Question 1

Which of the following statements is true of understanding an industry?

Accepted Answer

A) If managers do not properly define and understand their industry, they may be vulnerable to unseen competitors. 
B) Truly understanding an industry often begins by taking a product-oriented view. 
C) Firms should avoid choosing to compete in several markets at the same time. 
D) Identifying an industry based on the product or service provided is the best way to understand the industry. 
A) If managers do not properly define and understand their industry, they may be vulnerable to unseen competitors. 
B) Truly understanding an industry often begins by taking a product-oriented view. 
C) Firms should avoid choosing to compete in several markets at the same time. 
D) Identifying an industry based on the product or service provided is the best way to understand the industry.

Question 2

SevenCloud Inc., a soft drink company, provided service to its customers for approximately one year until a new company called Sparkle Inc. came up. Sparkle provided flavored water as a new product in the beverage market. Customers were eager to try out this new product and purchased it because they preferred it over aerated beverages. SevenCloud was afraid that if this trend continued, it would soon run the risk of going out of business. In this scenario, which of the following did SevenCloud Inc. experience?

Accepted Answer

A) Opportunity 
B) Threat 
C) Weakness 
D) Merger 
A) Opportunity 
B) Threat 
C) Weakness 
D) Merger

Question 3

Identify a true statement about substitutes.

Accepted Answer

A) Substitutes put upward pressure on the price that firms in an industry can charge. 
B) Substitutes give a firm the freedom to charge customers high prices for their products. 
C) It is a product with the same basic characteristics and is made using the same general set of inputs. 
D) It is a product that is fundamentally different yet serves the same basic function as another product. 
A) Substitutes put upward pressure on the price that firms in an industry can charge. 
B) Substitutes give a firm the freedom to charge customers high prices for their products. 
C) It is a product with the same basic characteristics and is made using the same general set of inputs. 
D) It is a product that is fundamentally different yet serves the same basic function as another product.

Question 4

Identify the role of general economic conditions in a firm's profitability.

Accepted Answer

A) When interest rates are low, many firms can afford to invest in new assets. 
B) When an economy slows down, industry growth rates increase and rivalry decreases. 
C) Inflation tends to increase overall economic growth, decreasing rivalry and the threat of substitutes. 
D) During deflation, many industries experience increases in price competition as a means of gaining market share. 
A) When interest rates are low, many firms can afford to invest in new assets. 
B) When an economy slows down, industry growth rates increase and rivalry decreases. 
C) Inflation tends to increase overall economic growth, decreasing rivalry and the threat of substitutes. 
D) During deflation, many industries experience increases in price competition as a means of gaining market share.

Question 5

Competition among firms within an industry best defines the term ________.

Accepted Answer

A) substitute 
B) threat 
C) rivalry 
D) opportunity 
A) substitute 
B) threat 
C) rivalry 
D) opportunity

Which of the following statements is true of understanding an industry?

Identify a true statement about substitutes.

Identify the role of general economic conditions in a firm's profitability.

Competition among firms within an industry best defines the term ________.

What Is Business Strategy

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Cost Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters

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

Which of the following statements is true of understanding an industry?

Identify a true statement about substitutes.

Identify the role of general economic conditions in a firm's profitability.

Competition among firms within an industry best defines the term ________.

What Is Business Strategy

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Cost Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters