Management Notes

Reference Notes for Management

Firms with few competitive resources are more likely to

Firms with few competitive resources are more likely to


A. not respond to competitive actions.
B. respond quickly to competitive actions.
C. delay responding to competitive actions.
D. respond to strategic actions, but not to tactical actions.

The Correct Answer Is:

C. delay responding to competitive actions.

Correct Answer Explanation: C. delay responding to competitive actions.

Firms with few competitive resources are more likely to delay responding to competitive actions (Option C) due to a variety of reasons. This delay stems from their limited capabilities and resources to swiftly counteract or adapt to changes in their competitive environment.

When a firm possesses limited competitive resources, it typically implies that it has fewer financial, technological, human, or other assets at its disposal compared to its competitors. This scarcity puts the firm at a disadvantage, as it may struggle to keep pace with the actions of more resourceful rivals.

For instance, if a competitor introduces a new product or service, a firm with few resources may lack the means to quickly develop and launch a similar offering in response.

Moreover, firms with limited competitive resources may face constraints in terms of research and development capabilities, which can hinder their ability to innovate or improve existing products or services.

This further contributes to the delay in responding to competitive actions. They may not have the necessary expertise, funding, or access to advanced technologies to keep up with industry trends and customer demands.

Additionally, firms lacking in competitive resources may also have restricted marketing and promotional capabilities. This means they may struggle to effectively communicate their value propositions to customers or to differentiate themselves from competitors.

As a result, they may find it challenging to counteract the marketing efforts of rivals who have more robust resources at their disposal.

Now, let’s examine why the other options are not correct:

A. Not respond to competitive actions:

This option is unlikely for several reasons. Firstly, in a competitive market, firms cannot afford to completely ignore the actions of their competitors. Ignoring competitive actions would mean disregarding potential threats and opportunities that could have a significant impact on the firm’s performance and market position.

Additionally, failing to respond to competitive actions could lead to a loss of market share, customer trust, and ultimately, business sustainability. Therefore, outright non-response is not a viable strategy for firms, regardless of their resource limitations.

B. Respond quickly to competitive actions:

While swift responses are often desirable in a competitive environment, firms with limited resources may face practical constraints that hinder their ability to respond quickly. Limited financial resources may prevent them from making rapid investments or changes.

Likewise, a lack of technological capabilities could slow down their ability to develop and implement new strategies. Additionally, a shortage of skilled personnel may affect their capacity to execute rapid responses.

Therefore, while a quick response is generally advantageous, firms with resource constraints may find it challenging to achieve this level of agility.

D. Respond to strategic actions, but not to tactical actions:

This option assumes a clear distinction between strategic and tactical actions. However, in practice, these two types of actions are often interlinked. Strategic actions involve long-term planning and decision-making, while tactical actions are more short-term, involving the implementation of specific strategies.

Firms need to be capable of both strategic and tactical responses to effectively navigate the competitive landscape. Limiting responses to only one type of action could lead to an imbalance in the firm’s approach, potentially undermining its competitiveness.

Therefore, this option is not a suitable characterization of how firms with limited competitive resources typically respond to competitive actions.

In conclusion, the options other than Option C are not as suitable because they either assume an unrealistic approach (Option A), may not be feasible due to resource constraints (Option B), or oversimplify the complex nature of competitive responses (Option D).

Option C, on the other hand, aligns with the practical challenges that firms with limited competitive resources often face, emphasizing the likelihood of delayed responses to competitive actions.

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