MGMT 481: Ch. 3

scale

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

a. technological and sociocultural

Using the PESTEL framework, which factors were the most powerful in influencing the failure of BlackBerry? a. technological and sociocultural b. political and sociocultural c. sociocultural and economic d. political and ecological e. legal and technological

b. identifying the most important strategic dimensions c. choosing two key dimensions for the horizontal and vertical axes d. graphing the firms in the strategic group and indicating each firm's market share

What are the three aspects of mapping strategic groups? a. calculating the shareholder value of the two firms selected b. identifying the most important strategic dimensions c. choosing two key dimensions for the horizontal and vertical axes d. graphing the firms in the strategic group and indicating each firm's market share

c. oligopoly

Which best describes the competitive industry structure in which BlackBerry found itself? a. monopoly b. monopolistic competition c. oligopoly d. perfect competition e. natural monopoly

e. threat of new entrants

Which of Porter's five forces was likely the most powerful factor influencing the failure of BlackBerry? a. threat of buyers b. threat of suppliers c. threat of substitute products or services d. rivalry among existing competitors e. threat of new entrants

a. strategic group composition b. the structure of their industry

Managers are able to influence which of the following types of external forces? (Check all that apply.) a. strategic group composition b. the structure of their industry c. interest rates d. currency exchange rates

d. a complement

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. mobility barrier b. loss leader c. co-opetition d. a complement

1. PESTEL Analysis 2. Porter's Five Forces 3. Strategic Group Mapping

Place the three frameworks used in industry analysis in the order they should be used, with the first at the top.

a. largely macroeconomic

The economic factors that affect a firm's external environment are ______. a. largely macroeconomic b. usually regional c. primarily ecological d. often unidentifiable

d. real estate

The economic recession that began in 2008 in the United States was the result of unwise investment in ______. a. the online economy b. stocks c. commodities d. real estate

b. stronger; weaker

The expected competitive intensity is stronger when the other four forces are ______, and weaker when the other four forces are ______. a. weaker; weaker b. stronger; weaker c. stronger; stronger d. weaker; stronger

d. sociocultural

The impact of baby boomers getting older on an industry would be classified in which PESTEL factor? a. legal b. technological c. economic d. sociocultural e. political

b. interdependent

The relationship between the natural environment and business organizations can best be described as ______. a. unconnected b. interdependent c. insignificant d. a U-shape

e. threat of entry

The risk that potential competitors will enter the industry is known as the ______. a. power of buyers b. power of suppliers c. rivalry among existing competitors d. threat of substitutes e. threat of entry

d. substitutes

The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel. a. buyers b. entry c. suppliers d. substitutes

b. non-price competition

When firms compete by offering unique product features rather than competing on price, ______ occurs. a. strategic intent b. non-price competition c. competitor allegiance d. an oligopoly

b. complement

A ______ is a product or service that adds value to the original product offering. a. co-opetitive potential b. complement c. strategic intent d. significant reduction

c. near monopoly

A ______ occurs when a firm has accrued significant market power and is changing the industry structure in its favor. a. natural monopoly b. accrued liable monopoly c. near monopoly d. strategic emergent monopoly

b. slow or negative

Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with ______ growth. a. exponential b. slow or negative c. fast and positive d. stable

False

T/F: Sociocultural factors tend to be fixed.

c. economic growth rate

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. economic growth rate d. currency exchange rate

d. threat of substitutes

The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers. a. power of buyers b. rivalry of existing competitors c. threat of new entrants d. threat of substitutes

a. businesses expanding operations to satisfy demand

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

a. market segments b. research and development c. customer service d. distribution channels

Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.) a. market segments b. research and development c. customer service d. distribution channels e. profit motive

d. explicit; tacit

Although ______ coordination, such as price fixing, is illegal in the United States, ______ coordination such as "an unspoken understanding" is not. a. tacit; perfect b. perfect; explicit c. tacit; monopolistic d. explicit; tacit

b. lean manufacturing

An example of a recent innovation in process technology is ______. a. the smartphone b. lean manufacturing c. the microwave d. the BP oil spill

a. economies of scale

Cost advantages that accrue for firms with larger output because they can spread fixed costs over more units and can employ technology more efficiently are called ______. a. economies of scale b. economies of scope c. size economies d. output advantages

d. emerging opportunities and threats within an industry

Effective use of the PESTEL framework can help us identify: a. only a few effective trends b. how a trend is changing buyer behavior in an industry c. emerging substitute products d. emerging opportunities and threats within an industry e. new competitors

a. intensity of rivalry

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________. a. intensity of rivalry b. switching costs c. development of new products d. industry growth

c. intensity of rivalry

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________. a. switching costs b. industry growth c. intensity of rivalry d. development of new products

c. product differentiation

Firms are able to create a near monopoly by maximizing ______. a. prices and costs b. their advertising revenue c. product differentiation d. competition

a. consolidated

Firms have a tendency to change the industry structure in their favor, for example by making industries more __ through mergers and acquisitions. a. consolidated b. competitive c. intuitive d. diffuse

d. an ecological

Global warming would be an example of ______ factor in a firm's external environment. a. a sociocultural b. a political c. a technological d. an ecological

c. would otherwise not be profitable

Governments sometimes set up a natural monopoly when a venture ______. a. is in the exclusive interest of private wealth creation b. could otherwise draw in a large number of rival firms c. would otherwise not be profitable d. is not wanted by the public

c. New airlines join the market from time to time.

What is the result of low barriers to entry in the airline industry? a. New airlines are unheard of. b. New airlines are really subsidiaries of incumbent airlines. c. New airlines join the market from time to time. d. New airlines are only allowed by government mandate.

a. Airlines' profit margins are reduced.

What is the result of the airline industry having powerful buyers? a. Airlines' profit margins are reduced. b. It is difficult for new airlines to enter the industry. c. The potential for airline profit is high. d. Airlines have increased negotiating power.

b. switching costs

f a business considers changing vendors, but doing so would require that business to alter product specifications, retrain employees, and/or modify existing processes, we would say the business faces significant ______. a. switching gains b. switching costs c. start-up costs d. vendor-changing costs

c. bargaining power of suppliers

The pressures that industry suppliers can exert on an industry's profit potential, is also called the ______. a. bargaining power of buyers b. threat of new entry c. bargaining power of suppliers d. rivalry amongst existing competitors

a. achieving competitive advantage

In a perfectly competitive industry, firms have difficulty ______. a. achieving competitive advantage b. keeping prices low c. making purchasing decisions d. avoiding profitability

c. mobility barrier

In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines. a. exit barrier b. strategic commitment c. mobility barrier d. supplier power

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

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. economic boom periods can overheat and lead to speculative bubbles b. people did not overvalue housing prices c. during economic boom periods, investors stay cautious and conservative d. the market was characterized by rational exuberance

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

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

c. a function of five forces related to competition

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

c. network effects

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 to find buyers for the items they are offering. This is an example of __. a. buyer-meets-seller effects b. competition effects c. network effects d. online effects

d. network effect

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. mass effect b. multiplicity effect c. user effect d. network effect

c. are interdependent

A key feature of an oligopoly is that the competing firms in the industry ______, meaning the actions of any one firm will influence the behaviors of the other firms. a. are price takers b. engage in monopolistic behavior c. are interdependent d. engage in co-opetition

a. low

In a period of economic boom, unemployment is ______, and human resources become expensive. a. low b. fluctuating c. high d. variable

c. buyers

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. a. existing competitors b. supplier c. buyers d. new entrants

a. strong

There is a(n) ______ relationship between competitive intensity and the power of the five forces. a. strong b. inverted c. negative d. disconnected

a. co-opetition

What term is used to describe cooperation by competitors who want to achieve a strategic objective? a. co-opetition b. strategic competition c. complementary assets d. strategic commitment

a. Incumbent firms spend more to satisfy customers. d. Industry profit potential declines. e. Incumbent firms lower prices.

When a new firm enters an industry, which of the following often occur? (Check all that apply.) a. Incumbent firms spend more to satisfy customers. b. Incumbent firms increase their market share. c. Incumbent firms raise prices. d. Industry profit potential declines. e. Incumbent firms lower prices.

d. switching costs

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. network effects b. bargaining power c. economies of scale d. switching costs

a. laws c. regulations e. mandates

Which of the following are factors in a firm's legal environment? (Check all that apply.) a. laws b. demographic trends c. regulations d. innovative technology e. mandates

a. exit barriers b. industry growth c. competitive industry structure

Which of the following are important factors in determining the intensity of rivalry among existing competitors? (Check all that apply.) a. exit barriers b. industry growth c. competitive industry structure d. entry barriers e. short-term contracts

d. entry barriers

Obstacles that determine how easily a firm can enter an industry, are called ______. a. supplier barriers b. rivalry barriers c. threats of substitutes d. entry barriers

c. an industry analysis

The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______. a. an industry PET scan b. a PESTEL analysis c. an industry analysis d. a market analysis

c. low switching costs d. real time, accurate price comparisons

Which of the following contribute to consumer buying power? a. high levels of product differentiation b. moderately high barriers to entry c. low switching costs d. real time, accurate price comparisons

a. firms' degree of pricing power c. height of entry barriers d. size and number of competitors

Which of the following help determine competitive industry structure? (Check all that apply.) a. firms' degree of pricing power b. composition of the board of directors c. height of entry barriers d. size and number of competitors e. the firm's resources

b. firms reduce the competition within the industry through mergers and acquisitions

A fragmented industry turns into a consolidated industry when: a. there are no restrictive government policies introduced in the industry b. firms reduce the competition within the industry through mergers and acquisitions c. the barriers to enter the industry are reduced d. the products/services are seen as commodities

c. an industry

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

d. low; many

A perfectly competitive industry has ______ entry barriers and ______ small firms. a. low; few b. high; few c. high; many d. low; many

strategic

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

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

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

d. natural monopolies

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. task environment

BlackBerry's response to the introduction of the iPhone was described in the case. The threat of the iPhone came from which environment? a. social environment b. political environment c. general environment d. task environment e. legal environment

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

In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming? a. It does not account for the threat of new entrants or proposed governmental legislation. b. It does not refer to the international nature of the PESTEL factors. c. It does not help us understand why there are performance differences among firms in the same strategic group.

a. a few large firms c. differentiated products d. high barriers to entry

In an oligopoly, which of the following conditions exist? (Check the three that apply.) a. a few large firms b. few commodity products c. differentiated products d. high barriers to entry

d. government bodies

In the PESTEL model, political factors are those that relate to ______. a. climate and weather b. employment c. banking organizations d. government bodies

b. mobility barriers

Industry-specific factors known as ______ separate one strategic group from another. a. planned emergencies b. mobility barriers c. competitive rivalries d. oligopolies

d. downturn; fall

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

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

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

b. changes in disposable income per capita

The kinds of factors that might be reviewed when considering the 'Economic' aspect of the PESTEL include: a. judicial outcomes that impact product liability within an industry b. changes in disposable income per capita c. changes in the average age of different consumer groups d. changes in the speed of internet communication capabilities e. the election of a conservative congress

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

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

a. limits to the industry's profit potential

Which of the following tend to result from strong competitive rivalry? a. limits to the industry's profit potential b. industry-wide price increases c. a reduction in the threat of substitutes d. less product differentiation

b. They are relatively low.

Which statement best describes entry barriers in the airline industry? a. They are generally insurmountable. b. They are relatively low. c. They are nonexistent. d. They are relatively high.

d. Political

______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms. a. Economic b. Profitable c. Technological d. Political

b. Over time, industry structures are not stable. d. The five forces model is a static model.

Which of the following statements about industry dynamics is true? a. Firms in an industry have a tendency to fragment in order to increase profitability. b. Over time, industry structures are not stable. c. The five forces model takes into account industry dynamics. d. The five forces model is a static model.

b. large corporate customers with extensive service requirements

According to the video, which of the following is an example of a buyer who will be able to successfully negotiate for lower prices? a. large corporate customer who can increase industry profitability b. large corporate customers with extensive service requirements c. individual consumers with strong brand preference d. individual consumers who buy install quantities

a. diving instead of flying between two nearby cities

According to the video, which of the following is an example of a threat of substitute product or service? a. diving instead of flying between two nearby cities b. using social media instead of newspaper advertisements for marketing c. buying instead of renting airplanes and gate space at airports d. using artificial sweeteners instead of corn syrup in soft drinks

c. it is intense in the airline industry due to high information transparence and low marginal costs

According to the video, which of the following is true of price-based competition? a. it is intense in the soft drink industry because price is the main competitive factor b. it is intense in the airline industry because it is confusing for customers to compare flight ticket prices using internet travel websites c. it is intense in the airline industry due to high information transparence and low marginal costs d. it is intense in the soft drink industry due to low brand preference among consumers

d. monopolistic competition

Many firms of all sizes actively compete in the computer hardware industry, and there are no firms with a large market share. Product offerings tend to be similar but are differentiated in ways that enable some firms to raise or impact pricing. The computer hardware industry is an example of ______. a. perfectly competitive industry b. natural monopoly c. oligopolistic industry d. monopolistic competition

a. Who are the players? c. What type of entry should be made? d. When to enter? e. How to enter?

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.) a. Who are the players? b. Why is it important to study the external environment? c. What type of entry should be made? d. When to enter? e. How to enter?

a. price stability c. growth rates e. interest rates

Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.) a. price stability b. technological advancements c. growth rates d. government regulations e. interest rates

b. the growth of the Hispanic population c. an increased demand by consumers for gluten-free products d. the widespread adoption of smart phones

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

a. investments from firms drop off b. most or all value is transferred to customers c. firms struggle to make profits

Which of the following are likely outcomes of a competitive rivalry based entirely on price cutting? (Check all that apply.) a. investments from firms drop off b. most or all value is transferred to customers c. firms struggle to make profits d. product offerings improve

c. powerful

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______. a. desperate for business b. evil c. powerful d. weak

b. Leverage existing assets c. Reconfiguring value chains d. Establishing a niche

Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry? a. Timing of the entry b. Leverage existing assets c. Reconfiguring value chains d. Establishing a niche

a. the power of buyers and suppliers c. the threat of entry c. the threat of substitutes

The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.) a. the power of buyers and suppliers b. the barriers to entry c. the threat of entry c. the threat of substitutes

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

What conclusions can be reached about the airline industry using the five forces framework? a. The supporting players, such as airports and aircraft suppliers, are quite profitable. b. The overall profitability of the airline industry is exceptionally low. c. Customers derive only very limited benefits from the existence of the airline industry. d. The mega-airlines must constantly struggle to achieve consistent profitability.

a. mitigate threats and leverage opportunities

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

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

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? a. substitutes were not readily available because customers cannot use other means of transport b. substitutes made it difficult for generating a profit potential in Spain's airline industry. c. the combination of the competitive forces leads to collusion among existing airlines d. entry barriers in Spain's airline industry are relatively because of the high costs involved

a. a differentiated product b. obstacles to entry c. the ability to raise prices for differentiated products

Which of the following are characteristics of a monopolistically competitive industry? (Check all that apply.) a. a differentiated product b. obstacles to entry c. the ability to raise prices for differentiated products d. very few competing firms

a. Firms in the industry sell a commodity product. b. Individual firms have little or no ability to raise prices. c. The industry is fragmented.

Which of the following are characteristics of a perfectly competitive industry? (Check all that apply.) a. Firms in the industry sell a commodity product. b. Individual firms have little or no ability to raise prices. c. The industry is fragmented. d. Consumers make purchasing decisions based on product features.

b. The companies differ in important dimensions from companies in other strategic groups. c. The companies pursue similar strategies. d. The companies form part of a specific industry.

Which of the following are characteristics of the companies in a strategic group? (Check all that apply.) a. The companies do not seek a competitive advantage. b. The companies differ in important dimensions from companies in other strategic groups. c. The companies pursue similar strategies. d. The companies form part of a specific industry.

b. government policy c. economies of scale d. credible threat of retaliation e. network effects f. capital requirements

Which of the following are important sources of entry barriers? (Check all that apply.) a. low product differentiation b. government policy c. economies of scale d. credible threat of retaliation e. network effects f. capital requirements

a. expenditures on research and development b. cost structure d. product and service offerings

Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.) a. expenditures on research and development b. cost structure c. expenditures on advertising and HR d. product and service offerings

b. oligopoly d. monopolistic competition e. perfect competition f. monopoly

Which of the following are the four main competitive industry structures? (Check all that apply.) a. monopolistic oligopoly b. oligopoly c. perfect monopoly d. monopolistic competition e. perfect competition f. monopoly

a. by obtaining price discounts c. by requesting more service d. by demanding higher quality

Which of the following are ways in which the power of buyers affects producers? (Check all that apply.) a. by obtaining price discounts b. by reducing economies of scale c. by requesting more service d. by demanding higher quality

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

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

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

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