Question 1

The primary objective of Porter's five forces model is to

Accepted Answer

A)  understand valuable, rare, and hard-to-imitate resources. 
B)  understand the profit potential of industries. 
C)  reduce the gap between the value of a firm's product and its cost of production. 
D)  break down a firm's value chain activities into primary and support. 
A)  understand valuable, rare, and hard-to-imitate resources. 
B)  understand the profit potential of industries. 
C)  reduce the gap between the value of a firm's product and its cost of production. 
D)  break down a firm's value chain activities into primary and support.

Question 2

How is a firm's task environment different from its general environment? Provide examples of both types of environments.

Accepted Answer

Student answers will vary. A sample answ

Question 3

Bethany is a chef who owns three moderately successful restaurants with innovative menus. Based on what you have read, which of these approaches could help her improve her profits?

Accepted Answer

A)  Change her menus and décor to appeal to economy-minded consumers. 
B)  Carefully time the opening of her business and focus on underserved niches. 
C)  Use her existing knowledge, equipment, and staff to launch a catering business. 
D)  Expand to new locations in economically struggling areas. 
A)  Change her menus and décor to appeal to economy-minded consumers. 
B)  Carefully time the opening of her business and focus on underserved niches. 
C)  Use her existing knowledge, equipment, and staff to launch a catering business. 
D)  Expand to new locations in economically struggling areas.

Question 4

What does it mean when a company leverages existing assets? Include a real-life example in your answer. Your example can be from the reading or from your own experience.

Accepted Answer

Student answers will vary. A sample answ

Question 5

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

Accepted Answer

A)  The overall industry profitability will increase. 
B)  The threat of strong competitive forces such as supplier power will increase. 
C)  The industry will face excess capacity in the future. 
D)  The structure of the industry will change from consolidated to one that is fragmented. 
A)  The overall industry profitability will increase. 
B)  The threat of strong competitive forces such as supplier power will increase. 
C)  The industry will face excess capacity in the future. 
D)  The structure of the industry will change from consolidated to one that is fragmented.

Question 6

Which of the following is a macroeconomic factor that can affect a firm's strategy?

Accepted Answer

A)  power of buyers 
B)  power of suppliers 
C)  levels of employment 
D)  threat of substitutes 
A)  power of buyers 
B)  power of suppliers 
C)  levels of employment 
D)  threat of substitutes

Question 7

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit?

Accepted Answer

A)  Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. 
B)  Suppliers have weak bargaining power because they offer products that are not differentiated. 
C)  Entry barriers in the industry are high, resulting in hardly any new airlines popping up. 
D)  Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry. 
A)  Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. 
B)  Suppliers have weak bargaining power because they offer products that are not differentiated. 
C)  Entry barriers in the industry are high, resulting in hardly any new airlines popping up. 
D)  Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

Question 8

Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit?

Accepted Answer

A)  the management consultancy industry in which the company's fixed costs are low 
B)  the steel industry in which the company has obligations like severance pay toward employees 
C)  the corporate training industry in which the company's commitments are mostly short-term 
D)  the e-commerce industry where the company has no long-term contractual agreements with suppliers 
A)  the management consultancy industry in which the company's fixed costs are low 
B)  the steel industry in which the company has obligations like severance pay toward employees 
C)  the corporate training industry in which the company's commitments are mostly short-term 
D)  the e-commerce industry where the company has no long-term contractual agreements with suppliers

Question 9

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?

Accepted Answer

A)  monopoly 
B)  oligopoly 
C)  perfect competition 
D)  monopolistic competition 
A)  monopoly 
B)  oligopoly 
C)  perfect competition 
D)  monopolistic competition

Question 10

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

Accepted Answer

A)  Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized. 
B)  In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four. 
C)  Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices. 
D)  In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other. 
A)  Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized. 
B)  In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four. 
C)  Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices. 
D)  In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

Question 11

Firms within the same industry automatically belong to the same strategic group.

Accepted Answer

A) True 
 B)False

Question 12

Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?

Accepted Answer

A)  Cost of capital for firms will be high. 
B)  Firms will invest less in future growth. 
C)  Economic growth rate will fall. 
D)  Consumer demand will increase. 
A)  Cost of capital for firms will be high. 
B)  Firms will invest less in future growth. 
C)  Economic growth rate will fall. 
D)  Consumer demand will increase.

Question 13

How is a firm's task environment different from its general environment?

Accepted Answer

A)  Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment. 
B)  Managers have no direct effect over external factors in the task environment; they have some influence over external forces in the general environment. 
C)  Managers have no direct effect over external factors in the task environment; they have influence over all external forces in the general environment. 
D)  Managers have influence over all external factors in the task environment; they have no direct effect over external forces in the general environment. 
A)  Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment. 
B)  Managers have no direct effect over external factors in the task environment; they have some influence over external forces in the general environment. 
C)  Managers have no direct effect over external factors in the task environment; they have influence over all external forces in the general environment. 
D)  Managers have influence over all external factors in the task environment; they have no direct effect over external forces in the general environment.

Question 14

Explain mobility barriers between strategic groups. Provide a real-world example.

Accepted Answer

Student answers will vary. A sample answ

Question 15

Euan manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be?

Accepted Answer

A)  He should consult lawyers about the possibility of suing for copyright infringement. 
B)  If the industry barriers to entry are low, he doesn't need to do anything. 
C)  He needs to find out if his company as well as other companies can provide the complements. 
D)  If the industry barriers to entry are high, he doesn't need to do anything. 
A)  He should consult lawyers about the possibility of suing for copyright infringement. 
B)  If the industry barriers to entry are low, he doesn't need to do anything. 
C)  He needs to find out if his company as well as other companies can provide the complements. 
D)  If the industry barriers to entry are high, he doesn't need to do anything.

Question 16

Which of the following is a primary feature of the five forces model?

Accepted Answer

A)  It is concerned exclusively about the intensity of rivalry among direct competitors. 
B)  It takes into account a firm's internal resources, capabilities, and core competencies. 
C)  It helps managers determine the changing speed of an industry or the rate of innovation. 
D)  It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes. 
A)  It is concerned exclusively about the intensity of rivalry among direct competitors. 
B)  It takes into account a firm's internal resources, capabilities, and core competencies. 
C)  It helps managers determine the changing speed of an industry or the rate of innovation. 
D)  It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

Question 17

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

Accepted Answer

A) True 
 B)False

Question 18

While Tender Chicken Inc. operates in a monopolistically competitive industry, Future Wireless Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true?

Accepted Answer

A)  The threat of new entrants will be higher for Tender Chicken than for Future Wireless. 
B)  Tender Chicken will have more pricing power than Future Wireless does. 
C)  Tender Chicken will have more profit potential than Future Wireless. 
D)  The number of buyers will be limited for both Tender Chicken and Future Wireless. 
A)  The threat of new entrants will be higher for Tender Chicken than for Future Wireless. 
B)  Tender Chicken will have more pricing power than Future Wireless does. 
C)  Tender Chicken will have more profit potential than Future Wireless. 
D)  The number of buyers will be limited for both Tender Chicken and Future Wireless.

Question 19

In the five forces model developed by Michael Porter, ________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Accepted Answer

A)  a stakeholder 
B)  regulation 
C)  competition 
D)  a barrier to entry 
A)  a stakeholder 
B)  regulation 
C)  competition 
D)  a barrier to entry

Question 20

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

Accepted Answer

A)  VRIO framework 
B)  SWOT analysis 
C)  BCG matrix 
D)  PESTEL framework 
A)  VRIO framework 
B)  SWOT analysis 
C)  BCG matrix 
D)  PESTEL framework

The primary objective of Porter's five forces model is to

How is a firm's task environment different from its general environment? Provide examples of both types of environments.

Bethany is a chef who owns three moderately successful restaurants with innovative menus. Based on what you have read, which of these approaches could help her improve her profits?

What does it mean when a company leverages existing assets? Include a real-life example in your answer. Your example can be from the reading or from your own experience.

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

Which of the following is a macroeconomic factor that can affect a firm's strategy?

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit?

Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit?

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

Firms within the same industry automatically belong to the same strategic group.

Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?

How is a firm's task environment different from its general environment?

Explain mobility barriers between strategic groups. Provide a real-world example.

Euan manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be?

Which of the following is a primary feature of the five forces model?

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

While Tender Chicken Inc. operates in a monopolistically competitive industry, Future Wireless Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true?

In the five forces model developed by Michael Porter, ________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

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

The primary objective of Porter's five forces model is to

How is a firm's task environment different from its general environment? Provide examples of both types of environments.

Bethany is a chef who owns three moderately successful restaurants with innovative menus. Based on what you have read, which of these approaches could help her improve her profits?

What does it mean when a company leverages existing assets? Include a real-life example in your answer. Your example can be from the reading or from your own experience.

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

Which of the following is a macroeconomic factor that can affect a firm's strategy?

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit?

Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit?

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

Firms within the same industry automatically belong to the same strategic group.

Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?

How is a firm's task environment different from its general environment?

Explain mobility barriers between strategic groups. Provide a real-world example.

Euan manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be?

Which of the following is a primary feature of the five forces model?

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

While Tender Chicken Inc. operates in a monopolistically competitive industry, Future Wireless Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true?

In the five forces model developed by Michael Porter, ________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

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