Question 1

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

Accepted Answer

A) True 
 B)False

Question 2

A few organizations wield such power and influence that they can shape some elements of the general environment.

Accepted Answer

A) True 
 B)False

Question 3

Buyers are less powerful when they face little or no switching costs in changing vendors.

Accepted Answer

A) True 
 B)False

Question 4

The purpose of Porter's five forces analysis is to identify the factors that affect the profit potential of an industry.

Accepted Answer

A) True 
 B)False

Question 5

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

Accepted Answer

A) True 
 B)False

Question 6

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Accepted Answer

A) True 
 B)False

Question 7

Rivalry tends to be fierce among an industry's competitors if fixed costs in the industry are low.

Accepted Answer

A) True 
 B)False

Question 8

Rivalry tends to be fierce among an industry's competitors if exit barriers in the industry are low.

Accepted Answer

A) True 
 B)False

Question 9

Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if:

Accepted Answer

A) differentiation among existing suppliers is high. 
B) access to distribution channels is limited. 
C) existing suppliers lack economies of scale. 
D) the suppliers' industry is highly concentrated. 
E) cost advantages independent of size are negligible. 
A) differentiation among existing suppliers is high. 
B) access to distribution channels is limited. 
C) existing suppliers lack economies of scale. 
D) the suppliers' industry is highly concentrated. 
E) cost advantages independent of size are negligible.

Question 10

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them.This example represents the _____ segment of PESTEL analysis.

Accepted Answer

A) political 
B) economic 
C) social 
D) legal 
E) environmental 
A) political 
B) economic 
C) social 
D) legal 
E) environmental

Question 11

When a buyer decides to enter its suppliers' business, the strategy is referred to as _____.

Accepted Answer

A) forward horizontal integration 
B) backward vertical integration 
C) horizontal diversification 
D) backward horizontal integration 
E) forward vertical integration 
A) forward horizontal integration 
B) backward vertical integration 
C) horizontal diversification 
D) backward horizontal integration 
E) forward vertical integration

Question 12

Backward vertical integration involves a supplier entering the industry that it supplies inputs to.

Accepted Answer

A) True 
 B)False

Question 13

Why would an executive in charge of an organization want to understand the environment surrounding that organization?

Accepted Answer

It is important to understand the enviro

Question 14

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

Accepted Answer

A) new entrants struggle to match incumbents' prices. 
B) this discourages customers from buying a new entrant's offerings. 
C) new entrants struggle to gather enough cash to get started. 
D) each incumbent has a group of loyal customers that enjoy its unique features. 
E) new entrants struggle to get their offerings to customers. 
A) new entrants struggle to match incumbents' prices. 
B) this discourages customers from buying a new entrant's offerings. 
C) new entrants struggle to gather enough cash to get started. 
D) each incumbent has a group of loyal customers that enjoy its unique features. 
E) new entrants struggle to get their offerings to customers.

Question 15

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets.As such, he decides to sell produce directly to the local market.This is an example of:

Accepted Answer

A) forward horizontal integration 
B) backward vertical integration 
C) horizontal diversification 
D) backward horizontal integration 
E) forward vertical integration 
A) forward horizontal integration 
B) backward vertical integration 
C) horizontal diversification 
D) backward horizontal integration 
E) forward vertical integration

Question 16

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.

Accepted Answer

A) True 
 B)False

Question 17

Michael Porter's five forces analysis is an important tool:

Accepted Answer

A) that considers a firm's strengths and weaknesses along with the opportunities and threats that exist in the firm's environment. 
B) for executives to analyze strategic groups in order to understand gaps in the industry that represent untapped opportunities. 
C) for analyzing how much profit potential exists in an industry. 
D) for evaluating profit potential of an organization's various business units or product lines. 
E) for organizing factors within the general environment and identifying how these factors influence industries and the firms within them. 
A) that considers a firm's strengths and weaknesses along with the opportunities and threats that exist in the firm's environment. 
B) for executives to analyze strategic groups in order to understand gaps in the industry that represent untapped opportunities. 
C) for analyzing how much profit potential exists in an industry. 
D) for evaluating profit potential of an organization's various business units or product lines. 
E) for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

Question 18

Give an example each of forward vertical integration and backward vertical integration.

Accepted Answer

Students' examples may vary.
Forward ver

Question 19

Rivalry in _____ industries tends to become bitter and fierce.

Accepted Answer

A) fragmented 
B) regulated 
C) rapidly expanding 
D) concentrated 
E) unregulated 
A) fragmented 
B) regulated 
C) rapidly expanding 
D) concentrated 
E) unregulated

Question 20

What is the purpose of conducting Michael Porter's five forces analysis? Describe the five forces that such an analysis focuses on.

Accepted Answer

The purpose of Michael Porter's five for

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

A few organizations wield such power and influence that they can shape some elements of the general environment.

Buyers are less powerful when they face little or no switching costs in changing vendors.

The purpose of Porter's five forces analysis is to identify the factors that affect the profit potential of an industry.

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Rivalry tends to be fierce among an industry's competitors if fixed costs in the industry are low.

Rivalry tends to be fierce among an industry's competitors if exit barriers in the industry are low.

Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if:

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them.This example represents the _____ segment of PESTEL analysis.

When a buyer decides to enter its suppliers' business, the strategy is referred to as _____.

Backward vertical integration involves a supplier entering the industry that it supplies inputs to.

Why would an executive in charge of an organization want to understand the environment surrounding that organization?

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets.As such, he decides to sell produce directly to the local market.This is an example of:

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.

Michael Porter's five forces analysis is an important tool:

Give an example each of forward vertical integration and backward vertical integration.

Rivalry in _____ industries tends to become bitter and fierce.

What is the purpose of conducting Michael Porter's five forces analysis? Describe the five forces that such an analysis focuses on.

Mastering Strategy: Art and Science

Leading Strategically

Managing Company Resources

Selecting Business-Level Strategies

Supporting the Business-Level Strategy: Competitive and Cooperative Moves

Competing in International Markets

Selecting Corporate-Level Strategies

Executing Strategy Through Organizational Design

Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility

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Exam 3: Evaluating the External Environment

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

A few organizations wield such power and influence that they can shape some elements of the general environment.

Buyers are less powerful when they face little or no switching costs in changing vendors.

The purpose of Porter's five forces analysis is to identify the factors that affect the profit potential of an industry.

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Rivalry tends to be fierce among an industry's competitors if fixed costs in the industry are low.

Rivalry tends to be fierce among an industry's competitors if exit barriers in the industry are low.

Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if:

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them.This example represents the _____ segment of PESTEL analysis.

When a buyer decides to enter its suppliers' business, the strategy is referred to as _____.

Backward vertical integration involves a supplier entering the industry that it supplies inputs to.

Why would an executive in charge of an organization want to understand the environment surrounding that organization?

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets.As such, he decides to sell produce directly to the local market.This is an example of:

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.

Michael Porter's five forces analysis is an important tool:

Give an example each of forward vertical integration and backward vertical integration.

Rivalry in _____ industries tends to become bitter and fierce.

What is the purpose of conducting Michael Porter's five forces analysis? Describe the five forces that such an analysis focuses on.

Mastering Strategy: Art and Science

Leading Strategically

Managing Company Resources

Selecting Business-Level Strategies

Supporting the Business-Level Strategy: Competitive and Cooperative Moves

Competing in International Markets

Selecting Corporate-Level Strategies

Executing Strategy Through Organizational Design

Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility

Filters