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Q:
The highest amount a firm can charge for its products is most directly affected by:
a. expected retaliation from competitors.
b. the cost of substitute products.
c. variable costs of production.
d. customers' high switching costs.
Q:
Which of the following, identified in an analysis of the general environment, is an opportunity for an entrepreneur who wishes to open a business providing "Fitness for Life" physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people?
a. The average age of the population in his community is high.
b. The level of unemployment in his community is high.
c. A chiropractor and two independent physical therapists are located in his community.
d. The average education level of the population in his community is low.
Q:
An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of:
a. high barriers to exit.
b. high switching costs.
c. high fixed costs.
d. low levels of competitive rivalry.
Q:
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for the project. Which of the following statements is most likely to be true?
a. The cost of the marble will be expensive because of the bargaining power of the supplier.
b. The cost of the marble will be moderate because of the bargaining power of the buyer.
c. The cost of the marble will be moderate because of economies of scale.
d. The cost of the marble will be expensive because of the high strategic stakes involved.
Q:
According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT:
a. low economies of scale needed for new firms to enter.
b. low supplier power due to commodity inputs.
c. high threat of substitute products due to a large number of low-cost alternatives.
d. high bargaining power of buyers due to low switching costs.
Q:
High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means that in the aircraft industry:
a. customers are relatively weak because of the high switching costs created by frequent-flyer programs.
b. the industry is moving toward differentiation of services.
c. the competitive rivalry in the industry is severe.
d. the economic segment of the external environment has shifted, but airline strategies have not changed.
Q:
As customers come to believe that a firm's product is unique, this allows the firm to:
a. decrease its advertising expenditures.
b. customize its product.
c. force other companies out of the market by lowering prices.
d. obtain loyal customers.
Q:
An analysis of income distribution would include all of the following EXCEPT:
a. the purchasing power of various age groups.
b. the discretionary income of various ethnic groups.
c. wage differentials between male and female employees working for a large manufacturer.
d. how income is distributed among regions of the United States.
Q:
Because of threats and risks in the global environment, some firms choose to take a more cautious approach by:
a. avoiding global markets altogether.
b. expanding only to developed countries.
c. focusing on global niche markets.
d. acquiring already established firms in foreign markets.
Q:
Firms within strategic groups:
a. follow dissimilar strategies.
b. follow similar strategies across certain dimensions.
c. typically engage in greater intergroup rivalry than intragroup rivalry.
d. exist almost exclusively in the manufacturing sector.
Q:
Demographic changes include variations in income distribution. Which of the following statements is true?
a. Firms are most interested in the consumers in the top 10 percent of household income.
b. In general, living standards have deteriorated over time.
c. The general loss in real income has been somewhat offset by the increase in dual-career couples.
d. Workforce diversity is making the concept of average income obsolete.
Q:
Global warming and energy consumption trends are aspects of the ______ segment of the general environment that firms should monitor.
a. technological
b. physical
c. sociocultural
d. economic
Q:
Coca-Cola and PepsiCo have been accused of contributing to the obesity problem in the United States. This accusation comes from the ______segment of the general environment.
a. economic
b. political/legal
c. technological
d. sociocultural
Q:
DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry DWK is likely to encounter here is:
a. government licensing and permits.
b. access to distribution channels.
c. consumers' switching costs.
d. cost disadvantages independent of scale.
Q:
Which of the following would NOT be identified in an analysis of the economic portion of the general environment?
a. The willingness of Chrysler's buyers to purchase large vehicles in light of an increase in oil prices
b. The ability of Ford to issue new debt in light of its recent financial performance
c. The ability of BMW's buyers to finance car purchases in light of a change in interest rates
d. The willingness of GM buyers to purchase new vehicles in light of the threat of recession
Q:
A competitor analysis includes all of the following about competitors EXCEPT:
a. future objectives.
b. current strategy.
c. assumptions.
d. traditions.
Q:
In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an expos that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owners fail to take into account when they began selling the lingerie?
a. the sociocultural segment
b. the economic segment
c. the demographic segment
d. the political/legal segment
Q:
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of:
a. an industry with low exit barriers.
b. increasing economies of scale.
c. slow industry growth.
d. high bargaining power among buyers.
Q:
The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ______ segment of the general environment in those countries that BP and other oil firms have to manage when contending with scarce resources.
a. technological
b. physical
c. demographic
d. global
Q:
The political/legal segment of an environment represents:
a. the political preferences of different ethnic groups in the society.
b. the technological values of different political entities in society.
c. how organizations and governments mutually try to influence each other.
d. the system of regulations governments at all levels place on businesses.
Q:
When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are: engaged in
a. scanning.
b. monitoring.
c. forecasting.
d. assessing.
Q:
Which of the following would be an example of the application of the next major technological opportunity for organizations?
a. Boeing's 747
b. Toyota's hybrid vehicles
c. Budweisers non-alcoholic beer
d. SpaceXs reusable space vehicle
Q:
Which of the following intelligence-gathering techniques is most likely to be legal and ethical?
a. Hiring investigators to examine the competitor's trash
b. Entering a competitor's production plant without authorization
c. Redirecting a competitor's emails to one's own company
d. Attending trade show presentations given by a competitor's employees
Q:
Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement about donors is accurate?
a. Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank.
b. Blood donors are suppliers and are powerful because of their concentration relative to the blood bank.
c. Blood donors are buyers and are not powerful because switching costs to change to alternative inputs are low.
d. Blood donors are buyers and are powerful because of the volume of blood needed.
Q:
Which of the following is NOT an entry barrier to an industry?
a. Expected competitor retaliation
b. Economies of scale
c. Customer product loyalty
d. Bargaining power of suppliers
Q:
Product differentiation refers to the:
a. ability of the buyer of a product to negotiate a lower price.
b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
Q:
Once a firm has determined its competitors' future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop:
a. an environmental assessment.
b. a marketing plan.
c. a response profile.
d. a task force to implement the plan.
Q:
Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is intense?
a. There is low geographic saturation of the market.
b. There is high differentiation among competing products.
c. The threat of supplier forward integration is low.
d. These companies are trying to find ways to differentiate their products.
Q:
A manufacturer of washing machines has expanded its plant and has created excess capacity, just as the general economy has taken a downturn. The company is likely to:
a. raise prices on washing machines to offset lost sales.
b. be vulnerable to new entrants to an attractive market.
c. suffer from intense rivalry from international manufacturers.
d. offer rebates and incentives for customers who purchase washing machines.
Q:
The Obama administration sought to pursue policies that would:
a. remove the United States from NAFTA.
b. abolish antitrust laws.
c. increase the amount of work U.S. companies outsource to firms in other nations.
d. reduce the amount of work U.S. companies outsource to firms in other nations.
Q:
The use of the Internet by Netflix to collect data on customer preferences is an example of:
a. assessing.
b. monitoring.
c. forecasting.
d. scanning.
Q:
Exit barriers to a firm include all of the following EXCEPT:
a. generic assets.
b. loyalty to employees.
c. governmental concern about job loss.
d. restrictive labor agreements.
Q:
The observation that China reached automotive production overcapacity in 2015, and has a glut of extra cars, is an aspect of the ______ segment of the general environment.
a. demographic
b. global
c. physical
d. technological
Q:
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here?
a. Buyers
b. Substitutes
c. Entry barriers
d. Suppliers
Q:
Which of the following is NOT an activity used in the external environmental analysis process?
a. Scanning
b. Decrypting
c. Monitoring
d. Assessing
Q:
Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa's firm's understanding of the competitor's business strategy and would allow Clarissa's employer to gain many of the competitor's clients. What ethical implications may result from this situation?
a. There is no ethical or legal concern here for Clarissa.
b. The ethical dilemma is not Clarissa's but her client's, since he passed on confidential information to her voluntarily.
c. The ethical dilemma here is the right of competitors not to reveal certain information.
d. This is an example of ethical competitor intelligence obtained as eavesdropping.
Q:
The economic environment refers to:
a. the nature and direction of the economy in which a firm competes or may compete.
b. the economic outlook of the world provided by the World Bank.
c. an analysis of how the environmental movement and world economy interact.
d. an analysis of how new environmental regulations will affect the U.S. economy.
Q:
One popular approach to taking care of the physical environment is:
a. producing and selling additional green products.
b. lobbying the government to reduce environmental regulations.
c. making donations to the Sierra Club and other environmental organizations.
d. increasing health benefits for employees.
Q:
Competitor intelligence is:
a. legally or illegally gained data about competitors' internal strategic processes and competitive decisions.
b. strategic information gained from industrial espionage targeting international competitors.
c. the data that the firm gathers to understand competitors' objectives, strategies, assumptions, and capabilities.
d. illegal to gather under the Sarbanes-Oxley Act.
Q:
All of the following are ethical sources of data for external analysis EXCEPT:
a. trade shows.
b. a competitor's annual reports.
c. a competitor's help-wanted advertisements.
d. a competitor's confidential memos.
Q:
Competitor analysis focuses on:
a. firms with which the company competes directly.
b. firms that produce products that are substitutes.
c. all firms in the industry.
d. companies that might enter the industry.
Q:
The environmental segments that make up the general environment typically will NOT include:
a. demographic factors.
b. sociocultural factors.
c. substitute products or services.
d. technological factors.
Q:
Buyers are powerful when:
a. there is a threat of forward integration.
b. they purchase a small proportion of the supplier's output.
c. switching costs are low.
d. the buyers' industry is fragmented.
Q:
Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis?
a. Wendy's and Taco Bell
b. Samsung and Apple
c. Netflix and Microsoft
d. Coca-Cola and PepsiCo
Q:
Environmental scanning would be most important for which of the following organizations?
a. A provider of hospice services for the terminally ill
b. A web design company catering to small businesses
c. A neighborhood sewer and water utility
d. A manufacturer of household linens
Q:
Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely?
a. Circuit will likely continue to manufacture the component, even at a loss, due to low supplier power.
b. Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes.
c. Circuit will likely discontinue manufacture of the component due to low strategic stakes.
d. Circuit will likely discontinue manufacture of the component due to high supplier stakes.
Q:
The likelihood of entry of new competitors is affected by ______ and ______.
a. barriers to entry; expected retaliation of current industry organizations
b. the power of existing suppliers; buyers
c. the profitability of the industry; the market share of its leading firm
d. the demand for the product; the profitability of the competitors
Q:
The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example of a ______ barrier to entry.
a. cost disadvantage independent of scale
b. government policy
c. capital requirements
d. product differentiation
Q:
Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ______ segment of the general environment.
a. economic
b. political/legal
c. technological
d. global
Q:
All of the following are forces that create high rivalry within an industry EXCEPT:
a. numerous or equally balanced competitors.
b. high fixed costs.
c. fast industry growth.
d. high storage costs.
Q:
The next critical technological opportunity for organizations is predicted to be:
a. the Internet.
b. multiphasic interventions.
c. biological engineering.
d. wireless communications.
Q:
Which of the following represents a competitive intelligence practice that is both legal and ethical?
a. A firm hires a competitor's employees and asks them to share the names and addresses of business contacts from their previous company.
b. An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products.
c. A city council member shares information about the decision process for selecting a contractor to build a new city council building with his wife, an executive with a construction firm bidding on the contract.
d. A marketing manager sells confidential plans for a company's expansion into the Far East to a firm that is not a direct competitor.
Q:
Counterfeiting goods and exporting them from China is:
a. ethical and legal.
b. unethical but legal.
c. ethical but illegal.
d. unethical and illegal.
Q:
In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT:
a. age structure.
b. ethnic mix.
c. distribution of income.
d. cultural values.
Q:
Suppliers are powerful when:
a. satisfactory substitutes are available.
b. they sell a commodity product.
c. they offer a credible threat of forward integration.
d. they are in a highly fragmented industry.
Q:
The threat from substitutes is high when:
a. switching costs are high.
b. the substitute product's price is lower than the industry product's price.
c. the quality of the substitute product is lower than the quality of the industry's product.
d. the substitute product stimulates new process innovations within the industry.
Q:
Customer loyalty programs such as airline frequent-flyer miles are an attempt to:
a. decrease competitors' access to distribution channels.
b. develop a cost advantage independent of scale.
c. increase customers' switching costs.
d. overcome the perishability of the hotel "product."
Q:
The competition within each strategic group is:
a. more intense than the competition between strategic groups.
b. less intense than the competition between strategic groups.
c. typically very low.
d. an unknown factor in the analysis of competitive practices within a firm's strategic group.
Q:
The communications industry is broadly defined as encompassing all of the following EXCEPT:
a. media companies.
b. smartphone producers.
c. book retailers.
d. entertainment companies.
Q:
The technological segment of environmental analysis includes:
a. institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.
b. the determination of when machinery will need to be replaced in a given firm.
c. the need for new technology used by a firm to gain a competitive advantage.
d. places where a firm's technology will allow that firm to dominate a given market.
Q:
BP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of the following segments of the general environment?
a. political/legal
b. global
c. technological
d. sociocultural
Q:
Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one-third of sales. With profitability far above the industry average, this product is responsible for one-half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?
a. The company should monitor the general environment for changes that might affect the revenue of all products.
b. The company should monitor the general environment for changes that might affect the profitability of the most profitable products.
c. The company should monitor the general environment for changes that might affect the profitability of all products.
d. The company should monitor the general environment for changes that might affect the revenue and profitability of all products.
Q:
New entrants to an industry are more likely when:
a. it is difficult to gain access to distribution channels.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
Q:
After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its tablets. Samsung needed to do this because:
a. it is in the same strategic group.
b. it is outside the strategic group.
c. of inter-strategic group competition.
d. of strategic distinctiveness.
Q:
How is consolidation among fuel providers serving airport facilities viewed in the five forces model of competition?
a. As a reduction of the airlines' ability to benefit from economies of scale.
b. As an increase in switching costs because the airlines have no choice but to use jet fuel and other oil products.
c. As an increase in the bargaining power of suppliers of a critical input.
d. As an increase in the intensity of rivalry among airlines for scarce resources.
Q:
New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the ______ aspect of demographic analysis.
a. age structure
b. geographic distribution
c. income distribution
d. ethnic mix
Q:
The U.S. Hispanic market is the third-largest "Latin American" economy behind Brazil and Mexico. This impacts the ______ aspect of demographic segment analysis.
a. age structure
b. geographic distribution
c. income distribution
d. ethnic mix
Q:
The concepts of Guanxi, Wa, and Inhwa all convey the general idea of:
a. entrepreneurial risk-taking.
b. interpersonal relationships.
c. the value of hard work.
d. personal achievement.
Q:
The external environment facing business stays relatively constant over time.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
Q:
Generally, industries with stronger competitive forces have higher profit potential.
a. True
b. False
Q:
Switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry.
a. True
b. False
Q:
Age structure, geographic distribution, income distribution, interest rates, and process innovations are all elements of concern when studying the demographic segment of the general environment.
a. True
b. False
Q:
An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, or low rivalry among firms.
a. True
b. False
Q:
The strengths of the five competitive forces are similar across strategic groups within an industry.
a. True
b. False
Q:
Although health care reform legislation was passed in the early part of the Obama administration, it continues to be a contentious issue for employers, employees, and politicians because of its increased expenses. These attitudes about health care reform make up the sociocultural segment of the general environment.
a. True
b. False
Q:
The five competitive forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition.
a. True
b. False
Q:
Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment.
a. True
b. False
Q:
The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing).
a. True
b. False
Q:
The industry environment directly influences a firm and its competitive actions and responses.
a. True
b. False
Q:
Strategic groups are firms in different industries following the same or similar strategies.
a. True
b. False