3830 ch. 3
Which of the following is NOT a main industry group in the SCP model? A. Monopolistic competition B. An oligopoly C. Perfect competition D. A strategic group
A strategic group
The type of industry most likely to engage in non-price competition is ___________. A. a perfectly competitive industry B. an oligopolistic industry C. all industries engage in non-price competition D. only strategic groups engage in non-price competition
An oligopolistic industry
BYD is an example of a new firm entering the global auto industry. With more firms vying for a U.S. market that is not growing very fast, what will happen? A. The rivalry will be about the same. B. The intensity of the incumbent firms will decrease. C. Competitive intensity is sure to rise. D. The incumbents will keep dominant market shares.
Competitive intensity is sure to rise
Given its size and industry influence, Walmart would be a powerful buyer. Which of the following is NOT an indication of Walmart's strength as a buyer? A. Three suppliers merge together to gain economy of scale. B. Suppliers locate very near Walmart's corporate headquarters. C. Walmart switches from Rubbermaid to another vendor for containers. D. Walmart decides to start manufacturing its own clothes to sell.
Three suppliers merge together to gain economy of scale.
What is the sixth force of industry attractiveness? A. Substitutes B. Economic growth rates C. Complements D. Technological innovation
Complements
Which of the following is NOT one of Porter's five forces? A. Substitutes B. Suppliers C. Complements D. Buyers
Complements
One of the consequences of the five forces analysis is that a firm must ask itself what? A. Is the company in a strategic group? B. Does the company strategy match the competitive landscape? C. Is the company in an oligopoly or monopolistic competition? D. Is the company engaged in co-opetition?
Does the company strategy match the competitive landscape?
All of the following are aspects of sociocultural factors influencing industry attractiveness EXCEPT: A. The growth rate of the population B. The age distribution of the population C. Environmental protection laws D. Lifestyle changes
Environmental protection laws
Competitive rivalry will get weaker when all of the following happen EXCEPT: A. Demand is growing. B. Exit barriers are low. C. Products are differentiated. D. One firm's actions will have little direct impact on a rival.
Exit barriers are low
In 1996, GM, Toyota, and Honda introduced electric vehicles into the California market. This was in response to a regulation passed by the state in 1990 requiring some percentage of zero-emissions vehicles from auto companies be sold in the state. When the regulation was rescinded in the late 1990s, all three firms pulled their electric vehicles out of the market. GM terminated its electric vehicle program, whereas Toyota and Honda used it to introduce hybrid cars only a few years later. Which of the following is NOT a valid conclusion to draw from this series of events? A. Government regulations are always bad for U.S. businesses. B. Government regulations can influence business strategies. C. GM made a strategic error by closing its electric-vehicle program. D. Toyota and Honda used the regulation as a catalyst for new lines of cars.
Government regulations are always bad for U.S. businesses
Which of the following would NOT explain why managers track interest rates? A. High interest rates make the cost of capital cheaper for a firm. B. High interest rates could delay a firm's expansion. C. Low interest rates make it easier for a firm to borrow money. D. Low interest rates increase market demand and economic growth.
High interest rates make the cost of capital cheaper for a firm
A process whereby formerly unrelated industries begin to satisfy the same customer need is often brought on by technological advances. What is this process called? A. Strategic grouping B. Competitive advantage C. Industry convergence D. Complementor analysis
Industry convergence
Generally, perfectly competitive industries such as paper and steel (commodities) are deemed to be ________ in profits to more differentiated industries like pharmaceuticals and cosmetics. A. superior B. inferior C. similar D. indeterminate
Inferior
Microsoft, Nintendo, and Epic are in the video gaming industry. Microsoft and Nintendo produce and sell video game consoles and games. Epic is a video game publisher. When Sony creates a strategic map, it will place Nintendo as a(n): A. Intra-group rival and expect a more intense rivalry from Nintendo than from Epic. B. Inter-group rival and expect a more intense rivalry from Nintendo than from Epic. C. Intra-group rival and expect less rivalry from Nintendo than from Epic. D. Complementor to the video gaming industry.
Intra-group rival and expect a more intense rivalry from Nintendo than from Epic.
A firm's pricing power: A. Is stronger in perfect competition than in monopolistic competition. B. Is stronger in monopolistic competition than in perfect competition. C. Is weaker in a monopoly than in an oligopoly. D. Is stronger in perfect competition than in a monopoly.
Is stronger in monopolistic competition than in perfect competition.
Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness? A. It decreases. B. It increases. C. It becomes a complement. D. It has no impact.
It decreases
When a buyer has a credible threat of backward integration, what happens to their power in the industry? A. It decreases. B. It increases. C. It converges. D. It has no impact.
It increases
When a supplier has a credible threat of forward integration, what happens to their power in the industry? A. It decreases. B. It has no impact. C. It converges. D. It increases.
It increases
The __________ environment affects a firm's industry environment. A. macro B. stakeholder C. internal D. supplier
Macro
Which of the main industry groups in the SCP model is described as having many firms, some pricing power, and differentiated products? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition
Monopolistic competition
Competitive rivalry among firms in the same strategic group is generally: A. More intense than competition between strategic groups. B. Less intense than competition between strategic groups. C. Similar in intensity than competition between strategic groups. D. Fairly dependent on what industry the strategic group is in.
More intense than competition between strategic groups.
A ____________ is created when the government believes the product or service would not be supplied by the market under free market conditions. A. monopolistic competition B. regulated monopoly C. near monopoly D. natural monopoly
Natural monopoly
As natural monopolies are shrinking due to global governmental privatizations, another competitive landscape is emerging. Firms like Intel that have 80 percent market share in some markets would be called what? A. Competitive monopoly B. Regulated monopoly C. Near monopoly D. Natural monopoly
Near monopoly
When there is pressure to innovate, advertising is key and improved service is important for competition, competitors are engaging in ______________ and prices will ________. A. price competition; be higher B. perfect competition; be higher C. non-price competition; be higher D. perfect competition: be lower
Non-price competition; be higher
Competition by offering unique product or service features rather than competing on price is called what? A. Monopolistic competition B. Differentiated competition C. Non-price competition D. High-intensity competition
Non-price competiton
An industry with three firms and a differentiated product is most likely a(n) ________, while an industry with three thousand firms and a differentiated product is most likely a(n) ________ industry. A. perfect competition; oligopolistic B. monopoly; perfectly competitive C. oligopoly; monopolistic competitive D. oligopoly; perfectly competitive
Oligopoly; monopolistic competitive
Agriculture is generally considered a perfect competition industry with largely commodity products. However, there is an aspect of the industry that can be classified as monopolistic competition with differentiated products and price premiums. Which part of the industry is it? A. Genetically modified wheat B. Corn for biodiesel C. Organic milk D. Fresh water salmon
Organic milk
Many Internet entrepreneurs have learned that it is difficult to beat the forces of perfect competition. In perfect competition, there are many small stores with largely commodity products and low entry barriers. Which industry has got caught up in the Internet bubble and has tried to join with online models, most of whom closed after a couple of years? A. Pet supply stores B. Book sellers C. Wine stores D. Express mail industry
Pet supply stores
Which of the following is NOT a major consideration of barriers to entry? A. Capital requirements B. Brand identity C. Positive growth rate D. Economies of scale
Positive growth rate
Competitive intensity will increase when all of the following happen EXCEPT: A. Proprietary technology is a core capability. B. Rivals are similar in size and capability. C. Buyers switching costs are low. D. Exit barriers are high.
Proprietary technology is a core capability
An ideal competitive environment from a profit-making standpoint is when: A. Rivalry is moderate, and high entry barriers and good substitutes do not exist. B. Rivalry is high, entry barriers are low, and there are many substitutes. C. Rivalry is high, buyers and sellers have strong bargaining power, and entry barriers are low. D. Rivalry is moderate, entry and exit barriers are low, and there are many substitutes.
Rivalry is moderate, and high entry barriers and good substitutes do not exist
________ reveals which companies are in the strongest or weakest position relative to your company. A. Scenario group mapping B. Strategic group mapping C. Situational group mapping D. Statistical group mapping
Strategic group mapping
Mr. Smith was looking to buy a car but decided to buy a motorcycle instead. The motorcycle is a _______ and comes from outside the original industry. A. complement B. substitute C. convergence D. complementor
Substitute
Which of the following would NOT indicate that sellers are a strong competitive force? A. Substitutes exist for their components. B. They can supply the component for a cheaper cost than industry makers can produce it. C. The buyers of their component are not important customers. D. The component that they supply affects buyer product quality.
Substitutes exist for their components
The innovations in process efficiencies such as Six Sigma, the Internet, and biotechnology are all elements of which macro environmental force? A. Political factors B. Sociocultural factors C. Technological factors D. Economic factors
Technological factors
In Strategy Highlight 3.1, why was the U.S. government putting pressure on UBS, the venerable Swiss bank? A. The U.S. government was investigating UBS for restraint of trade. B. The U.S. government wanted information on potential tax evaders. C. The U.S. government thought UBS had vital information about the 2009 financial meltdown. D. The U.S. government wanted information about UBS corporate tax payments globally.
The U.S. government wanted information on potential tax evaders.
A key feature of an oligopoly is that the firms are interdependent, which allows them to be good examples in game theory. What does it mean when firms are interdependent? A. The actions of one competitor influences the behavior of the others. B. The competitors take actions according to their own situation. C. The competitive landscape is brutal and will likely have low profits. D. There will be a dominant solution available in the market.
The actions of one competitor influences the behavior of the others
A small-scale appliance manufacturer has been producing goods for a private label company for 25 years. This manufacturer has no brand image, a small production facility, and scarce capital resources. The company has made several strategic attempts to increase market share and create a nationally branded appliance market presence. So far, it has been unsuccessful. Why is this most likely so? A. The appliance industry is not an attractive industry when it comes to existing firms. B. The company is limited by inter-group mobility barriers based on economies of scale and brand loyalty. C. The five forces analysis reflects that the appliance industry is very attractive. D. All of these.
The company is limited by inter-group mobility barriers based on economies of scale and brand loyalty.
The five-forces-plus-complements model is useful in understanding industry profit potential, but it is only a snapshot in time. Managers must also consider ___________. A. the cost structure B. the industry dynamics C. the competitive landscape D. the strategic group
The industry dynamics
According to the SCP model, what is the relationship between firms and their industries? A. The firm's structure determines the industry conduct and is not related to firm performance. B. The firm's conduct shapes the industry structure and leads to firm performance. C. The industry structure determines firm conduct and these combine to determine firm performance. D. None of these.
The industry structure determines firm conduct and these combine to determine firm performance
The level of entry barriers is only relevant to potential competitors because: A. Firms that are established in an industry have already overcome the barriers to entry. B. The existence of high entry barriers has little impact on overall industry profitability. C. Competitive markets are dynamic, so established firms expect that there will always be new entrants. D. The level of entry barriers is relevant to both existing and potential firms due to the competitive consequences for both.
The level of entry barriers is relevant to both existing and potential firms due to the competitive consequences for both.
Applying the five forces model to the airline and soft drink industries demonstrates all EXCEPT which of the following? A. The soft drink industry has fairly low forces. B. The airline industry has a high level of forces. C. The profit level should be higher in the soft drink industry than the airline industry. D. The macro environmental forces are similar between the airline and soft drink industries.
The macro environmental forces are similar between the airline and soft drink industries
When the collective strength of the five forces works against an industry: A. Individual firms should compete on price. B. Individual firms should move from one strategic group to another. C. The profit potential is weak. D. There is a high degree of profit potential.
The profit potential is weak.
A large textile manufacturer located in South Carolina had to exit the industry because it could no longer compete with firms from overseas. The company laid off hundreds of employees, its suppliers started to struggle, and several local establishments closed their doors. It can be said that the local economy in South Carolina was experiencing what? A. The retaliation effects of abandonment B. The ripple effects through the supply chain C. The destructive role of complements D. Dynamic industry consequences
The ripple effects through the supply chain
Which of the following would NOT indicate that buyers are a strong competitive force? A. They can integrate backward. B. They can purchase from several sellers. C. They are reliant on the industry's product. D. They buy in large quantities.
They are reliant on the industry's product
Suppliers are powerful when which of the following happens? A. Satisfactory substitutes are available. B. They sell a commodity. C. They offer a credible threat of forward integration. D. They are part of a highly fragmented industry.
They offer a credible threat of forward integration
What is BYD using to avoid entry barriers upon entering the automotive industry? A. They purchased a major automotive company. B. They reduced the switching costs of moving to electric vehicles. C. They used proprietary battery technology for use in electric vehicles. D. They have an established brand in China.
They used proprietary battery technology for use in electric vehicles
A firm can use its knowledge of the five forces to strengthen its competitive position through ___________. A. product differentiation B. leveraging complements C. backward integrating to reduce supplier power D. All of these
All of these
As noted in Strategy Highlight 3.1, UBS is a Swiss banking institution that provided tax savings to U.S. clients until the U.S. government took action against UBS. Which of the following is true? A. Political factors can remove a firm's competitive advantage(s). B. Barriers to entry can be created through political factors. C. Political factors can influence a firm's ability to differentiate its product. D. All of these.
All of these
The competitive threat of potential entry is NOT strong when _____________. A. there will be expected competitive retaliation B. there are sizable economies of scale C. there are strong brand preferences and customers are loyal D. All of these
All of these
The factors that are important to focus on when mapping strategic groups include: A. Identifying the top competitive factors in your market, such as expenditures on research and development, pricing, distribution channels, and customers. B. Choosing two key dimensions from these factors for the horizontal and vertical axes, plotting your rivals along these axes, and looking for differences among the competition. C. Analyzing the firms that are closest to your organization on the map, because they will give your firm the strongest rivalry. D. All of these.
All of these
The worldwide car industry has had few new entrants in the past couple of decades due to very large entry barriers. How is BYD getting around these barriers? A. In electric vehicles, the design is simpler than gas engines. B. BYD started as a battery company and has strengths there. C. BYD started by selling in emerging markets before developed ones. D. All of these.
All of these
_______________ assesses whether a good business opportunity exists or not. A. A structure-conduct-performance (SCP) analysis B. A five forces industry environmental analysis C. A PESTEL model analysis D. All of these
All of these
Macro-environmental PESTEL analysis considers the effects of forces on ________. A. a single firm B. industry leaders C. an entire industry D. a strategic group
An entire industry
Recessions are often viewed as a period of defensive position for firms. However, shrewd managers initiate strategic successes during downturns. What is an example of this provided in the text? A. GM's foray into electric vehicles in California B. Apple's increased R&D spending that lead to the launch of iPod C. Intel's movement into European markets D. UBS
Apple's increased R&D spending that lead to the launch of iPod
The objective of Porter's five forces model is to: A. Assess firm profitability. B. Assess the potential for profits within an industry. C. Emphasize the intensity of rivalry within an industry. D. Analyze the economic conditions of the industry.
Asses the potential for profits within an industry
When firms that provide key raw materials to an industry can frequently negotiate for higher prices, the: A. Bargaining power of buyers is high. B. Bargaining power of suppliers is high. C. Barriers to entry are low. D. Bargaining power of suppliers is low.
Bargaining power of suppliers is high.
A ____________ is a product or service that can help raise demand in an industry by indirectly enhancing performance or decreasing prices. A. core competency B. substitute C. complement D. component
Complement
The profit potential for strategic groups within an industry is __________ between groups. A. undetermined B. different C. similar D. none of these
Different
Industry structures are not stable over time. The U.S. banking industry has seen major consolidation in recent years. We would expect the result of this dynamic change to be what? A. Generally lower industry profits. B. It will have no effect on profitability. C. Further erosion in business. D. Generally higher industry profits.
Generally higher industry profits
Court decisions and regulations such as CARB zero-emissions are elements of which macro environmental force? A. Political factors B. Economic factors C. Sociocultural factors D. Legal factors
Legal factors
Georgia Power and Philadelphia Gas Works are two examples of firms in what type of industry structure? A. monopolistic competition B. regulated monopoly C. natural monopoly D. oligopoly
Natural monopoly
If a rival makes a strategic move in a(n) _________ industry, the dominant firm is most likely to respond with its own initiative to counter (or coordinate) the effects of the first firm. A. monopolistic competitive B. oligopolistic C. monopolistic D. perfectly competitive
Oligopolistic
Which of the main industry groups in the SCP model is described as having a few large firms, differentiated products, and high entry barriers? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition
Oligopoly
A firm's six PESTEL environmental forces include ______________. A. political, trade secrets, legal, and technological B. product, environmental, political, and technological C. political, economic, legal, and technological D. environmental, product, ecological, and technological
Political, economic, legal, and technological
Microsoft and Intel are complements to each other. Their alternating advances over time have created a ________. A. virtuous cycle B. virtual circle C. circle of complements D. mobility barrier
Virtuous cycle
Non-price competition such as today's rivalry between Coca-Cola and Pepsi refers to: A. When one firm cuts prices to gain market share, the competition will do the same. B. When a firm is driving costs down in order to gain competitive advantages through lower prices. C. When a firm has no pricing power that leads to a competitive disadvantage. D. When a firm is offering unique products and services as opposed to competing on price.
When a firm is offering unique products and services as opposed to competing on price.
The soft drink industry has been one of the most profitable industries for years. There are two key competitors, Coke and Pepsi, who compete on product innovation and lifestyle advertising. Additionally, barriers to entry are high and supplier power is weak. Michael Porter calls this industry: A. A positive-sum industry B. A "five star" industry C. A shining star industry D. A complementary industry
A "five-star" industry
The U.S. airline industry has intense rivalry, primarily undifferentiated products, low entry barriers, and low switching costs. Furthermore, suppliers of aircraft engines to the industry have strong bargaining power. It is no surprise that this industry has been one of the least profitable for years. Michael Porter calls this industry what? A. A zero-sum industry B. A "zero star" industry C. A declining star industry D. A competitively dynamic industry
A "zero-star" industry
John Connelly went to the grocery store to buy some butter. As he was looking at the butter offerings, he noticed that Pam cooking spray was advertised as $1.00 less for the same amount of product. John purchased the spray. The spray is considered to be a what? A. A complement B. A mobility product C. A replacement D. A substitute
A substitute
The United Auto Workers (UAW) union is which of the five forces in the automotive industry? A. A supplier B. A buyer C. A complement D. A substitute
A supplier
Which of the following is NOT a benefit about the background of BYD that may help it be successful in overcoming barriers to enter the electric vehicle market? A. BYD has a large and successful home market. B. BYD is the only car company focused on electric cars. C. BYD is accustomed to selling competitive products to multinational firms. D. BYD started as a battery firm and has key insights to this technology.
BYD is the only car company focused on electric cars
Strategic group mapping tells us that: A. competitive pressures in an industry are similar among all strategic groups B. competitive pressures in an industry favor some strategic groups while threatening others C. that product features and prices are irrelevant to a strategic group D. rivals inside a strategic group serve different customers
Competitive pressures in an industry favor some strategic groups while threatening others