Deck 3: The External Environment: Opportunities, threats, industry Competition, and Competitor Analysis

Question 1

The five forces model (buyers/suppliers/new entrants/substitutes/rivalry) is a firm-level analytical model.

Answer 1

False

Question 2

Generally,the stronger the competitive forces,the higher the profitability of an industry.

Answer 2

False

Question 3

When forecasting,analysts must observe environmental changes to determine if an important trend is beginning to emerge.

Answer 3

False

Question 4

Switching costs,access to distribution channels,economies of scale,large numbers of competing firms,and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry.

Question 5

Typically,fast industry growth increases an industry's rivalry.

Question 6

The political/legal segment of the general environment is the arena in which organizations compete for attention,resources and a voice in the laws and regulations guiding interactions among nations.

Question 7

An attractive industry is one that is characterized by high entry barriers,suppliers and buyers with strong bargaining power,low threats from substitute products,and low rivalry among firms.

Question 8

Boundary spanners are corporate employees in positions to interact with external constituents.

Question 9

The external environmental analysis process should be used no more than once a year.

Question 10

The final result of successful value creation is above-average returns.

Question 11

The objective of assessing the external environment is to determine the timing and significance of the effects of environmental changes and trends on the strategic management of the firm.

Question 12

Because the health of a nation's economy affects the performance of individual firms and industries,companies study the economic environment to identify changes,trends,and their strategic implications.

Question 13

The technological segment represents the impact of new products,processes,and materials,but it does not entail the institutions and activities involved with creating knowledge.

Question 14

Without monitoring,a firm is left with a mass of data of unknown relevance.

Question 15

An analysis of the general environment is usually focused on the future.

Question 16

Differences in retirement planning between French and American workers are reflected in the demographic segment of the general environment.

Question 17

When analysts scan the environment,they typically have complete and unambiguous data.

Question 18

Suppliers are powerful when no satisfactory substitutes are available,the selling industry is relatively more concentrated,and switching costs are high.

Question 19

Age structure,geographic distribution,income distribution,interest rates,and process innovations are some of the elements of concern when studying the demographic segment of the general environment.

Question 20

Demographics,economics,political/legal changes,sociocultural changes,technology,and global changes are the six elements comprising the industry environment.

Question 21

Corporate restructurings and a breakdown in traditional lifetime employment practices have led to ____.

A) a more diverse workforce
B) more older workers in the workplace.
C) an increase in telecommuting.
D) more contingency workers.

Question 22

Observing demographic changes in population size involves:

A) examining the population growth rate.
B) determining the average weight of the population of an area.
C) observing the distribution of technologies across certain ethnic groups.
D) suggesting remedies for problems related to distribution of age groups across regions.

Question 23

The technological segment of environmental analysis includes:

A) institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.
B) the determination of when machinery will need to be replaced in a given firm.
C) the need for new technology in order for a firm to gain a competitive advantage.
D) places where a firm's technology will allow that firm to dominate a given market.

Question 24

An analysis of the economic environment would include all of the following EXCEPT:

A) interest rates.
B) international trade.
C) the health of other countries' economies.
D) the ethnicity of the workforce.

Question 25

Strategic groups are firms in different industries following the same or similar strategies.

Question 26

The ethically questionable practice of placing "cookies" on website customers' personal hard drives is an example of using the Internet for ____.

A) assessing.
B) monitoring.
C) forecasting.
D) scanning.

Question 27

Which of the following is NOT an activity used in the external environmental analysis process?

A) Scanning
B) Training
C) Monitoring
D) Assessing

Question 28

The environmental segments that comprise the general environment typically will NOT include:

A) demographics.
B) sociocultural.
C) substitutes.
D) technological.

Question 29

The process of competitor analysis should examine the competitor's future objectives,current strategy,assumptions,and capabilities.

Question 30

The strengths of the five competitive forces are similar across strategic groups in an industry.

Question 31

The political/legal segment of an environment represents the:

A) political preferences of different ethnic groups in the society.
B) technological values of different political entities in society.
C) arena where organizations compete for attention,resources and a voice in laws and regulations.
D) study of attitudes businesses and other organizations have toward government.

Question 32

When analysts develop feasible projections of the future based on monitored changes and trends,they are engaged in what activity?

A) Scanning
B) Monitoring
C) Forecasting
D) Assessing

Question 33

A general environmental analysis can be expected to produce all of the following EXCEPT:

A) objective answers.
B) recognition of environmental changes.
C) identification of organizational opportunities.
D) identification of organizational threats.

Question 34

The sociocultural segment of an environmental analysis is concerned with:

A) the economic condition of society.
B) social attitudes and cultural values within a society.
C) the political condition of the societies in which the firm does business.
D) the technological condition of the society.

Question 35

Any competitor intelligence practice that is legal is also ethical.

Question 36

Heterogeneous work groups tend to be more creative and innovative,as well as more ____,than homogenous work groups.

A) cohesive
B) easily influenced
C) difficult to manage
D) subject to stagnation

Question 37

The economic environment refers to:

A) the nature and direction of the economy in which a firm competes.
B) the economic outlook of the world provided by the World Bank.
C) an analysis of how the environmental movement and world economy interact.
D) an analysis of how new environmental regulations will affect our economy.

Question 38

The ____ environment is composed of elements in the broader society that can influence an industry and the firms within it.

A) general
B) competitor
C) sociocultural
D) industry

Question 39

Analyzing the income distribution of the general environment would include all of the following EXCEPT:

A) the purchasing power of different groups.
B) the discretionary income of different groups.
C) how much salary each group makes within its own firm.
D) how income is distributed within populations.

Question 40

By 2020,____ percent of the U.S.population will be Hispanic and Asian.

A) 55
B) 68
C) 72
D) 80

Question 41

Suppliers are powerful when:

A) satisfactory substitutes are available.
B) they sell a commodity product.
C) they have credible threat of forward integration.
D) they are in a highly fragmented industry.

Question 42

Understanding how new knowledge can develop new products,processes,or materials is a result of analyzing the ____ segment of the general environment.

A) economic
B) political/legal
C) technological
D) global

Question 43

As customers come to believe that a firm's product is unique,this allows the firm to:

A) decrease its advertising expenditures.
B) customize its product.
C) force other companies out of the market by lowering prices.
D) obtain loyal customers.

Question 44

Which of the following is true of the Internet?

A) The Internet has strategic implications,but only for small firms.
B) The Internet is often referred to as the "communication corridor."
C) The Internet is a global web of more than 200,000 computer networks.
D) The Internet provides a source of data and information.

Question 45

The forces that create high rivalry include:

A) low strategic stakes.
B) high switching costs.
C) high product differentiation.
D) multiple competitors.

Question 46

Switching costs refer to the:

A) cost to a producer to exchange equipment in a facility when new technologies emerge.
B) cost of changing the firm's strategic group.
C) one-time costs suppliers incur when selling to a different customer.
D) one-time costs customers incur when buying from a different supplier.

Question 47

Product differentiation refers to the:

A) ability of the buyers of a product to negotiate a lower price.
B) response of incumbent firms to new entrants.
C) belief by customers that a product is unique.
D) fact that as more of a product is produced the cheaper it becomes per unit.

Question 48

Buyers are powerful when:

A) there is not a threat of backward integration.
B) they are not a significant purchaser of the supplier's output.
C) there are no switching costs.
D) the buyers' industry is fragmented.

Question 49

Under which of the following conditions will a buyer group NOT be powerful?

A) When they purchase a large portion of an industry's output
B) When switching costs are high
C) When suppliers sell an undifferentiated product
D) When they have a credible threat of backward integration

Question 50

The threat of new entrants is increased if:

A) access to distribution channels is hard to gain.
B) economies of scale in the industry are high.
C) product differentiation in the industry is low.
D) capital requirements in the industry are high.

Question 51

The threat from substitutes is high when:

A) switching costs are high.
B) the substitute product's price is lower than the industry product's price.
C) the quality of the substitute product is lower than the quality of the industry's product.
D) the substitute product stimulates new process innovations within the industry.

Question 52

Which of the following is NOT an entry barrier to an industry?

A) Expected competitor retaliations
B) Economies of scale
C) Product loyalty
D) Bargaining power of suppliers

Question 53

Which of the following conditions does NOT cause a supplier group to be powerful?

A) When satisfactory substitute products are available to industry firms
B) When the effectiveness of suppliers' products has created high switching costs for industry firms
C) When industry firms are not significant customers for the supplier group
D) When suppliers are a credible threat to integrate forward into the buyer's industry

Question 54

The forces that create high rivalry within an industry include all of the following EXCEPT:

A) numerous or equally balanced competitors.
B) high fixed costs.
C) fast industry growth.
D) high storage costs.

Question 55

Economies of scale refer to the fact that as the:

A) quantity of product produced in a given time period increases,the cost of manufacturing each unit increases.
B) quantity of product produced in a given time period increases,the cost of manufacturing each unit remains constant.
C) quantity of product produced in a given time period increases,the cost of manufacturing each unit decreases.
D) physical size of the product gets larger,the costs of production become lower.

Question 56

Compared to the general environment,the industry environment has:

A) a less direct effect on value creation and a firm's returns.
B) a more direct effect on value creation and a firm's returns.
C) the subtle effect of creating a barrier to the hiring of new employees.
D) no effect on value creation and a firm's returns.

Question 57

The likelihood of entry of new competitors is affected by ____ and ____.

A) barriers to entry,expected retaliation of incumbents
B) the power of suppliers,buyers
C) the profitability of the industry,the market share of its leading firm
D) the demand for the product,the profitability of the competitors

Question 58

Which of the following conditions does NOT contribute to intense rivalry among competing firms?

A) Slow industry growth
B) An equal balance among competing firms
C) When fixed costs account for a large part of a firm's total costs
D) When firms have been able to establish differentiated products

Question 59

Upper limits on the prices a firm can charge are impacted by:

A) expected retaliation from competitors.
B) substitute products.
C) high switching costs.
D) low switching costs.

Question 60

The concepts of Guanxi,Wa,and Inhwa all convey the general idea of ____.

A) entrepreneurial risk-taking
B) interpersonal harmony
C) the value of hard work
D) personal achievement

Question 61

When rivalrous firms compete aggressively by trying to attract competitors' customers,this might be an indication of:

A) an industry with low exit barriers.
B) increasing economies of scale.
C) slow industry growth.
D) high bargaining power among buyers.

Question 62

Which of the following intelligence gathering techniques is legal?

A) Buying a competitor's confidential documents
B) Trespassing
C) Eavesdropping
D) Listening to trade show presentations given by a competitor's employees

Question 63

Exit barriers to a firm would include:

A) non-specific assets.
B) emotional barriers.
C) low government restrictions.
D) low fixed costs of exit.

Question 64

What are high exit barriers and how do they affect the competition within an industry?

Question 65

Competitor analysis focuses on:

A) firms with which the company competes directly.
B) firms that produce products that are substitutes.
C) all firms in the industry.
D) companies that might enter the industry.

Question 66

Competitor intelligence could ethically come from all the following EXCEPT:

A) court records.
B) financial reports.
C) trade show discussions.
D) eavesdropping.

Question 67

Exit barriers are comprised of all of the following EXCEPT:

A) emotional barriers.
B) social restrictions.
C) non-specialized assets.
D) strategic interrelationships.

Question 68

Strategic group analysis would NOT examine firms that:

A) come from the same industry.
B) compete along the same strategic dimensions.
C) follow similar strategies.
D) produce products that are dissimilar to one another.

Question 69

Identify and describe the three major parts of the external environment.

Question 70

Explain why it is important to study and understand the external environment.

Question 71

An industry with low entry barriers,buyers with strong bargaining positions,and intense rivalry among competing firms is called a(n) ____ industry.

A) rivalrous
B) unattractive
C) moderately attractive
D) moderately unattractive

Question 72

What do firms need to know about their competitors and what intelligence-gathering techniques can be used to obtain this information?

Question 73

A competitor analysis includes all of the following EXCEPT:

A) competitor objectives.
B) competitor capabilities.
C) competitor assumptions.
D) competitor substitutes.

Question 74

Firms within strategic groups:

A) follow dissimilar strategies.
B) follow similar strategies across certain dimensions.
C) typically engage in greater intergroup rivalry than intragroup rivalry.
D) exist almost exclusively in the manufacturing sector.

Question 75

Which of the following represents a competitive intelligence practice that is both legal and ethical?

A) A firm hires a competitor's employee and asks that employee to share the names and addresses of business contacts contained in his/her Rolodex.
B) An executive attends a trade show solely to obtain a competitor's brochures,listen to sales pitches,and ask questions about the competitor's products.
C) The husband of a Staples' executive goes to work for Office Depot and shares operations information with his wife.
D) A chemical engineer at Avery-Dennison sells confidential plans for the company's expansion into the Far East.

Question 76

High strategic stakes enhance competitive rivalry.____ is one factor which does NOT promote rivalry.

A) Close physical proximity of competitors
B) The struggle for a lucrative geographic market
C) Competing manufacturing technologies
D) Contending for market leadership

Question 77

Describe and discuss the four activities of the external environmental analysis process.

Question 78

The data that the firm gathers to understand competitors' objectives,strategies,assumptions and capabilities is called ____.

A) industrial espionage
B) strategic information
C) competitor intelligence
D) the competitor dossier

Question 79

What proportion of firms use formal processes to study competitors?

A) Most
B) Nearly all
C) A relatively small percentage
D) Approximately one-third

Question 80

An attractive industry would have all of the following characteristics EXCEPT:

A) low barriers to entry.
B) suppliers with low bargaining power.
C) a moderate degree of rivalry.
D) low threats from substitute products.