HRM Strategy Ch 2

Which of the following describes when a firm purchases one or more of its suppliers in order to make a product itself rather than buying it from another firm? Switching costs Backward integration Barriers to entry Forward integration

Backward integration

How should a company identify the industry they compete in, and therefore their competitors? By identifying the product or service they produce. By identifying companies with similar products and using their NAICS code. By identifying the job that their products do for customers. By identifying substitutes.

By identifying the job that their products do for customers.

There are five forces that define an industry's structure. Which of the following is NOT one of these forces? Competition Suppliers Employees Customers

Employees

Barnes & Noble competes in only the book retailing industry. True False

False

Farmers (fragmented industry) have bargaining power over frozen food makers (concentrated industry). True False

False

Fortunately, the importance of each of the general environmental factors remains relatively the same from industry to industry. True False

False

Industries with relatively standardized products generally experience less competition and rivalry. True False

False

Interestingly, the five forces that shape industry competition are not subject to change so the firms can plan accordingly. True False

False

Who identified fives forces that shape profit-making potential of the average firm in an industry? Jeff Dyer Michael Porter Steve Jobs Mark Benioff

Michael Porter

Which ONE of the following explains why a competitor would have a hard time competing with Facebook (used as an example in the text)? Government policy restrictions Patents Capital requirements Network effects

Network effects

_____________ involve(s) growth in demand for a firm's product that results from a growth in the number of existing customers. Forward integration Backward integration Switching costs Network effects

Network effects

What company was used as an example of the poor outcome when not responding to competitors? This company was eventually purchased by Microsoft. Hotmail NetGames Nokia Hewlett Packard

Nokia

What does NAICS stand for? North American Industry Classification System. North American Internal Class System. North American Industry Codes Standard. North American Internal Codes System.

North American Industry Classification System.

How do low exit barriers affect rivalry? Rivalry decreases Rivalry increases Low exit barriers do not affect rivalry

Rivalry decreases

How does high growth in demand affect rivalry? Rivalry decreases Rivalry increases Switching costs do not affect rivalry

Rivalry decreases

How do high levels of unused production capacity affect rivalry? Rivalry decreases Rivalry increases Unused production capacity does not affect rivalry

Rivalry increases

How do low switching costs for buyers affect rivalry? Rivalry decreases Rivalry increases Switching costs do not affect rivalry

Rivalry increases

_____________ refer to society's cultural values, norms, and attitudes. Demographic forces Political forces Social forces Global forces

Social forces

Which of the following statements regarding industry attractiveness is incorrect? Trends that might change any of the five forces in an industry all come from the general environment. Managers often define competition too narrowly. A significant threat from just one or two of the five forces is often sufficient to destroy the attractiveness of an industry. Each of the five forces can be altered by actions taken by firms within or without the industry.

Trends that might change any of the five forces in an industry all come from the general environment

An industry is more attractive the lower number of substitutes there are. True False

True

Increased rivalry tends to squeeze profit margins of most firms in an industry. True False

True

Michael Porter identified five forces that shape the profit-making potential of the average firm in an industry which include rivalry, buyer power, supplier power, threat of new entrants, and threat of substitute products. True False

True

The first strategic decision that most firms must make is to select the industry and markets in which it will compete. True False

True

Which of the following statements is false? Two firms who have similar products and meet similar customer needs are not necessarily part of the same industry. A firm's landscape is defined by the industry in which a firm competes and the product and geographic markets that the firm targets. If managers do not accurately define and understand their industry, they can become vulnerable to unseen competition. Truly understanding an industry often begins by taking a customer-oriented view.

Two firms who have similar products and meet similar customer needs are not necessarily part of the same industry.

Which one of the following does NOT tend to increase buyer price sensitivity? When buyers are struggling financially When the product is a significant proportion of buyer's costs When buyers purchase in large volumes When the product affects buyers' performance significantly When the product doesn't save buyers money

When the product affects buyers' performance significantly

When products or services can be used in tandem with those from another industry they are called competing products or services. complementary products or services. substitute products or services. rival products or services.

complementary products or services.

If there are few sellers, but lots of buyers, supplier bargaining power tends to be high. low. bargaining power doesn't change with number or concentration.

high

When a buyer has a credible threat to backward integrate (making the product themselves), the buyer bargaining power _____________ over suppliers. decrease increases remains the same

increases

When buyer price sensitivity is high, buyers tend to exert pressure on suppliers to keep prices low. high. price sensitive buyers do not affect suppliers' prices.

low

Fragmented industries tend to have __________ competitors and __________ intense rivalry. fewer; less more; less fewer; more more; more

more; more

A firm's external environment provides both opportunities and threats. strengths and weaknesses. weaknesses and threats. strengths and opportunities.

opportunities and threats.

High fixed costs and highly perishable products have what effect on rivalry? Rivalry decreases Rivalry increases fixed costs and perishable products do not affect rivalry

rivalry increases

The general environment is made up of eight categories but does not include economic conditions. demographics. social and cultural forces. substitute products or services.

substitute products or services

Barriers that help keep firms using the same supplier or buyer by imposing extra costs for changing suppliers or buyers are called threats. barriers to entry. switching costs. complementary products or services.

switching costs