Question 1

The objective of divestment is to extract a firm from a declining industry.

Accepted Answer

A) True 
 B)False

Question 2

Rivalry tends to be high when

Accepted Answer

A)  there are few firms in an industry and these firms tend to be unequal in size. 
B)  the industry growth rate is higher. 
C)  firms are unable to differentiate their products. 
D)  production capacity can be added in small increments.

Question 3

The threat of rivalry tends to be high in an industry when firms are able to meaningfully differentiate their products.

Accepted Answer

A) True 
 B)False

Question 4

Firms pursuing a harvest strategy in a declining industry do not expect to remain in the industry over the long term.

Accepted Answer

A) True 
 B)False

Question 5

In general, first-mover advantages can arise from any of these sources except

Accepted Answer

A)  technological leadership. 
B)  preemption of strategically valuable assets. 
C)  the creation of customer switching costs. 
D)  using an imitative strategy to introduce improved versions of competitors' new products.

Question 6

Firms that engage in a long, systematic phased withdrawal from an industry, extracting as much value as possible during the withdrawal period, are following a(n) ________ strategy.

Accepted Answer

A)  niche 
B)  expansion 
C)  divestment 
D)  harvest

Question 7

The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.

Accepted Answer

A)  different; the same 
B)  approximately the same; the same 
C)  different; different 
D)  approximately the same; different

Question 8

Which of the following best describes the competition in the U.S. online auction industry?

Accepted Answer

A)  Perfect competition 
B)  Monopolistic competition 
C)  Oligopoly 
D)  Monopoly

Question 9

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.

Accepted Answer

A)  first-mover 
B)  competitive 
C)  early-entrant 
D)  first-comer

Question 10

What are customer-switching costs?

Accepted Answer

The answer of What are customer-switching costs?...

Question 11

A firm's supplier poses a greater threat if the supplier's industry has a large number of firms, none of which dominate the supplying industry, than if the supplier's industry is dominated by a small number of firms.

Accepted Answer

A) True 
 B)False

Question 12

When activity in an economy is relatively low for a short period of time, the economy is said to be in a

Accepted Answer

A)  recession. 
B)  depression. 
C)  prosperous cycle. 
D)  boom.

Question 13

Within the five forces framework, the five most common threats facing firms from their competitive environment include each of the following except

Accepted Answer

A)  substitutes. 
B)  complementors. 
C)  suppliers. 
D)  buyers.

Question 14

Product innovation is an effort to refine and improve a firm's current processes.

Accepted Answer

A) True 
 B)False

Question 15

If the owner of a jewelry store who normally purchased diamonds from a diamond brokerage firm were to open its own diamond brokerage firm, this would be an example of forward vertical integration.

Accepted Answer

A) True 
 B)False

Question 16

All of the following are elements of the general environment except

Accepted Answer

A)  technological trends. 
B)  demographic trends. 
C)  industrial trends. 
D)  cultural trends.

Question 17

The threat of entry in an industry depends on the cost of entry, and the cost of entry, in turn, depends upon the existence and "height" of barriers to entry.

Accepted Answer

A) True 
 B)False

Question 18

Suppliers are a greater threat to firms in an industry when suppliers are threatened by substitutes.

Accepted Answer

A) True 
 B)False

Question 19

The products or services provided by a firm's rivals meet ________ customer needs in ________ ways as the product provided by the firm itself.

Accepted Answer

A)  different; the same 
B)  approximately the same; the same 
C)  different; different 
D)  approximately the same; different

Question 20

Buyers tend to have less power when

Accepted Answer

A)  a firm has only one buyer, or a small number of buyers. 
B)  the products or services being sold to buyers are standard and not differentiated. 
C)  the supplies they purchase are an insignificant portion of the costs of their final products. 
D)  they are not earning significant economic profits.

Exam 2: Evaluating a Firms External Environment

The objective of divestment is to extract a firm from a declining industry.

Rivalry tends to be high when

The threat of rivalry tends to be high in an industry when firms are able to meaningfully differentiate their products.

Firms pursuing a harvest strategy in a declining industry do not expect to remain in the industry over the long term.

In general, first-mover advantages can arise from any of these sources except

Firms that engage in a long, systematic phased withdrawal from an industry, extracting as much value as possible during the withdrawal period, are following a(n) ________ strategy.

The products or services provided by a firm's substitutes meet customer needs in ways as the product provided by the firm itself.

Which of the following best describes the competition in the U.S. online auction industry?

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.

What are customer-switching costs?

A firm's supplier poses a greater threat if the supplier's industry has a large number of firms, none of which dominate the supplying industry, than if the supplier's industry is dominated by a small number of firms.

When activity in an economy is relatively low for a short period of time, the economy is said to be in a

Within the five forces framework, the five most common threats facing firms from their competitive environment include each of the following except

Product innovation is an effort to refine and improve a firm's current processes.

If the owner of a jewelry store who normally purchased diamonds from a diamond brokerage firm were to open its own diamond brokerage firm, this would be an example of forward vertical integration.

All of the following are elements of the general environment except

The threat of entry in an industry depends on the cost of entry, and the cost of entry, in turn, depends upon the existence and "height" of barriers to entry.

Suppliers are a greater threat to firms in an industry when suppliers are threatened by substitutes.

The products or services provided by a firm's rivals meet customer needs in ways as the product provided by the firm itself.

Buyers tend to have less power when