Question 1

A competitive environment where there is weak to moderate rivalry among sellers,high entry barriers,weak competition from substitute products,and little bargaining leverage on the part of both suppliers and customers

Accepted Answer

A)  lacks powerful driving forces. 
B)  gives each industry competitor the best potential for building sustainable competitive advantage. 
C)  makes it hard for industry members to pursue a differentiation strategy. 
D)  is conducive to industry members earning attractive profits. 
E)  requires that industry members have low costs.

Question 2

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 3

Thinking strategically about industry and competitive conditions in a given industry involves evaluating such considerations as

Accepted Answer

A)  cultural,lifestyle,and demographic changes. 
B)  the birth of new industries,new knowledge,and disruptive technologies. 
C)  weather,climate change,and water shortages. 
D)  interest rates,exchange rates,unemployment rates,inflation rates,and economic growth. 
E)  how often sellers alter their prices,how sensitive buyers are to price differences among sellers,whether the item being purchased is a good or a service,and whether buyers buy frequently or infrequently.

Question 4

Which of the following is not a relevant consideration in identifying an industry's dominant economic features?

Accepted Answer

A)  Market size and growth rate,the geographic scope of competitive rivalry,and demand-supply conditions 
B)  How many strategic groups the industry has and which ones are most profitable and least profitable 
C)  The number and sizes of buyers,the number of rivals,and the pace of product innovation 
D)  The pace of technological change 
E)  The current industry position in its life cycle to reveal the industry's growth prospects

Question 5

Identify two benefits of constructing a strategic group map.

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Question 6

Identify and briefly describe five common barriers to entering an industry.

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Question 7

Identify five factors that tend to weaken the intensity of competitive rivalry among an industry's member firms.

Accepted Answer

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Question 8

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 9

The most powerful of the five competitive forces is usually

Accepted Answer

A)  the competitive pressures that stem from the ready availability of attractively priced substitute products. 
B)  the competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage. 
C)  the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates. 
D)  the competitive pressures associated with the potential entry of new competitors. 
E)  the bargaining power and leverage that large customers are able to exercise.

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

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong?

Accepted Answer

A)  When buyer demand is growing rapidly 
B)  When buyers are relatively well informed about sellers' products,prices,and costs 
C)  When buyers pose a major threat to integrate backward into the product market of sellers 
D)  When sellers' products are weakly differentiated,making it easy for buyers to switch to competing brands 
E)  When buyers have considerable discretion over whether and when they purchase the product

Question 12

In identifying an industry's key success factors,strategists should

Accepted Answer

A)  try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. 
B)  consider on what basis customers choose between competing brands,what resources and competitive capabilities firms need to be competitively successful,and what shortcomings are almost certain to put a company at a significant competitive disadvantage. 
C)  consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. 
D)  consider what it will take to overtake the company with the industry's overall best strategy. 
E)  focus their attention on what it will take to capitalize on impacts of the industry's driving forces.

Question 13

Driving forces analysis

Accepted Answer

A)  involves identifying the driving forces,assessing whether their impact will make the industry more or less attractive,and determining what strategy changes a company may need to make to prepare for the impact of the driving forces. 
B)  identifies which strategic group is the most powerful. 
C)  helps managers identify which industry member is likely to become (or remain)the industry leader and why. 
D)  helps managers identify which key success factors are most likely to help their company gain a competitive advantage. 
E)  helps managers identify which of the five competitive forces will be the strongest driver of industry change.

Question 14

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 15

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

Accepted Answer

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Question 16

The competitive threat that outsiders will enter a market is weaker when

Accepted Answer

A)  financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers. 
B)  the pool of entry candidates is large and some have resources that would make them formidable market contenders. 
C)  the industry's market growth is rapid. 
D)  newcomers can be expected to earn attractive profits. 
E)  buyers have little loyalty to the brands and product offerings of existing industry members.

Question 17

An industry's key success factors

Accepted Answer

A)  are a function of market share,entry barriers,economies of scale,degree of vertical integration,and industry profitability. 
B)  vary according to whether an industry has high or low long-term attractiveness. 
C)  can be determined through identifying an industry's dominant economic characteristics,assessing the five competitive forces,considering the impacts of the driving forces,comparing the market positions of industry members,and forecasting the likely next moves of industry rivals. 
D)  can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies. 
E)  depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.

Question 18

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?

Accepted Answer

A)  Artificial sweetener as a substitute for sugar 
B)  Wireless phone service as a substitute for a landline telephone 
C)  Coca-Cola as a substitute for Pepsi 
D)  Digital cameras as substitutes for film cameras 
E)  Video-on-demand services as a substitute for renting movies from a movie rental store

Question 19

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

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Question 20

Identify and briefly explain any two of the factors that influence the strength of competition from substitute products.

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Exam 3: Evaluating a Companys External Environment