MGMT 489 Chap 3

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

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

interdependent

The economic factors that affect a firm's external environment are ______.

largely macroeconomic

Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business.

legal

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

In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

mobility barrier

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

mobility barriers

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

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

strategic

The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.

substitutes

Which of the following are the four main competitive industry structures? (Check all that apply.)

-perfect competition -monopoly -monopolistic competition -oligopoly

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

Political

The external forces called technological factors ______.

capture the application of knowledge to create new process and products

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

rivalry

Which of the following statements about Airbnb is correct?

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

Which of the following statements about industry dynamics is true?

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

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.)

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

According to Porter's model, which of the following should be considered when analyzing a firm's competition? (Check all that apply.)

-buyers -the threat of substitutes -suppliers

Which of the following are ways in which the power of buyers affects producers? (Check all that apply.)

-by requesting more service -by obtaining price discounts -by demanding higher quality

Michael Porter developed the five forces model to help firms do which of the following? (Check all that apply.)

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

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

-growth rates -price stability -interest rates

Which of the following contribute to consumer buying power?

-low switching costs -real time, accurate price comparisons

Which of the following are factors in a firm's legal environment? (Check all that apply.)

-mandates -laws -regulations

Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space?

-presenting a well-designed website -fortuitous timing that led to growing demand -developing a smooth transaction between hosts and guests

Which of the following help determine competitive industry structure? (Check all that apply.)

-size and number of competitors -height of entry barriers -firms' degree of pricing power

The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.)

-the power of buyers and suppliers -the threat of entry -the threat of substitutes

Which of the following are examples of sociocultural factors? (Check all that apply.)

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

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

1) PESTAL Analysis 2) Porter's five forces 3) Strategic group mapping

The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______.

an industry analysis

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

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

Which of the following are characteristics of a perfectly competitive industry? (Check all that apply.)

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

When a new firm enters an industry, which of the following often occur? (Check all that apply.)

-Industry profit potential declines. -Incumbent firms lower prices. -Incumbent firms spend more to satisfy customers.

What are the three aspects of mapping strategic groups?

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

What is the result of the airline industry having powerful buyers?

Airlines' profit margins are reduced.

True or false: Sociocultural factors tend to be fixed.

False

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

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

a function of five forces related to competition

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

threat of entry

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

Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.)

-research and development -distribution channels -customer service -market segments

In a perfectly competitive industry, firms have difficulty ______.

achieving competitive advantage

Global warming would be an example of ______ factor in a firm's external environment.

an ecological

Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.)

-product and service offerings -expenditures on research and development -cost structure

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.

powerful

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

It consists of small firms.

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.

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

an industry

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

bargaining power of suppliers

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

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

consolidated

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

government bodies

An example of a recent innovation in process technology is ______.

lean manufacturing

Which of the following tend to result from strong competitive rivalry?

limits to the industry's profit potential

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

mitigate threats and leverage opportunities