Question 1

Explain the reason why substitute products are taken as a threat by firms.

Accepted Answer

A substitute is a product that is fundamentally different yet serves the same basic function or purpose as another product.One of the primary problems for the strategist in assessing substitutes is determining what a substitute is and what isn't.It involves determining the boundary of an industry.Generally, something can be considered a substitute if it serves the same function, such as quenching thirst, but does so with a different set of characteristics.If the product has the same basic characteristics and is made using the same general set of inputs, it would be considered part of rivalry, rather than a substitute.In general, substitutes put downward pressure on the price that firms in an industry can charge.The factors that determine the intensity of a threat of substitutes include the awareness and availability of substitutes and their price and performance compared to an industry's products.

Question 2

_____ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.

Accepted Answer

A)  Integrations 
B)  Weaknesses 
C)  Threats 
D)  Rivalries 
A)  Integrations 
B)  Weaknesses 
C)  Threats 
D)  Rivalries C

Question 3

Satchels Corp.has been in the retail bag business for 10 years.It has created unique value and attained brand loyalty from its customers.Recently, a new bag company started up in the same area as Satchels.In order to retain the reputation that it has established and avoid competition with the new company, Satchels introduced a new line of fashion bags, conducted a sale, and also increased its advertising.This made it difficult for the new company to gain profits.This scenario best illustrates _____.

Accepted Answer

A)  forward integration 
B)  barriers to exit 
C)  barriers to entry 
D)  backward integration 
A)  forward integration 
B)  barriers to exit 
C)  barriers to entry 
D)  backward integration C

Question 4

The airline industry is a profitable industry.The firms in this industry create barriers to entry through patents and regulations in order to reduce the threat of new entrants.It also minimizes the threat of substitutes while keeping rivalry to a minimum.The airline industry can be best categorized as a(n):

Accepted Answer

A)  attractive industry. 
B)  unattractive industry. 
C)  fragmented industry. 
D)  concentrated industry. 
A)  attractive industry. 
B)  unattractive industry. 
C)  fragmented industry. 
D)  concentrated industry.

Question 5

CharmingBells Inc.has been running into a loss gradually, but the board of directors are reluctant to shut the company down because it has invested millions of dollars' worth of equipment which can only be used in that industry.Moreover, the people in CharmingBells Inc.have become emotionally attached to the company and do not want the company completely shut down.This scenario best illustrates _____.

Accepted Answer

A)  high fixed costs 
B)  used production capacity 
C)  high exit barriers 
D)  unused production capacity 
A)  high fixed costs 
B)  used production capacity 
C)  high exit barriers 
D)  unused production capacity

Question 6

Bright Inc.is a toothpaste manufacturing company that is facing intense competition from its rivals.In order to encourage higher consumption of its products as well as minimize brand switching among its existing consumers, Bright introduced sweepstakes as a consumer sales promotion strategy.However, its rivals retaliated by introducing deals such as a featured price which is lower than the regular price, buy one, get one free offers, and large package offers that give a percentage more free.This scenario best illustrates a _____.

Accepted Answer

A)  primary industry 
B)  secondary industry 
C)  fragmented industry 
D)  concentrated industry 
A)  primary industry 
B)  secondary industry 
C)  fragmented industry 
D)  concentrated industry

Question 7

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term _____.

Accepted Answer

A)  opportunities 
B)  standardization 
C)  strengths 
D)  substitution 
A)  opportunities 
B)  standardization 
C)  strengths 
D)  substitution

Question 8

Which of the following statements is true about concentrated industries?

Accepted Answer

A)  These industries have few competitors and rivalry is less intense. 
B)  Smaller competitors usually respond aggressively to actions taken by large firms. 
C)  Few large competitors are aware of each other's presence and therefore more likely to create conflict. 
D)  If firms are approximately the same size, they tend to be able to respond, or retaliate, strongly to moves by rival firms. 
A)  These industries have few competitors and rivalry is less intense. 
B)  Smaller competitors usually respond aggressively to actions taken by large firms. 
C)  Few large competitors are aware of each other's presence and therefore more likely to create conflict. 
D)  If firms are approximately the same size, they tend to be able to respond, or retaliate, strongly to moves by rival firms.

Question 9

A product that is fundamentally different yet serves the same function or purpose as another product best defines the term _____.

Accepted Answer

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

Question 10

The household appliance industry has few major manufacturers like Nebula Corp., Cook Well Inc., and Mercury Corp.and a few smaller manufacturers.There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars.This scenario best illustrates a _____.

Accepted Answer

A)  quinary industry 
B)  fragmented industry 
C)  quaternary industry 
D)  concentrated industry 
A)  quinary industry 
B)  fragmented industry 
C)  quaternary industry 
D)  concentrated industry

Question 11

Which of the following statements is true of standardization of products?

Accepted Answer

A)  It is easier to convince the customers to switch brands. 
B)  They meet customer needs in unique ways. 
C)  It makes buyers more loyal to a particular brand. 
D)  These products are usually inimitable and of high quality. 
A)  It is easier to convince the customers to switch brands. 
B)  They meet customer needs in unique ways. 
C)  It makes buyers more loyal to a particular brand. 
D)  These products are usually inimitable and of high quality.

Question 12

How do switching costs affect industry rivalry?

Accepted Answer

The lower the switching costs,

Question 13

Royalz Inc.is an automobile company that requires a lot of raw material to manufacture its cars.Royalz Inc.buys these raw materials from other companies that sell car parts as products.From which of the following does Royalz Inc.source its inputs?

Accepted Answer

A)  Producers 
B)  Customers 
C)  Suppliers 
D)  Employees 
A)  Producers 
B)  Customers 
C)  Suppliers 
D)  Employees

Question 14

A federal act was passed in the country of Arahonia which changed the way many of the Arahonian industries worked.Most of the firms in Arahonia had to restructure their strategic plans accordingly.This resulted in the larger firms acquiring the smaller ones which did not exit the market altogether.This scenario best illustrates a(n) _____.

Accepted Answer

A)  technology change 
B)  regulatory force 
C)  economic change 
D)  cultural force 
A)  technology change 
B)  regulatory force 
C)  economic change 
D)  cultural force

Question 15

Identify the five forces that shape the profit-making potential of an average firm in an industry.Discuss the basic steps involved in using the five forces analysis tool.

Accepted Answer

Michael Porter, a well-known strategy pr

Question 16

Readmore Publishing House, the publisher of a regional daily, has been slowly losing profits as its readers prefer to get news through the television.A recent study on the readers who made the switch stated that it is more accessible and faster to attain up-to-date news through the television rather than to wait for the next day for an update on current events.Which of the following is Readmore Publishing House is facing?

Accepted Answer

A)  Producer power 
B)  Network effect 
C)  Substitute 
D)  New entrant 
A)  Producer power 
B)  Network effect 
C)  Substitute 
D)  New entrant

Question 17

The residents of the town of Segonon have initiated a campaign to stop the production of aerated beverages by Sip Drink Inc.The community members of Segonon stated that these beverages are causing loss of memory, nausea, and tiredness among the children who consume them regularly, and thus, have urged that the company should be shut down.The community's reaction to Sip Drink's beverages illustrates a _____.

Accepted Answer

A)  regulatory force 
B)  social force 
C)  legal force 
D)  global force 
A)  regulatory force 
B)  social force 
C)  legal force 
D)  global force

Question 18

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

Question 19

Which of the following statements is true about rivalry?

Accepted Answer

A)  It is an expensive method that treats other companies amicably. 
B)  It helps increase losses for an organization to a large extent. 
C)  It is a force that is best avoided in an industry to increase profits. 
D)  It is an important driving force to increase profitability. 
A)  It is an expensive method that treats other companies amicably. 
B)  It helps increase losses for an organization to a large extent. 
C)  It is a force that is best avoided in an industry to increase profits. 
D)  It is an important driving force to increase profitability.

Question 20

Which of the following statements is true of a fragmented industry?

Accepted Answer

A)  It is characterized by rivalry that is typically less intense. 
B)  It usually has very few competitors and tends to be dominated by a few large firms. 
C)  It is difficult to keep track of the pricing and competitive moves of multiple players. 
D)  It involves companies selling the same brand of products that are scattered in different locations. 
A)  It is characterized by rivalry that is typically less intense. 
B)  It usually has very few competitors and tends to be dominated by a few large firms. 
C)  It is difficult to keep track of the pricing and competitive moves of multiple players. 
D)  It involves companies selling the same brand of products that are scattered in different locations.

Explain the reason why substitute products are taken as a threat by firms.

_____ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term _____.

Which of the following statements is true about concentrated industries?

A product that is fundamentally different yet serves the same function or purpose as another product best defines the term _____.

Which of the following statements is true of standardization of products?

How do switching costs affect industry rivalry?

Royalz Inc.is an automobile company that requires a lot of raw material to manufacture its cars.Royalz Inc.buys these raw materials from other companies that sell car parts as products.From which of the following does Royalz Inc.source its inputs?

Identify the five forces that shape the profit-making potential of an average firm in an industry.Discuss the basic steps involved in using the five forces analysis tool.

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

Which of the following statements is true about rivalry?

Which of the following statements is true of a fragmented industry?

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

Explain the reason why substitute products are taken as a threat by firms.

_____ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term _____.

Which of the following statements is true about concentrated industries?

A product that is fundamentally different yet serves the same function or purpose as another product best defines the term _____.

Which of the following statements is true of standardization of products?

How do switching costs affect industry rivalry?

Royalz Inc.is an automobile company that requires a lot of raw material to manufacture its cars.Royalz Inc.buys these raw materials from other companies that sell car parts as products.From which of the following does Royalz Inc.source its inputs?

Identify the five forces that shape the profit-making potential of an average firm in an industry.Discuss the basic steps involved in using the five forces analysis tool.

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

Which of the following statements is true about rivalry?

Which of the following statements is true of a fragmented industry?

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