4970 ch3

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE) in 2008?

Any of the five forces on its own, if sufficiently strong, can extract industry profitability.

Which of the following is a characteristic of a fragmented industry?

There are many small firms.

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Threat of new entrants will be low.

Beans Inc. operates in a perfectly competitive agricultural industry. Classica Apparel Inc., in contrast, operates in a monopolistically competitive industry

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

A key feature of an oligopoly is that the competing firms

are interdependent.

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

entering the aircraft manufacturing industry requires huge capital investments.

Which of the following features about a buyer indicates that the buyer has high bargaining power

when the buyer operates in an industry where products are undifferentiated

Which of the following would most likely not indicate that sellers are a strong competitive force in an industry?

when the buyers' cost of switching to substitutes is low

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?

The firms can differentiate their product offerings

Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain.

backward integration

In an industry, the threat of entry is high when

capital requirements are low

Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure?

competing against each other through price-cutting

Which of the following is an example of monopolistic competition?

computer hardware industry

Which of the following is a feature of a monopolistically competitive industry

differentiated products

Given the industry structure in the automobile business, entering the auto manufacturing industry doesn't seem advisable.

economies of scale

Which of the following is a feature of an oligopolistic industry structure?

high entry barriers

In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry?

if the industry has recently become deregulated

Economies of scale are cost advantages that accrue for firms with

larger output

Corner Market Inc. is a supermarket chain. Due to strong competition from other stores in the industry, Corner Market has aggressively used branding, pricing, and superior customer service to uniquely position itself in the market.

monopolistic competition

Fadia Ammunition Inc., a firm controlled and managed by the government of Fadia, is the only company that has the license to produce defense arms in the country.

monopoly

Clear Calls Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all Clear Calls users are free.

network effects

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.

oligopoly

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

the threat of substitutes

Buyers are highly price sensitive when

they earn low profits or are strapped for cash.

The telecommunication industry of United Canava is primarily dominated by three large firms: AD Telecom Inc., Mystic Telecom Corp., and Total Talk Inc.

oligopoly

Pure Carat 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

only achieve competitive parity.

In which of the following industry competitive structures do selling firms have the lowest pricing power?

perfect competition

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price.

perfect competition

The relative bargaining power of suppliers is high when

suppliers provide products that are differentiated.

First Ledger Inc., an auditing company, replaced its existing accounting software with new accounting software from another supplier

switching cost.