Question 1

New entrants are more likely to join an industry if:

Accepted Answer

A)   differentiation among existing competitors is high.
B)   access to distribution channels is limited.
C)   existing competitors lack economies of scale.
D)   capital requirements to enter the industry are high.
E)   expected retaliation from existing competitors is high. C

Question 2

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Accepted Answer

A) True 
 B)False  True

Question 3

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Accepted Answer

A)   there are relatively few firms supplying the industry compared to the number of buyers.
B)   the good or service purchased by the buyers represents a high percentage of the buyer's costs.
C)   the industry's goods or services are highly differentiated.
D)   buyers face high switching costs in changing vendors.
E)   the good or service is of significant importance to the quality or price of the buyer's offerings. B

Question 4

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

Accepted Answer

A)   new entrants struggle to match incumbents' prices.
B)   this discourages customers from buying a new entrant's offerings.
C)   new entrants struggle to gather enough cash to get started.
D)   each incumbent has a group of loyal customers that enjoy its unique features.
E)   new entrants struggle to get their offerings to customers.

Question 5

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets. As such, he decides to sell produce directly to the local market. This is an example of:

Accepted Answer

A)   forward horizontal integration
B)   backward vertical integration
C)   horizontal diversification
D)   backward horizontal integration
E)   forward vertical integration

Question 6

Which of the following segments of PESTEL analysis is the "Moore's Law" associated with?

Accepted Answer

A)   Political
B)   Economic
C)   Social
D)   Technological
E)   Environmental

Question 7

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Accepted Answer

A)   there are relatively few firms supplying the industry compared to the number of buyers.
B)   the good or service purchased by the buyers represents a negligible percentage of the buyer's costs.
C)   the industry's goods or services are highly differentiated.
D)   buyers face high switching costs in changing vendors.
E)   the good or service is of limited importance to the quality or price of the buyer's offerings.

Question 8

Which of the following segments of PESTEL analysis includes elements such as tax policies and changes in trade restrictions and tariffs?

Accepted Answer

A)   Political
B)   Economic
C)   Social
D)   Technological
E)   Environmental

Question 9

A generation ago, ketchup was an essential element of every American pantry and salsa was a relatively unknown product. The popularity of salsa exploded and has been attributed to trends in demographics such as population size, age, and ethnic mix as well as cultural trends such as attitudes toward obesity and consumer activism. What factor of PESTEL does this represent?

Accepted Answer

A)   Political
B)   Economic
C)   Social
D)   Technological
E)   Environmental

Question 10

Attitudes toward obesity constitute a social factor in the PESTEL framework.

Accepted Answer

A) True 
 B)False

Question 11

Describe PESTEL analysis.

Accepted Answer

The answer of Describe PESTEL analysis....

Question 12

The environment provides resources that an organization needs in order to create goods and services.

Accepted Answer

A) True 
 B)False

Question 13

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

Accepted Answer

A) True 
 B)False

Question 14

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

Accepted Answer

A) True 
 B)False

Question 15

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them. This example represents the _____ segment of PESTEL analysis.

Accepted Answer

A)   political
B)   economic
C)   social
D)   legal
E)   environmental

Question 16

Changes in legal factors can have a positive impact on the profit potential of many industries.

Accepted Answer

A) True 
 B)False

Question 17

What does the environment of any organization consist of? How can a business influence the environment?

Accepted Answer

The answer of What does the environment of any organization...

Question 18

The political segment includes elements such as tax policies, changes in trade restrictions and tariffs, and the stability of governments.

Accepted Answer

A) True 
 B)False

Question 19

During an economic crisis credit markets typically loosen their requirements.

Accepted Answer

A) True 
 B)False

Question 20

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.

Accepted Answer

A) True 
 B)False

Exam 3: Evaluating the External Environment

New entrants are more likely to join an industry if:

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets. As such, he decides to sell produce directly to the local market. This is an example of:

Which of the following segments of PESTEL analysis is the "Moore's Law" associated with?

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Which of the following segments of PESTEL analysis includes elements such as tax policies and changes in trade restrictions and tariffs?

Attitudes toward obesity constitute a social factor in the PESTEL framework.

Describe PESTEL analysis.

The environment provides resources that an organization needs in order to create goods and services.

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them. This example represents the _____ segment of PESTEL analysis.

Changes in legal factors can have a positive impact on the profit potential of many industries.

What does the environment of any organization consist of? How can a business influence the environment?

The political segment includes elements such as tax policies, changes in trade restrictions and tariffs, and the stability of governments.

During an economic crisis credit markets typically loosen their requirements.

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.