Question 1

Which one of the following is not a factor that affects the strength of supplier bargaining power?

Accepted Answer

A)  whether needed inputs are in short or ample supply 
B)  whether industry members are a strong threat to integrate backward into the business of suppliers 
C)  whether industry members are struggling to make good profits because of slow-growing market demand 
D)  whether the costs of industry members to switch their purchases to alternative suppliers or substitutes are high or low 
E)  whether the item being supplied is a commodity that is readily available from many suppliers

Question 2

Industry conditions change

Accepted Answer

A)  because of such powerful driving forces as swings in buyer demand,changing interest rates,ups and downs in the economy,and higher/lower entry barriers. 
B)  because of newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups. 
C)  because new industry key success factors emerge. 
D)  because forces create pressures or incentives for industry participants (competitors,customers,suppliers) to alter their actions in important ways. 
E)  chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

Question 3

Identify and briefly explain any three factors that lead to weak bargaining power on the part of buyers.

Accepted Answer

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Question 4

Which of the following are most unlikely to qualify as driving forces?

Accepted Answer

A)  changes in the long-term industry growth rate,the entry or exit of major firms,and changes in cost and efficiency 
B)  increasing globalization of the industry and product innovation 
C)  new Internet technology applications,new government regulations,and significant changes in government policy toward the industry 
D)  mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances 
E)  changes in who buys the industry's product and how they use it

Question 5

What are industry key success factors? Why is it important for strategy makers to have a clear understanding of an industry's key success factors?

Accepted Answer

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Question 6

A competitive environment in which there is strong rivalry among sellers,low entry barriers,strong competition from substitute products,and considerable bargaining leverage on the part of both suppliers and customers

Accepted Answer

A)  is competitively unattractive from the standpoint of earning good profits. 
B)  offers little ability to build a sustainable competitive advantage. 
C)  is highly conducive to achieving strong product differentiation and high brand loyalty. 
D)  offers moderate to good prospects for achieving low costs and building a sustainable competitive advantage. 
E)  requires that industry members have a strongly differentiated product offering in order to be profitable.

Question 7

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on

Accepted Answer

A)  whether most buyers possess roughly equal or varying degrees of bargaining power. 
B)  how many buyers are engaged in collaborative partnerships with sellers. 
C)  whether entry barriers are high or low. 
D)  whether the overall quality of the items being furnished by industry members is rising or falling. 
E)  whether buyer demand is strong or declining.

Question 8

Not all positions on a strategic group map are equally attractive because

Accepted Answer

A)  entry and exit barriers are different for each strategic group. 
B)  key success factors are usually quite different for differently positioned industry participants. 
C)  small strategic groups are always less profitable than large strategic groups. 
D)  across-group rivalry is strongest at the outer edges of the strategic group map. 
E)  industry driving forces and competitive pressures favor some companies or groups and hurt others,and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position.

Question 9

Identify and briefly explain any three factors that intensify competitive pressures stemming from the threat that new firms will enter the industry.

Accepted Answer

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Question 10

In which one of the following instances is supplier bargaining power and leverage not weakened?

Accepted Answer

A)  when industry members pose a credible threat of backward integration into the business of suppliers 
B)  when the cost of switching from one supplier to another is low 
C)  when the buying firms purchase in large quantities and thus are important customers of the suppliers 
D)  when the item being supplied is a commodity 
E)  when the items purchased from suppliers are in short supply

Question 11

Which one of the following is not part of a company's broad macro-environment?

Accepted Answer

A)  conditions in the economy at large 
B)  population demographics,and societal values and lifestyles 
C)  technological and ecological factors 
D)  governmental regulations and legislation 
E)  the company's resource strengths,resource weaknesses,and competitive capabilities

Question 12

Identify and briefly explain any four of the factors that influence the strength or intensity of competitive rivalry among an industry's member firms.

Accepted Answer

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Question 13

The competitive pressures from substitute products tend to be stronger when

Accepted Answer

A)  buyers are relatively comfortable with the quality and performance of substitutes,and the costs to buyers of switching over to the substitutes are low. 
B)  there are more than 10 sellers of substitute products. 
C)  substitutes exhibit the latest in technological innovation. 
D)  buyers have high psychic costs in severing existing brand relationships and establishing new ones. 
E)  demand for the industry's product is not very price sensitive.

Question 14

Identify three factors that affect whether an industry does or does not present a company with a good business opportunity.

Accepted Answer

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Question 15

Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry?

Accepted Answer

A)  How many companies in the industry have good track records for revenue growth and profitability? 
B)  What strategic moves are rivals likely to make next? 
C)  What are the key factors for future competitive success? 
D)  Does the outlook for the industry offer good prospects for profitability? 
E)  What forces are driving changes in the industry,and what impact will these changes have on competitive intensity and industry profitability?

Question 16

The best test of whether potential entry is a strong or weak competitive force is

Accepted Answer

A)  the strength of buyer loyalty to existing brands. 
B)  whether the industry's driving forces make it harder or easier for new entrants to be successful. 
C)  whether the strategies of industry members are well matched to the industry's key success factors. 
D)  whether the industry offers an opportunity for a blue ocean strategy. 
E)  to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

Question 17

A strategic group

Accepted Answer

A)  consists of those industry members that are growing at about the same rate and have similar product line breadth. 
B)  includes all rival firms having comparable profitability. 
C)  is a cluster of industry rivals that have similar competitive approaches and market positions. 
D)  consists of those firms whose market shares are about the same size. 
E)  is made up of those firms having comparable profit margins.

Question 18

Rivalry among competing firms tends to be more intense when

Accepted Answer

A)  demand for the product is growing slowly,one or maybe several industry members become dissatisfied with their market position,buyers have low switching costs,and when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share. 
B)  the products/services of rival sellers are strongly differentiated,and buyer demand is strong. 
C)  rivals are relatively content with their market position. 
D)  there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members. 
E)  there are fewer firms in the industry that have unequal market shares.

Question 19

Which one of the following does not cause the rivalry among competing sellers to be weak?

Accepted Answer

A)  high buyer switching costs 
B)  rapid growth in buyer demand 
C)  Industry members aren't aggressive in drawing sales and market share away from rivals. 
D)  one or more competitors become dissatisfied with their market position 
E)  strongly differentiated products among rival sellers

Question 20

Just how strong the competitive pressures are from substitute products depends on

Accepted Answer

A)  whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently. 
B)  whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes. 
C)  whether the available substitutes are products or services. 
D)  whether the producers of substitutes have ample budgets for new product R&D. 
E)  the speed with which buyer needs and expectations are changing.

Exam 3: Evaluating a Companys External Environment