MGT 449 - CH 3

Shield Autos Inc. has newly launched a luxury car into the European market. Which of the following would most likely NOT be a complement to the car? 1) A premium car manufactured and sold by Mova Autos Inc., a rival company 2) A bank that insures cars against theft and accidents 3) A car service station managed and run by Shield Autos Inc. 4) A stereo system that can be used as a GPS system in cars

1) A premium car manufactured and sold by Mova Autos Inc., a rival company

Earlier, the travel industry was controlled by a few large travel companies that booked holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of the Internet, smaller travel agencies started mushrooming in the industry and customers started making their own reservations. Which of the following can be inferred from this information? 1) The travel industry changed from a consolidated structure to a fragmented one. 2) The pricing power of the incumbent firms in the travel industry has increased. 3) The bargaining power of buyers in the travel industry has decreased. 4) The structure of the travel industry changed from monopolistic competition to an oligopolistic one.

1) The travel industry changed from a consolidated structure to a fragmented one.

Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure? 1) Competing against each other through product differentiation 2) Competing against each other through price-cutting 3) Competing against each other through new-product introductions 4) Competing against each other through lifestyle advertisements

2) Competing against each other through price-cutting

Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? 1) Monopolistic competition 2) Oligopoly 3) Monopoly 4) Perfect competition

2) Oligopoly

Industry convergence is a process whereby: 1) firms within the same industry start to satisfy different customer needs. 2) formerly unrelated industries begin to satisfy the same customer need. 3) excess capacity within an industry is reduced through horizontal mergers. 4) firms within an industry start to target a narrow market segment

2) formerly unrelated industries begin to satisfy the same customer need.

Which of the following best illustrates a firm operating in a monopolistically competitive industry? 1) A foreign exchange company sells currencies of different countries at market prices as it cannot differentiate its products from its competitors'. 2) A chain of multiplex theaters, along with its competitor, owns 80 percent of the multiplex market share. 3) An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers. 4) A railway company owned by the government of New Darvland, owns 100 percent of the railway transport in the country

3) An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers.

In Galvania Republic, the federal government owns and manages all the nuclear power plants. This is because the business would not be profitable if there was more than one supplier in the nuclear power industry. Which of the following industry competitive structures does the scenario best illustrate? 1) Monopolistic competition 2) Oligopoly 3) Natural monopoly 4) Perfect competition

3) Natural monopoly

A key feature of an oligopoly is that the competing firms _____. 1) are independent 2) have no pricing power 3) are interdependent 4) have no barriers to entry

3) are interdependent

A company is best described as a _____ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service. 1) competitor 2) shareholder 3) complementor 4) strategic equivalent

3) complementor

A fragmented industry is made into a consolidated industry through: 1) governmental deregulation. 2) globalization. 3) technological innovation and new legislation. 4) horizontal mergers and acquisitions

4) horizontal mergers and acquisitions.