Strategic Managment - Quiz 3
A firm's _____ relates to its ability to create value for customers (V) while containing the cost to do so (C). A. strategic position B. incumbency C. threat of entry D. attrition rate
a
A strategic group will typically include: A. firms within the same industry. B. customers belonging to a particular socioeconomic class. C. firms employing similar number of employees, irrespective of their industries. D. employees within a firm earning the same amount of salaries.
a
Competitive rivalry based solely on _____ is destructive to firms as it transfers most of the value created in the industry to the customers. A. price-cutting B. new product releases C. promotional campaigns D. product differentiation
a
During periods of high industry growth: A. price competition among firms frequently decreases. B. rivals are focused on taking market share away from one another. C. firms indulge in intense promotional campaigns. D. new product releases with minor modifications become common.
a
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
How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces? A. Threat of new entrants will be low B. Bargaining power of suppliers will be high C. Availability of complements will be low D. Threat of substitute products and services will be high
a
In an industry, the threat of entry is high when: A. capital requirements are low. B. expected returns are high. C. technological know-how is industry specific. D. switching costs are high.
a
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 huge capital investments. B. there is expected to be a huge return on 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
Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry? A. Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry. B. Suppliers have weak bargaining power because they offer products that are not differentiated. C. Entry barriers in the industry are high resulting in hardly any new airlines popping up. D. Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.
a
Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of: A. co-opetition B. perfect competition C. monopolization D. conglomeration
a
Shield Autos Inc. has newly launched a luxury car into the European market. Which of the following would most likely NOT be a complement to the car? A. A premium car manufactured and sold by Mova Autos Inc., a rival company B. A bank that insures cars against theft and accidents C. A car service station managed and run by Shield Autos Inc. D. A stereo system that can be used as a GPS system in cars
a
The final step in industry analysis is to: A. draw a strategic group map. B. identify the underlying drivers of the five forces. C. identify the key players in each of the five forces. D. define the relevant industry.
a
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
Vibgyor TV Inc. is a large production company that controls a major portion of the movie industry's market share along with two other firms. Despite its competitiveness with the two other firms, it is influenced by their actions and often has to consider their strategic actions before acting on its own. In this scenario, Vibgyor TV Inc. is most likely functioning in a(n) _____ industry. A. oligopolistic B. monopolistic C. perfectly competitive D. monopolistically competitive
a
Which of the following external forces is a part of a firm's task environment? A. The composition of the strategic group to which the firm belongs B. The interest rates prevalent in the economy in which the firm operates C. The inflation level in the economy in which the firm operates D. The recent innovations in process technology, including lean manufacturing
a
Which of the following is a feature of a monopolistically competitive industry? A. Differentiated products B. High entry barriers C. No pricing power D. A single firm
a
Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines? A. The overall industry profitability will increase. B. The threat of strong competitive forces such as supplier power will increase. C. The industry will face excess capacity in the future. D. The structure of the industry will change from consolidated to one that is fragmented.
a
Which of the following would most likely NOT indicate that sellers are a strong competitive force in an industry? A. When the buyers' cost of switching to substitutes is low B. When the products and services they provide can be differentiated C. When the buyers of their products are customers who buy in small quantities D. When the components they supply affect buyers' product quality
a
Which type of industry structure is often analyzed using game theory? A. Oligopolistic B. Monopolistic C. Perfectly competitive D. Monopolistically competitive
a
While Burger Cult Inc. operates in a monopolistically competitive industry, Citizen Telecom Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true? A. The threat of new entrants will be higher for Burger Cult Inc. than Citizen Telecom Inc. B. Burger Cult Inc. will have more pricing power than Citizen Telecom Inc. C. Burger Cult Inc. will have more profit potential than Citizen Telecom Inc. D. The number of buyers will be limited for both Burger Cult Inc. and Citizen Telecom Inc.
a
While implementing strategic group mapping for the U.S. domestic airline industry, two strategic groups become apparent: low-cost, point-to-point airlines (Virgin Atlantic, Alaska Airlines, JetBlue, and Southwest Airlines) versus differentiated airlines using a hub-and-spoke system (American, Delta, and United). Which of the following statements is true about these two strategic groups? A. Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that between American and Southwest airlines. B. American, United, and Delta airlines will be affected differently by Porter's five competitive forces. C. Alaska Airlines and Delta airlines will be affected by the external environment in very similar ways. D. Competitive rivalry between Virgin Atlantic and Delta airlines is likely to be higher than that between American, Delta, and United.
a
While industry forces have been favorable for a long time in the U.S. automotive industry, recent dynamics have lowered the profit potential of competing in this industry and thus reduced its attractiveness. The continued success of Tesla Motors in the industry will depend on other firm and industry factors. Which of the following represents one such factor that directly affects Tesla Motors? A. Since suppliers of its key sources are few, the bargaining power of suppliers is high. B. Since individual buyers do not have many choices, their bargaining power is low. C. There is a lack of balance in demand and supply: demand far exceeds capacity within the industry. D. There is a noticeable absence of complementary products and services for the industry.
a
With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as? A. Industry convergence B. Backward integration C. Product differentiation D. Customer myopia
a
_____ are best described as industry-specific factors that separate one strategic group from another. A. Mobility barriers B. Excise duties C. Embargoes D. Learning effects
a
_____ is best described as cooperation by competitors to achieve a strategic objective. A. Co-opetition B. Conglomeration C. Amalgamation D. Liquidation
a
Balmia Ammunition Inc., a firm controlled and managed by the government of Balmia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate? A. Monopolistic competition B. Monopoly C. Oligopoly D. Perfect competition
b
Beans Inc. operates in a perfectly competitive agricultural industry. Classica Apparel Inc., in contrast, operates in a monopolistically competitive industry. Keeping this information in mind, which of the following statements is true? A. Beans Inc. will face competition from many sellers, whereas Classica Apparel Inc. will be the only seller in the market. B. While Classica Apparel Inc. will have the power to set the prices for its products, Beans Inc. will have little or no ability to do so. C. Beans Inc. will have many buyers for its products, whereas Classica Apparel Inc. will have very few buyers for its products. D. While Beans Inc. will communicate the degree of product differentiation through advertising, Classica Apparel Inc. will need no advertising.
b
Bright Billion Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Bright Billion Inc. find it most difficult to exit? A. The management consultancy industry in which the company's fixed costs are low B. The steel industry in which the company has obligations like severance pay toward employees C. The corporate training industry in which the company's commitments are mostly short-term D. The e-commerce industry where the company has no long-term contractual agreements with suppliers
b
Buyers are highly price sensitive when: A. their purchase represents a small fraction of their procurement budget. B. they earn low profits or are strapped for cash. C. the quality of their products and services are highly affected by the quality of the inputs. D. the industry's products are highly characterized with non-price competition.
b
Companies in the same strategic group are _____ to each other. A. complementors B. direct competitors C. strategic partners D. shareholders
b
Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition
b
Family Needs Inc. is a supermarket chain. Due to strong competition from other stores in the industry, Family Needs has aggressively used branding, pricing, and superior customer service to uniquely position itself in the market. As a result, the supermarket chain has been able to differentiate itself from its competitors and sell its products at higher prices. Which of the following industry competitive structures does this scenario best illustrate? A. Perfect competition B. Monopolistic competition C. Monopoly D. Oligopoly
b
First Ledger Inc., an auditing company, replaced its existing accounting software with new accounting software from another supplier. Since the new software has different features and abilities, First Ledger Inc. has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents First Ledger Inc.'s _____. A. opportunity cost B. switching cost C. octroi charge D. excise duty
b
Given the industry structure in the automobile business, entering the auto manufacturing industry doesn't seem advisable. Yet Tesla Motors is joining the fray. Rather than attempting to compete head-on in internal combustion engines, Tesla Motors is entering the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche? A. Network effects B. Economies of scale C. Customer switching costs D. Capital requirements
b
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
In a firm's external environment, _____ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class. A. political trends B. demographic trends C. ecological trends D. economic trends
b
In the 1950s, in response to extreme forms of nationalism and the resulting world wars that had devastated Europe, the first steps were taken to create a supra-national EU. In 1992, after almost 40 years of continued economic integration, peace, and prosperity, the European leaders initiated further steps toward political economic integration. Which of the following represents one of the steps the European leaders initiated? A. Creating a country called the United States of Europe B. Introducing a common currency C. Providing budgetary authority to all states of the EU D. Separating heavy industries such as coal and steel
b
Industry convergence is a process whereby: A. firms within the same industry start to satisfy different customer needs. B. formerly unrelated industries begin to satisfy the same customer need. C. excess capacity within an industry is reduced through horizontal mergers. D. firms within an industry start to target a narrow market segment.
b
The primary objective of Porter's five forces model is to: A. replace a firm's competitive advantage with 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. break down a firm's value chain activities into primary and support.
b
The telecom industry in the country of Andalus is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry, the: A. threat of substitutes is most likely high. B. threat of new entrants is most likely low. C. bargaining power of buyers is most likely low. D. entry barriers are most likely non-existent.
b
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
Which of the following is a characteristic of a fragmented industry? A. The entry barriers are high. B. There are many small firms. C. Firms tend to have high profitability. D. Firms have substantial pricing power.
b
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. Managers cannot determine the changing speed of an industry or the rate of innovation. C. It fails to provide a basis for deriving implications for a firm's strategic position within an industry. D. The model fails to consider that threat of substitutes can come from outside a given industry.
b
Which of the following is an example of monopolistic competition? A. Iron ore industry B. Computer hardware industry C. Express delivery industry D. Beverages industry
b
Which of the following is an implication of high exit barriers in an industry? A. The number of underperforming firms in the industry will be low. B. The industry will face excess capacity. C. The competitive pressure among existing firms will be low. D. The industry will be more attractive for new entrants.
b
Which of the following represents an economic factor in a firm's external general 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
Which of the following statements is NOT true about the five forces in Porter's competitive analysis model? A. The relative strengths of the five forces that shape competition are context-dependent. B. The stronger the five forces in an industry, the greater the industry's profit potential. C. Competition in the model is described as the tug-of-war between the five forces to capture as much as possible of the economic value created in an industry. D. An analysis of the five forces provides the basis for how a firm should position itself to gain and sustain a competitive advantage.
b
Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure? A. Competing against each other through product differentiation B. Competing against each other through price-cutting C. Competing against each other through new-product introductions D. Competing against each other through lifestyle advertisements
b
3T Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all 3T users are free. When a person switches to a 3T network, his or her entire network of family and friends is likely to switch to the same network to avail the benefit of free calls and messages. In addition, an existing user who gets a new user to register with 3T Inc. is given a free wireless connection. This has helped to keep competition away from 3T. In this scenario, which of the following factors is acting as an entry barrier for 3T Inc.? A. Economies of scale B. High capital requirement C. Network effects D. High fixed costs
c
A company is best described as a _____ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service. A. competitor B. shareholder C. complementor D. strategic equivalent
c
A key feature of an oligopoly is that the competing firms _____. A. are independent B. have no pricing power C. are interdependent D. have no barriers to entry
c
Due to economic regression in United Filipia, the profitability of the large conglomerate Blue Wing Products Inc. (BWP) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would BWP find it most easy to exit? A. The automobile business where the company has contractual obligations with suppliers B. The airline business where the company's strategic commitments are long-term C. The e-commerce retail business where investments on assets are low D. The pharmaceutical business where the company has a large number of fixed costs
c
Economies of scale are cost advantages that accrue for firms with: A. high fixed costs. B. low employee turnover. C. larger output. D. high capital risks.
c
Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality dining rather than the prices. In this scenario, which of the following will be a part of Golden Harvest's strategic group? A. A nearby fast food restaurant B. A food kiosk in an adjacent subway station C. A premium rooftop restaurant in the same city D. A mobile food cart parked opposite to the five-star hotel
c
Home Cart, Home Essentials, Good Store, and Price King are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All the four stores cater to the needs of highly price-sensitive customers. Thus, together Home Cart, Home Essentials, Good Store, and Price King form a _____. A. focus group B. command group C. strategic group D. cross-functional group
c
In Galvania Republic, the federal government owns and manages all the nuclear power plants. This is because the business would not be profitable if there was more than one supplier in the nuclear power industry. Which of the following industry competitive structures does the scenario best illustrate? A. Monopolistic competition B. Oligopoly C. Natural monopoly D. Perfect competition
c
In an industry, the rivalry among existing competitors is high when: A. fixed costs are low and marginal costs are high. B. exit barriers are low. C. incumbent firms are highly committed to the business. D. industry growth is high.
c
In the _____ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes. A. PESTEL framework B. VRIO framework C. five forces model D. value chain analysis
c
In the smartphone industry, Google is a complementor to Samsung. Which of the following statements best explains why this is true? A. Samsung apps are tailored exclusively for Google smartphones and tablets. B. Google's smartphones increase in value because they face strong buying power from Samsung. C. Samsung's smartphones increase in value when they are pre-installed with Google's Android system. D. Google accounts for a large quantity of Samsung's overall sales.
c
True Gold Inc. is a company that sells 24-carat gold biscuits to companies that manufacture jewelry. Since the company operates in an industry where many other suppliers sell standardized products, it can most likely: A. easily achieve a temporary competitive advantage. B. easily achieve a sustainable competitive advantage. C. only achieve competitive parity. D. maintain its absolute advantage for long time.
c
True West Airlines Inc. follows a cost-leadership strategy. Which of the following firms will most likely be its direct competitor? A. Pioneer Airlines Inc., which follows a cost-increase strategy B. West Railways, which follows a differentiation strategy C. Jet King Airlines Inc., which follows a low-cost strategy D. Blue Cabs Inc., which follows a cost-leadership strategy
c
When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate? A. Monopoly B. Oligopoly C. Perfect competition D. Monopolistic competition
c
Which of the following best illustrates a firm operating in a monopolistically competitive industry? A. A foreign exchange company sells currencies of different countries at market prices as it cannot differentiate its products from its competitors'. B. A chain of multiplex theaters, along with its competitor, owns 80 percent of the multiplex market share. C. An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers. D. A railway company owned by the government of New Darvland, owns 100 percent of the railway transport in the country.
c
Which of the following do the sociocultural forces in a firm's external environment best represent? A. The interest rates prevalent in an economy B. The laws protecting small enterprises in a nation C. The family size of the firm's target market D. The rate of employee attrition within the firm
c
Which of the following factors best contributes to the U.S. automotive industry being characterized by high entry barriers? A. New auto companies create electric cars powered by simpler motors and gearboxes. B. New entrants in the automotive industry expect that incumbents will not or cannot retaliate. C. Car manufacturers require large-scale production in order to be cost-competitive. D. Few industrial products are as easy to build as cars powered by internal combustion engines.
c
Which of the following firms will most likely NOT be a complementor to a firm that manufactures computers? A. A company that develops operating software B. A company that develops application software C. A company that manufactures its own brand of desktops and laptops D. A company that manufactures portable external disks
c
Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Espa-ola (AVE) in 2008? A. A strong threat of substitutes decreases the rivalry among existing competitors. B. All the five forces must work together to have a meaningful impact. C. Any of the five forces on its own, if sufficiently strong, can extract industry profitability. D. Competition must be defined more narrowly to remain confined to the industry's closest competitors.
c
Which of the following statements 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 complementors to each other.
c
Which of the following statements with regard to industry structures is true? A. They are stable over time, not dynamic. B. Having a large number of competitors generally equates to higher industry profitability. C. A consolidated industry tends to be more profitable than a fragmented one. D. Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power.
c
Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? A. The competition in the industry is insignificant. B. The number of buyers in the industry is small. C. The firms can differentiate their product offerings. D. The entry barriers in the industry are extremely high.
c
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 Porter's model are strong. D. the gap between the value the firm's product generates and the cost to produce it is large.
d
A fragmented industry is made into a consolidated industry through: A. governmental deregulation. B. globalization. C. technological innovation and new legislation. D. horizontal mergers and acquisitions.
d
Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Curry Rush is most likely operating in a(n) _____. A. oligopoly B. monopoly C. perfectly competitive industry D. monopolistically competitive industry
d
Demand for traditional fast-food providers such as McDonald's, Burger King, and Wendy's has been on a decline in recent years. Consumers have become more health conscious and demand has shifted to alternative restaurants like Subway, Chick-fil-A, and Chipotle. Attempts by McDonald's and Wendy's to steal customers from one another include frequent discounting tactics such as dollar menus. Such competitive actions are indicative of _____. A. profitability increases B. perfect competition C. natural monopolies D. cut-throat competition
d
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
In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry? A. If the company is able to put up a credible threat of retaliation B. If the capital requirements in the industry are high C. If the customer switching costs in the industry are high D. If the industry has recently become deregulated
d
In which of the following situations is the power of suppliers high in an industry? A. Suppliers offer products that are undifferentiated. B. Suppliers can credibly threaten to backward integrate into the industry. C. Suppliers depend heavily on the industry for their revenues. D. Suppliers' industry is more concentrated than the industry it sells to.
d
Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds' products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised its bargaining power as a buyer through _____. A. forward integration B. product differentiation C. crowdsourcing D. backward integration
d
The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A. VRIO framework B. SWOT analysis C. BCG matrix D. PESTEL framework
d
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. Ecological factors B. Sociocultural factors C. Technological factors D. Legal factors
d
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. Monopolistic competition D. Oligopoly
d
What is most likely to happen when there is too much money in an economy? A. There are too many goods and services. B. There is a drop in interest rates. C. There is high economic growth. D. There is an increase in prices.
d
When applying the five forces model, the first step should ideally be: A. drawing a strategic group map. B. identify the underlying drivers of each force. C. assessing the overall industry structure. D. defining the relevant industry.
d
When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger? A. The emergence of entry barriers B. The bargaining power of suppliers C. The availability of complements D. The threat of substitutes
d
Which of the following features about a buyer indicates that the buyer has high bargaining power? A. When the buyer cannot credibly threaten to backwardly integrate into the industry. B. When the buyer cannot purchase specific products from other sellers. C. When the buyer faces high switching costs. D. When the buyer operates in an industry where products are undifferentiated.
d
Which of the following forces was NOT originally a part of Michael Porter's fives forces model? A. Threat of substitute products or services B. Bargaining power of buyers C. Rivalry among existing competitors D. Strategic role of complements
d
Which of the following is a feature of an oligopolistic industry structure? A. Many small sellers B. Standardized or undifferentiated products C. Limited pricing power D. High entry barriers
d
Which of the following is a primary feature of the five forces model? A. It is concerned exclusively about the intensity of rivalry among direct competitors. 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 views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.
d
Which of the following is an implication of low interest rates? A. Cost of capital for firms will be high. B. Firms will invest less in future growth. C. Economic growth rate will fall. D. Consumer demand will increase.
d
Which of the following is most likely an implication of new firms entering an industry? A. The bargaining power of buyers will reduce. B. The industry's overall profit potential and sales will increase. C. The rivalry among existing competitors will reduce. D. The incumbent firms will spend more to satisfy their existing customers.
d
Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly? A. Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized. B. In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four. C. Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices. D. In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.
d
