SB Chapter 3

Which of the following are characteristics of the companies in a strategic group? (Check all that apply.)

The companies form part of a specific industry. The companies pursue similar strategies. The companies differ in important dimensions from companies in other strategic groups.

Managers have ______ direct influence over external forces in the firm's general environment than those in the firm's task environment.

less

Which of the following are examples of sociocultural factors?

A growing number of U.S. consumers have become more health-conscious about what they eat. The growth of the Hispanic population.

An industry analysis provides which of the following?

A rigorous way of identifying the industry's profit potential. The level of profitability that can be expected for the average firm in the industry. Insight into a firm's strategic position within an industry.

In a perfectly competitive industry, firms have difficulty ______.

Achieving competitive advantage

Which of the following help determine competitive industry structure? (Check all that apply.)

Firms' degree of pricing power. Height of entry barriers. Size and number of competitors

In an oligopoly, which of the following conditions exist? (Check the three that apply.)

High barriers to entry. A few large firms. Differentiated products

Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully? (Check all that apply.)

Who are the players? When to enter? What type of entry should be made? How to enter?

Which of the following are factors in a firm's legal environment? (Check all that apply.)

Mandates Regulations Laws

When managers understand the forces in the external environment, they are better able to ______.

Mitigate threats and leverage opportunities

In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

Mobility barrier

Industry-specific factors known as ______ separate one strategic group from another.

Mobility barriers

Many firms of all sizes actively compete in the computer hardware industry, and there are no firms with a large market share. Product offerings tend to be similar but are differentiated in ways that enable some firms to raise or impact pricing. The computer hardware industry is an example of ______.

Monopolistic competition

Which of the following are the four main competitive industry structures? (Check all that apply.)

Monopolistic competition. Perfect competition. Oligopoly. Monopoly.

In the five forces model, threat of entry refers to the risk:

Of potential competitors entering the industry.

Which of the following statements about industry dynamics is true?

Over time, industry structures are not stable. The five forces model is a static model

Although the five forces model is useful in understanding an industry's profit potential, it provides only a ___.

Point-in-time snapshot of a moving target

______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms.

Political

Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.)

Research and development. Customer service. Market segments. Distribution channels.

The intensity with which companies in an industry jockey for market share and profitability is known as ___.

Rivalry

The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of

Scale

Which of the following are examples of economies of scale? (Check all that apply.)

Spreading fixed costs over more units. Having more negotiating power vis-a-vis suppliers.

A(n) ___ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.

Strategic

The ___ the forces, the ___ the expected competitive intensity, which in turn limits the industry's profit potential.

Stronger; Stronger

Which of the following are characteristics of a perfectly competitive industry? (Check all that apply.)

The industry is fragmented. Firms in the industry sell a commodity product. Individual firms have little or no ability to raise prices.

Which of the following are ways that powerful suppliers are a threat to firms?

They can reduce the industry's profit potential. They can force the cost of production to increase.

The risk that potential competitors will enter the industry is known as the ______.

Threat of entry

Which of the following are characteristics of a monopolistically competitive industry? (Check all that apply.)

A differentiated product. Obstacles to entry. The ability to raise prices for differentiated products

Which of the following contribute to consumer buying power?

Real time, accurate price comparisons. Low switching costs

The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.

Substitutes

Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment.

Economic

Cost advantages that accrue for firms with larger output because they can spread fixed costs over more units and can employ technology more efficiently are called ______.

Economies of scale.

Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry? (Check all that apply.)

Leveraging existing assets. Establishing a niche. Reconfiguring value chains

According to Porter's model, which of the following should be considered when analyzing a firm's competition? (Check all that apply.)

The threat of substitutes. Buyers. Suppliers

The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.)

The threat of substitutes. The power of buyers and suppliers. The threat of entry

Place the three frameworks used in industry analysis in the order they should be used, with the first at the top

1. PESTEL analysis 2. Porter's five forces 3. Strategic group mapping

In the PESTEL model, political factors are those that relate to ______.

Government bodies

According to Michael Porter, the profit potential of an industry is ______.

A function of five related to competition

Global warming would be an example of ___ factor in a firm's external environment.

An Ecological

The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______.

An industry analysis

A group of companies that deal with more or less the same set of suppliers and buyers make up ______.

An industry.

A key feature of an oligopoly is that the competing firms in the industry ______, meaning the actions of any one firm will influence the behaviors of the other firms.

Are interdependent

The power of ______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality.

Buyers

Production costs can increase when ______.

Buyers demand higher quality and more service.

A ______ is a product or service that adds value to the original product offering.

Complement

Firms have a tendency to change the industry structure in their favor, making it more __ through horizontal mergers and acquisitions, since this tends to be more profitable than a fragmented one.

Consolidated

Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.)

Cost structure. Expenditures on research and development. Product and service offerings

A company is a complementor to your company if ______.

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

When a new firm enters an industry, which of the following often occur? (Check all that apply.)

Incumbent firms lower prices. Incumbent firms spend more to satisfy customers. Industry profit potential declines.

Which of the following are important factors in determining the intensity of rivalry among existing competitors?

Industry growth. Competitive industry structure. Exit barriers

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________.

Intensity of rivalry

The relationship between the natural environment and business organizations can best be described as ______.

Interdependent

Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.)

Interest rates Growth rates Price stability

In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming?

It does not help us understand why there are performance differences among firms in the same strategic group

Which of the following statements about Airbnb is correct?

It handles more accommodations than the three biggest hotel chains combined.

Which of the following reduces profit margins for air carriers?

Large corporate Customers contracting with the U.S. airline industry.

Which of the following innovative ideas helped Airbnb develop a successful business in the peer-to-peer rental space?

Ensuring a smooth transaction between hosts and guests. Presenting a well-designed website. Fortuitous timing that led to growing demand

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.

Powerful

Which of the following statements about legal factors as an external force is true?

Regulatory changes tend to affect entire industries at once.

Managers are able to influence which of the following types of external forces? (Check all that apply.)

Strategic group composition. The structure of their industry

An example of a recent innovation in process technology is ______.

lean manufacturing

Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business.

Legal

There is a(n) ______ relationship between competitive intensity and the power of the five forces.

Strong

The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers.

Threat of substitutes

Sociocultural factors are constantly in flux and also differ across groups.

True

Which of the following are ways in which the power of buyers affects producers?

By obtaining price discounts. By requesting more service. By demanding higher quality.

The external forces called technological factors ______.

Capture the application of knowledge to create new process and products.

What are the three aspects of mapping strategic groups?

Choosing two key dimensions for the horizontal and vertical axes. Graphing the firms in the strategic group and indicating each firm's market share. Identifying the most important strategic dimensions.