499 Test 1 - Ch 3 Questions
Which of the following is not generally a driving force capable of producing fundamental changes in industry and competitive conditions? A) Changes in the long-term industry growth rate B) Increasing globalization of the industry C) Product innovation and technological change D) Ups and downs in the economy and interest rates E) New government regulations or significant changes in government policy toward the industry
Ups and downs in the economy and interest rates
In seeking to predict the next moves of close or key rivals, it is not useful to consider which of these questions? A) Which rivals badly need to increase their unit sales and market share? B) Are there predictable trends in the timing of rivals' new-product launches or marketing promotions? C) Which rivals have a strong incentive, along with the resources, to make major strategic changes? D) Which rivals are likely to enter new geographic markets or expand their product offerings? E) Which rivals have the strongest management team.
Which rivals have the strongest management team.
A company's broad macroenvironment refers to
all the strategically significant forces and factors outside a company's boundaries—general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation.
The driving forces in an industry
are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions
The key success factors in an industry
are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace.
Industry conditions change
because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways.
The bargaining leverage of suppliers is greater when
only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.
The payoff of good scouting reports on rivals is improved ability to
predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps.
Rivalry among competing firms tends to be more intense when
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 strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.
A strategic group consists of those firms in an industry that
employ similar competitive approaches and occupy similar positions in the market.
The competitive threat that outsiders will enter a market is weaker when
financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers.
An industry's driving forces
generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.
Having good competitive intelligence about rivals' strategies, latest actions and announcements, resource strengths and weaknesses, and moves to improve their situation is important because it
helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves.
Steps involved in driving forces analysis include
identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces.
Rivalry among competing sellers is generally more intense when
industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.
Not all positions on a strategic group map are equally attractive because
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.
Rivalry among competing sellers tends to be less intense when
industry rivals are not particularly aggressive in drawing sales and market share away from rivals.
Driving forces analysis
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.
A strategic group
is a cluster of industry rivals that have similar competitive approaches and market positions.
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
is competitively unattractive from the standpoint of earning good profits.
A competitive environment in which 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
is conducive to industry members earning attractive profits.
The collective impact of the five competitive forces on competitive pressures tends to
lower the combined profitability of industry members.
The most powerful of the five typical sources of competitive pressures is usually
the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.
The marketplace being a competitive battlefield is primarily due to
the constant rivalry of firms to strengthen buyer patronage among competing sellers of a product or service, in order to win a competitive edge over rivals.
Competitive pressures stemming from buyers' bargaining power tend to be weaker when
the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.
Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of
the extent to which suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.
________ is/are the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions.
A company's macroenvironment
Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry? 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?
A) How many companies in the industry have good track records for revenue growth and profitability?
Based on an analysis of the five forces that increase or decrease competitive pressures in an industry, in which of the following industries is profitability likely to be lowest? A) Pizza restaurants B) Wireless lighting systems C) Delivery services using drones D) Wearable fitness and health monitors E) Pharmaceuticals
A) Pizza restaurants
Which of the following conditions acts to weaken buyers' bargaining power? A) When buyers are unlikely to integrate backward into the business of sellers B) When buyers are well informed about sellers' products, prices, and costs C) When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low D) When buyers have the ability to postpone purchases if they do not like the prices offered by sellers E) When buyers are few in number and/or often purchase in large quantities
A) When buyers are unlikely to integrate backward into the business of sellers
Which of the following is likely to have the biggest strategy-shaping impact on on-demand transportation providers such as Uber and Lyft? A) Tesla and ZipCar announce a joint venture for electric automobile sharing services. B) Amazon launches a mobile delivery service via drones. C) Apple and Ford launch a global network of autonomous driverless cars, buses, and trucks on demand via a mobile app. D) Greyhound develops and markets a mobile app for customers to purchase intercity bus tickets. E) Yellow Cab company launches mobile app campaigns for community-connection and awareness.
Apple and Ford launch a global network of autonomous driverless cars, buses, and trucks on demand via a mobile app.
Which of the following factors is not a relevant consideration in judging whether buyers' bargaining power is relatively strong or relatively weak? A) The number of buyers is small, or a customer is particularly important to the seller. B) Buyers are relatively well informed about sellers' products, prices, and costs. C) Buyer needs and expectations are changing slowly or rapidly. D) Buyer demand is weak or strong and slowly or rapidly growing. E) Buyers pose a credible threat of integrating backward into the business of sellers.
Buyer needs and expectations are changing slowly or rapidly.
In which of the following instances are industry members not subject to stronger competitive pressures from substitute products? A) The costs to buyers of switching over to the substitutes are low. B) Buyers are dubious about using substitutes. C) The quality and performance of the substitutes is well matched to what buyers need to meet their requirements. D) Buyer brand loyalty is weak. E) Substitutes are readily available at competitive prices.
Buyers are dubious about using substitutes.
Which of the following is not a good example of a substitute product that triggers stronger competitive pressures? A) Lyft or Uber as a substitute for rental cars B) Airbnb as a substitute for hotels and motels C) Dasani water as a substitute for Aquafina water D) Smartphones as substitutes for film cameras E) Netflix and Amazon streaming video on demand as a substitute for DVD players
C) Dasani water as a substitute for Aquafina water
Which of the following factors usually is not a consideration involved with evaluating whether an industry presents a sufficiently attractive business opportunity? A) Constructing a strategic group map to assess the attractiveness of the competitive position of each strategic group to determine the overall attractiveness of all the strategic groups B) Using value chain analysis to determine the relative cost positions of rival firms and who is the industry's lowest-cost producer C) Determining which firms in the industry have a competitive advantage and how they attained their advantage D) Determining the industry outlook for future profitability E) Determining the overall strength of the five competitive forces
Determining the industry outlook for future profitability
Which of the following is not one of the principal components of strategic significance in the PESTEL analysis? A) Technological factors that include the pace of change and technical developments possessing the potential to impact society B) Changes in laws and regulations that give rise to the birth of new industries, new knowledge, and disruptive technologies C) Economic conditions that include the general economic climate and specific factors such as interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can affect consumer confidence D) Sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact business E) Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business
Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business
Which of the following is a good example of a manufacturing-related key success factor? A) Global distribution capabilities B) High labor productivity (especially if the production process has high labor content) C) Low distribution costs D) Accurate filling of buyer orders E) Short delivery time capability
High labor productivity (especially if the production process has high labor content)
Which of the following is not a good example of a marketing-related key success factor (KSF)? A) High utilization of fixed assets B) A well-known and well-respected brand name C) Breadth of product line and product selection D) Clever advertising E) Courteous, personalized customer service
High utilization of fixed assets
Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? A) Changes in who buys the product and how they use it, changes in the long-term industry growth rate, and changes in cost and efficiency B) Entry or exit of major firms, product innovation, and marketing innovation C) Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration D) Diffusion of technical know-how and changing societal concerns, attitudes, and lifestyles E) Changes in manufacturing processes brought on by technological change, increasing globalization of the industry, and new Internet capabilities
Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
Which one of the following is not a common type of driving force? A) Entry or exit of major firms B) Changing societal concerns, attitudes, and lifestyles C) Diffusion of technical know-how across more companies and more countries D) Increasing efforts on the part of industry members to collaborate closely with their suppliers E) Technological change and manufacturing process innovation
Increasing efforts on the part of industry members to collaborate closely with their suppliers
Which one of the following does not intensify the competitive pressures associated with the threat of entry? A) Incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers. B) Industry members are struggling to earn good profits. C) Entry barriers are relatively low. D) Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence. E) Newcomers can expect to earn attractive profits, and a number of outsiders have the expertise and resources to hurdle past whatever entry barriers exist.
Industry members are struggling to earn good profits.
Which of the following are most unlikely to qualify as driving forces? 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
Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances
Each of the following exemplifies the impact of the macroenvironment on a company's strategic opportunities except A) United States' sales of Stolichnaya Vodka dwindle on account of a boycott of Russian products. B) consumer confidence in Volkswagen drops precipitously because of falsified emissions data. C) Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry. D) traffic increases at the outlets of Whole Foods following its introduction of new store formats that are solely for the sale of private label generic products. E) sales of FitBit surge on account of new features that monitor the users' blood pressure and sleep habits.
Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry.
Which one of the following increases the competitive pressures associated with the threat of entry? A) Incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers. B) Buyers have a high degree of loyalty to the brands and product offerings of existing industry members. C) Buyer demand for the product is growing fairly slowly. D) Few outsiders have the expertise and resources to hurdle past whatever entry barriers exist. E) Newcomers can expect to earn attractive profits.
Newcomers can expect to earn attractive profits.
Which one of the following does not cause the rivalry among competing sellers to be weak? A) High buyer switching costs B) Rapid growth in buyer demand C) Industry members are not 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
One or more competitors become dissatisfied with their market position
________ is the most powerful and widely known tool used to assess the state of competition in an industry.
Porter's five-force model
Which of the following is generally not considered as a barrier to entry? A) Rapid market growth B) Sizable capital requirements and an array of regulatory requirements C) Strong buyer loyalty to existing brands D) Sizable economies of scale in production E) Difficulties in gaining access to distribution and securing adequate space of retailers' shelves
Rapid market growth
Which of the following is not a factor to consider in identifying an industry's dominant economic features? A) Market size, growth rate, and prospects B) Scope of competitive rivalry including geographic area C) Market demand-supply conditions D) Strength of both driving forces and competitive forces E) Role and pace of technological change
Strength of both driving forces and competitive forces
Which of the following is not a factor that causes buyers' bargaining power to be stronger? A) Some buyers are a threat to integrating backward into the business of sellers. B) The industry is composed of a few large sellers, and the customer group consists of numerous buyers that purchase in fairly small quantities. C) Buyers have considerable discretion over whether and when they purchase the product. D) Buyers are well informed about sellers' products, prices, and costs. E) The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.
The industry is composed of a few large sellers, and the customer group consists of numerous buyers that purchase in fairly small quantities.
Which of the following factors should a company consider when determining if an industry offers good prospects for attractive profits? A) The industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors B) An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C) Whether there are more than five key success factors and more than five barriers to entry D) Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group E) Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product
The industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors
Which of the following is not one of the five typical sources of competitive pressures? A) The power and influence of industry-driving forces B) The bargaining power of suppliers and seller-supplier collaboration C) The threat of new entrants into the market D) The attempts of companies in other industries to win customers over to their own substitute products E) The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry
The power and influence of industry-driving forces
Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers? A) To reduce the costs of switching suppliers B) To speed the availability of next-generation components C) To enhance the quality of parts and components being supplied and reduce defect rates D) To squeeze out important cost savings for both themselves and their suppliers E) To reduce inventory and logistics costs
To reduce the costs of switching suppliers
Which of the following is not an appropriate guideline for developing a strategic group map for a given industry? A) Variables chosen as axes for the map should indicate big differences in how rivals have positioned themselves to compete in the marketplace. B) Variables chosen as axes for the map can be quantitative, qualitative, or discrete and defined in terms of distinct classes and combinations. C) Variables selected as axes for the map should be highly correlated. D) Several maps should be drawn if more than one pair of variables can help illuminate differences in the competitive positioning of industry members. E) Sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.
Variables selected as axes for the map should be highly correlated.
Based on an analysis of the five forces that increase or decrease competitive pressures in an industry, in which of the following industries is profitability likely to be highest? A) Video streaming services B) Supermarkets C) Commercial airlines D) Electric and gas utilities E) Tire manufacturing
Video streaming services
In which one of the following instances is supplier bargaining power and leverage not weakened? A) When industry members pose a credible threat of backward integration into the business of suppliers B) When sales to a strategic partner constitute a big percentage of their total sales C) When the items purchased from suppliers are in short supply D) When the buying firms purchase in large quantities and thus are important customers of the suppliers E) When the cost of switching from one supplier to another is low
When industry members pose a credible threat of backward integration into the business of suppliers
In which one of the following instances is suppliers' bargaining power and leverage not weakened? 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
When the items purchased from suppliers are in short supply
Which one of the following is not a factor that affects the strength of suppliers' bargaining power? 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
Whether industry members are struggling to make good profits because of slow-growing market demand
Evaluating whether an industry presents a sufficiently attractive business opportunity usually does not involve a consideration of which of the following factors? A) The industry's growth potential B) Whether competitive pressures will likely grow stronger or weaker C) Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces D) The company's competitive position in the industry and its ability to perform industry key success factors E) Whether the industry's product is strongly or weakly differentiated
Whether the industry's product is strongly or weakly differentiated
Angela and Jeff are co-owners of five specialty cupcake and dessert bakeries in their region. Which of the following questions would not help them to predict the next strategic moves and countermoves of their rivals? A) How frequently does their rival fulfill special orders for custom cupcakes and how large are those special orders? B) How does the rival manage door-to-door deliveries at no extra cost? C) What percentage of customers frequent the rival's store? D) Why are the rival's cupcakes so popular among customers? E) Which mode of transport does the rival's supplier use?
Which mode of transport does the rival's supplier use?
Using the five-forces model of competition to determine the character and strength of the competitive forces within a given industry involves
building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.
The competitive pressures from substitute products tend to be stronger when
buyers are relatively comfortable with the quality and performance of substitutes, and the costs to buyers of switching over to the substitutes are low.
An industry's key success factors
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.
Increasing globalization can be a driving force in an industry because
companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities.
The most powerful of the five competitive forces is usually the
competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage.
In identifying an industry's key success factors, strategists should
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.
Factors that cause the rivalry among competing sellers to be weak include
rapid growth in buyer demand and high buyer-switching costs.
Which of the following factors represents the strategically relevant political factors in the macroenvironment that will influence the performance of all firms across the board? A) the strength of the federal banking system B) the exogenous forces related to the general environmental demand C) social factors that could fuel a political agenda and create greater transparency D) bailouts and energy policies that are industry-specific E) tax policy, fiscal policy, and tariffs providing impetus for antitrust matters
the strength of the federal banking system
The nature and strength of the competitive forces that prevail in an industry is generally a joint product of all of the following except A) pressures associated with rivalry among sellers to attract buyer patronage. B) threats that firms outside the industry will decide to enter the market. C) attempts of companies in other industries to win buyers over to their own substitute products. D) pressures stemming from the bargaining power of both suppliers and buyers. E) those associated with environmental forces such as climate change or water shortages.
those associated with environmental forces such as climate change or water shortages.
The best test of whether potential entry is a strong or weak competitive force is
to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.
In which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong? 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
when buyer demand is growing rapidly
Just how strong the competitive pressures are from substitute products depends on
whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.
Whether buyers' bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on
whether buyer demand is strong or declining.
