Chapter 3

Restrictions imposed by the government, such as export quotas on certain products, are a part of the _____ of the PESTEL framework. • sociocultural environment • economic environment • ecological environment

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Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? • Complementary products and services like battery charging and service stations were pervasive. • GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry. • Other American automakers of plug-in hybrid sports cars, like Fisker Automative, filed for bankruptcy.

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In the restaurant industry, a large number of restaurants cater to the similar food-related needs of customers. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, or different services like home delivery and organic ingredients. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) _____. (PG 74) • monopolistically competitive structure • monopoly • oligopoly

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_____ is best described as the amount that savers are paid for use of their money and the amount that borrowers pay for that use. • Surcharge • Royalty fee • Service tax • Interest rate

• Interest rate

Although U.S. companies usually lay off people during periods of economic recession, the Japanese company, Toyota, prefers to use these periods to train its workers on the latest manufacturing techniques. Which of the following is the result of this human resource management strategy? • It positions the company well when the economy picks up again. • It raises the opportunity cost of starting a new venture. • It creates permanent financial risk for the company. • It removes any short-term expenses for the company.

• It positions the company well when the economy picks up again.

How do complements affect a primary product or service? • They lower the utility of the primary product. • They increase the demand for the primary product. • They reduce the value of the primary product. • They act as the strategic equivalent of the primary product.

• They increase the demand for the primary product.

The relative bargaining power of suppliers is most likely low when: • incumbent firms face low switching costs when changing suppliers. • the suppliers' industry is more concentrated than the industry it sells to. • there are no readily available substitutes for the products and services they offer. • the suppliers provide products that are differentiated.

• incumbent firms face low switching costs when changing suppliers.

A consolidated industry turns into a fragmented industry when: • network effects enjoyed by incumbent firms within the industry become stronger. • restrictive government policies are introduced in the industry. • technological advances lead to industry convergence. • firms reduce competition within the industry through mergers and acquisitions.

• technological advances lead to industry convergence.