BP 3
the __________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment
PESTEL framework
In the smartphone industry, Google is a complementor to Samsung. Which of the following statements best explains why this is true
Samsung's smartphones increase in value when they are preinstalled with Google's Android system
How did Virgin America enter the airline industry despite the industry's notoriously low profitability? A. Virgin America offered average-cost service between small and large metropolitan cities in the American West. B. Virgin America offered average-cost service between major metropolitan cities along the American East Coast. C. Virgin America offered low-cost service between small and large metropolitan cities in the American South. D. Virgin America offered low-cost service between major metropolitan cities on the American East and West coasts.
Virgin America offered low cost service between the major metropolitan cities on the american east and west coasts
Which of the following statements with regard to industry structures is true
a consolidated industry tends to be more profitable than a fragmented one
Shield Autos Inc. has newly launched a luxury car into the European market. Which of the following would most likely NOT be a complement to the car? A. A premium car manufactured and sold by Mova Autos Inc., a rival company B. A bank that insures cars against theft and accidents C. A car service station managed and run by Shield Autos Inc. D. A stereo system that can be used as a GPS system in cars
a premium car manufactured and sold by Mova Autos Inc., a rival company
competitive industry structure refers to elements and features common to
all industries
The Beacon is a newspaper that sold print copies of its paper in a medium-sized town in Kansas for more than 100 years. Recently, the Beacon signed a deal with IntelNews Inc. to present the paper digitally to homes and businesses. This example shows A. a monopoly. B. an oligarchy. C. monopolistic competition. D. an industry convergence.
an industry convergence
In the step by step process of industry analysis, identifying the underlying drivers of each force is followed by
assessing the overall industry structure
Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds' products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised its bargaining power as a buyer through _____.
backward integration
How can a firm change its industry structure from monopolistically competitive or oligopolistic to a near monopoly? A. By reducing the entry barriers in its industry B. By developing proprietary technology C. By implementing frequent price-cuts D. By decreasing its pricing power
by developing proprietary technology
When applying the five forces model, the first step should ideally be
defining the relevant industry
How do low interest rates affect a business? A. Firms tend to defer investments. B. Firms can easily borrow money to finance future growth. C. Consumer demand slows down. D. Business credit is harder to obtain.
firms can easily borrow money to finance future growth
Which following statements accurately brings out the difference between monopolistic competition and an oligopoly?
in monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other
Which of the following is a primary feature of the five forces model?
it views, competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes
Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Curry Rush is most likely operating in a(n) _____. A. oligopoly B. monopoly C. perfectly competitive industry D. monopolistically competitive industry
monopolistically competitive industry
Which type of industry structure is often analyzed using game theory?
oligopolistic
Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition
oligopoly
When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which one of the following industry competitive structures does the iron ore industry best illustrate?
perfect competition
What are network effects?
positive effect that one user of a product or service has on the value of that product or service for other users
During periods of high industry growth
price competition among firms frequently decreases
Home Savings, Good Deals, Hank's Store, and King Bargains are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All four stores cater to the needs of highly price-sensitive customers. Thus, together Home Savings, Good Deals, Hank's Store, and King Bargains form a A. focus group. B. command group. C. strategic group. D. cross-functional group.
strategic group
Which of the following forces was not originally a part of Michael Porter's five forces model?
strategic role of complements
Keeping in mind the five forces in the airline industry, which of the follows best explains the situation in the industry
substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry
Which of the following is an implication of high exit barriers in an industry?
the industry will face excess capacity
Which of the following do the sociocultural forces in a firm's external environment best represent?
the family size of the firm's target market
Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? A. The competition in the industry is insignificant. B. The number of buyers in the industry is small. C. The firms can differentiate their product offerings. D. The entry barriers in the industry are extremely high.
the firms can differentiate their product offerings
a firm's industry strategic position is likely to be strong when
the gap between the value the firm's product generates and the cost to produce it is large
Buyers are highly price sensitive when:
they earn low profits or are strapped for cash.
The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry the____
threat of new entrants is most likely low
the primary objective of porter's five forces model is to
understand the profit potential of different industries