantly changes the meaning of the answer choice. The comparison is not between two potential concerns of the non-dominant company, but rather between the two companies' levels of concern about the market trend. Because the decisions of both companies can be tied back to the market trend, we cannot say that the non dominant company was less concerned than the dominant company.

(A) is out.

Now look at (C):
Quote:
C) understood which strategy Its dominant competitor was likely to follow

As explained above, the non-dominant company formulated its reaction to the market trend by anticipating what the dominant company would do.

The word "likely" is necessary (or at least not problematic) because of the timeline laid out by the author. While the passage was written after these events took place, the companies made their decisions in the middle of the events themselves. The non-dominant company had to foresee the actions of the dominant company, which inherently adds doubt to their analysis. (C) is the correct answer.

I hope that helps!
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Re: One key to predicting a competitor's strategies  [#permalink]

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New post 06 Aug 2019, 02:48
AdityaHongunti wrote:
Correct- This is the main idea of the passage. The author just introduces the current strategy exemplifies it and then provides his recommendations for a new one. So the recommendation is the main idea.



This is wrong.

It looks as if you're merely justifying the answer here.

The author doesn't recommend "a new one". He discusses the strategy in P1, gives an example of it in P2, and informs the reader on how to actually implement the strategy - "You can <IMPLEMENT THE STRATEGY I DISCUSSED IN P1> by < DOING THIS> (using a resource based view)."

There's also a typo in the last paragraph - its missing "The".


Q2 - primary purpose
A - is incorrect. Clearly there is no debate nor stand taken.
B - is correct because the last paragraph clearly highlights the purpose. "Your company can <DO THIS TOO!>". I think its fairly presumptuous of this answer choice to label "managers" since "managers" aren't really mentioned anywhere, but the fact the author is mentioning "your company" should be sufficient to indicate some seniority - I actually thought CEO/ Business owner at first.

The general passage goes like this:
P1: discuss a strategy -compare your company to competitors
P2: discuss its application with use of an example
p3: make recommendation to use said strategy and propose a method for incorporating it (Resource based view)

C - false. Two companies are discussed in relation to a market trend as an example of the strategy recommended.
D - the passage doesn't really analyse as much as propose the strategy. To analyse is to really put something under a magnifying glass and review it in some great depth. P1 discusses the strategy briefly, P2 provides an example of this, and P3 recommends a method of implementing this strategy. For this reason, the passage does not analyse the strategy and is thus incorrect.

FYI here's the google definition for analyse:
examine (something) methodically and in detail, typically in order to explain and interpret it.


E - no prevailing beliefs are mentioned and nothing is called into question. Incorrect.
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Re: One key to predicting a competitor's strategies   [#permalink] 06 Aug 2019, 02:48
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