Complete Connect Ch.3

Which of the following statements about Airbnb is correct? A. It operates only in North America and Europe. B. It was spun off as a service developed by Google, Inc. C. It was founded before the Internet was created. D. It handles more accommodations than the three biggest hotel chains combined.

D. It handles more accommodations than the three biggest hotel chains combined.

When a firm in an oligopoly cuts prices, ______. A. there is no impact B. all competitors raise their prices C. market share is lost D. a price war is likely to result

D. a price war is likely to result

A(n) _____________ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.

Strategic

A firm's strategic position relates to its ability to create __________ for customers while containing the __________ to do so.

Value; Costs

The ______ is a measure of the change in the amount of goods and services produced by a nation's economy.

economic growth rate

Managers are able to influence which of the following types of external forces?

- The Structure of their industry - Strategic group composition

The relationship between the natural environment and business organizations can best be described as ______. A. a U-shape B. interdependent C. unconnected D. insignificant

B. interdependent

Which of the following were resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain? (Check all that apply.)

Focusing on such details as store layout and design Carefully choosing the supplier of the potatoes for their fries

Which of the following statements about Airbnb is correct?

It handles more accommodations than the three biggest hotel chains combined.

Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry?

Leverage existing assets Reconfiguring value chains Establishing a niche

Recessions are less likely to harm ___________-cost airlines, which appeal more to budget-conscious travelers than legacy carriers.

Low

In the airlines industry, the _______________ barrier of offering international routes restricts movement.

Mobility

______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.

Primary

______ are the firm's current level of intangible resources.

Resource stocks

______ resources have physical attributes and are visible.

Tangible

What conclusions can be reached about the airline industry using the five forces framework?

The mega-airlines must constantly struggle to achieve consistent profitability. The supporting players, such as airports and aircraft suppliers, are quite profitable.

Which of the following are situations in which a resource is considered valuable? (Check all that apply.)

The resource helps the firm increase its economic value creation (V-C). The resource helps a firm exploit an external opportunity.

True or false: The relative strengths of the five forces that shape competition are largely dependent on the context.

True

Which of the following are important strategic dimensions in mapping strategic groups?

- Expenditures on research and development - Technology - Product differentiation - Product and service offerings - Cost structure - Market segments - Distribution channels - Customer service

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________. A. intensity of rivalry B. switching costs C. industry growth D. development of new products

A. intensity of rivalry

The economic factors that affect a firm's external environment are ______. A. largely macroeconomic B. often unidentifiable C. usually regional D. primarily ecological

A. largely macroeconomic

An example of a recent innovation in process technology is ______. A. lean manufacturing B. the microwave C. the BP oil spill D. the smartphone

A. lean manufacturing

Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business. A. legal B. socio-cultural C. economic D. technological

A. legal

The positive effect that one user of a product or service has on the value of that product or service for other users is known as the ___. A. network effect B. user effect C. mass effect D. multiplicity effect

A. network effect

True or false: A competitive advantage is most often maintained indefinitely.

False

In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must ______.

be organized to capture value

Isolating mechanisms are considered to be ______.

barriers to imitation

According to the PESTEL model, which of the following are kinds of forces that exist in the general external environment? (Check all that apply.)

economic technological ecological

In the PESTEL model, political factors are those that relate to ______.

government bodies

What should a firm do in order to be organized to capture value? (Check all that apply.)

have good coordinating systems have a good organizational structure

Which of the following can help a firm extend its competitive advantage? (Check all that apply.)

intellectual property protection better expectations of future resource value path dependence

Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.)

interest rates price stability growth rates

Managers have ______ direct influence over external forces in the firm's general environment than those in the firm's task environment.

less

A perfectly competitive industry has ______ entry barriers and ______ small firms.

low; many

The concept of social complexity suggests that ______.

social and business systems that work for one firm may be hard to imitate because of complex interactions between these systems

What might potential substitutes do to make themselves more attractive to customers?

offer a lower price offer a higher value proposition

Primary activities include which of the following? (Check all that apply.)

operations supply chain management

Marketing, sales, and distribution are ______ activities in a firm's value chain.

primary

Which of the following are employed as nonmarket strategies to influence government bodies? (Check all that apply.)

public relations lobbying litigation

A resource is ______ if the number of firms that possess it is less than the number of firms required to reach a state of perfect competition.

rare

Managers are able to influence which of the following types of external forces? (Check all that apply.)

strategic group composition the structure of their industry

The resource-based view classifies all resources as ______.

tangible or intangible

A core competency can help a company achieve which of the following? (Check all that apply.)

to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can

Which of the following is not considered an isolating mechanism?

uncertainty about future resource value

Industry-specific factors known as _________ separate one strategic group from another.

Mobility barriers

The ______ is a theoretical model that explains and predicts what resource attributes underpin competitive advantage. It identifies which types of resources are key to firm performance.

VRIO framework

According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.

be organized to capture value

In the early 2000s, easy credit made real estate the investment of choice in the United States. By the end of the decade, however, a recession had set in, impacting almost all businesses in the country. This example shows that _____.

economic boom periods can overheat and lead to speculative bubbles

When managers understand the forces in the external environment, they are better able to ______.

mitigate threats and leverage opportunities

The culture of Zappos is hard to imitate because it consists of numerous, diverse interactions among its employees, processes, procedures, and norms, that create which of the following?

social complexity

A resource is considered ______ if it helps a firm to deal with an external threat.

valuable

The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of _________.

economies of scale

What are examples of intangible resource stock a company may have? (Check all that apply.)

engineering expertise reputation for quality dynamic capabilities

______ are any assets that a firm can draw on when formulating and implementing a strategy.

Resources

Firms within the same strategic group tend to follow a ___________ strategy while firms in a different strategic group follow a ____________ strategy.

Similar; Different

An example of a recent innovation in PROCESS technology is ____________.

Nanotechnology

According to Michael Porter, the profit potential of an industry is ___________.

A function of five forces related to competition.

True or false: Sociocultural factors tend to be fixed. A. True B. False

B. False

Which of the following statements about legal factors as an external force is true? A. The courts do not allow the government to use legal factors to exert its political will on businesses. B. Regulatory changes tend to affect entire industries at once. C. Legal factors affect a firm's profit potential only indirectly. D. The U.S. government has allowed very few industries to be deregulated.

B. Regulatory changes tend to affect entire industries at once.

In order to influence changes in their political environment, firms pursue ______.

nonmarket strategies

Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.) A. Ensuring a smooth transaction between hosts and guests B. Fortuitous timing that led to growing demand C. Following the traditional rental model offered by hotels D. Presenting a well-designed website

A. Ensuring a smooth transaction between hosts and guests B. Fortuitous timing that led to growing demand D. Presenting a well-designed website

When a firm in an oligopoly cuts prices, ______. A. a price war is likely to result B. market share is lost C. all competitors raise their prices D. there is no impact

A. a price war is likely to result

A group of companies that deal with more or less the same set of suppliers and buyers make up ______. A. an industry B. a state C. a multi-environment D. a business group

A. an industry

The external forces called technological factors ______. A. capture the application of knowledge to create new process and products B. represent official government decisions and regulations C. quantify characteristics of the economy and business climate D. describe society's norms and values

A. capture the application of knowledge to create new process and products

In the early 2000s, easy credit made real estate the investment of choice in the United States. By the end of the decade, however, a recession had set in, impacting almost all businesses in the country. This example shows that _____. A. the market was characterized by rational exuberance B. during economic boom periods, investors stay cautious and conservative C. economic boom periods can overheat and lead to speculative bubbles D. people did not overvalue housing prices

C. economic boom periods can overheat and lead to speculative bubbles

The economic recession that began in 2008 in the United States was the result of unwise investment in ______. A. commodities B. stocks C. real estate D. the online economy

C. real estate

Firms have a tendency to change the industry structure in their favor, for example by making industries more __________ through mergers and acquisitions.

Consolidated

Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully? (Check all that apply.)

Who are the players? When to enter? What type of entry should be made? How to enter?

Which statement best describes the rivalry among existing competitors in the airline industry?

It is intense due to the pressures created by industry forces.

Time compression diseconomies occur when a firm ______.

attempts to reach an outcome in a reduced amount of time

Along which of the following dimensions do strategic groups differ from one another?

- Expenditures on research and development - Technology - Product differentiation - Product and service offerings - Market segments - Distribution channels - Customer service

Which of the following are examples of sociocultural factors? (Check all that apply.) A. the growth of the Hispanic population B. the widespread adoption of smart phones C. an increased demand by consumers for gluten-free products D. an extended period of low interest rates

A. the growth of the Hispanic population B. the widespread adoption of smart phones C. an increased demand by consumers for gluten-free products

According to Michael Porter, the profit potential of an industry is ______. A. similar for all service industries B. a function of five forces related to competition C. entirely determined by industry-specific factors D. largely random

B. a function of five forces related to competition

A rise in economic growth is reflected by ______. A. businesses staying the same B. businesses expanding operations to satisfy demand C. businesses closing operations due to lack of demand

B. businesses expanding operations to satisfy demand

Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment. A. sociocultural B. economic C. political D. technological

B. economic

In a period of economic boom, unemployment is ______, and human resources become expensive. A. fluctuating B. low C. variable D. high

B. low

In the five forces model, threat of entry refers to the risk that ______. A. startup costs for a given company will be excessive B. potential competitors will enter a given industry C. an established market will gain more customers D. that government regulators will target a given industry

B. potential competitors will enter a given industry

When a person that has been using a PC with a Microsoft Windows operating system starts using an Apple computer (which has a different operating system), that person will incur significant customer ______________. A. economies of scale B. switching costs C. network effects D. bargaining power

B. switching costs

Managers are able to influence which of the following types of external forces? (Check all that apply.) A. currency exchange rates B. the structure of their industry C. strategic group composition D. interest rates

B. the structure of their industry C. strategic group composition

______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms. A. Technological B. Economic C. Political D. Profitable

C. Political

Global warming would be an example of ______ factor in a firm's external environment. A. a technological B. a political C. an ecological D. a sociocultural

C. an ecological

It might be a good idea to expand or upgrade a firm's human capital base during a ______, because unemployment is high and therefore human capital is abundant and wages usually _____. A. boom period, rise B. downturn; rise C. boom period; fall D. downturn; fall

D. downturn; fall

The ______ is a measure of the change in the amount of goods and services produced by a nation's economy. A. level of employment B. interest rate C. currency exchange rate D. economic growth rate

D. economic growth rate

When managers understand the forces in the external environment, they are better able to ______. A. illustrate the impact of strategic actions B. understand the firm's internal resources C. achieve price stability D. mitigate threats and leverage opportunities

D. mitigate threats and leverage opportunities

As utility companies tend to serve a whole market exclusively, they are known as ______ because the governments involved believe that the product or service would not be supplied otherwise. A. rivals B. perfect competitors C. differentiated oligopolies D. natural monopolies

D. natural monopolies

Firms within the same strategic group are ________________ competitors.

Direct

In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming?

It does not help us understand why there are performance differences among firms in the same strategic group.

What are the characteristics of a strategic activity system as it applies to firms? (Check all that apply.)

It is socially complex. It consists of interconnected activities. It is causally ambiguous.

Obstacles that determine how easily a firm can enter an industry, are called ______. A. entry barriers B. rivalry barriers C. threats of substitutes D. supplier barriers

A. entry barriers

Michael Porter developed the five forces model to help firms do which of the following? (Check all that apply.) A. gain and sustain a competitive advantage B. determine the profit potential of different industries C. understand the strengths and weaknesses of a firm's resources D. analyze PESTEL forces

A. gain and sustain a competitive advantage B. determine the profit potential of different industries

In the PESTEL model, political factors are those that relate to ______. A. government bodies B. banking organizations C. climate and weather D. employment

A. government bodies

What is the result of low barriers to entry in the airline industry?

New airlines join the market from time to time.

______ describes a process in which the options one faces in the current situation are limited by decisions made in the past.

Path dependence

______ are the firm's level of investments to maintain or build a resource.

Resource flows

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is known as ______.

an interest rate

What do the best firms in an industry seek to identify and manage on an ongoing basis as sources to respond to their external environment? (Check all that apply.)

core competencies capabilities resources

Core competencies of a business are generated by the interaction of ______.

resources and capabilities

An industry analysis provides which of the following? (Check all that apply.) A. insight into a firm's strategic position within an industry B. the stability of the firm's internal structure C. a rigorous way of identifying the industry's profit potential D. the level of profitability that can be expected for the average firm in the industry

A. insight into a firm's strategic position within an industry C. a rigorous way of identifying the industry's profit potential D. the level of profitability that can be expected for the average firm in the industry

Which of the following does the five forces model to help firms do?

determine the profit potential of different industries gain and sustain a competitive advantage