Quiz 1

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All of the following are considered an external stakeholder within a firm except which of the following?

A. Alliance partners B. Governments C. Employees D. Creditors Employees are an internal, NOT an external, stakeholder.

The objective of Porter's five forces model is to:

A. Assess firm profitability. B. Assess the potential for profits within an industry. C. Emphasize the intensity of rivalry within an industry. D. Analyze the economic conditions of the industry. Applying the five forces analysis to an industry helps to determine competitive intensity and attractiveness of an industry, which reflects profit potential.

Which of the following is NOT a major consideration of barriers to entry?

A. Capital requirements B. Brand identity C. Positive growth rate D. Economies of scale Positive growth rates in an industry attract entrants, so it is not an entry barrier.

Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness?

A. It decreases. B. It increases. C. It becomes a complement. D. It has no impact. High exit barriers cause firms to stay in the industry longer than they may want to and increases rivalry, thereby reducing potential profits.

Strategy is primarily about ____________.

A. Maximizing firm profits B. Deriving operation effectiveness C. Creating superior value D. Competitive benchmarking A strategy must create superior value to drive competitive advantage for the firm.

6. Which of the main industry groups in the SCP model is described as having a few large firms, differentiated products, and high entry barriers?

A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition An oligopoly has a few large firms, differentiated products, and high entry barriers.

Competitive intensity will increase when all of the following happen EXCEPT:

A. Proprietary technology is a core capability. B. Rivals are similar in size and capability. C. Buyers switching costs are low. D. Exit barriers are high. Proprietary technology protects firms from rivalry.

An ideal competitive environment from a profit-making standpoint is when:

A. Rivalry is moderate, and high entry barriers and good substitutes do not exist. B. Rivalry is high, entry barriers are low, and there are many substitutes. C. Rivalry is high, buyers and sellers have strong bargaining power, and entry barriers are low. D. Rivalry is moderate, entry and exit barriers are low, and there are many substitutes. Profitability is weakened when barriers to exit and entry are low, buyers and sellers have strong bargaining power, and there exist many substitutes.

Suppliers are powerful when which of the following happens?

A. Satisfactory substitutes are available. B. They sell a commodity. C. They offer a credible threat of forward integration. D. They are part of a highly fragmented industry. A credible threat of forward integration increases supplier power.

Which of the following is NOT one of Porter's five forces?

A. Substitutes B. Suppliers C. Complements D. Buyers Complements is added as a sixth force for industry attractiveness, but Porter's model does not include it.

Any unplanned strategic initiative undertaken by mid-level employees of their own volition is a(n) ________________.

A. dominant strategic plan B. developing strategy C. emergent strategy D. contingent strategy Emergent strategy starts at the middle- and lower-levels of an organization.

A firm's six PESTEL environmental forces include ______________.

A. political, trade secrets, legal, and technological B. product, environmental, political, and technological C. political, economic, legal, and technological D. environmental, product, ecological, and technological The six PESTEL forces are political, economic, sociocultural, technological, ecological, and legal.

A firm can use its knowledge of the five forces to strengthen its competitive position through ___________.

A. product differentiation B. leveraging complements C. backward integrating to reduce supplier power D. All of these Firms that are able to differentiate a product have a degree of pricing power, complements add value to a product and backward integrating removes supplier power.

Generally, perfectly competitive industries such as paper and steel (commodities) are deemed to be ________ in profits to more differentiated industries like pharmaceuticals and cosmetics.

A. superior B. inferior C. similar D. indeterminate Perfectly competitive industries are inferior in profit-making ability because their capacity to differentiate a product offering is limited and consumers base their purchasing decisions solely on price.

Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.

A. sustainable competitive advantage B. increased power distance C. diseconomies of scope D. competitive disadvantage If a firm underperforms relative to its rivals or the industry average, it has a competitive disadvantage.


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