STR: 581: Ch 3: Evaluating a Company's External Environment
The total dollar investment needed to enter a market successfully is known as the ________ requirement.
capital
The "L" in PESTEL analysis stands for ____
legal/regulatory conditions
When analyzing industry dynamics, before taking action to prepare for industry and competitive changes, companies must first diagnose _____.
the forces driving industry change
In the retail industry, competition between _____ is more intense than the rivalry among _____.
Walmart and target; high0end fashion retailers
Understanding the ______ of driving forces requires looking at the effects of each factor separately.
collective impact
The final step in evaluating an industry and competitive environment is to _____.
combine the results of each analytic framework to determine its prospects
Suppliers of ____ are in a weak bargaining position because there is no reason to choose the product of one supplier over that of another except for price.
commodities
Increasing consumer demand, low cost foreign inputs, and reduced trade barriers all contribute to the increasing _____ of economic markets.
globalization
Regulatory actions taken by _____ have recently affected the banking industry and the health care industry.
governments
Supplier power is greatest when demand for their products is _____ and the products are _____.
high; in short supply
How do product innovations affect the pattern of competition within an industry?
more first time buyers become interested in the products
The existence of complementors shows that a company's success in the marketplace _______ other industry participants.
need not come at the expense of
Buyers bargaining power is reduced when ____
product information is incomplete
Which indicators of a rival's potential strategic moves are found in the SOAR framework fro competitor analysis?
resources and capabilities
Which indicators of a rival's potential strategic moves are found in the SOAR framework from competitor analysis?
resources and capabilities
Industry members with similar competitive approaches and positions in the market are known as a(n) _______.
strategic
industry members with similar competitive approaches and positions in the market are known as a(n) _____ group.
strategic
Rivalry among industry members will be high when ____.
there is excess supply in the market
Rivalry among industry members will be high when _______.
there is excess supply in the market
When evaluating strategy options, companies must determine whether a competitive ____ exists where competitors are able to create and capture new demand.
white space
Which of the following would likely have the greatest bargaining power over the sellers who supply them?
Best Buy Stores
The SOAR framework for competitor analysis was developed by ______.
Michael Porter
What acronym serves as a reminder of the components of a company's macro-environment?
PESTEL
Using the SOAR framework for competitor analysis, match the elements on the left with their descriptions on the right.
Strategy: how the rival company is competing currently Objectives: the rival's strategic and performance goals Assumptions: what the rival believes about itself and the industry Resources and capabilities: the rival's key strengths and weaknesses
True or false: All buyers of a product generally have equal bargaining power with sellers.
false
Minimum wage legislation tends to affect _____ industries more than others.
labor-intensive
Buyer's bargaining power is reduced when _____
product information is incomplete
New brands typically "buy" their way into a wholesale or retail investment network ____
1. by giving dealers large promotional allowances 2. by cutting their prices
Which of the following are strategically relevant macro-environment factors affecting cigarette producers?
1. cultural stigma 2. cigarette taxes 3. antismoking ordinances
Which fo the following are outlines in the five forces model of competition?
1. customer bargaining power 2. competition from rival sellers 3. supplier bargaining power
Which of the following tend to reduce competitive activity among sellers?
1. fear of retaliation 2. when there are few competitors in a market
To develop a sound business strategy to combat competitive conditions, companies must _____.
1. gauge the strength of the five competitive forces 2. identify competitive pressures
Which of the following factors would lead to higher entry barriers for new industry entrants?
1. high capital requirements 2. restrictive trade policies
What are some of the most important factors for determining a company's prospects for competitive success and attractive profits?
1. how well the company's strategy delivers on the industry key success factors 2. whether the company occupies a stronger market position than rivals
List the three steps of driving-forces analysis in order, from the first step to the last.
1. identify what the driving forces are 2. assess whether the driving forces are acting to make an industry more or less attractive 3. determine what strategy changes are needed to prepare for the effects of the driving forces
When devising long-term strategies, companies in the restaurant industries must pay special attention to changes in ____.
1. lifestyles 2. eating habits 3. leisure time preferences
Which of the following are examples of trade restrictions?
1. local content requirements 2. antidumping rules 3. tariffs
Over time, falling levels of risk tend to stimulate ______ on the part of growth minded companies that seek new opportunities.
1. new entry 2. capital investments
Examples of substitute products that lead to competitive pressure between industries include ______
1. newspapers and cable news 2. sugar and sweet n low
What variables are typically included in a strategic group map?
1. product line breadth 2. price/quality range 3. degree of vertical integration
Which of the following are ways by which rival sellers try to differentiate their products from those of competitors?
1. providing improved customer service 2. building higher performance products
Which of the following are examples of regulated industries that require government controlled entry?
1. railroads 2. telecommunications 3. liquor retailing
The competitive pressure created by the presence of substitute products increases when the substitutes are ____.
1. readily available and attractively prices 2. seen as comparable in terms of quality and performance
Which of the following are types of marketing tactics?
1. rebates 2. sales promotions
What forces drive change within an industry?
1. shifts in who buys products 2. product innovation 3. technological advancement
Which of the following components form part of a company's macro-environment?
1. sociocultural forces 2. legal/regulatory conditions 3. political factors
Which of the following concepts are analytic tools for assessing a company's industry and competitive environment?
1. strategic group mapping 2. driving forces 3. the value net
Which of the following are factors that affect the intensity of rivalry among competing sellers within an industry?
1. substitutes 2. suppliers 3. new entrants
Which of the following are examples of key success factors?
1. superior firm branding capabilities 2. strong network of wholesale distributors 3. superior product differentiation
Which of the following are true of ideal competitive environment for earning profit?
1. suppliers are in weak bargaining positions 2. rivalry among present sellers is muted
Which of the following concepts are analytic tools for assessing a company's industry and competitive environment?
1. the five forces framework 2. competitor analysis
What factors determine how serious the threat of entry is for a particular market?
1. the likelihood that existing firms will retaliate against new entrants 2. the effect of barriers to entry
In the past, Microsoft has used its dominant market status in which of the following ways?
1. to pressure PC makers to load only Microsoft products 2. to charge PC makers premium prices
Which conditions increase rivalry among competing sellers?
1. when buyer demand is growing slowly 2. when the cost of switching brands is low
Which circumstances would increase the bargaining power of buyers?
1. when the cost for buyers to switch brands is low 2. when buyers are comparatively large and few
The threat of _____ increases competitive pressure on incumbent firms.
a new entrant in an industry
When the overall effect of the five competitive forces is moderate to weak, an industry is ______.
attractive
The two variables selected as ______ in a strategic group map should not be highly correlated.
axes
The suppliers of any given industry must have sufficient ________ power in order to influence the terms of supply in their favor.
bargaining
Big apparel retailers like Target and L.L. Bean wield significant ______ when they are buying products from manufacturers.
bargaining power
Longer life expectations and more wealth in the hands of retirees are examples of shifts in ____.
buyer demographics
The ability of sellers to raise prices without losing sales is restricted by ___
buyer price sensitivity
The ability of sellers to raise prices without losing sales is restricted by _____.
buyer price sensitivity
Suppliers of _____ are in a weak bargaining position because there is no reason to choose the product of one supplier over that of another except for price.
commodities
Buyers with strong bargaining power can exert strong ______ pressures and reduce industry profitability by demanding price concessions and additional features
competitive
Buyers with strong bargaining power can exert strong ______ pressures and reduce industry profitability by demanding price concessions and additional features.
competitive
When all five types of competitive forces are exerting strong pressure on an industry, the industry is said to be ____.
competitively unattractive
Companies that make products that enhance the value of a focal firm's products when those products are used together are called ______.
complementors
When the supplier industry is more highly _____ than the industry it sells to, it is generally able to deny requests for lower prices.
concentrated
Value net analysis can help managers improve their position through _____ as well as competitive interactions.
cooperative
If it become more costly for a buyer to switch brands, then rivalry between competitors will ______
decrease
Consumers have the option to delay the purchase of ____- goods as hot tubs and home entertainment centers.
discretionary
Consumers have the option to delay the purchase of _____ goods such as hot tubs and home entertainment centers.
discretionary
The change agents with the biggest influences in reshaping an industry landscape are known as _______ forces.
driving
When undertaking the third step in a strategic analysis of industry dynamics, managers must decide what strategy adjustments are needed to deal with the effects of ___.
driving forces
True or false: Strategically relevant factors typically exist only within a company's industry boundaries
false
True or false: in a given industry, all the driving forces push change in the same direction but by different amounts.
false
To match a business strategy to prevailing competitive conditions, companies must initiate actions that alter the underlying factors driving the ____.
five competitive forces
The most powerful tool for diagnosing the principal competitive pressure in a market is known as the ____.
five forces model of competition
If products offered by competing companies are _____, it will be easier for rivals to convince buyers to switch.
identical
The scarcity of substitute inputs ______ the bargaining power of suppliers by increasing the ______ of the industry members.
increases; dependence
_____ rarely have much bargaining power when negotiating price concessions, but ______ can have considerable bargaining power.
individual consumers; business buyers
On a map of strategic groups, why are some groups more favorably positioned than others?
industry driving forces favor some strategic groups and hurt others
Suppliers' bargaining power increases when ____
industry members are not major customers of those suppliers
Anheuser-Busch has partially ____ into metal-can manufacturing to gain bargaining power over manufacturers.
integrated backward
The advantage gained from a "wall of patents" is a form of ____
intellectual property protection
The advantage gained from a "wall of patents" is a form of ____.
intellectual property protection
What factor allowed Honda to successfully enter the US lawn mower market despite local competition?
its reputation and its expertise with gasoline engines
Intense competitive pressure from _____ of the five competitive forces is sufficient to destroy the conditions for good profitability.
just one
The competitive factors that most affect industry members' ability to prosper in the marketplace are known as _____ factors.
key success
Buyer price sensitivity increases when an industry product makes up a(n) ____ portion of the total purchases of the buyer.
large
Lowered switching costs ____ suppliers bargaining power.
limit
Lowered switching costs ______ supplier bargaining power.
limit
Strategically relevant factors have a bearing on the ______ direction of any given company.
long-term
Buyers are more sensitive to prices when they have a ______ income.
low
All companies operate in a broad _______-environment that is made up of six components, including political factors and technical factors.
macro
Intel uses its ___ to give top priority to PC manufacturers that primarily use intel chips.
market dominance
Intel uses its ____ to give top priority to PC manufacturers that primarily use intel chips
market dominance
When two industries are closely related to one another, companies can be threatened by the competitive pressure produced by _____ products.
substitute
Powerful _____ can end up eroding industry profitability by ____ higher prices.
suppliers; charing
high ___ deter buyers from purchasing substitute products.
switching costs
Which of the following is an example of a sociocultural force that affects companies?
the trend towards healthier lifestyles
What is the purpose of using the SOAR framework for competitor analysis?
to predict a business rival's moves and counter-moves.
True or false: key success factors are so important that all firms in a given industry must pay attention to them or else jeopardize their competitive success.
true
Which of the following is true of key success factors?
usually two or three KSFs outrank the others in terms of importance
The _____ ____ framework includes cooperative interactions among industry participants and introduces the category of "complementors."
value net
Which of the following is an example of something that establishes a network effect in customer demand?
video game systems
