Deck 2: The External and Internal Environments

Question 1

According to Michael Porter's model, the competitive environment includes rivalry among current competitors and the impact of new entrants, substitute and complementary products, suppliers, and customers.

Answer 1

True

Question 2

A firm's ________ includes its rivals, suppliers, customers, new entrants, substitutes, and complementary products.

A)environmental scanning
B)competitive intelligence
C)external environment
D)competitive environment
E)organizational climate

Answer 2

D

Question 3

________ are specific government organizations in a firm's more immediate task environment.

A)Open systems
B)Regulators
C)Prospectors
D)Stakeholders
E)Defenders

Answer 3

B

Question 4

Organizations are ________ systems, which means that they are affected by and in turn affect their external environments.

A)input
B)output
C)open
D)closed
E)social

Question 5

________ lead to new products, advanced production facilities, and better ways of managing and communicating.

A)Demographic shifts
B)Societal preferences
C)Political changes
D)Technological advances
E)Economic turbulences

Question 6

Although a top executive team may have unique ________ strengths and ideas about its goals, it must consider ________ factors before taking action.

A)external; internal
B)internal; external
C)traditional; unconventional
D)unconventional; traditional
E)past; future

Question 7

When investors bid up stock prices, companies have less capital to fuel their strategies.

Question 8

Which of the following was introduced as the result of an evolving societal trend?

A)shares of stock
B)hourly wages
C)levels of management
D)offshoring
E)family leave

Question 9

Organizations are at an advantage if they depend on a single powerful supplier because such dependency ensures consistency.

Question 10

How is immigration affecting U.S. demographics?

A)It is increasing the diversity of the workforce.
B)It is decreasing the number of workers.
C)It is decreasing the number of consumers.
D)It is making the educational levels of the workforce more similar.
E)It is decreasing the amount of paperwork needed to hire workers.

Question 11

April, a manager in a call center, encourages her employees to solve customers' problems without her approval of the particular situation. In this case, April is trying to empower her employees.

Question 12

Bettie's Bags buys leather and lesser quantities of canvas, zippers, metal snaps, and other materials to manufacture purses. Which of the following is Bettie's Bags' output?

A)leather
B)canvas
C)zippers
D)snaps
E)purses

Question 13

Enrico has used environmental scanning to gather information that will help him make his company more competitive. This is an example of cognitive intelligence.

Question 14

A more diverse workforce presents managers with challenges as well as opportunities.

Question 15

A failure to develop a strategy that incorporates ________ may doom a firm to obsolescence.

A)hierarchical bureaucracy
B)many layers of middle management
C)classic production methods
D)technological advances
E)closed communication systems

Question 16

________ are measures of various characteristics of the people who make up groups or other social units.

A)Psychographics
B)Demographics
C)Domain selections
D)Lifestyle analytics
E)Group dynamics

Question 17

Which of the following statements about the impact of the stock market is true?

A)The stock market has little effect on the amount of capital a company has.
B)If a company exceeds its performance expectations, its stock price will often drop.
C)Publicly held companies are more insulated from the stock market than privately held companies.
D)The stock market may have a profound effect on the behavior of individual managers.
E)Stock market fluctuations have little effect on the compensation of managers.

Question 18

Advances in 3-D printing have made it easier and faster for manufacturers to create prototypes of new parts. These advances are an example of changes in the ________ environment.

A)technological
B)economic
C)political
D)demographic
E)biophysical

Question 19

What term is used to describe all the relevant forces outside an organization's boundaries?

A)environmental scanning
B)competitive intelligence
C)external environment
D)competitive environment
E)organizational climate

Question 20

Using bribery as a business tactic may result in fines for U.S. firms. Which of the following types of environmental forces at work does this reflect?

A)competitive
B)economic
C)legal
D)technological
E)demographic

Question 21

Rabia proposed to her boss that their small firm build a new production plant to serve a large new global market. Her boss replied, "Rabia, several multinational firms, who are world-class in terms of global reach, influence, stability, and financial depth, will be going after that market. We be a new entrant among large established competitors; the barriers to entry are just too high for us. We are small and financial resource-limited, so we would be challenged to meet the market's ________ requirements."

A)capital
B)demographic
C)buffering
D)domain selection
E)public relations

Question 22

Crowley Heat Exchangers, Inc. is the only provider of a patented high-efficiency heat exchanger. Global Construction Corporation desires to include Crowley's heat exchanger in a proposal for a major project for Global's largest client. However, Crowley charges a premium price for its patented equipment. As a result, Global's potential profit on the major project is eroded, which is an example of the high bargaining power of

A)customers.
B)suppliers.
C)complements.
D)competitors.
E)new entrants.

Question 23

A(n)________ is a potential threat; customers use it as an alternative, buying less of one kind of product but more of another.

A)new entrant
B)substitute
C)ensemble
D)divestiture
E)complement

Question 24

Haru, a new manager at an electronics company, has been asked to focus on the competitive environment of the organization. Which of the following is a factor Haru should focus on?

A)government regulation
B)economic performance
C)demographics
D)rivals
E)technology

Question 25

The goal of ________ is having the right product in the right quantity at the right place at the right cost.

A)barriers to entry
B)benchmarking
C)supply chain management
D)empowerment
E)open systems

Question 26

Which of the following is an example of a potential substitute product?

A)salsa for ketchup
B)ink cartridges for printers
C)socks for shoes
D)iTunes for iPods
E)furniture for apartments

Question 27

Which of the following is an element of Michael Porter's model for analyzing the competitive environment of an organization?

A)substitutes
B)cost strategy
C)societal trends
D)regulatory forces
E)demographics

Question 28

Hospitals and universities are very expensive to run, not only due to the capital equipment that is required for each but also due to the personnel, such as specialized medical doctors and researchers. The cost of these types of institutions is an example of

A)a barrier to entry.
B)environmental uncertainty.
C)unfair competition.
D)high switching costs.
E)strategic maneuvering.

Question 29

Sylvia owns a civil engineering consulting firm. Over the past several years, the bulk of her business has derived from a long term contract with the federal government. She learned today that her firm will not be awarded an extension of the contract, and thus her firm's work for the government client will come to an end within 30 days. The very negative impact of this decision on Sylvia's firm is a reminder that

A)contracting with the federal government is not profitable over the long term.
B)a firm that does not achieve affirmative action goals must implement a corrective action plan.
C)government clients cannot be relied upon to be good business partners.
D)long-term services contracts are not good for business.
E)an organization is at a disadvantage if it depends too heavily upon powerful customers.

Question 30

Wholesale Tools Corporation (WTC)is a wholesale provider of power tools. Six months ago, Mac Jones, national sales director for WTC, negotiated a multi-year contract to provide power tools to FixIt, Inc., a national retail hardware chain. Under the contract, WTC can provide FixIt with power tools made of materials of lesser quality at a lesser price. Therefore, FixIt can charge its retail customers a lower price, providing an attractive profit for both companies. Six months into the contract, Mac and FixIt are disappointed that, although the power tools meet the technical specifications of the contract, the tools are not selling. Furthermore, FixIt is receiving complaints from its customers about the quality of the power tools, prompting FixIt to consider canceling the contract. In retrospect, in its eagerness to land a large contract with FixIt, Mac failed to adequately consider the needs of the

A)media.
B)distributor.
C)final consumer.
D)supplier.
E)broker.

Question 31

Which of the following was designed to help managers analyze the competitive environment and adapt to or even influence the nature of competition?

A)Dell's IdeaStorm
B)Michael Porter's model
C)B2B selling
D)Peter Drucker's theory
E)organizational smoothing

Question 32

If many factors prevent new companies from entering an industry, the

A)threat of new entrants is more serious.
B)threat of competitive rivalry is high.
C)threat to established firms is less serious.
D)new companies can easily compete with the established ones.
E)industry is said to have just a few barriers to entry.

Question 33

Steven is marketing manager for Abrams Technologies, a firm that sells environmental control systems to the coal-fired power industry. Steven's business is highly competitive, with many existing rivalries and new players. However, coal-fired power plants are being shut down in favor of substitute forms of energy, e.g., wind and natural gas. Thus, opportunities to sell environmental control systems to coal-fired power plants are rare, and his clients have many choices of providers and technologies. Steven's firm has long-term pricing agreements with its equipment suppliers, so Steven knows what external costs Abrams will incur on potential new projects for environmental control systems. The competitive force that appears to represent the lowest risk to Steven's firm is

A)competition between existing rivals.
B)impact of new competitors.
C)power of suppliers.
D)power of customers.
E)impact of substitute or complement services or products.

Question 34

A firm's current competition, suppliers, customers, and the threat of new entrants or of substitutes are all elements in the

A)task environment.
B)Peter's model for organizational excellence.
C)microenvironment.
D)Porter's model for competitive environment.
E)supply chain management.

Question 35

Conditions that may prevent new firms from entering an industry are referred to as

A)barriers to entry.
B)strategic maneuvers.
C)unfair trade practices.
D)industry regulators.
E)entry inhibitors.

Question 36

The immediate environment surrounding a firm is known as its

A)macroenvironment.
B)demographic environment.
C)competitive environment.
D)internal environment.
E)economic environment.

Question 37

The recent legalization of same-sex marriage has major implications for how companies manage their labor force. For example, companies must now make sure their benefit packages include all types of family structures. This is an example of how ________ trends affect businesses.

A)psychological
B)political
C)economic
D)technological
E)societal

Question 38

Karl's office has always used Bentley computers. His technical people have suggested that he switch all his employees over to Best computers. Karl is reluctant because it will mean not only replacing all the computers but also buying all new software and taking the time to train everyone. Karl is worried about

A)barriers to entry.
B)benchmarking.
C)environmental uncertainty.
D)switching costs.
E)strategic maneuvering.

Question 39

Venus was a low-cost airline that operated in the 1990s. Industry analysts state that although Venus was able to provide all the services the customers wanted, it was thrown out of business because of aggressive pricing from larger airline firms. Which of the following aspects of the competitive environment does this scenario illustrate?

A)customers
B)rivals
C)regulators
D)the economy
E)social trends

Question 40

Which of the following is a barrier to entry?

A)consumer demand for a product
B)brand identification
C)the existence of a popular complement
D)a low-cost distribution method
E)an inexpensive production process

Question 41

Giving consumers what they want or need, the way they want it, the first time is known as

A)planned merchandise.
B)planned obsolescence.
C)customer service.
D)cause marketing.
E)operations management.

Question 42

________ create alternative combinations of different factors into a total picture of the environment and a firm.

A)Scenarios
B)Forecasts
C)Benchmarks
D)Competitive intelligences
E)Strategic maneuvers

Question 43

________ refers to management of the network of facilities and people that obtain materials from the outside, transform them into products, and distribute the products to customers.

A)Inventory management
B)Strategic maneuvering
C)Human resource management
D)Customer service
E)Supply chain management

Question 44

The managers at Green Thumb Gardening Tools engage in an annual organizational assessment, trying to predict industry changes as well as possible opportunities and threats. They look at issues, such as who their competitors are, current entry barriers, and what substitutes exist for their products. This assessment is called

A)scenario development.
B)forecasting.
C)benchmarking.
D)environmental scanning.
E)strategic maneuvering.

Question 45

Charlotte owns and operates a convenience store in a large city. Competitors are many, and competition is fierce. Due to her small business's size, she cannot realistically influence her business environment. However, Charlotte can and does take steps to adapt to the environment, including

A)slashing her food prices to force her competitors to do likewise city-wide (competitive aggression).
B)sponsoring local events to establish and maintain a positive brand image (public relations).
C)recruiting the mayor to participate on her business advisory board (cooptation).
D)hiring a lobbyist to promote state legislation that is favorable to operation of convenience stores (political action).
E)hiring part-time help and maintaining extra inventory for peak periods (buffering).

Question 46

A customer who purchases raw materials or wholesale products before selling them to other parties is known as a(n)

A)final purchaser.
B)intermediate consumer.
C)final customer.
D)first-tier supplier.
E)preliminary customer.

Question 47

Organizations must acquire a variety of resources in order to produce a product or service of value. These resources may include materials, equipment, financing, or even employees. The sources that provide these various resources are referred to as

A)shareholders.
B)regulators.
C)retailers.
D)suppliers.
E)prospectors.

Question 48

Nargis writes a narrative that describes what she thinks will happen to her child care business if the trend of flexible hours for corporate employees continues to grow. This narrative is an example of

A)benchmarking.
B)a scenario.
C)strategic maneuvering.
D)a divestiture.
E)strategic vision.

Question 49

Which of the following combinations can result in a best-case scenario?

A)many competitors, high threat with and few entry barriers, and few customers
B)many competitors, high threat with and few entry barriers, and many customers
C)few entry barriers, many substitutes, and many customers
D)high industry growth, low threat with and many entry barriers, and customers with low bargaining power
E)low industry growth, high threat with and few entry barriers, and suppliers with low bargaining power

Question 50

Tammi Sloane, owner of a licensed supplier of advanced self-driving vehicle technology, independently influences her company's business environment. Determine which action below is not among the ways that Tammi independently influences her business environment.

A)by encouraging elected officials to pass regulations that favor her business (political action)
B)by suing firms who are not licensed to sell her equipment when they attempt to do so (legal action)
C)by sponsoring national sporting events (public relations)
D)by joining a task force with others in her industry to seek lower-cost raw materials (coalition)
E)by stressing benefits of her technology against those of her competitors through comparative advertising (competitive aggression)

Question 51

Environmental ________ refers to the degree of discontinuous change that occurs within the industry.

A)complexity
B)dysfunction
C)contracting
D)cooptation
E)dynamism

Question 52

Which of the following is true about using forecasts?

A)Multiple forecasts are best, and their predictions can be averaged.
B)Forecasts become more accurate when predicting further into the future.
C)Forecasts are useless when the future will look radically different from the past.
D)The more complex the forecast, the more accurate are the predictions.
E)The accuracy of forecasts does not vary from one application to another.

Question 53

Loyalty Management Consulting uses the services of QuickBite, which runs the employee cafeteria in the building and also caters business meetings at a discounted rate because of the volume of business it does with Loyalty. The other available cafeteria services do not provide catering. In this case, if Loyalty decides to terminate QuickBite's contract and shift to some other service, it is likely to create

A)high employment costs.
B)redemption costs.
C)favorable quality status.
D)complementary products.
E)high switching costs.

Question 54

The main difference between a final consumer and an intermediate consumer is that

A)the intermediate consumer purchases finished products, whereas the final consumer buys only raw materials.
B)intermediate consumers buy raw materials and sell finished products to final consumers, who use them.
C)final consumers make more purchases than the intermediate consumers.
D)unlike final consumers, intermediate consumers provide monetary benefits to organizations by purchasing their products.
E)final consumers tend to have more bargaining power than intermediate consumers.

Question 55

________ costs are fixed costs buyers face if they change suppliers.

A)Changing
B)Switching
C)Renewable
D)Exchange
E)Sunk

Question 56

The method for predicting how variables will change in the future is known as

A)budgeting.
B)buffering.
C)forecasting.
D)benchmarking.
E)scanning.

Question 57

Randall, senior product development manager at WasteTech Corporation, is considering the acquisition of a new waste treatment technology from a small development firm. The asking price is $10 million. However, the environmental uncertainty of the waste treatment marketplace is both complex and dynamic. Randall wants to acquire the new technology but seeks to manage the risk associated with his decision, or "hedge his bets." Key elements of his risk management strategy might be to

A)gain competitive intelligence through environmental scanning, develop business scenarios, forecast sales, and benchmark the technology.
B)diversify, merge, divest, prospect, or defend the technology.
C)establish visible artifacts; develop symbols, rites, and ceremonies; and develop stories about the technology.
D)decide upon a clan (collaborate), adhocracy (create), hierarchy (control), or market (compete)culture from which to market the technology.
E)buffer, smooth, and empower in order to manage the technology supply chain.

Question 58

Emerson Smith, sales director for a beverage wholesaler, analyzed whether his company should attempt to become beverage supplier next year for TopChoice, a national fast food chain. Emerson learned that Deluxe Beverages, Inc., currently has a supply contract with TopChoice that has three more years in its term; TopChoice would have to pay Deluxe Beverages $3 million to terminate the supply contract early. Also, Deluxe Beverages has installed automated beverage ordering software in TopChoice's home office; TopChoice would have to spend $1 million to replace the software and retrain its staff. Emerson concluded that TopChoice's ________ costs would be too high to seriously consider a change in supplier during the multi-year term of the supply contract, so he decided not to attempt to become TopChoice's beverage supplier next year.

A)capital
B)operating
C)switching
D)labor
E)cooptation

Question 59

Suave and Debonair, Inc., a chain of men's clothing stores, is facing increased competition. CEO Pablo Espinosa has tried several tactics-all unsuccessful-to influence his business environment: slashing prices, offering seasonal promotions to smooth out sales, contracting with wholesalers in advance of seasonal rushes to prevent inventory depletion, and appointing the president of the chamber of commerce in his state to his board of directors. Now, Pablo is considering a more significant change to his business-perhaps acquiring a formal wear/tuxedo rental and retail business or a boutique Western wear store to add to his business portfolio. Pablo is now considering ________ as a tactic to manage the business environment.

A)independent action
B)domain selection
C)cooptation
D)buffering
E)smoothing

Question 60

An outcome of environmental scanning is ________, which is the information necessary to decide how best to manage in a given competitive environment.

A)corporate governance
B)strategic vision
C)competitive intelligence
D)corporate espionage
E)competitive dissertation

Question 61

To improve customer service in its overseas call center, Bell Software decided to investigate the call center practices of competing companies. The team discovered that a smaller company, Bumblebee Software Inc., seemed to have outstanding customer service. The team then determined differences between the organizations and developed a plan to incorporate the best elements of Bumblebee into Bell. This illustrates

A)environmental dynamism.
B)benchmarking.
C)strategic maneuvering.
D)cooperative action.
E)forecasting.

Question 62

Quartermaine University has just formed a board of trustees and invited 25 of its wealthiest alumni to join. In this example, Quartermaine University is demonstrating

A)contraction.
B)cooptation.
C)coalition.
D)political action.
E)voluntary action.

Question 63

The process of sharing power with employees is called

A)empowerment.
B)downgrading.
C)benchmarking.
D)vertical synergy.
E)power building.

Question 64

Complete Office Products recently announced that it was selling off its office furniture division in order to realign itself more competitively in the marketing of its other products, particularly those in its office supplies and technology divisions. Which of the following strategic maneuvers is illustrated in this scenario?

A)diversification
B)an acquisition
C)a merger
D)divestiture
E)domain selection

Question 65

When two or more companies work together to manage their external environment, they are using

A)monopolistic strategies.
B)strategic maneuvering.
C)cooperative strategies.
D)dependent strategies.
E)competitive strategies.

Question 66

Aunt Lucy's Style is a company that sells different types of costume jewelry. When Aunt Lucy's Style spends its own money to promote the costume jewelry industry as a whole, the company is practicing

A)competitive aggression.
B)competitive pacification.
C)public relations.
D)voluntary cooptation.
E)comparative action.

Question 67

One firm buying another is called a(n)

A)merger.
B)acquisition.
C)divestiture.
D)prospective.
E)defender.

Question 68

Fatima recently got promoted to a managerial role in a bureaucratic organization. The industry was changing dramatically, and Fatima suggested that the management team encourage employees to develop confidence by giving them some control and authority in order to create a more flexible, adaptable organization. Here, Fatima is suggesting the use of ________ with employees.

A)smoothing
B)benchmarking
C)empowerment
D)cooptation
E)coalition

Question 69

Diego owns Signature Gifts, a store that specializes in items that businesses can customize with their company name or logo and then give away as advertising or customer-loyalty rewards. He is projecting that the economy will rebound this fall. He ordered additional holiday-themed gifts in February in anticipation of possible surge in sales during the holiday season. In this case, which of the following methods is Diego using to be sure that he has enough gifts for extra holiday customers?

A)just-in-time inventory
B)smoothing
C)benchmarking
D)buffering
E)diversification

Question 70

The entrance by a company into another market or industry for which it has an existing expertise is called

A)benchmarking.
B)strategic positioning.
C)outsourcing.
D)domain selection.
E)cooptation.

Question 71

Leveling normal fluctuations at the boundaries of the environment is called

A)buffering.
B)smoothing.
C)flexible processing.
D)empowerment.
E)coalition.

Question 72

Titan and Spencer-Fields are the two leading online booksellers. Recently, Titan engaged in an online price war with Spencer-Fields in order to gain greater market share. This is an example of ________ on the part of Titan.

A)cooptation
B)voluntary action
C)competitive pacification
D)competitive aggression
E)environmental scanning

Question 73

Creating supplies of excess resources in case of unpredictable needs is known as

A)cooptation.
B)smoothing.
C)flexible processing.
D)empowering.
E)buffering.

Question 74

Methods for adapting the technical core to changes in the environment are known as

A)flexible processes.
B)smoothing effects.
C)buffering techniques.
D)benchmarking tools.
E)environmental scanners.

Question 75

When a brand advertises its products as being superior to that of its competitors, it is demonstrating

A)competitive aggression.
B)competitive pacification.
C)benchmarking.
D)political action.
E)cooptation.

Question 76

Domain selection, diversification, mergers/acquisitions, and divestiture are all examples of

A)illegal boundary management.
B)maneuvering the competition.
C)strategic maneuvering.
D)independent strategies.
E)portfolio maneuvering.

Question 77

Mila, who works as a manager for a manufacturing company, investigates what computer programs her company's five biggest rivals use for placing and tracking customer orders. She then compares the features of those programs with the program her company uses. What process has Mila used?

A)scenario planning
B)forecasting
C)benchmarking
D)environmental scanning
E)strategic maneuvering

Question 78

Wellspring Health and United Coverage are two health insurance companies that have joined forces with one another to lobby against a new regulation that will affect their ability to deny claims. This action is referred to as

A)contraction.
B)coalition.
C)cooptation.
D)domain selection.
E)benchmarking.

Question 79

________ occurs when a firm invests in different types of businesses or products or when it expands geographically to reduce its dependence on a single market or technology.

A)Domain selection
B)Diversification
C)Acquisition
D)Divestiture
E)Empowerment

Question 80

Two general types of proactive strategies for influencing an organization's environment are

A)dependent strategies and independent strategies.
B)independent action and cooperative action.
C)cooperative strategies and strategic maneuvering.
D)strategic maneuvering and dependent strategies.
E)independent action and strategic maneuvering.