MAN 4720, Exam 1, Chapter 3

2. A group of companies that deal with more or less the same set of suppliers and buyers comprise a. An industry b. A state c. A business group d. A multi-environment

a. An industry

33. Industry _____ is the process by which formerly unrelated industries begin to satisfy the came customer need a. Convergence b. Complementariness c. Emergence d. Parity

a. Convergence

6. The _____ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers a. Threat of substitutes b. Power of buyers c. Rivalry of existing competitors d. Threat of new entrants

a. Threat of substitutes

11. The term oligopoly comes form the Greek for a. Few sellers b. Interdependence c. Many sellers d. Differentiated product

a. Few sellers

15. The key take away from the Five Forces Model is a. The weaker the forces, the lower the industry's ability to earn profits b. The stronger the forces, the lower the industry's ability to earn profits c. The more stable the forces, the greater the new entrants d. The higher the threat of new suppliers, the more buyers exit

b. The stronger the forces, the lower the industry's ability to earn profits

30. Walmart producing private-label brands such as Equate health and beauty items and Parent's choice baby products, is an example of a. Horizontal integration b. Forward integration c. Backward integration d. Skip-hop integration

c. Backward integration

27. When suppliers do not depend heavily on the industry for a large portion of their revenues, the power of suppliers is a. Moderate b. Insignificant c. High d. Low

c. High

18. The relationship between the natural environment and business organizations can best be described as a. A U-shape b. Insignificant c. Interdependent d. Unconnected

c. Interdependent

3. The stronger the five forces, the _____ the industry's profit potential a. Stronger b. Less differentiated c. Lower d. Higher

c. Lower

26. A ______ occurs when a firm has accrued significant market power and is changing the industry structure in its favor a. Near monopoly b. Strategic emergent monopoly c. Natural monopoly d. Accrued liable monopoly

a. Near monopoly

16. In order to influence changes in their political environment, firms pursue a. Revolutionary change b. Constitutional amendments c. Market strategies d. Nonmarket strategies

d. Nonmarket strategies

21. In the aftermath of the Gulf of Mexico oil spill, BP had to agree to four years of government monitoring of its safety practices and ethics and was temporarily banned from new contracts with the US government. This is an example of how government can affect firm performance by exerting ____ pressure on companies a. Socio-cultural b. Technological c. Economic d. Political e. Legal

d. Political

34. Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with ______ growth a. Fast and positive b. Exponential c. Stable d. Slow or negative

d. Slow or negative

31. The online auction site eBay has more than 100 million active users, so buyers are more likely to find what they are looking for while sellers are more likely to find buyers for the items they are offering. This is an example of a. Buyer-meets-seller effects b. Network effects c. Competition effects d. Online effects

b. Network effects

12. _______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms a. Profitable b. Political c. Technological d. Economic

b. Political

22. When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are a. Desperate for business b. Powerful c. Evil d. Weak

b. Powerful

20. The intensity with which companies in an industry jockey for market share and profitability is known as a. Identification b. Rivalry c. Threats d. Barriers

b. Rivalry

5. A ______ is a set of companies that pursue a similar strategy within a specific industry to achieve competitive advantage a. Technological force b. Strategic group c. Competitive rival d. Dynamic performer

b. Strategic group

4. One way of mapping competitors in to strategic groups is on a graph. When choosing this method, the dimensions of the X and Y axes should a. Be correlated b. Not expose differences among the competitors c. Not be correlated d. Not pertain to market forces

c. Not be correlated

24. Despite high barriers to entry, startups such as Tesla have been able to break into the US car market through a. The manipulation of foreign currencies b. The exploitation of US labor laws c. Technological innovations d. Exploitation of import quotas

c. Technological innovations

9. A company is a complementor to your company if a. Customers private label your product b. That company praises your company for excellence c. The market is fragmented and you can gain solidarity with a former rival d. Customers value your product more when they can use it with the other company's product

d. Customers value your product more when they can use it with the other company's product

35. When there are a few buyers and each buyer purchases large quantities to the size of a single seller, the power of buyers is a. Moderate b. Insignificant c. Low d. High

d. High

25. Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of _____ factors influencing business a. Technological b. Economic c. Socio-cultural d. Legal

d. Legal

7. The pressures that industry suppliers can exert on an industry's profit potential, is also called the a. Threat of new entry b. Bargaining power of suppliers c. Bargaining power of buyers d. Rivalry amongst existing competitors

b. Bargaining power of suppliers

13. Production costs can be increased when a. Buyers demand lower quality and less service b. Buyers demand higher quality and more service c. The power of suppliers goes down

b. Buyers demand higher quality and more service

32. Exit barriers are composed of ______ factors a. Political and economic b. Economic and social c. Political and legal d. Technological and demographic

b. Economic and social

23. The pace of technological change seems to be a. Tied to the rate of demographic change b. Increasing c. Decreasing d. Tied to the rate of sociocultural change

b. Increasing

29. 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. Perfect competitors b. Differentiated oligopolies c. Natural monopolies d. Rivals

c. Natural monopolies

10. An industry in which only one firm supplies the market is know as a. A perfect competition b. An oligopoly c. A monopolistic competition d. A monopoly

d. A monopoly

17. In a perfectly competitive industry, firms have difficulty a. Keeping prices low b. Avoiding profitability c. Making purchasing decisions d. Achieving competitive advantage

d. Achieving competitive advantage

14. Firms have a tendency to change the industry structure in their favor, for example by making industries more ____ through mergers and acquisitions a. Diffuse b. Intuitive c. Competitive d. Consolidated

d. Consolidated

28. In a period of economic boom, unemployment is _____ and human resources become expensive a. Fluctuating b. Variable c. High d. Low

d. Low

8. A perfectly competitive industry has ____ entry barriers and _____ small firms a. High; many b. High; few c. Low; few d. Low; many

d. Low; many

1. When managers understand the forces in the external environment, they are better able to a. Understand the firm's internal resources b. Achieve price stability c. Mitigate threats and leverage opportunities d. Illustrate the impact of strategic actions

c. Mitigate threats and leverage opportunities

19. When a firm is able to maximize the gap between ______, it increases it competitive advantage a. The rate of growth and the rate of sales b. The PESTEL analysis and the industry analysis c. The number of employees and the number of positions to be filled d. The cost of production and the value of what it produces

d. The cost of production and the value of what it produces