Chapter 3 - External Analysis

The only legal means of retaliation against new entrants is price competition.

False

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

an industry analysis

High exit barriers lead to intense rivalry.

True

The weaker the five forces in Porter's model, the _______ the industry's profit potential.

greater

In general, a firm improves its strategic position by ______.

increasing its competitive advantage

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

less

When managers understand the forces in the external environment, they are better able to ______.

mitigate threats and leverage opportunities

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

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

rivalry

Advantages based on brand loyalty, proprietary technology, preferential access to raw materials, and favorable geographic locations are examples of ______.

advantages independent of size

A group of companies that deal with more or less the same set of suppliers and buyers make up ______.

an industry

The external forces called technological factors ______.

capture the application of knowledge to create new process and products

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

legal

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

It consists of small firms

Which statement best describes the rivalry among existing competitors in the airline industry?

It is intense due to the pressure created by industry forces

Walmart producing private-label brands, such as Equate health and beauty items and Parent's choice baby products, is an example of ______.

backward integration

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.

buyers

Production costs can increase when ______.

buyers demand higher quality and more service

Obstacles that determine how easily a firm can enter an industry, are called ______.

entry barriers

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

explicit; tacit