CONNECT CHAPTER 3 BCOR 460

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

- Customer service - Market segments - Research and development - Distribution channels

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

There is a(n) ______ relationship between competitive intensity and the power of the five forces

strong

The _______ the forces, the _______ the expecting competitive intensity, which in turn limits the industry's profit potential

stronger; stronger

Buyers demand higher quality and more service

substitutes

A company is a complementor to your company if ______

Customers value your product more when they can use it with the other company's product

Sociocultural factors are constantly in flux and also differ across groups

true

Governments sometimes set up a natural monopoly when a venture _____

would not otherwise not be profitable

In the five forces model, threat of entry refers to the risk ______

Of potential competitors entering the industry

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

economic growth rate

Cost advantages that accrue for firms with larger outputs because they can spread fixed costs over more units and can employ technology more efficiently are called _______

economies of scale

Obstacles that determine how easily a firm can enter an industry are called

entry barriers

Although _______ coordination, such as a price fixing, is illegal in the US, ______ coordination such as an "unspoken understanding" is not

explicit; tacit

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _______

intensity of rivalry

The relationship between the natural environment and business organizations can best be described as

interdependent

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

low; many

The economic recession that began in 2008 in the US was the result of unwise investment in ______

real estate

The intensity with which companies in an industry jockey for market share and profitability is known as ________

rivalry

Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment

economic

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

government bodies

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

scale

The risk that potential competitors will enter the industry is known as the _______

threat of entry

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 be supplied otherwise

natural monopolies

What term describes the positive effect that one user of a product or service has on the value of that product or service for other users

network effect

Which of the following innovative ideas helped Airbnb develop a successful business in the peer to peer rental space

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

Micheal Porter developed the five forces model to help firms do which of the following

- Gain and sustain a competitive advantage - Determine the profit potential of different industries

Which of the following are important sources of entry barriers

- Government policy - Credible threat of retaliation - Capital requirements - Network effects - Economies of scale

Which of the following help determine competitive industry structure

- Height of entry barriers - Firms' degree of pricing power - Size and number of competitors

Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully

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

Which of the following are important factors in determining the intensity of rivalry among existing competitors

- Industry growth - Competitive industry structure - Exit barriers

Which of the following contribute to consumer buyer power

- Low switching costs - Real time, accurate price comparisons

Which of the following are characteristics of a monopolistically competitive industry

- Obstacles to entry - A differentiated product - The ability to raise prices for differentiated products

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

- Reconfiguring value chains - Leverage existing assets - Establishing a niche

Which of the following are ways in which the power of buyers affects producers

- Requesting more service - Demanding higher quality - Obtaining price discounts

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

- Strategic group composition - The structure of their industry

An industry analysis provides which of the following?

- The level of profitability that can be expected for the average firm in the industry - A rigorous way of identifying the industry's profit potential - Insight into a firm's strategic position within an industry

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, a quite profitable

The pressure of rivalry increases when which of the following forces increase in intensity

- The power of buyers and suppliers - Threat of substitutes - Threat of entry

Which of the following are examples of sociocultural factors

- growth of the hispanic population - increased number of health conscious consumers

Production costs can increase when

Buyers demand higher quality and more service

When a firm in an oligopoly cuts prices, _______

a price war is likely to result

In a perfectly competitive industry firms have difficulty ______

achieving competitive advantage

The perfect competitive industry, firms have difficulty _________

achieving competitive advantage

A group of companies that deal with more or less the same set of suppliers and buyers make up _____

an industry

The most rigorous means of investigating the profit potential within a specific industry is to conduct _______

an industry analysis

A key feature of an oligopoly is that the competing firms in the industry ________, meaning the actions of any one firm will influence the behavior of the other firms

are interdependent

The pressures that industry suppliers can exert on an industry's profit potential, is also called the _______

bargaining power of suppliers

A rise in economic growth is reflected by ______

businesses expanding operations to satisfy demand

The power of _______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality

buyers

The ________ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers

threat of substitutes

Although the five forces model is useful in understanding an industry's profit potential, it provides only a ______

point in time snapshot of a moving target

Which factors result from the processes and actions of government bodies that influence the decisions and behavior of firms

political

In an oligopoly, which of the following conditions exist

- High barriers to entry - A few large firms - Differentiated products

Which of the following statements about industry dynamics is true

- the five forces model is a static model - over time, industry structures are not stable

Which of the following are examples of economic factors in the firm's general environment?

-growth rates -price stability -interest rates

Which of the following are factors in a firm's legal environment?

-mandates -laws -regulations

Which of the following are ways that powerful suppliers are a threat to firms

-they can force the cost of production to increase -they can reduce the industry's profit potential

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

A function of five forces related to competition

Which of the following statements about Airbnb is correct

It handles for accommodations than the three biggest hotel chains combined

What is true about the external forces called technological factors?

They capture the application of knowledge to create new process and products

Many drivers find a GPS navigation system useful. Because installing a GPS system in an automobile adds value to the vehicle, the system functions as

a complement

Which of the following statements is likely to be true about a fragmented industry

it consists of small firms

Which of the following reduces profit margins for air carriers

large corporate customers contracting with the US airline industry - the presence of monopoly power

Which of the following is an example of a recent innovation in processing technology?

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

legal

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

mitigate threats and leverage opportunities

Industry specific factors known as ______ separate one strategic group from another

mobility barriers

Firms have a tendency to change the industry structure in their favor, making it more _______ through horizontal mergers and acquisitions, since this tends to be more profitable than a fragmented one

consolidated

In the early 2000s, easy credit made real estate the investment of choice in the US. by the end of the decade, however, a recession had set in, impacting almost all businesses in the country. What does this example show?

economic boom periods can overhead and lead to speculative bubbles

The online auction site eBay has more than 100 million active users, so buyers are more likely to find what they are looking for while sellers are more likely find buyers for the items they are offering. What is this an example of

network effects

When firms compete by offering unique product features rather than competing on price, ______ occurs

non price competition