Exam 2: Evaluating a Firms External Environment

Buyers tend to have less power when

It is possible for a single firm to be a complementor of one firm and a competitor of another.

Which of the following statements regarding substitutes is accurate?

In the 1980s,the video cassette rental industry had a large number of small firms with no firm with a dominant market share.The video cassette rental industry in the 1980s was a(n)________ industry.

In a perfectly competitive industry,

First movers that invest only in technology usually obtain sustained competitive advantages,even if they do not tie up strategically valuable resources in an industry before their full value is widely understood.

Firms in a declining industry that engage in a long,systematic phased withdrawal from the industry,extracting as much value as possible during the withdrawal period,are following a(n)________ strategy.

A firm's general environment consists of broad trends in the context within which the firm operates that can have an impact on the firm's strategic choices.

If you were to purchase a new Apple iPod and were unable to use your previously downloaded library of digital music with your new iPod,this would be an example of a customer-switching cost you would incur to use Apple's product.

Civil wars,political coups,terrorism,wars between countries,famines,and country or regional economic recessions are all examples of which element of the general environment?

________ make a wide variety of raw materials,labor and other critical assets available to firms.

Identify the five most common threats facing firms from their local competitive environment that are represented in the five forces framework,and discuss under what conditions firms in a specific industry are most likely to earn an above average profit and when they are likely to earn a below average profit.

The most promising opportunity for a firm in a declining industry is to

Firms in industries characterized by ________ can expect to earn only competitive parity.

Understanding a firm's general environment can help the firm identify some of the threats and opportunities it faces.

If the owner of a jewelry store who normally purchased diamonds from a diamond brokerage firm were to open his own diamond brokerage firm,this would be an example of forward vertical integration.

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.

BidBuy is the world's leading online auction company. When BidBuy was founded ten years ago it was the first online auction company, and it has been the leader since it was founded. Although there are other firms in the industry, BidBuy controls over 75% of the market in the United States, and three additional firms control another 20% of the U.S. market. One of the aspects of BidBuy that keeps users from changing to other online auction companies is the large user base BidBuy has built and a feedback rating system that allows buyers and sellers to rate their satisfaction with each other following each transaction. This allows users to build a reputation for honesty and trustworthiness. Sellers with a high feedback rating tend to receive more bids on their auctions and a higher price for their goods. To help facilitate payment transfers between buyers and sellers following successful online auctions, companies such as DollarDog have been founded, and these companies have facilitated growth for BidBuy. Having attained a 75% market share in the U.S., BidBuy has begun expanding internationally, opening its own sites in some countries and purchasing incumbents in others. In its international expansion, BidBuy has allowed its individual companies to customize their offerings according to the needs and desires of the countries in which they operate and when these companies are successful, BidBuy works to transfer these successful capabilities throughout the firm. -Which of the following best describes the competition in the U.S.online auction industry?

Diseconomies of scale exist in an industry when a firm's costs fall as a function of that firm's volume of production.