Ch 3 Strategic Management

The economic factors that affect a firm's external environment are ______. Multiple choice question. largely macroeconomic primarily ecological often unidentifiable usually regional

largely macroeconomic

Which of the following tend to result from strong competitive rivalry? Multiple choice question. limits to the industry's profit potential less product differentiation a reduction in the threat of substitutes industry-wide price increases

limits to the industry's profit potential

Which of the following contribute to consumer buying power? Multiple select question. low switching costs moderately high barriers to entry high levels of product differentiation real time, accurate price comparisons

low switching costs real time, accurate price comparisons

Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.) Multiple select question. market segments customer service research and development profit motive distribution channels

market segments customer service research and development distribution channels

In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines. Multiple choice question. supplier power exit barrier strategic commitment mobility barrier

mobility barrier

Industry-specific factors known as ______ separate one strategic group from another. Multiple choice question. planned emergencies mobility barriers competitive rivalries oligopolies

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 ______. Multiple choice question. perfectly competitive industry oligopolistic industry natural monopoly monopolistic competition

monopolistic competition

When firms compete by offering unique product features rather than competing on price, ______ occurs. Multiple choice question. competitor allegiance strategic intent non-price competition an oligopoly

non-price competition

______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms. Multiple choice question. Profitable Political Technological Economic

Political

A rise in economic growth is reflected by ______. Multiple choice question. businesses expanding operations to satisfy demand businesses staying the same businesses closing operations due to lack of demand

businesses expanding operations to satisfy demand

Which of the following help determine competitive industry structure? (Check all that apply.) Multiple select question. height of entry barriers composition of the board of directors size and number of competitors firms' degree of pricing power the firm's resources

height of entry barriers size and number of competitors firms' degree of pricing power

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 characteristics of a monopolistically competitive industry? (Check all that apply.) Multiple select question. obstacles to entry the ability to raise prices for differentiated products very few competing firms a differentiated product

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

Although the five forces model is useful in understanding an industry's profit potential, it provides only a ___. Multiple choice question. point-in-time snapshot of static industries dynamic view of a moving target fixed view of a static competitive market point-in-time snapshot of a moving target

point-in-time snapshot of a moving target

Which of the following are factors in a firm's legal environment? (Check all that apply.) Multiple select question. demographic trends regulations mandates innovative technology laws

regulations mandates laws

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.) Multiple select question. Having more negotiating power vis-à-vis suppliers Employing technology less efficiently Spreading fixed costs over fewer units Spreading fixed costs over more units

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

Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.)

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

Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.) Multiple select question. growth rates technological advancements interest rates price stability government regulations

growth rates interest rates price stability

An example of a recent innovation in process technology is ______. Multiple choice question. the microwave the BP oil spill lean manufacturing the smartphone

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. Multiple choice question. socio-cultural legal economic technological

legal

Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry? Multiple select question. Establishing a niche Timing of the entry Leverage existing assets Reconfiguring value chains

Establishing a niche Leverage existing assets Reconfiguring value chains

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. Multiple choice question. supplier existing competitors new entrants buyers

buyers

According to Porter's model, which of the following should be considered when analyzing a firm's competition? (Check all that apply.) Multiple select question. buyers the regulations in possible host countries the threat of substitutes suppliers

buyers the threat of substitutes suppliers

Which of the following statements about legal factors as an external force is true? Multiple choice question. The U.S. government has allowed very few industries to be deregulated. Regulatory changes tend to affect entire industries at once. The courts do not allow the government to use legal factors to exert its political will on businesses. Legal factors affect a firm's profit potential only indirectly.

Regulatory changes tend to affect entire industries at once.

Which of the following statements about industry dynamics is true? Multiple select question. The five forces model takes into account industry dynamics. The five forces model is a static model. Firms in an industry have a tendency to fragment in order to increase profitability. Over time, industry structures are not stable

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

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 ______. Multiple choice question. mobility barrier loss leader a complement co-opetition

a complement

In a perfectly competitive industry, firms have difficulty ______. Multiple choice question. achieving competitive advantage keeping prices low making purchasing decisions avoiding profitability

achieving competitive advantage

A group of companies that deal with more or less the same set of suppliers and buyers make up ______. Multiple choice question. a state a multi-environment a business group an industry

an industry

Which of the following are the four main competitive industry structures? (Check all that apply.) Multiple select question. perfect monopoly monopolistic competition perfect competition oligopoly monopoly monopolistic oligopoly

monopolistic competition perfect competition oligopoly monopoly

Obstacles that determine how easily a firm can enter an industry, are called ______. Multiple choice question. rivalry barriers supplier barriers entry barriers threats of substitutes

entry barriers

The expected competitive intensity is stronger when the other four forces are ______, and weaker when the other four forces are ______. Multiple choice question. stronger; stronger weaker; stronger weaker; weaker stronger; weaker

stronger; weaker

The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel. Multiple choice question. entry substitutes suppliers buyers

substitutes

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 5 forces 3. strategic group mapping

The ______ is a measure of the change in the amount of goods and services produced by a nation's economy. Multiple choice question. interest rate currency exchange rate level of employment economic growth rate

economic growth rate

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. Multiple choice question. engage in monopolistic behavior engage in co-opetition are price takers are interdependent

are interdependent

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______. Multiple choice question. powerful evil desperate for business weak

powerful

In the PESTEL model, political factors are those that relate to ______. Multiple choice question. employment climate and weather banking organizations government bodies

government bodies

Managers are able to influence which of the following types of external forces? (Check all that apply.) Multiple select question. the structure of their industry strategic group composition currency exchange rates interest rates

the structure of their industry strategic group composition

Global warming would be an example of ______ factor in a firm's external environment. Multiple choice question. a political an ecological a sociocultural a technological

an ecological

Which of the following are characteristics of the companies in a strategic group? (Check all that apply.) Multiple select question. The companies do not seek a competitive advantage. The companies differ in important dimensions from companies in other strategic groups. 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. The companies form part of a specific industry. The companies pursue similar strategies.

What is the result of the airline industry having powerful buyers? Multiple choice question. Airlines' profit margins are reduced. It is difficult for new airlines to enter the industry. The potential for airline profit is high. Airlines have increased negotiating power.

Airlines' profit margins are reduced.

Which of the following statements is likely to be true about a fragmented industry? Multiple choice question. It has high profitability. It consists of small firms. It has a very low competitive structure. It consists of only a few firms.

It consists of small firms.

The intensity with which companies in an industry jockey for market share and profitability is known as ______. Multiple choice question. threats barriers identification rivalry

rivalry

True or false: Sociocultural factors tend to be fixed.

False

Which of the following are characteristics of a perfectly competitive industry? (Check all that apply.) Multiple select question. Firms in the industry sell a commodity product. The industry is fragmented. Consumers make purchasing decisions based on product features. Individual firms have little or no ability to raise prices.

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

When a new firm enters an industry, which of the following often occur? (Check all that apply.) Multiple select question. Incumbent firms increase their market share. Industry profit potential declines. Incumbent firms spend more to satisfy customers. Incumbent firms lower prices. Incumbent firms raise prices.

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

In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming? Multiple choice question. It does not help us understand why there are performance differences among firms in the same strategic group. It does not refer to the international nature of the PESTEL factors. It does not account for the threat of new entrants or proposed governmental legislation.

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? Multiple choice question. It was spun off as a service developed by Google, Inc. It handles more accommodations than the three biggest hotel chains combined. It was founded before the Internet was created. It operates only in North America and Europe.

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

According to Michael Porter, the profit potential of an industry is ______. Multiple choice question. entirely determined by industry-specific factors largely random a function of five forces related to competition similar for all service industries

a function of five forces related to competition

Which of the following are examples of sociocultural factors? (Check all that apply.) Multiple select question. an increased demand by consumers for gluten-free products the growth of the Hispanic population the widespread adoption of smart phones an extended period of low interest rates

an increased demand by consumers for gluten-free products the growth of the Hispanic population the widespread adoption of smart phones

The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______. Multiple choice question. an industry analysis an industry PET scan a market analysis a PESTEL analysis

an industry analysis

Production costs can increase when ______. Multiple choice question. the power of suppliers goes down buyers demand lower quality and less service buyers demand higher quality and more service

buyers demand higher quality and more service

The external forces called technological factors ______. Multiple choice question. capture the application of knowledge to create new process and products describe society's norms and values quantify characteristics of the economy and business climate represent official government decisions and regulations

capture the application of knowledge to create new process and products

A company is a complementor to your company if ______. Multiple choice question. customers value your product more when they can use it with the other company's product the market is fragmented and you can gain solidarity with a former rival that company praises your company for excellence customers private label your product

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. Multiple choice question. explicit; tacit tacit; perfect perfect; explicit tacit; monopolistic

explicit; tacit

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________. Multiple choice question. industry growth development of new products switching costs intensity of rivalry

intensity of rivalry

The relationship between the natural environment and business organizations can best be described as ______. Multiple choice question. a U-shape interdependent insignificant unconnected

interdependent

There is a(n) ______ relationship between competitive intensity and the power of the five forces. Multiple choice question. negative inverted strong disconnected

strong

The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.) Multiple select question. the power of buyers and suppliers the threat of substitutes the barriers to entry the threat of entry

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

The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers. Multiple choice question. power of buyers threat of new entrants rivalry of existing competitors threat of substitutes

threat of substitutes

Which of the following are ways that powerful suppliers are a threat to firms? (Check all that apply.) Multiple select question. They can force the cost of production to increase. They can reduce the industry's profit potential. They can drive away the consumer market directly. They can capture part of the economic value created by firms.

They can force the cost of production to increase. They can reduce the industry's profit potential. They can capture part of the economic value created by firms.

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.) Multiple select question. When to enter? Who are the players? How to enter? What type of entry should be made? Why is it important to study the external environment?

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

In an oligopoly, which of the following conditions exist? (Check the three that apply.) Multiple select question. a few large firms few commodity products high barriers to entry differentiated products

a few large firms high barriers to entry differentiated products

Which of the following are important factors in determining the intensity of rivalry among existing competitors? (Check all that apply.) Multiple select question. short-term contracts entry barriers competitive industry structure exit barriers industry growth

competitive industry structure exit barriers industry growth

Firms have a tendency to change the industry structure in their favor, for example by making industries more __ through mergers and acquisitions. Multiple choice question. consolidated competitive diffuse intuitive

consolidated

Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.) Multiple select question. expenditures on research and development expenditures on advertising and HR product and service offerings cost structure

expenditures on research and development product and service offerings cost structure

Which of the following are important sources of entry barriers? (Check all that apply.) Multiple select question. government policy network effects capital requirements economies of scale credible threat of retaliation low product differentiation

government policy network effects capital requirements economies of scale credible threat of retaliation

What are the three aspects of mapping strategic groups? Multiple select question. graphing the firms in the strategic group and indicating each firm's market share identifying the most important strategic dimensions calculating the shareholder value of the two firms selected 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 choosing two key dimensions for the horizontal and vertical axes

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

strategic

The risk that potential competitors will enter the industry is known as the ______. Multiple choice question. power of suppliers threat of entry rivalry among existing competitors threat of substitutes power of buyers

threat of entry