chapter 3 learnsmart

Through use of the PESTEL model, firms are able to do which of the following?

monitor external factors evaluate external trends

The ___ the forces, the ___ the expected competitive intensity, which in turn limits the industry's profit potential.

stronger; stronger

The five forces of Porter's model include the threat of entry and substitutes, rivalry among existing competitors, and the power of ______.

suppliers and buyers

Which of the following are forces in Porter's five forces model? (Check all that apply.)

bargaining power of buyers threat of substitute products or services threat of new entrants

Which of the following are important sources of entry barriers?

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

Sociocultural factors

capture a society's cultures, norms, and values

The external forces called technological factors ______.

capture the application of knowledge to create new process and products

Technological factors

capture the application of knowledge to create new processes and products

PESTEL model

groups the factors in the firm's general environment into six segments Political Economic Sociocultural Technological Ecological Legal

five forces model

helps strategic leaders understand the profit potential of different industries and how they can position their respective firms to gain and sustain competitive advantage by combing theory from industrial organization economics with detailed case studies, porter derived two key insights that form the basis of his seminal five forces model

The online auction site eBay has more than 100 million active users, so buyers are more likely to find what they are looking for while sellers are more likely to find buyers for the items they are offering. This is an example of __.

network effects

Which of the following are the four main competitive industry structures? (Check all that apply.)

perfect competition oligopoly monopolistic competition monopoly

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

It consists of small firms.

Production costs can increase when ______.

buyers demand higher quality and more service

According to the PESTEL model, which of the following are kinds of forces that exist in the general external environment?

ecological technological economic

A ______ is a product or service that adds value to the original product offering.

complement

political factors

Results from processes and actions of government bodies that can influence decisions and behavior of firms

There is a(n) ______ relationship between competitive intensity and the power of the five forces.

Strong

Which of the following help determine competitive industry structure? (Check all that apply.)

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

When suppliers do not depend heavily on the industry for a large portion of their revenues, the power of suppliers is ______.

high

If a business considers changing vendors, but doing so would require that business to alter product specifications, retrain employees, and/or modify existing processes, we would say the business faces significant ______.

switching costs

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

Legal

Who developed the five forces model?

Michael Porter

economic factors

in a firm's external environment are largely macroeconomic, affecting economy-wide phenomena.

Legal factors

include the official outcomes of political processes as manifested in laws, mandates, regulations, and court decisions—all of which can have a direct bearing on a firm's profit potential.

The relationship between the natural environment and business organizations can best be described as ______.

interdependent

Ecological factors

involve broad environmental issues such as the natural environment, global warming, and sustainable economic growth

Which of the following are factors in a firm's legal environment?

laws regulations mandates

According to Porter's model, which of the following should be considered when analyzing a firm's competition?

the threat of substitutes buyers suppliers

Which of the following are forces in Porter's five forces model?

threat of new entrants threat of substitute products or services bargaining power of buyers

5 macroeconomic factors that can affect firm strategy are

Growth rates Levels of employment Interest rates Price stability (inflation/deflation) Currency exchange rates

When a person that has been using a PC with a Microsoft Windows operating system starts using an Apple computer (which has a different operating system), that person will incur significant customer ______________.

switching costs