Module 2 Formative Assessment Questions
New entrants to industry are more likely when: a. it is difficult to gain access to distribution channels b. capital requirements in the industry are high c. economies of scale in the industry are high d. product differentiation in the industry is low
d. product differentiation in the industry is low
The industry environment directly influences a firm and its competitiveness actions and responses (T/F)
true
The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. Which of the following effects will these conditions have on the domestic airline industry? a. It will make the airline industry more attractive because of decreased supplier power b. It will make the airline industry more attractive because of increased supplier power c. It will make the airline industry less attractive because of decreased supplier power d. It will make airline industry more attractive because of new entrant
a. It will make the airline industry more attractive because of decreased supplier power
Product differentiation refers to the: a. belief by customers that a product is unique b. fact that as more of a product is produced the cheaper it becomes per unit c. ability of the buyer of a product to negotiate a lower price d. response of incumbent firms to new entrants
a. belief by customers that a product is unique
The communications industry is broadly defined as encompassing all of the following EXCEPT: a. book retailers b. smartphone producers c. media companies d. entertainment companies
a. book retailers
Home Depot and Lowe's are examples of: a. members of a strategic group b. firms in a fragmented industry c. companies that have been unable to achieve synergy in their markets d. competitors who belong to different strategic groups because of different customer characteristics
a. members of a strategic group
As customers come to believe that a firm's product is unique, this allows the firm to: a. obtain loyal customers b. force other companies out of the market by lowering prices c. decrease its advertising expenditures d. customize its product
a. obtain loyal customers
All of the following are aspects of the political/legal segment of the general environment EXCEPT: a. antitrust laws b. attitudes and values c. taxation laws d. deregulation philosophies
b. attitudes and values
In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT: a. ethnic mix b. cultural values c. age structure d. distribution of income
b. cultural values
Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is intense? a. there is high differentiation among competing products b. these companies are trying to find ways to differentiate their products c. the threat of supplier forward integration is low d. there is low geographic saturation of the market
b. these companies are trying to find ways to differentiate their products
Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one-third of sales. With profitability far above the industry average, this product is responsible for one-half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark? a. The company should monitor the general environment for changes that might affect the profitability of the most profitable products b. The company should monitor the general environment for changes that might affect the revenue of all products c. The company should monitor the general environment for changes that might affect the revenue and profitability of all products d. The company should monitor the general environment for changes that might affect the profitability of all products
c. The company should monitor the general environment for changes that might affect the revenue and profitability of all products
DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry that DWK is likely to encounter here is: a. consumers' switching costs b. cost disadvantages independent of scale c. access to distribution channels d. government licensing and permits
c. access to distribution channels
The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ________ segment of the general environment in those countries that BP and other oil firms must manage when contending with scarce resources a. technological b. demographic c. global d. physical
c. global
According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT: a. low economies of scale needed for new firms to enter b. high bargaining power of buyers due to low switching costs c. low supplier power due to commodity inputs d. high threat of substitute products due to a large number of low-cost alternatives
c. low supplier power due to commodity inputs
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of: a. an industry with low exit barriers b. increasing economies of scale c. slow industry growth d. high bargaining power among buyers
c. slow industry growth.
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is MOST relevant here? a. suppliers b. entry barriers c. substitutes d. buyers
c. substitutes
Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ________ segment of the general environment a. economic b. global c. technological d. political/legal
c. technological
The threat from substitutes is high when: a. the quality of the substitute product is lower than the quality of the industry's product b. switching costs are high c. the substitute product's price is lower than the industry product's price d. the substitute product stimulates new process innovations within the industry
c. the substitute product's price is lower than the industry product's price
The economic environment refers to: a. the economic outlook of the world provided by the World Bank b. an analysis of how new environmental regulations will affect the U.S. economy c. an analysis of how the environmental movement and world economy interact d. the nature and direction of the economy in which a firm competes or may compete
d. the nature and direction of the economy in which a firm competes or may compete
An attractive industry is one that is characterized by high entry barriers, suppliers, and buyers with strong bargaining power, low threats from substitute products, or low rivalry among firms (T/F)
false
Any competitor intelligence practice that is legal is also ethical (T/F)
false
Contrary to popular belief, the global segment of the external environment does not provide many opportunities for firms that recently experienced low growth and profits coming from emerging markets (T/F)
false
Firms can directly control the elements of the six segments of the general environment (T/F)
false
Strategic groups are firms in different industries following the same or similar strategies (T/F)
false
The legislation introduced in the U.S. Congress during the early tenure of the Obama administration intended to reduce the amount of work U.S. companies outsource and is an example of a potential change in the sociocultural segment of the general environment (T/F)
false
The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry between the groups (T/F)
false
When firms analyze the external environment, they typically have complete and unambiguous data (T/F)
false