BCOR 2304 - Reading 2

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

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

According to Porter's model, which of the following should be considered when analyzing a firm's competition?

- buyers - the threat of substitutes - suppliers

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

- competitive industry structure - exit barriers - industry growth

In an oligopoly, which of the following conditions exist?

- differentiated products - a few large firms - high barriers to entry

Which of the following are examples of sociocultural factors?

- growth of the Hispanic population - increased number of health-conscious consumers

Which of the following are examples of economic factors in the firm's general environment?

- growth rates - interest rates - price stability

Which of the following are the four main competitive industry structures?

- perfect competition - oligopoly - monopolistic competition - monopoly

An industry analysis provides which of the following?

- 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 - a rigorous way of identifying the industry's profit potential

The pressure of rivalry increases when which of the following forces increase in intensity?

- the power of buyers and suppliers - the threat of substitutes - the threat of entry

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

An Industry Analysis

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

An ecological

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

Intensity of Rivalry

Which of the following statements is likely to be true about a fragmented industry?

It consists of small firms.

Which of the following statements is true about fragmented industries?

It consists of small firms.

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

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

Lean Manufactoring

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

Regulatory changes tend to affect entire industries at once.

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

Scale

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

Strong

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

Stronger and Stronger

In a perfectly competitive industry, firms have difficulty ______.

achieving competitive advantage

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

Although ______ coordination, such as price fixing, is illegal in the United States, ______ coordination such as "an unspoken understanding" is not.

explicit; tacit

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

government bodies

The economic factors that affect a firm's external environment are ______.

largely macroeconomic

Which of the following tend to result from strong competitive rivalry?

limits to the industry's profit potential

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

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

powerful

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

rivalry

Managers are able to influence which of the following types of external forces?

strategic group composition the structure of their industry

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

substitutes

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

threat of substitutes

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

Legal

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

Less

A perfectly competitive industry has ______ entry barriers and ______ small firms.

Low and Many

Which factors result from the processes and actions of government bodies that influence the decisions and behavior of firms?

Political

Which of the following are examples of economies of scale?

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

When a new firm enters an industry, which of the following often occur?

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

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

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

What is true about the external forces called technological factors?

They capture the application of knowledge to create new process and products.

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

Threat of Entry

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

True

Many drivers find a GPS navigation system useful. Because installing a GPS system in an automobile adds value to the vehicle, the system functions as ______.

a complement

Production costs can increase when ______.

buyers demand higher quality and more service

Which of the following contribute to consumer buying power?

- low switching costs - real time, accurate price comparisons

Which of the following are characteristics of a monopolistically competitive industry?

- obstacles to entry - the ability to raise prices for differentiated products - a differentiated product

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

- obtaining price discounts - demanding higher quality - requesting more service

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

Interdependent

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

a function of five forces related to competition

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

When firms compete by offering unique product features rather than competing on price, ______ occurs.

non-price competition