Question 1

Rapid growth in demand enables companies to expand their revenues and profits without taking market share away from competitors.

Accepted Answer

A) True 
 B)False

Question 2

Opportunities arise when a company can take advantage of conditions in its industry environment to formulate and implement strategies that enable it to become more profitable.

Accepted Answer

A) True 
 B)False

Question 3

Define a strategic group. What are some examples of how strategic groups differ in the way they bring their products to market? What are the implications for identifying threats and opportunities?

Accepted Answer

The answer of Define a strategic group. What are some...

Question 4

Strong brand loyalty and high customer switching costs are low barriers to entering an industry.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is currently an embryonic industry?

Accepted Answer

A)  Personal computers 
B)  Biotechnology 
C)  Internet retailing 
D)  Nanotechnology 
E)  Wireless communications

Question 6

Dale Smith opened his forklift dealership twenty years ago. Over the last five years he has been approached by several larger operations looking to buy him out. He had hoped to pass the business onto his sons, but they aren't interested in continuing the business and he is having a hard time letting go. This is an example of the exit barrier known as emotional attachment.

Accepted Answer

A) True 
 B)False

Question 7

In growth industries:

Accepted Answer

A)  the intensity of rivalry is very high. 
B)  technological expertise is the most important entry barrier. 
C)  the threat from potential competitors is typically highest. 
D)  distribution channels are poorly developed. 
E)  buyers are not familiar with the industry's products.

Question 8

An impact that the changing industry boundaries have had is that:

Accepted Answer

A)  owners of companies can now define boundaries. 
B)  there is an increase in the number of competitors within an industry. 
C)  technological changes do not affect companies anymore. 
D)  the pattern of customer needs does not affect companies anymore. 
E)  the number of product substitutes available for customers has reduced.

Question 9

First-time demand expands rapidly due to new customers entering the market in which of the following stages of the industry life cycle?

Accepted Answer

A)  Embryonic 
B)  Growth 
C)  Shakeout 
D)  Maturity 
E)  Decline

Question 10

Changes in the characteristics of a population, such as age or race, are irrelevant to the analysis of an industry's macroenvironment.

Accepted Answer

A) True 
 B)False

Question 11

Successful innovation cannot transform the nature of industry competition.

Accepted Answer

A) True 
 B)False

Question 12

As an industry enters the shakeout stage:

Accepted Answer

A)  rivalry among companies declines. 
B)  demand grows at a high rate. 
C)  prices of products increase. 
D)  excess productive capacity emerges. 
E)  new entrants come into the market.

Question 13

Which of the following statements about complementors is true?

Accepted Answer

A)  Their impact on industries was first recognized by Porter's Five Forces model. 
B)  They have little importance in high-technology industries. 
C)  They have the power to impact the sales of the industry to which they supply complement products. 
D)  They tend to increase the sales of the industry they are supplying complements to by producing fewer low-quality complement products. 
E)  They cannot gain enough power to extract profits from the industry to which they supply complement products.

Question 14

Which of the following is NOT an implication that strategic groups must address when considering threats and opportunities?

Accepted Answer

A)  Threats to profitability come from rivals within the strategic group. 
B)  Customers see the products of those in a strategic group as substitutes for on another. 
C)  Competition comes on two fronts, from those within the strategic group as well as those in other strategic groups within the industry. 
D)  Different strategic groups have distinctive and varied relationships with each of the identified competitive forces. 
E)  The strength of competitive forces facing strategic groups is a result of the competitive positioning approach chosen by the group.

Question 15

Dave grew up in a household that primarily drank Minute Maid orange juice and lemonade. Now married with his own children, he continues to purchase Minute Maid products for his own family. This is an example of switching costs.

Accepted Answer

A) True 
 B)False

Question 16

Suppliers in an industry are most powerful when:

Accepted Answer

A)  there are few substitutes for the products that they sell. 
B)  switching costs are low. 
C)  companies in the industry threaten to enter the suppliers' industry. 
D)  their profitability is significantly affected by the purchases of companies in a particular industry. 
E)  they refrain from entering their customers' industry because of lack of resources.

Question 17

Which of the following is NOT considered a benefit of industry analysis?

Accepted Answer

A)  It can be a powerful tool to aid in a manager's strategic thinking. 
B)  It recognizes how competitive forces are isolated and do not impact each other. 
C)  It stimulates systematic thinking about strategic choices. 
D)  It makes it easier to identify opportunities and threats within an industry. 
E)  It can result in profitable changes to existing strategies.

Question 18

Which of the following would not diminish the risk of entry of potential competitors for an established company within an industry?

Accepted Answer

A)  Government prohibition of market entry in the company's industry. 
B)  Consumers prefer the established company's product. 
C)  Potential competitors cannot match the established company's lower cost structure. 
D)  The established company does not benefit from cost reductions due to mass production of standardized products. 
E)  Customers are locked into the established company's product due to the high amount of energy, time, and money it would take to switch to a new product.

Question 19

The extent of rivalry among established companies is lowest when:

Accepted Answer

A)  the industry's product is a commodity. 
B)  demand is growing rapidly. 
C)  exit barriers are substantial. 
D)  the industry is entering a decline stage. 
E)  the fixed costs are high.

Question 20

Starbucks and an independent local café are different in terms of their business techniques. They both sell coffee and, therefore, belong to the same strategic group.

Accepted Answer

A) True 
 B)False

Exam 2: External Analysis: the Identification of Opportunities and Threats

Rapid growth in demand enables companies to expand their revenues and profits without taking market share away from competitors.

Opportunities arise when a company can take advantage of conditions in its industry environment to formulate and implement strategies that enable it to become more profitable.

Define a strategic group. What are some examples of how strategic groups differ in the way they bring their products to market? What are the implications for identifying threats and opportunities?

Strong brand loyalty and high customer switching costs are low barriers to entering an industry.

Which of the following is currently an embryonic industry?

In growth industries:

An impact that the changing industry boundaries have had is that:

First-time demand expands rapidly due to new customers entering the market in which of the following stages of the industry life cycle?

Changes in the characteristics of a population, such as age or race, are irrelevant to the analysis of an industry's macroenvironment.

Successful innovation cannot transform the nature of industry competition.

As an industry enters the shakeout stage:

Which of the following statements about complementors is true?

Which of the following is NOT an implication that strategic groups must address when considering threats and opportunities?

Dave grew up in a household that primarily drank Minute Maid orange juice and lemonade. Now married with his own children, he continues to purchase Minute Maid products for his own family. This is an example of switching costs.

Suppliers in an industry are most powerful when:

Which of the following is NOT considered a benefit of industry analysis?

Which of the following would not diminish the risk of entry of potential competitors for an established company within an industry?

The extent of rivalry among established companies is lowest when:

Starbucks and an independent local café are different in terms of their business techniques. They both sell coffee and, therefore, belong to the same strategic group.