Connect Ch.3

The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of _________.

economies of scale

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________. A. intensity of rivalry B. switching costs C. industry growth D. development of new products

A. intensity of rivalry

The economic factors that affect a firm's external environment are ______. A. largely macroeconomic B. often unidentifiable C. usually regional D. primarily ecological

A. largely macroeconomic

An example of a recent innovation in process technology is ______. A. lean manufacturing B. the microwave C. the BP oil spill D. the smartphone

A. lean manufacturing

Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business. A. legal B. socio-cultural C. economic D. technological

A. legal

The positive effect that one user of a product or service has on the value of that product or service for other users is known as the ___. A. network effect B. user effect C. mass effect D. multiplicity effect

A. network effect

The relationship between the natural environment and business organizations can best be described as ______. A. a U-shape B. interdependent C. unconnected D. insignificant

B. interdependent

In a period of economic boom, unemployment is ______, and human resources become expensive. A. fluctuating B. low C. variable D. high

B. low

When a firm in an oligopoly cuts prices, ______. A. there is no impact B. all competitors raise their prices C. market share is lost D. a price war is likely to result

D. a price war is likely to result

Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.) A. Ensuring a smooth transaction between hosts and guests B. Fortuitous timing that led to growing demand C. Following the traditional rental model offered by hotels D. Presenting a well-designed website

A. Ensuring a smooth transaction between hosts and guests B. Fortuitous timing that led to growing demand D. Presenting a well-designed website

When a firm in an oligopoly cuts prices, ______. A. a price war is likely to result B. market share is lost C. all competitors raise their prices D. there is no impact

A. a price war is likely to result

A group of companies that deal with more or less the same set of suppliers and buyers make up ______. A. an industry B. a state C. a multi-environment D. a business group

A. an industry

The external forces called technological factors ______. A. capture the application of knowledge to create new process and products B. represent official government decisions and regulations C. quantify characteristics of the economy and business climate D. describe society's norms and values

A. capture the application of knowledge to create new process and products

Obstacles that determine how easily a firm can enter an industry, are called ______. A. entry barriers B. rivalry barriers C. threats of substitutes D. supplier barriers

A. entry barriers

Michael Porter developed the five forces model to help firms do which of the following? (Check all that apply.) A. gain and sustain a competitive advantage B. determine the profit potential of different industries C. understand the strengths and weaknesses of a firm's resources D. analyze PESTEL forces

A. gain and sustain a competitive advantage B. determine the profit potential of different industries

Which of the following are examples of sociocultural factors? (Check all that apply.) A. the growth of the Hispanic population B. the widespread adoption of smart phones C. an increased demand by consumers for gluten-free products D. an extended period of low interest rates

A. the growth of the Hispanic population B. the widespread adoption of smart phones C. an increased demand by consumers for gluten-free products

True or false: Sociocultural factors tend to be fixed. A. True B. False

B. False

Which of the following statements about legal factors as an external force is true? A. The courts do not allow the government to use legal factors to exert its political will on businesses. B. Regulatory changes tend to affect entire industries at once. C. Legal factors affect a firm's profit potential only indirectly. D. The U.S. government has allowed very few industries to be deregulated.

B. Regulatory changes tend to affect entire industries at once.

According to Michael Porter, the profit potential of an industry is ______. A. similar for all service industries B. a function of five forces related to competition C. entirely determined by industry-specific factors D. largely random

B. a function of five forces related to competition

In the five forces model, threat of entry refers to the risk that ______. A. startup costs for a given company will be excessive B. potential competitors will enter a given industry C. an established market will gain more customers D. that government regulators will target a given industry

B. potential competitors will enter a given industry

When a person that has been using a PC with a Microsoft Windows operating system starts using an Apple computer (which has a different operating system), that person will incur significant customer ______________. A. economies of scale B. switching costs C. network effects D. bargaining power

B. switching costs

Managers are able to influence which of the following types of external forces? (Check all that apply.) A. currency exchange rates B. the structure of their industry C. strategic group composition D. interest rates

B. the structure of their industry C. strategic group composition

______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms. A. Technological B. Economic C. Political D. Profitable

C. Political

Global warming would be an example of ______ factor in a firm's external environment. A. a technological B. a political C. an ecological D. a sociocultural

C. an ecological

In the early 2000s, easy credit made real estate the investment of choice in the United States. By the end of the decade, however, a recession had set in, impacting almost all businesses in the country. This example shows that _____. A. the market was characterized by rational exuberance B. during economic boom periods, investors stay cautious and conservative C. economic boom periods can overheat and lead to speculative bubbles D. people did not overvalue housing prices

C. economic boom periods can overheat and lead to speculative bubbles

The economic recession that began in 2008 in the United States was the result of unwise investment in ______. A. commodities B. stocks C. real estate D. the online economy

C. real estate

Which of the following statements about Airbnb is correct? A. It operates only in North America and Europe. B. It was spun off as a service developed by Google, Inc. C. It was founded before the Internet was created. D. It handles more accommodations than the three biggest hotel chains combined.

D. It handles more accommodations than the three biggest hotel chains combined.

The ______ is a measure of the change in the amount of goods and services produced by a nation's economy. A. level of employment B. interest rate C. currency exchange rate D. economic growth rate

D. economic growth rate

In the PESTEL model, political factors are those that relate to ______. A. government bodies B. banking organizations C. climate and weather D. employment

A. government bodies

An industry analysis provides which of the following? (Check all that apply.) A. insight into a firm's strategic position within an industry B. the stability of the firm's internal structure C. a rigorous way of identifying the industry's profit potential D. the level of profitability that can be expected for the average firm in the industry

A. insight into a firm's strategic position within an industry C. a rigorous way of identifying the industry's profit potential D. the level of profitability that can be expected for the average firm in the industry

A rise in economic growth is reflected by ______. A. businesses staying the same B. businesses expanding operations to satisfy demand C. businesses closing operations due to lack of demand

B. businesses expanding operations to satisfy demand

Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment. A. sociocultural B. economic C. political D. technological

B. economic

When managers understand the forces in the external environment, they are better able to ______. A. illustrate the impact of strategic actions B. understand the firm's internal resources C. achieve price stability D. mitigate threats and leverage opportunities

D. mitigate threats and leverage opportunities

As utility companies tend to serve a whole market exclusively, they are known as ______ because the governments involved believe that the product or service would not be supplied otherwise. A. rivals B. perfect competitors C. differentiated oligopolies D. natural monopolies

D. natural monopolies

It might be a good idea to expand or upgrade a firm's human capital base during a ______, because unemployment is high and therefore human capital is abundant and wages usually _____. A. boom period, rise B. downturn; rise C. boom period; fall D. downturn; fall

D. downturn; fall