CSM Competitive Analysis & Market Intelligence 2 — Questions and Answers
Question 1: The BCG Growth-Share Matrix classifies business units into four categories. A unit with HIGH market share but LOW growth is called a:
- Star
- Cash Cow (Correct answer)
- Question Mark
- Dog
Correct answer: Cash Cow
Cash Cows have dominant market share in slow-growth markets, generating steady cash flow with minimal investment needed.
Question 2: A firm performs a SWOT analysis before entering a new market. Which of the following would be classified as an OPPORTUNITY?
- The company's strong R&D department
- An aging and inflexible IT infrastructure
- Emerging demand for eco-friendly products in the target market (Correct answer)
- A key competitor that recently cut prices
Correct answer: Emerging demand for eco-friendly products in the target market
Opportunities are external, favorable conditions in the environment that a firm can exploit to its advantage.
Question 3: Industry concentration can be measured with the Herfindahl-Hirschman Index (HHI). A very HIGH HHI score indicates:
- A highly fragmented, competitive market
- A near-monopoly or highly concentrated market (Correct answer)
- Equal market share among many players
- Low barriers to entry
Correct answer: A near-monopoly or highly concentrated market
A high HHI score means a few firms control most of the market, indicating high concentration and less competitive rivalry.
Question 4: Benchmarking against the best-in-class company outside your industry is specifically called:
- Competitive benchmarking
- Internal benchmarking
- Generic benchmarking (Correct answer)
- Functional benchmarking
Correct answer: Generic benchmarking
Generic benchmarking compares processes against best practices from entirely different industries to find transferable innovations.
Question 5: A first-mover advantage is most sustainable when:
- The industry has low switching costs and many substitutes
- Technology changes rapidly and incumbents cannot patent innovations
- The pioneer builds strong customer loyalty and proprietary technology before rivals enter (Correct answer)
- Products in the market are commodities
Correct answer: The pioneer builds strong customer loyalty and proprietary technology before rivals enter
First-mover advantages are durable when the pioneer locks in customers through loyalty programs, patents, or proprietary assets before competitors arrive.
Question 6: In competitive intelligence, which source is considered SECONDARY data?
- Interviews with a competitor's former employee
- Observation of a competitor's trade show booth
- Published industry analyst reports (Correct answer)
- Direct customer surveys about competitor products
Correct answer: Published industry analyst reports
Secondary data is information already collected and published by others, such as analyst reports, press releases, and industry databases.
Question 7: When a strategic manager evaluates the 'bargaining power of buyers' in Porter's model, HIGH buyer power is indicated by:
- Buyers purchasing small, fragmented volumes
- The product being a critical, unique input for buyers
- Buyers purchasing in large volumes with low switching costs (Correct answer)
- A large number of buyers and few alternative suppliers
Correct answer: Buyers purchasing in large volumes with low switching costs
When buyers purchase in large volumes and can easily switch suppliers, they can demand lower prices or better terms, giving them high bargaining power.
CSM Competitive Analysis & Market Intelligence 2
The BCG Growth-Share Matrix classifies business units into four categories.
A unit with HIGH market share but LOW growth is called a: