Exam 2: Analysis of the External Environment: Opportunities and Threats

Smart Waves Inc., a company that sells computers, provides an external hard disk along with its high-end professional laptops. Customers can store extra data in these hard disks without having to purchase them. The offer that Smart Waves provides is an example of ________.

Which of the following statements is true about the role of technology in a firm's profitability?

Summer Corp., a retailer of consumer electronics, has been experiencing high profits because an increasing percentage of the customers have sufficient disposable income to afford its products. Similar companies have also experienced a boom in customer demand. Which of the following macroeconomic forces is Summer Corp. experiencing?

Which of the following statements best describes the term backward integration?

In what way are switching costs a fundamental part of not just rivalry but also the force of new entrants?

Identify a true statement about competition among firms within an industry.

SliderPage Inc., a furniture company, has been trying hard to keep its profits going. SliderPage asked its suppliers to reduce the cost of the raw materials that would be needed to create its products and also tried to buy supplies that are less expensive. Which of the following buyer price sensitivity factors is best illustrated in this scenario?

A product that is fundamentally different yet serves the same function or purpose as another product best defines the term ________.

Satchels Corp. has been in the retail bag business for 10 years. It has created unique value and attained brand loyalty from its customers. Recently, a new bag company started up in the same area as Satchels. In order to retain the reputation that it has established and avoid competition with the new company, Satchels introduced a new line of fashion bags, conducted a sale, and also increased its advertising. This made it difficult for the new company to gain profits. This scenario best illustrates ________.

Bright Inc. is a toothpaste manufacturing company that is facing intense competition from its rivals. In order to encourage higher consumption of its products as well as minimize brand switching among its existing consumers, Bright introduced sweepstakes as a consumer sales promotion strategy. However, its rivals retaliated by introducing deals such as a discounted price bonus size offers, and buy one, get one free offers. This scenario best illustrates a ________.

Which of the following statements is true of standardization of products?

Readmore Publishing House, the publisher of a regional daily, has been slowly losing profits as its readers prefer to get news through the television. A recent study on the readers who made the switch stated that it is more accessible and faster to attain up-to-date news through the television rather than to wait for the next day for an update on current events. Which of the following is Readmore Publishing House is facing?

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term ________.

In the context of rivalry, which of the following statements is true of products by a firm?

Identify the five forces that shape the profit-making potential of an average firm in an industry. Discuss the basic steps involved in using the five forces analysis tool.

A hardware company named Ace Works Corp. has been going through financial problems because the entire industry experienced a drastic rise in prices. This has made it hard for the company to plan any future investments as it cannot risk the chance of losing more funds. Rather than development, most of the companies in this industry are experiencing an increase in price competition because all of them are competing with each other to gain more market share. Which of the following general economic conditions is Ace Works Corp. experiencing?

A firm that provides products that are inputs to another firm's production process is known as a(n)___.

Identify a true statement about network effects.

Define barriers to entry and briefly mention its characteristics.

The airline industry is a profitable industry. The firms in this industry create barriers to entry through patents and regulations in order to reduce the threat of new entrants. It also minimizes the threat of substitutes while keeping rivalry to a minimum. The airline industry can be best categorized as a(n)_________.