Strategic Management: Chapter 3

Describe oligopoly competition

- high entry barriers - differentiated product - some pricing power - few (large firms)

What are Porter's five competitive forces that explain the profit potential of different industries?

1. threat of entry 2. power of suppliers 3. power of buyers 4. threat of substitutes 5. rivalry among existing competitors

From the leadership chapter we described that a Vision Statement describes __________________________ A. What the organization wants to accomplish B. the specific goals of the organization C. what industry and markets the organization competes in D. how the organizational will accomplish its goals

A

How do complements affect a primary product or service? A. They increase the demand for the primary product. B. They reduce the value of the primary product. C. They act as the strategic equivalent of the primary product. D. They lower the utility of the primary product.

A

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? A. They can demand better terms from their suppliers. B. They cannot employ technology efficiently. C. They can spread fixed costs over lesser units. D. They benefit from a less specialized division of labor.

A

Which of the following describes the concept of co-opetition? A. cooperation by competitors who want to achieve a strategic objective B. a product, service, or competency that adds value to the original product offering when the two are used in tandem C. obstacles that interfere with a firm's ability to leave an industry D. decisions that are costly, have a long-term impact, and are difficult to reverse

A

________ factors in the PESTEL framework result from the pressure that various groups, such as government bodies, nongovernmental organizations, and social movements, can exert to influence the decisions and behaviors of firms. A. Political B. Economic C. Sociocultural D. Ecological

A

How do complementors work on the supplier side?

A company is your complementor if its more attractive for a supplier to provide resources to you when its also supplying the other company than when it's supplying you alone

What is the difference between firm effects and industry effects in determining a firm's performance?

A firm's performance is more closely related to its managers' actions (firm effects) than to the external circumstances surrounding it (industry effects)

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) A. plant B. industry C. focus group D. occupational group

B

Because a consolidated industry tends to be more profitable than a fragmented one, firms have a tendency to change the industry structure in their favor, making it more consolidated through? hint: This has happened in the airline industry. A. restrictive government policies. B. horizontal mergers and acquisitions. C. a reduction in barriers to the industry. D. increasing the number of products or services offered.

B

Which of the following statements is true of a monopoly? A. It is often analyzed using game theory. B. There is only one, often large firm supplying the market. C. Competing firms are most often independent of one another. D. It is characterized by low entry barriers.

B

From our case discussion last week, you could infer that Meta plans to? A. partner with Space X to enter the space debris cleanup business B. take over the world C. build a virtual reality platform to avoid competition from apple and microsoft D. move back to the office to improve teamwork and ideation

C

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________Blank, is believed to add value to the original product offering (or service) when the two are used in tandem. (hint: "The Right Game" article described this sixth force. A. mobility barrier B. value chain C. complement D. technological factor

C

Which of the following is a feature of a fragmented industry? A. It allows firms to set prices. B. It tends to generate high profitability. C. It consists of many small firms. D. One large firm dominates the industry.

C

What is clustering in markets and what does it provide?

Clustering provides better choices for customers (increases value) and larger market for suppliers (lower costs)

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? A. Ez Solutions Inc. will find it easier to raise prices to increase profits. B. Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand. C. Ez Solutions Inc. will experience less competition from rival companies. D. Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

D

In "The Right Game" article, the authors propose that firms are often ___________ and ____________ with other firms at the same time. A. competing, building markets B. building markets, cooperating C. competing, colluding D. competing, cooperating

D

In class we described that strategic leaders spend most of their day? A. networking at public events B. working alone C. on teleconference calls D. in face to face meetings

D

Strategic group mapping establishes that A. rivals inside a strategic group serve different customers. B. competitive pressures within an industry are similar among all strategic groups. C. product features and prices are irrelevant to a strategic group. D. competitive rivalry is strongest between firms that are within the same strategic group.

D

What does the five forces model determine and shape for a firm?

Determines the profit potential of an industry and shapes a firm's competitive strategy

What are some examples of complementors to Airbnb?

Netflix, Amazon, software,

What is the product life cycle and what are the steps?

The product life cycle is Embryonic - slow growth, high prices, significant investment, high risk Growth - increasing demand, improving profits, falling prices, low competition Shake out - slowing growth, intense competition, focus on cutting costs Mature - little to no growth, industry consolidation, high barriers to entry Decline - negative growth, excess capacity, high competition

Describe a monopoly

a company that completely dominates a particular industry

Define a complementor

a company that provides a good or service that leads customers to value your firm's offering more when the two are combined

Describe monopolistic competition

a market dominated by many sellers, few barriers, product is differentiated with many substitutes but some firms can find ways to differentiate themselves with niches and there is some pricing power

Describe perfect competition

a market structure in which a large number of firms all produce the same product and there are low barriers of entry

What is the value net?

an alternative tool to analyze the competitive environment

Define co-opetition

cooperation by competitors to achieve a strategic objective

Industries are __________, meaning they change over time

dynamic

What are examples of ecological factors?

global warming, sustainable economic growth, natural environment

Define an industry

group of firms with more or less the same set of suppliers and buyers and tend to offer similar products and services

What are examples of economic factors?

growth rates, employment rates, interest rates, price stability, currency exchange rates

What are examples of technological factors?

innovations in product technology and process technology such as biotechnology and electric cars

What are examples of legal factors?

laws, mandates, regulations, court decisions

What are examples of political factors?

lobbying, public relations, contributions, and litigations

What is an industry analysis?

method to identify industry's profit potential

What are the four industry competitive structures?

perfect competition, monopolistic competition, oligopoly, and monopoly

Name the six factors that make up the external environment of a firm

political, legal, ecological, economical, sociocultural, and technological

What are examples of sociocultural factors?

society's cultures, norms, and values

A _____________ ____________ is a set of firms within a specific industry that pursue a similar strategy in their quest for competitive advantage

strategic group