business policy chp3 questions

Which of the followings statements accurately brings out the difference between monopolistic competition and an oligopoly?

In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other

The ________ allows scanning, monitoring, and evaluating of changes and trend in a firm's macro environment

PESTEL framework

In the smartphone industry, Google is a complement to Samsung. Which of the following statements best explains why this is true?

Samsung's smartphones increase in value when they are preinstalled with Google's Android system

Competitive industry structure refers to elements and feature common to _____________

all industries

How did Virgin America enter the airline industry despite the industry's notoriously low profitability? A. Virgin America offered average-cost service between small and large metropolitan cities in the American West. B. Virgin America offered average-cost service between major metropolitan cities along the American East Coast. C. Virgin America offered low-cost service between small and large metropolitan cities in the American South. D. Virgin America offered low-cost service between major metropolitan cities on the American East and West coasts.

Virgin America offered low-cost service between major metropolitan cities on the American East and West coasts

Which of the following statements with regard to industry structures is true?

a consolidated industry tends to be more profitable than a fragmented one

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? A. A premium car manufactured and sold by Mova Autos Inc., a rival company B. A bank that insures cars against theft and accidents C. A car service station managed and run by Shield Autos Inc. D. A stereo system that can be used as a GPS system in cars

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

The Beacon is a newspaper that sold print copies of its paper in a medium-sized town in Kansas for more than 100 years. Recently, the Beacon signed a deal with IntelNews Inc. to present the paper digitally to homes and businesses. This example shows

an industry convergence

In the step-by-step process of industry analysis, identifying the underlying drivers of each force is followed by

assessing the overall industry structure

Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds' products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised its bargaining power as a buyer through _____.

backward integration

How can a firm change its industry structure from monopolistically competitive or oligopolistic to a near monopoly? A. By reducing the entry barriers in its industry B. By developing proprietary technology C. By implementing frequent price-cuts D. By decreasing its pricing power

by developing proprietary technology

When applying the five forces model, the first step should ideally be

defining the relevant industry

How do low interest rates affect a business? A. Firms tend to defer investments. B. Firms can easily borrow money to finance future growth. C. Consumer demand slows down. D. Business credit is harder to obtain.

firms can easily borrow money to finance future growth

Which of the following is a primary feature of the five forces model?

it views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes

Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Curry Rush is most likely operating in a(n) _____. A. oligopoly B. monopoly C. perfectly competitive industry D. monopolistically competitive industry

monopolistic-ally competitive industry

Which type of industry structure is often analyzed using game theory?

oligopolistic

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? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition

oligopoly

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?

perfect competition

During periods of high industry growth _____________-

price competition among firms frequently decreases

Home Savings, Good Deals, Hank's Store, and King Bargains are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All four stores cater to the needs of highly price-sensitive customers. Thus, together Home Savings, Good Deals, Hank's Store, and King Bargains form a A. focus group. B. command group. C. strategic group. D. cross-functional group.

strategic group

Which of the following forces was not originally a part of Michael Porter's fives forces model? A. threat of substitute products or services B. rivalry among existing competitors C. bargaining power of buyers D. strategic role of complements

strategic role of complements

Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry? A. Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry. B. Suppliers have weak bargaining power because they offer products that are not differentiated. C. Entry barriers in the industry are high resulting in hardly any new airlines popping up. D. Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry

Which of the following do the sociocultural forces in a firm's external environment best represent?

the family size of the firm's target market

Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? A. The competition in the industry is insignificant. B. The number of buyers in the industry is small. C. The firms can differentiate their product offerings. D. The entry barriers in the industry are extremely high.

the firms can differentiate their product offerings

A firm's strategic position is likely to be strong when: A. the entry barriers within the industry it operates in are low and the exit barriers are high. B. its suppliers and vendors can easily forward integrate and buyers can backward integrate. C. all the five forces in Porter's model are strong. D. the gap between the value the firm's product generates and the cost to produce it is large.

the gap between the value the firm's product generates and the cost to produce it is large

Which of the following is an implication of high exit barriers in an industry?

the industry will face excess capacity

Buyers are highly price sensitive when: A. their purchase represents a small fraction of their procurement budget. B. they earn low profits or are strapped for cash. C. the quality of their products and services are highly affected by the quality of the inputs. D. the industry's products are highly characterized with non-price competition.

they earn low profits or are strapped for cash

The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry, the A. threat of substitutes is most likely high. B. threat of new entrants is most likely low. C. bargaining power of buyers is most likely low. D. entry barriers are most likely nonexistent.

threat of new entrants is most likely low

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

understand the profit potential of different industries

the positive effect that one use of a product or service has on the value of that product or service for other users

what are network effects