INTG BUS POLICY/STRATEGY - Week 3

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LOOK UP

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

A consolidated industry trend to be more profitable than a fragmented one

Companies in the same strategic group are ___ to each other

Direct competitors

Firms within the same industry automatically belong to the same strategic group

FALSE

For profit businesses operating in long-standing fields such as energy and transportation usually operate in an environment of price stability

FALSE

How do low interest rates affect a business?

Firms can easily borrow money to finance future growth

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

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

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

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Which of the following is a drawback of Porter's five forces model?

Managers cannot determine the changing speed of an industry or the rate of innovation

How is a firm's task environment different from its general environment?

Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment

The ______ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment

PESTEL framework

Which of the following statements is true about strategic groups?

Profitability varies between different strategic groups

In which of the following situations is the power of suppliers high in an industry?

Suppliers' industry is more concentrated than the industry it sells too

A company that owns failing movie theaters could leverage existing assets by turning the buildings into performance spaces and conference sites

TRUE

Due to economic regression in Freedonia, the profitability of the large corporation Happiness Products Inc. )HPI) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would HPI find it most easy to exit?

The e-commerce retail business, where investments on assets are low

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Threat of new entrants will be low

In an industry, the threat of entry is high when

capital requirements are low

In a firm's external environment, _______ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class

demographic trends

A strategic group will typically include

firms within the same industry

Economies of scale are cost advantages tat accrue for firms with

larger output

Which of the following external forces is a part of a firm's task environment?

the composition of the strategic group to which the firm belongs

A firm's strategic position is likely to be strong when

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

When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger?

the threat of substitutes

The primary objective of Porter's fives forces model it to

understand the profit potential of industries