BA 405: Chapter 2 Homework

An industry that is attracting large numbers of new customers through increased interest and education is at the _____ stage of industry life cycle. a. embryonic b. declining c. growth d. shakeout

c. growth

An industrial tool manufacturer relies on a distributor network with the largest online outlet and store network aimed at construction workers. The distributor network is seeking a manufacturer to provide them with private label products. They've decided they will offer only their own product line and not any other brand in this category of industrial tools. Now the industrial tool company must decide whether to agree to this proposition or lose this company as a customer. This is an example of which of the competitive forces at play in this industry? a. Industry competitive structure b. Rivalry among established companies c. Bargaining power of suppliers d. Bargaining power of buyers

d. Bargaining power of buyers

Jordan's mobile communications device company is conducting an industry analysis as it considers new strategies for its five-year strategic plan. The analysis reveals that recent government deregulation has reduced the barriers to entry and several start-ups are entering the industry. Which of these strategies could be a part of the plan to counteract this? a. Expand into a different industry, serving a different set of customers and their needs. b. Acquire the company's biggest supplier, bringing the capability of manufacturing critical component parts into the business structure. c. Utilize an intensive advertising campaign to build brand loyalty. d. Grow industry demand by educating consumers about the features and benefits of products in the mobile communications device industry.

c. Utilize an intensive advertising campaign to build brand loyalty.

As an industry environment evolves over time, the: a. industry becomes more profitable. b. strategic groups become less attractive to new entrants. c. strength of the competitive forces in the industry change. d. number of companies is reduced and the industry becomes more consolidated.

c. strength of the competitive forces in the industry change.

In the toy industry, Mattel is one of the world leaders with its line of Barbie dolls. However, it has faced competition from MGA Entertainment with its Bratz dolls since the 1990s. Which of these statements is true about the strategic group in which these companies compete? a. The two companies occupy different strategic groups and likely will have very different competitive forces and different strategies. b. The companies are dealing with the same competitive forces as all other companies across the toy industry. c. As toy companies, they both have the ability to quickly pursue the toy truck market with minimal investment. d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

Which of these is an example of a product or service in an industry operating in the growth stage? a. Video and record stores b. Legal services c. Residential solar panels d. Employee performance management software

d. Employee performance management software

The Baby Boomer generation (those born immediately after World War II) is aging. A local healthcare network is looking at several expansion strategies. Which strategy might be the best response to this demographic force in the macroenvironment? a. The network will add more than 100 maternity beds to three of its suburban hospitals. b. The network will enter into official referral agreements with six new physician practice groups that focus on pediatrics. c. The network will invest in genetic testing options tailored to identifying the future health needs of people currently in their twenties. d. The network will build a blended-use community that offers independent retirement living, assisted living, and skilled nursing care.

d. The network will build a blended-use community that offers independent retirement living, assisted living, and skilled nursing care.

The pace of technological change has accelerated. Technological forces can have an impact on the macroenvironment, creating conditions that are: a. easy for established companies to take advantage of to introduce their products to new markets. b. threats to embryonic industries, preventing them from growing to maturity. c. raising the cost of entry for potential new entrants into industries and protecting established companies in mature industries. d. both creative and destructive, making established products obsolete overnight and creating new product possibilities at the same time.

d. both creative and destructive, making established products obsolete overnight and creating new product possibilities at the same time.

Strategic groups exist because: a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies. b. government regulators have different rules for companies based on the size of the company, geographic headquarters, and number of employees. c. customers want variety in the products and services they select, and different brands can serve customers' needs differently. d. industries are one-dimensional, and all businesses within an industry utilize the same resources and same strategies to achieve their goals.

a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies.

Companies can reduce the impact of the substitute products force in the competitive forces model by: a. identifying an industry by the customers that it serves and the needs it fulfills rather than by the products it sells and staying focused on ensuring its products meet those needs. b. increasing its sales volume to spread its overhead and reduce its per-piece production costs. c. working with affiliated companies in other industries to develop accessories for their products that enhance the benefits and functionality of their offerings. d. pitting component parts manufacturers in competition against each other to reduce production costs and improve quality.

a. identifying an industry by the customers that it serves and the needs it fulfills rather than by the products it sells and staying focused on ensuring its products meet those needs.

Why should strategic managers be concerned with the life cycle of the industry in which their companies operate? a. The life cycle of an industry will only indicate the amount of investment a manager should put into research and development. b. Recognizing the crucial points in an industry's development is essential to forecasting and strategizing for the future. c. The stage an industry is in will predict whether the company can be successful. d. An industry life cycle is the driver for developing a mission and vision statement.

b. Recognizing the crucial points in an industry's development is essential to forecasting and strategizing for the future.

An analysis of the macroenvironment includes the: a. internal leadership structure of a company, including CEO, CFO, and board of directors. b. geographic location in which a company operates, manufactures products, and serves customers. c. economic, global, technological, demographic, social, and political context within which a company operates. d. environmental factors that are impacted by the company's operations, such as its consumption of water, effect on air quality, and consumption of natural resources.

c. economic, global, technological, demographic, social, and political context within which a company operates.

In which of the following situations would a buyer be the most powerful? a. The buyer orders in small quantities, with no purchasers representing more than 1 percent of total sales. b. Because of the industry's competitive nature, its participants have virtually eliminated switching costs for industry customers. c. Buyers are unable to independently produce the product. d. The industry is essentially a monopoly.

b. Because of the industry's competitive nature, its participants have virtually eliminated switching costs for industry customers.

Which of the following statements about complementors as a strategic force is true? a. Complementors are an essential element in Porter's Five Forces model. b. Complementors can gain so much power that they become a competitive threat to the industry rather than a complementor. c. A complementor presents the threat of a substitute product to an industry. d. A desktop computer and a laptop computer are the ultimate example of complementors.

b. Complementors can gain so much power that they become a competitive threat to the industry rather than a complementor.

In reviewing the competitive forces model through an industry life-cycle analysis, which of these could be true of an embryonic industry? a. Bargaining power of suppliers: The industry will have an established supplier network, making the bargaining power of suppliers weak and giving companies an opportunity to pit suppliers against each other for the best cost and quality. b. Complementors: The industry will likely have few complementors, with few products available that would add value when used in combination with the product or service. c. Bargaining power of buyers: The industry will have weak buyers who will be eager to take on the products and services of the new industry, regardless of its cost or level of customer awareness. d. Risk of entry by potential competitors: Potential competitors will be strong, with multiple companies working in the industry achieving economies of scale quickly. Hide Fe

b. Complementors: The industry will likely have few complementors, with few products available that would add value when used in combination with the product or service.

The industry life-cycle analysis has several potential limitations. Which of these is a limitation that strategic managers should be aware of? a. Industry life cycles have very few strategic implications and shouldn't be used to determine potential strategies. b. Industries will not always travel through the stages in a predictable way. c. Companies cannot do anything to alter the course of an industry as it evolves through the life-cycle stages. d. All companies within an industry should employ similar strategies based on the life cycle of the industry they're operating in.

b. Industries will not always travel through the stages in a predictable way.

All of the following would be in the same strategic group within the auto industry EXCEPT: a. Honda. b. Mercedes. c. Ford. d. Toyota.

b. Mercedes.

A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company managing which forces in the macroenvironment? a. Social forces b. Political and legal forces c. Technological forces d. Global forces

b. Political and legal forces

In the competitive forces model, the central element that the other four elements contribute directly to strength is: a. risk of entry by a potential competitor. b. closeness of substitutes to an industry's products. c. rivalry among established firms in the industry. d. bargaining power of suppliers.

c. rivalry among established firms in the industry.

A discount membership general merchandise store has been educating customers about its business model of a membership fee based on the volume of products they buy. The store has been focused on reducing cost through the development of its supply chain and inventory systems. What would you add to the company's strategy as the industry moves from the shakeout stage to the mature stage? a. The company should expand the number of stores to serve the growing number of customers who are joining discount membership stores. b. The company should monitor prices of similar products at other discount membership stores, such as Costco and Sam's Club, matching prices to maximize profitability and avoid a price war. c. The company should close its lowest-performing stores, regardless of their profitability, to reduce its excess capacity. d. The company should educate customers about the features of discount store membership because not enough customers are aware of the benefits.

b. The company should monitor prices of similar products at other discount membership stores, such as Costco and Sam's Club, matching prices to maximize profitability and avoid a price war.

An analysis using the competitive forces model of an industry can indicate: a. whether a company is a good choice for shareholders to invest in. b. areas of threat and areas of opportunity that can serve as the basis of strategy formulation and implementation. c. the stage of the life cycle of industries in which the industry is currently operating. d. the extent to which globalization is having an impact on the industry.

b. areas of threat and areas of opportunity that can serve as the basis of strategy formulation and implementation.

The most immediate threat to a company's profitability comes from: a. companies in other industries who have substitute products that meet the same customer needs. b. its closest competitors, companies within the same strategic group. c. companies within the same industry but in different strategic groups. d. a lack of investment from capital stakeholders.

b. its closest competitors, companies within the same strategic group.

Market saturation is an indication that an industry has entered the: a. growth stage. b. mature stage. c. shakeout stage. d. embryonic stage.

b. mature stage.

Industry competitive structure identifies the number and size of companies. Fragmented industries often: a. follow prices set by the industry leader to achieve higher profits. b. suffer from excess capacity and price wars. c. result in high barriers to entry and fewer companies operating in an industry. d. avoid being commoditized because product and service offerings are varied.

b. suffer from excess capacity and price wars.

Where a company operates and sells its product can have an impact on its profitability because: a. government-owned companies set the prices for most of the world's products and will raise or lower prices based on local economies. b. the health of a country's economy, measured by growth rate and other factors, can affect both the customers' ability to purchase products and the price they're willing to pay. c. companies operating solely within a single country have greater opportunities for higher profits. d. companies selling their goods in countries that have a negative growth rate can raise their prices and gain greater profitability. Hide Feedback

b. the health of a country's economy, measured by growth rate and other factors, can affect both the customers' ability to purchase products and the price they're willing to pay.

Macroeconomic forces contribute to an industry's ability to be profitable. Which of the following examples shows how a company might appeal to new customers and increase its revenues by focusing on a macroeconomic force? a. A department store expands into three new states. b. A company that processes honey products purchases a research facility to improve conditions for honey bees as a way to ensure its supply. c. A home mortgage company creates a sales promotion with incentives for potential home buyers to take advantage of a particularly favorable interest rate. d. A pharmaceutical company changes its company name to the name of its best-selling product.

c. A home mortgage company creates a sales promotion with incentives for potential home buyers to take advantage of a particularly favorable interest rate.

Through research and development, a cable company has found a way to use its existing network lines to serve customers with a new product offering - home security systems. The company is offering the service for a lower monthly fee than most security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until they ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play? a. Cost conditions b. Bargaining power of suppliers c. Customer switching costs d. Complementors

c. Customer switching costs

Potential competitors may enter an industry and begin to take market share from existing companies. What would be one of the largest challenges a new entrant would need to overcome to be successful when entering the industry? a. Very few customers are currently buying a product. b. Several powerful retailers provide the only access to customers. c. Production costs are high and require high volumes to achieve profitability. d. Complementors are lacking that go along with the product.

c. Production costs are high and require high volumes to achieve profitability.

At Hy-Vee grocery stores, a frequent shopper card for customers tracks their purchases and automatically offers discounts on the products they buy most often, building brand loyalty to the store. At which stage of the industry life cycle is this approach most effective? a. Embryonic b. Complementor c. Shakeout d. Declining

c. Shakeout

Michael Porter's theory of punctuated equilibrium suggests periods of freezing and reshaping of industries. Which of these represents a formerly declining industry now in a reshaping period? a. The gas-powered car industry is experiencing a rebound after a period of decline, but without meaningful innovation. b. The trucking industry has seen cyclical demand for the delivery of products from manufacturers to distribution centers and then to stores and customers. c. The global mass transit industry is reshaping as people in developed countries seek environmental benefits and those in developing nations look for ways to serve dense populations. d. The river barge transportation system has sustained barriers to entry, mainly because of the cost of equipment and availability of appropriate, cost-effective riverside property.

c. The global mass transit industry is reshaping as people in developed countries seek environmental benefits and those in developing nations look for ways to serve dense populations.