Question 1

Which of the following external forces is a part of a firm's task environment?

Accepted Answer

A)  the composition of the strategic group to which the firm belongs 
B)  the interest rates prevalent in the economy in which the firm operates 
C)  the inflation level in the economy in which the firm operates 
D)  the recent innovations in process technology, including lean manufacturing 
A)  the composition of the strategic group to which the firm belongs 
B)  the interest rates prevalent in the economy in which the firm operates 
C)  the inflation level in the economy in which the firm operates 
D)  the recent innovations in process technology, including lean manufacturing A

Question 2

Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.

Accepted Answer

A) True 
 B)False  True

Question 3

Defend or refute the statement: "Strategic groups do not impact competitive rivalry within an industry."

Accepted Answer

This statement is incorrect. Firms in the same strategic group tend to follow a similar strategy. Companies in the same strategic group, therefore, are direct competitors. The rivalry among firms of the same strategic group is generally more intense than the rivalry between strategic groups: intra-group rivalry exceeds inter-group rivalry. The number of different business strategies pursued within an industry determines the number of strategic groups in that industry.

Question 4

Which of the following features about a buyer indicates that the buyer has high bargaining power?

Accepted Answer

A)  when the buyer cannot credibly threaten to backwardly integrate into the industry 
B)  when the buyer cannot purchase specific products from other sellers 
C)  when the buyer faces high switching costs 
D)  when the buyer operates in an industry where products are undifferentiated 
A)  when the buyer cannot credibly threaten to backwardly integrate into the industry 
B)  when the buyer cannot purchase specific products from other sellers 
C)  when the buyer faces high switching costs 
D)  when the buyer operates in an industry where products are undifferentiated

Question 5

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?

Accepted Answer

A)  "Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful." 
B)  "Firm effects. I will be able to have the most impact on those." 
C)  "Industry effects. They have the most substantial effect on superior firm performance." 
D)  "Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort." 
A)  "Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful." 
B)  "Firm effects. I will be able to have the most impact on those." 
C)  "Industry effects. They have the most substantial effect on superior firm performance." 
D)  "Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort."

Question 6

What is the drawback of the five forces model? Provide an example that shows this drawback. The example can be from your reading or from your own experience.

Accepted Answer

Student answers will vary. A sample answ

Question 7

Competitive rivalry based solely on ________ is destructive to firms as it transfers most of the value created in the industry to the customers.

Accepted Answer

A)  price-cutting 
B)  new product releases 
C)  promotional campaigns 
D)  product differentiation 
A)  price-cutting 
B)  new product releases 
C)  promotional campaigns 
D)  product differentiation

Question 8

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because

Accepted Answer

A)  entering the aircraft manufacturing industry requires huge capital investments. 
B)  there is expected to be a huge return on investment within this industry. 
C)  there is no credible threat of retaliation from the incumbents. 
D)  entering the aircraft manufacturing industry means violating government policies. 
A)  entering the aircraft manufacturing industry requires huge capital investments. 
B)  there is expected to be a huge return on investment within this industry. 
C)  there is no credible threat of retaliation from the incumbents. 
D)  entering the aircraft manufacturing industry means violating government policies.

Question 9

For-profit businesses operating in long-standing fields such as energy and transportation usually operate in an environment of price stability.

Accepted Answer

A) True 
 B)False

Question 10

Explain how the availability of substitutes affects business strategy. Include an example of a company or industry where many substitutes are available and one where few or none are available.

Accepted Answer

Student answers will vary. A sample answ

Question 11

Etsuro is a management consultant. Baker Corp. asks him to evaluate their company, and he finds that the difference between the cost of producing the firm's products and the value of those products is extremely narrow. What should Etsuro suggest that Baker Corp. management do?

Accepted Answer

A)  Find a way to widen the gap between cost and value. 
B)  Find a way to pass on as much profit as possible to suppliers and customers. 
C)  Shore up the company's strong position by erecting entry barriers. 
D)  Encourage customers to buy complements to their products. 
A)  Find a way to widen the gap between cost and value. 
B)  Find a way to pass on as much profit as possible to suppliers and customers. 
C)  Shore up the company's strong position by erecting entry barriers. 
D)  Encourage customers to buy complements to their products.

Question 12

A local manufacturer that wants to be a global manufacturer faces few mobility barriers because it has not yet invested in supply chains, which can become outdated and expensive.

Accepted Answer

A) True 
 B)False

Question 13

A company that owns failing movie theaters could leverage existing assets by turning the buildings into performance spaces and conference sites.

Accepted Answer

A) True 
 B)False

Question 14

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. Which of the following factors in a firm's general environment does this mandate best indicate?

Accepted Answer

A)  ecological factors 
B)  sociocultural factors 
C)  technological factors 
D)  legal factors 
A)  ecological factors 
B)  sociocultural factors 
C)  technological factors 
D)  legal factors

Question 15

Due to economic regression in Freedonia, the profitability of the large corporation Happiness Products Inc. (HPI) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would HPI find it most easy to exit?

Accepted Answer

A)  the automobile industry, where the company has contractual obligations with suppliers 
B)  the airline business, where the company's strategic commitments are long-term 
C)  the e-commerce retail business, where investments on assets are low 
D)  the pharmaceutical business, where the company has a large number of fixed costs 
A)  the automobile industry, where the company has contractual obligations with suppliers 
B)  the airline business, where the company's strategic commitments are long-term 
C)  the e-commerce retail business, where investments on assets are low 
D)  the pharmaceutical business, where the company has a large number of fixed costs

Question 16

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).

Accepted Answer

A)  strategic position 
B)  industry effects 
C)  advantage of the marketplace 
D)  industry analysis 
A)  strategic position 
B)  industry effects 
C)  advantage of the marketplace 
D)  industry analysis

Question 17

What is meant by industry convergence? Explain with the help of a real-world example.

Accepted Answer

Student answers will vary. A sample answ

Question 18

A new company named Far Reach Inc. entered the radio retail business, which is a fairly consolidated industry. In response, two large incumbent radio retailers, Smooth Waves and Clear Signal, lowered the price of their radios. Also, they spent more money to improve their radios and on additional marketing. By doing this, Smooth Waves and Clear Signal

Accepted Answer

A)  decreased industry exit barriers. 
B)  increased industry exit barriers. 
C)  decreased industry profit potential. 
D)  increased industry profit potential. 
A)  decreased industry exit barriers. 
B)  increased industry exit barriers. 
C)  decreased industry profit potential. 
D)  increased industry profit potential.

Question 19

Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers?

Accepted Answer

A)  New auto companies create electric cars powered by simpler motors and gearboxes. 
B)  New entrants in the automotive industry expect that incumbents will not or cannot retaliate. 
C)  Car manufacturers require large-scale production in order to be cost-competitive. 
D)  Few industrial products are as easy to build as cars powered by internal combustion engines. 
A)  New auto companies create electric cars powered by simpler motors and gearboxes. 
B)  New entrants in the automotive industry expect that incumbents will not or cannot retaliate. 
C)  Car manufacturers require large-scale production in order to be cost-competitive. 
D)  Few industrial products are as easy to build as cars powered by internal combustion engines.

Question 20

Quick Market Inc. is a food supply company that wants to sell its products directly to consumers through mail order instead of going through supermarkets and other stores. However, supermarket chains want to make this transaction either illegal or more difficult for Quick Market. To accomplish this, they are using ________ to influence the political process.

Accepted Answer

A)  ecological factors 
B)  lobbying forces 
C)  interest rates 
D)  demographic research 
A)  ecological factors 
B)  lobbying forces 
C)  interest rates 
D)  demographic research

Which of the following external forces is a part of a firm's task environment?

Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.

Defend or refute the statement: "Strategic groups do not impact competitive rivalry within an industry."

Which of the following features about a buyer indicates that the buyer has high bargaining power?

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?

What is the drawback of the five forces model? Provide an example that shows this drawback. The example can be from your reading or from your own experience.

Competitive rivalry based solely on ________ is destructive to firms as it transfers most of the value created in the industry to the customers.

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because

For-profit businesses operating in long-standing fields such as energy and transportation usually operate in an environment of price stability.

Explain how the availability of substitutes affects business strategy. Include an example of a company or industry where many substitutes are available and one where few or none are available.

Etsuro is a management consultant. Baker Corp. asks him to evaluate their company, and he finds that the difference between the cost of producing the firm's products and the value of those products is extremely narrow. What should Etsuro suggest that Baker Corp. management do?

A local manufacturer that wants to be a global manufacturer faces few mobility barriers because it has not yet invested in supply chains, which can become outdated and expensive.

A company that owns failing movie theaters could leverage existing assets by turning the buildings into performance spaces and conference sites.

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. Which of the following factors in a firm's general environment does this mandate best indicate?

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).

What is meant by industry convergence? Explain with the help of a real-world example.

Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Which of the following external forces is a part of a firm's task environment?

Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.

Defend or refute the statement: "Strategic groups do not impact competitive rivalry within an industry."

Which of the following features about a buyer indicates that the buyer has high bargaining power?

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?

What is the drawback of the five forces model? Provide an example that shows this drawback. The example can be from your reading or from your own experience.

Competitive rivalry based solely on ________ is destructive to firms as it transfers most of the value created in the industry to the customers.

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because

For-profit businesses operating in long-standing fields such as energy and transportation usually operate in an environment of price stability.

Explain how the availability of substitutes affects business strategy. Include an example of a company or industry where many substitutes are available and one where few or none are available.

Etsuro is a management consultant. Baker Corp. asks him to evaluate their company, and he finds that the difference between the cost of producing the firm's products and the value of those products is extremely narrow. What should Etsuro suggest that Baker Corp. management do?

A local manufacturer that wants to be a global manufacturer faces few mobility barriers because it has not yet invested in supply chains, which can become outdated and expensive.

A company that owns failing movie theaters could leverage existing assets by turning the buildings into performance spaces and conference sites.

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. Which of the following factors in a firm's general environment does this mandate best indicate?

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).

What is meant by industry convergence? Explain with the help of a real-world example.

Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters