Chapter 3 External Analysis

Which of the following represents an economic factor in a firm's external genera environment? a. The government regulations and laws in the country in which the firm exists b. The stage of the business cycle that the country is in c. The values and norms prevalent in the society in which the firm operates d. The bargaining power of the firm's suppliers and buyers

b. The stage of the business cycle that the country is in

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because a. Entering the aircraft manufacturing industry requires have capital investment. b. There is expected to be a huge return of investment within this industry c. There is no credible threat of retaliation from the incumbents d. Entering the aircraft manufacturing industry means violating government policies

a. Entering the aircraft manufacturing industry requires have capital investment.

The relative bargaining power of suppliers is high when a. Suppliers provide products that are differentiated b. Incumbent firms face low supplier switching costs c. Incumbent firms can credibly threaten to backward integrate into the industry d. Suppliers depend heavily on the industry for a large portion of their revenues

a. Suppliers provide products that are differentiated

Companies in the same strategic group are _____ to each other a. Complementors b. Direct competitors c. Strategic partners d. Shareholders

b. Direct competitors

The primary objective of Porter's five forces model is to a. Replace a firm's competitive advantage with a competitive parity b. Understand the profit potential of different industries c. Reduce the gap between the value of a firm's product and its cost of production d. Breakdown a firm's value chain activities into primary and support

b. Understand the profit potential of different industries

When is the rivalry among existing competitors in an industry likely to be more intense? a. When the industry growth rate is high b. When firms make strategic commitments to compete in an industry c. When firms engage in non-price competition as opposed to price-cutting d. When the industry has low exit barriers

b. When firms make strategic commitments to compete in an industry

Which of the following is true about strategic groups? a. It is not possible to have two different strategic groups within the same industry b. Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups. c. Profitability varies between different strategic groups d. Companies within the same strategic group are competitors

c. Profitability varies between different strategic groups

The government of Filvia has mandated that the standard minimum wage in the country to be increased to $8000 per year. This has ensured that all firs in the country pay their employees at least $8000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors in a firm's general environment does the mandate best indicate? a. Ecological factors b. Sociocultural factors c. Technological factors d. Legal factors

d. Legal factors

In which of the following industry competitive structures do selling firms have the lowest pricing power? a. Monopolistic competition b. Monopoly c. Oligopoly d. Perfect competition

d. Perfect competition

A firm's strategic position is likely to be strong when: a. The entry barriers within the industry it operates in are low and the exit barriers are high b. Its suppliers and vendors can easily forward integrate and buyers can backward integrate c. All the five forces in the Porter's model are strong d. The gap between the value of the firm's product generates and the cost to produce it is larger

d. The gap between the value of the firm's product generates and the cost to produce it is larger