Deck 4: Understanding Market Opportunities

Question 1

Identify a demographic trend that influences market attractiveness.

A)fitness and nutrition
B)increased levels of immigration
C)business ethics
D)deregulation in a firm's operation

Answer 1

B

Question 2

According to Porter's five competitive forces,rivalry among present competitors is greater under which of the following conditions?

A)when strong economies of scale and learning effects are present
B)when low switching costs exist for the buyers
C)when suppliers can realistically threaten forward integration
D)when strong product differentiation exists among current players

Answer 2

B

Question 3

Which of the following factors is considered a critical success factor in the case of retailing?

A)price
B)location
C)promotion
D)product

Answer 3

B

Question 4

Most companies and most goods deliver generic category benefits when:

A)The offering provides customer benefits that other solutions do not.
B)The threat of backward integration exists.
C)There is little product differentiation.
D)The amount of fixed and working capital required to produce a dollar of sales is large.

Question 5

When large music record companies such as Sony,Warner Music and Universal decided that they would make thousands of songs available for download over the internet,this was a clear strategic response to changes in the:

A)sociocultural environment
B)economic environment
C)technological environment
D)political environment

Question 6

A distribution agency was using facsimile machines to send and receive long-distance messages.This was replaced with an all-in-one printer,flatbed scanner,copier and fax device that allowed the agency to accomplish multiple tasks at the same price.For the manufacturer of the facsimile machines,this example represents the:

A)entry barrier for companies
B)bargaining power of buyers
C)threat of substitute products
D)rivalry among present competitors

Question 7

The bargaining power of suppliers increases under all of the following conditions except:

A)if the cost of switching suppliers is high
B)if prices of substitutes are high
C)if suppliers can realistically threaten backward integration
D)if the supplier's product is a large part of the buyer's value added

Question 8

According to the opportunity/threat matrix,which of the following events should be closely monitored?

A)events with a low probability of occurring and having a low impact
B)events with a high probability of occurring and having a high impact
C)events with a low probability of occurring and having a high impact
D)events with a high probability of occurring and having a low impact

Question 9

A(n)_____ is composed of individuals and organisations who are interested in,and are willing to buy,a good or service to obtain benefits that will satisfy a particular need.

A)sector
B)channel
C)industry
D)market

Question 10

Porter's model identifies rivalry among present competitors as one competitive force.According to this concept,why would the restaurant industry face greater rivalry?

A)because of the absence of a dominant firm
B)because of high investment intensity
C)because of little product differentiation
D)because of low switching costs for buyers

Question 11

Identify a sociocultural environment trend that affects market attractiveness.

A)declining marriage rates
B)increased levels of immigration
C)imbalanced population growth
D)fitness and nutrition

Question 12

What does it mean when firms create new market space?

A)Firms begin to vertically integrate by acquiring their competitors,thus freeing up market space.
B)Firms start looking across substitute industries or to complementary product and service offerings that go beyond what an industry has traditionally offered.
C)Firms outsource their operations to low-cost labour locations in order to cut costs.
D)Firms pursue a defender strategy by establishing strategic alliances with competitor firms in order to secure new market space.

Question 13

Which of the following conditions does not relate to the bargaining power of buyers?

A)Strong product differentiation exists among current players.
B)The threat of backward integration exists.
C)Concessions for large buyers that account for a large portion of industry sales.
D)Switching costs that reduce the buyer's bargaining power.

Question 14

Opportunities are attractive at the micro level for the industry when the company meets which of the following tests?

A)The target market is likely to grow.
B)The source of customer pain and ability to resolve it has been identified.
C)The offering provides customer benefits that other solutions do not.
D)The company possesses something proprietary that is not easily duplicable.

Question 15

A micro-level analysis of market and industry attractiveness is based on:

A)the industry as a whole
B)the market as a whole
C)environmental conditions that affect the market
D)specific target customers

Question 16

The rise in production of products such as hybrid gas-electric vehicles,phosphate-free detergents and high-efficiency light bulbs is indicative of the impact of which of the following macro-environmental force?

A)ecological/natural environment
B)technological environment
C)regulatory environment
D)economic environment

Question 17

Each macro-environmental trend has a distinct impact on the consumer and industrial market.Identify the scenario where industries such as check-cashing outlets and pawn shops will face a tough time staying in business.

A)increased immigration
B)robust economy
C)deregulation
D)ageing population

Question 18

Marketers of such consumer services as health care,holiday accommodation and life insurance are capitalising on the general trend of an ageing population and are developing and implementing marketing strategies accordingly.What macro-environmental trend is acting as a catalyst here?

A)technological
B)ecological/natural
C)sociocultural
D)population/demographic

Question 19

Deregulation:

A)protects inefficiencies
B)creates rapid growth in some markets
C)creates inflationary pressures
D)restricts entry by new competitors

Question 20

The problem of overcoming a cost disadvantage becomes more difficult for existing firms that share their output with their related businesses:

A)if gaining distribution is particularly difficult
B)when strong product differentiation exists among current players
C)if the industry has strong capital requirements at the outset
D)when strong economies of scale and learning effects are present

Question 21

Briefly describe the challenges in macro-level market and industry analysis and outline methods of measuring markets and industries.

Question 22

The growing tendency of businesses to champion their commitment to environmentally sustainable business practices is a result of changes and trends in the:

A)technological environment
B)sociocultural environment
C)population/demographic environment
D)economic environment

Question 23

For a business in any industry there are two critical success factors.One is to ask: Which few decisions or activities are the ones that,if gotten wrong,will almost always have severely negative effects on company performance?
Whilst good customer service in the retail industry is important it is not critical compared to the right location of a business.If a business is located in the wrong place it won't have enough customers to worry about poor customer service.The other question that must be asked is equally if not more important: Which decisions or activities,done right,will usually deliver disproportionately positive effects on performance? This relies on offering the right product be it a good or service to enable a business to effectively compete in the marketplace.

Question 24

Being able to recognise and understand market opportunities and to have the capacity to determine which opportunities are most likely to prove financially successful is the concern of a firm's financial manager not that of a marketing manager.

Question 25

The five competitive forces model when used collectively determines an industry's long-term attractiveness regarding: rivalry among present competitors; threat of new entrants into the industry; the bargaining power of suppliers; the bargaining power of buyers; and the threat of substitute products.

Question 26

Markets are groups of organisations offering goods and services that are similar and close substitutes for one another whereas industries are a group of individuals or organisations willing and able to buy goods or services to satisfy a particular class of want or need.

Question 27

There are four criteria that determine if opportunities are attractive at the micro level on the market side.One of these is that the offering provides industry generic benefits.

Question 28

The macro-environment can be divided into six major components: demographic,social,economic,technological,legal and business environments.

Question 29

What are critical success factors? How can they be identified? How do effective teams play an important role in achieving the CSFs?
Those critical factors that tend to separate the winners from the also-rans within an industry-and whose successful implementation along with other hard-to-imitate elements specific to a firm may account for a firm's continued success within a particular industry-are called the industry's critical success factors,or CSFs.An industry's CSFs may be identified by asking two key questions: (1)Which few decisions or activities are the ones that,if gotten wrong,will almost always have severely negative effects on company performance? (2)Which decisions or activities,done right,will almost always deliver disproportionately positive effects on performance? An efficient and well-connected team enables firms to enhance the attractiveness of an opportunity because it is more likely to be able to ride out the inevitable winds of change.Connected people up and down the value chain are able to control the uncertainties involved with the attractiveness of an industry,and the success of the product by changing strategies according to requirements.

Question 30

Every value chain starts with the development of key capabilities in the area of customer service (training and development).

Question 31

Opportunities are attractive at the micro level on the industry side when the company itself meets a number of tests: it possesses something proprietary that other companies cannot easily duplicate or imitate; the business has or can develop superior organisational processes,capabilities or resources that others would find it difficult to imitate or duplicate; the company's business model is economically viable.

Question 32

Which one of the below is not a part of the three team domains?

A)mission,aspiration,and propensity risk
B)ability to execute CSFs
C)connectedness up,down and across the value chain
D)strategic synergies between functional units within the firm