Chapter 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

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

B. By developing proprietary technology

In a firm's external environment, ________ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class. A) Ecological trends B) Economic trends C) Political trends D) Demographic trends

D) Demographic trends

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A) SWOT analysis B) BCG matrix C) VRIO framework D) PESTEL framework

D) PESTEL framework

Which of the following is a primary feature of the five forces model? A) It views competition within an industry broadly to include such as buyers, suppliers, and the threat of substitutes. B) It takes into account a firm's internal resources, capabilities, and core competencies. C) It helps managers determine the changing speed of an industry or the rate of innovation. D) It is connected exclusively about the intensity of rivalry among direct competitors.

A) It views competition within an industry broadly to include such as buyers, suppliers, and the threat of substitutes.

Earlier, the travel industry was controlled by a few large travel companies that booked holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of the Internet, smaller travel agencies started mushrooming in the industry and customers started making their own reservations. Which of the following can be inferred from this information? A) The travel industry changed from a consolidated structure to a fragmented one. B) The pricing power of the incumbent firms in the travel industry has increased. C) The bargaining power of buyers in the travel industry has decreased. D) The structure of the travel industry changed from monopolistic competition to an oligopolistic one.

A) The travel industry changed from a consolidated structure to a fragmented one.

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. This has ensured that all firms in the country pay their employees at least $8,000 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 this mandate best indicate? A) Technological factors B) Legal factors C) Sociocultural factors D) Ecological factors

B) Legal factors

In the aircraft engine manufacturing industry, at least for large commercial jets, Rolls-Royes and General Electric are the only competitors. There is not a significant threat of entry because A) There is expected to be a huge return on investment within this industry. B) Government policy prevent from new entry to the industry. C) Entering the aircraft engine manufacturing industry requires huge capital investments. D) There is no credible threat of retaliation from the incumbents.

C) Entering the aircraft engine manufacturing industry requires huge capital investments.

Which of the following is a drawback of Porter's five forces model? A) The model describes competition narrowly as a firm's closest competitors. B) It fails to provide a basis for deriving implications for a firm's strategic position within an industry. C) Managers cannot determine the changing speed of an industry or the rate of innovation. D) The model fails to consider that threat of substitutes can come from outside a given industry.

C) Managers cannot determine the changing speed of an industry or the rate of innovation.

The telecommunication industry of United Canava is primarily dominated by three large firms: AD Telecom Inc. , Mystic Telecom Corp., and Total Talk Inc. Instead of cutting prices competitively, these firms have resorted to non-price competition through branding and product differentiation. Which of the following industry competitive structures are these companies most likely in? A) Monopoly B) Perfect competition C) Oligopoly D) Monopolistic competition

C) Oligopoly

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines? A) The structure of the industry will change from consolidated to one that is fragmented. B) The industry will face excess capacity in the future. C) The threat of strong competitive forces such as supplier power will increase. D) The overall industry profitability will increase.

D) The overall industry profitability will increase.