Question 1

Which of the following statements is true about rivalry in the context of established companies?

Accepted Answer

A)  It significantly reduces the costs of established companies. 
B)  It squeezes profits out of an industry. 
C)  It enables companies to lower their spending on non-price-competitive strategies. 
D)  It forces companies to reduce prices when it is less intense. 
E)  It is unaffected by the demand conditions of an industry.

Question 2

An industry's buyers have high bargaining power when:

Accepted Answer

A)  they purchase in small quantities. 
B)  switching costs are low. 
C)  it is economically impossible for them to purchase an input from several companies at once. 
D)  the supply industry depends upon buyers for a very small percentage of its total orders. 
E)  the industry is a monopoly.

Question 3

Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefined competition in the beer industry with its introduction of low-calorie beer (Miller Lite). This health trend represents a _____force.

Accepted Answer

A)  social 
B)  political 
C)  legal 
D)  technological 
E)  demographic

Question 4

Which of the following is NOT a barrier to entry?

Accepted Answer

A)  Economies of scale 
B)  Brand loyalty 
C)  Absolute cost advantages 
D)  High customer bargaining power 
E)  High customer switching costs

Question 5

Government deregulation of telephone service lowered the barriers to entry and lowered industry profit rates.

Accepted Answer

A) True 
 B)False

Question 6

Many beverage manufacturers are noticing that sales for packaged water and fruit-based beverages is increasing compared to carbonated drinks because customers are increasingly becoming health conscious. This change in customer preferences can be attributed to which of the following factors of the macroenvironment?

Accepted Answer

A)  Economic forces 
B)  Demographic forces 
C)  Technological forces 
D)  Political forces 
E)  Social forces

Question 7

When the value of the dollar is low compared to the value of other currencies, products made in the United States are relatively inexpensive and products made overseas are relatively expensive.

Accepted Answer

A) True 
 B)False

Question 8

Demand reaches total saturation in the ____ stage of the industry life-cycle.

Accepted Answer

A)  embryonic 
B)  growth 
C)  shakeout 
D)  maturity 
E)  decline

Question 9

Cost reductions gained through mass-producing a standardized output are a source of scale economies.

Accepted Answer

A) True 
 B)False

Question 10

The competitive structure of an industry refers to the:

Accepted Answer

A)  number of market segments in the industry. 
B)  number and size distribution of companies in the industry. 
C)  number of consumers in the industry. 
D)  number of manufacturing plants in the industry. 
E)  number of products produced in the industry.

Question 11

The threat from potential competitors is greatest in the _____ stage of the industry life cycle.

Accepted Answer

A)  embryonic 
B)  growth 
C)  shakeout 
D)  maturity 
E)  decline

Question 12

A company's closest competitors are those in its strategic group.

Accepted Answer

A) True 
 B)False

Question 13

Using the industry life-cycle model, explain how the threats and opportunities for existing firms in an industry change over time.

Accepted Answer

The answer of Using the industry life-cycle model, explain how...

Question 14

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 15

The risk of entry by potential competitors is a function of the height of the barriers to entry.

Accepted Answer

A) True 
 B)False

Question 16

Why is it important to understand the external environment in order to think strategically?

Accepted Answer

The answer of Why is it important to understand the...

Question 17

A group of firms manufactures writing implements such as pens, pencils, and markers. This group should be referred to as a(n):

Accepted Answer

A)  substitute. 
B)  market segment. 
C)  service provider. 
D)  regulator. 
E)  industry.

Question 18

In growth industries:

Accepted Answer

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

Question 19

One of the defining characteristics of the mature stage of the industry life-cycle is that growth is low or zero.

Accepted Answer

A) True 
 B)False

Question 20

Threats arise when conditions in the external environment endanger the integrity and profitability of a company's business.

Accepted Answer

A) True 
 B)False

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

Which of the following statements is true about rivalry in the context of established companies?

An industry's buyers have high bargaining power when:

Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefined competition in the beer industry with its introduction of low-calorie beer (Miller Lite) . This health trend represents a _____force.

Which of the following is NOT a barrier to entry?

Government deregulation of telephone service lowered the barriers to entry and lowered industry profit rates.

When the value of the dollar is low compared to the value of other currencies, products made in the United States are relatively inexpensive and products made overseas are relatively expensive.

Demand reaches total saturation in the ____ stage of the industry life-cycle.

Cost reductions gained through mass-producing a standardized output are a source of scale economies.

The competitive structure of an industry refers to the:

The threat from potential competitors is greatest in the _____ stage of the industry life cycle.

A company's closest competitors are those in its strategic group.

Using the industry life-cycle model, explain how the threats and opportunities for existing firms in an industry change over time.

The extent of rivalry among established companies is lowest when:

The risk of entry by potential competitors is a function of the height of the barriers to entry.

Why is it important to understand the external environment in order to think strategically?

A group of firms manufactures writing implements such as pens, pencils, and markers. This group should be referred to as a(n) :

In growth industries:

One of the defining characteristics of the mature stage of the industry life-cycle is that growth is low or zero.

Threats arise when conditions in the external environment endanger the integrity and profitability of a company's business.