GM170 Ch 3

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of political rather than economic considerations?

A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing.

________ tends to be more fierce when exit barriers in the industry are high, resulting in some firms being locked into the industry.

Competitive rivalry

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.?

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?

GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

Which of the following is a feature of a fragmented industry?

It consists of many small firms.

Which of the following statements is true of an oligopoly?

It is often analyzed using game theory.

_________ are industry-specific factors that separate one strategic group from another.

Mobility barriers

Restrictions imposed by the government, such as export quotas on certain products, are a part of the ________ environment of the PESTEL framework.

Political

When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect?

Substitutes made it difficult for generating a profit potential in Spain's airline industry.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?

They can demand better terms from their suppliers.

How do complements affect a primary product or service?

They increase the demand for the primary product.

Which of the following firms most likely has the lowest bargaining power as a buyer?

a cell phone company that requires highly customized software for its phones

Generally speaking, which of these situations is likely to lead to greater profits?

an industry with fewer but larger competitors

What term is used to describe cooperation by competitors who want to achieve a strategic objective?

co-opetition

Strategic-group mapping establishes that

competitive rivalry is strongest between firms that are within the same strategic group.

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem.

complement

Which of these is a way to reconfigure a value chain?

entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups

A fragmented industry turns into a consolidated industry when

firms reduce competition within the industry through mergers and acquisitions.

MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to

forward integrate.

The relative bargaining power of suppliers is most likely low when

incumbent firms face low switching costs when changing suppliers.

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)

industry.

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n)

interest rate.

In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)

monopolistically competitive structure.

Owners of coffee plantations in the country of Cantonica grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Cantonica best illustrates a(n) ________ structure.

perfectly competitive

A consolidated industry turns into a fragmented industry when

restrictive government policies are introduced in the industry.