CONNECT CHAPTER 3 BCOR 460
Along which of the following dimensions do strategic groups differ from one another
- Customer service - Market segments - Research and development - Distribution channels
Which of the following does the five forces model to help firms do
- Determine the profit potential of different industries - Gain and sustain a competitive advantage
There is a(n) ______ relationship between competitive intensity and the power of the five forces
strong
The _______ the forces, the _______ the expecting competitive intensity, which in turn limits the industry's profit potential
stronger; stronger
Buyers demand higher quality and more service
substitutes
A company is a complementor to your company if ______
Customers value your product more when they can use it with the other company's product
Sociocultural factors are constantly in flux and also differ across groups
true
Governments sometimes set up a natural monopoly when a venture _____
would not otherwise not be profitable
In the five forces model, threat of entry refers to the risk ______
Of potential competitors entering the industry
The overall ______ is a measure of the change in the amount of goods and services produced by a nation's economy?
economic growth rate
Cost advantages that accrue for firms with larger outputs because they can spread fixed costs over more units and can employ technology more efficiently are called _______
economies of scale
Obstacles that determine how easily a firm can enter an industry are called
entry barriers
Although _______ coordination, such as a price fixing, is illegal in the US, ______ coordination such as an "unspoken understanding" is not
explicit; tacit
Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _______
intensity of rivalry
The relationship between the natural environment and business organizations can best be described as
interdependent
A perfectly competitive industry has _______ entry barriers and ______ small firms
low; many
The economic recession that began in 2008 in the US was the result of unwise investment in ______
real estate
The intensity with which companies in an industry jockey for market share and profitability is known as ________
rivalry
Growth rates, interest rates, and levels of employment would be considered ______ factors in a firm's general environment
economic
In the PESTEL model, political factors are those that relate to _________
government bodies
The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of
scale
The risk that potential competitors will enter the industry is known as the _______
threat of entry
As utility companies tend to serve a whole market exclusively, they are known as ______ because the governments involved believe that the product or service would be supplied otherwise
natural monopolies
What term describes the positive effect that one user of a product or service has on the value of that product or service for other users
network effect
Which of the following innovative ideas helped Airbnb develop a successful business in the peer to peer rental space
- Ensuring a smooth transaction between hosts and guests - Fortuitous timing that led to growing demand - Presenting a well designed website
Micheal Porter developed the five forces model to help firms do which of the following
- Gain and sustain a competitive advantage - Determine the profit potential of different industries
Which of the following are important sources of entry barriers
- Government policy - Credible threat of retaliation - Capital requirements - Network effects - Economies of scale
Which of the following help determine competitive industry structure
- Height of entry barriers - Firms' degree of pricing power - Size and number of competitors
Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully
- How to enter - When to enter - What type of entry should be made - Who are the players
Which of the following are important factors in determining the intensity of rivalry among existing competitors
- Industry growth - Competitive industry structure - Exit barriers
Which of the following contribute to consumer buyer power
- Low switching costs - Real time, accurate price comparisons
Which of the following are characteristics of a monopolistically competitive industry
- Obstacles to entry - A differentiated product - The ability to raise prices for differentiated products
Which of the following are approaches for answering the question "How to enter" when a firm is considering entering an industry
- Reconfiguring value chains - Leverage existing assets - Establishing a niche
Which of the following are ways in which the power of buyers affects producers
- Requesting more service - Demanding higher quality - Obtaining price discounts
Managers are able to influence which of the following types of external forces
- Strategic group composition - The structure of their industry
An industry analysis provides which of the following?
- The level of profitability that can be expected for the average firm in the industry - A rigorous way of identifying the industry's profit potential - Insight into a firm's strategic position within an industry
What conclusions can be reached about the airline industry using the five forces framework?
- The mega airlines must constantly struggle to achieve consistent profitability - The supporting players, such as airports and aircraft suppliers, a quite profitable
The pressure of rivalry increases when which of the following forces increase in intensity
- The power of buyers and suppliers - Threat of substitutes - Threat of entry
Which of the following are examples of sociocultural factors
- growth of the hispanic population - increased number of health conscious consumers
Production costs can increase when
Buyers demand higher quality and more service
When a firm in an oligopoly cuts prices, _______
a price war is likely to result
In a perfectly competitive industry firms have difficulty ______
achieving competitive advantage
The perfect competitive industry, firms have difficulty _________
achieving competitive advantage
A group of companies that deal with more or less the same set of suppliers and buyers make up _____
an industry
The most rigorous means of investigating the profit potential within a specific industry is to conduct _______
an industry analysis
A key feature of an oligopoly is that the competing firms in the industry ________, meaning the actions of any one firm will influence the behavior of the other firms
are interdependent
The pressures that industry suppliers can exert on an industry's profit potential, is also called the _______
bargaining power of suppliers
A rise in economic growth is reflected by ______
businesses expanding operations to satisfy demand
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
The ________ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers
threat of substitutes
Although the five forces model is useful in understanding an industry's profit potential, it provides only a ______
point in time snapshot of a moving target
Which factors result from the processes and actions of government bodies that influence the decisions and behavior of firms
political
In an oligopoly, which of the following conditions exist
- High barriers to entry - A few large firms - Differentiated products
Which of the following statements about industry dynamics is true
- the five forces model is a static model - over time, industry structures are not stable
Which of the following are examples of economic factors in the firm's general environment?
-growth rates -price stability -interest rates
Which of the following are factors in a firm's legal environment?
-mandates -laws -regulations
Which of the following are ways that powerful suppliers are a threat to firms
-they can force the cost of production to increase -they can reduce the industry's profit potential
According to Michael Porter, the profit potential of an industry is
A function of five forces related to competition
Which of the following statements about Airbnb is correct
It handles for accommodations than the three biggest hotel chains combined
What is true about the external forces called technological factors?
They capture the application of knowledge to create new process and products
Many drivers find a GPS navigation system useful. Because installing a GPS system in an automobile adds value to the vehicle, the system functions as
a complement
Which of the following statements is likely to be true about a fragmented industry
it consists of small firms
Which of the following reduces profit margins for air carriers
large corporate customers contracting with the US airline industry - the presence of monopoly power
Which of the following is an example of a recent innovation in processing technology?
lean manufacturing
Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business
legal
When managers understand the forces in the external environment, they are better able to ________
mitigate threats and leverage opportunities
Industry specific factors known as ______ separate one strategic group from another
mobility barriers
Firms have a tendency to change the industry structure in their favor, making it more _______ through horizontal mergers and acquisitions, since this tends to be more profitable than a fragmented one
consolidated
In the early 2000s, easy credit made real estate the investment of choice in the US. by the end of the decade, however, a recession had set in, impacting almost all businesses in the country. What does this example show?
economic boom periods can overhead and lead to speculative bubbles
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 find buyers for the items they are offering. What is this an example of
network effects
When firms compete by offering unique product features rather than competing on price, ______ occurs
non price competition