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

Which of the following statements is true of buyer power?

MouseTag Inc. has incorporated a new type of technology that has increased the potential of the company by two-fold. Its machinery can now work faster and produce more products in a day than any of its previous machines ever could. This has also helped increase the profits of the company. Which of the following trends does this scenario best illustrate?

GetYoung Inc., a cosmetic company, recently launched a beauty bar soap that claims to soften the users' skin, giving it a natural glow, and also make them look up to 5 years younger. A lot of women eagerly tried out this soap and received positive results and thus encouraged their friends to try out the soap. GetYoung Inc. gained profits very fast through this word-of-mouth advertising. This scenario best illustrates ________.

OneTick Shop Inc. experienced a loss of finances in the small town of Brightland as a lot of people from the town moved to bigger cities in search of jobs. This resulted in a loss of both returning as well as new customers. This scenario primarily reflects ________.

The household appliance industry has few major manufacturers like Nebula Corp., Cook Well Inc., and Mercury Corp. and a few smaller manufacturers. There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars. This scenario best illustrates a ________.

Products that can be used in tandem with those from another industry best define the term ________.

Explain the reason why substitute products are taken as a threat by firms.

The attractiveness of an industry is ________.

Attractive industries are those where firms ________.

Which of the following statements is true about concentrated industries?

The residents of the town of Segonon have initiated a campaign to stop the production of aerated beverages by Sip Drink Inc. The community members of Segonon stated that these beverages are causing loss of memory, nausea, and tiredness among the children who consume them regularly, and thus, have urged that the company should be shut down. The community's reaction to Sip Drink's beverages illustrates a ________.

The computers of Main Frame Inc., a computer company, are manufactured with in-built operating software. The users of this software have avoided using computers manufactured by other companies because that would entail converting their data to the other software. Also, they would have to get used to working smoothly with the other software. From this scenario, we can infer that ________.

How do switching costs affect industry rivalry?

BlockWood Inc. has been providing raw materials to Couches Corp., a furniture company. The management at Couches recently decided to cut the prices it pays for the raw materials. BlockWood Inc. tried to negotiate a price that would be feasible for both companies, but Couches did not agree to pay more than what they had quoted. As BlockWood Inc. was facing similar difficulties with other buyers too, it eventually stopped supplying raw materials and took to manufacturing furniture instead. This scenario best illustrates ________.

Pancake Platter Inc. opens a new breakfast deli in the small town of Lakeville. It makes a lot of profit during its first year because it is the only deli in the area. Customers choose to have breakfast at this deli because their only other options for availing this type of service would be to travel several miles to the next town. This scenario best illustrates ________.

According to economists, a fragmented industry is an industry which ________.

Barriers that help keep firms using the same supplier or buyer by imposing extra costs for substituting suppliers or buyers are known as ___.

Define switching costs and the forces that it takes into consideration.

Jupiter Bank was one of the first banks to adopt intelligent imaging that helps in classifying, storing, and retrieval of data. It was also among the first to practice virtual banking and transfer data electronically. As such, Jupiter Bank was an early adopter of these new and faster techniques of banking. This helped the bank to gain a large market share which consequently enabled it to generate huge profits. Jupiter Bank yielded such profits because it paid importance to ________.

CharmingBells Inc. has been running into a loss gradually, but the board of directors are reluctant to shut the company down because it has invested millions of dollars' worth of equipment which can only be used in that industry. Moreover, the people in CharmingBells Inc. have become emotionally attached to the company and do not want the company completely shut down. This scenario best illustrates ________.