Ch. 3

Ace your homework & exams now with Quizwiz!

When restrictive government policies do not exist or when industries become deregulated, the _______ is high

Threat of entry

High exit barriers lead to intense rivalry. T/F

True

To determine economic value, one must subtract the cost of production from the ____

Value of a firm's product or service

What are three factors in determining the intensity of rivalry among existing competitors?

1. Competitive industry structure 2. Exit barriers 3. Industry growth

Through the PESTEL model, firms are able to do what 2 things?

1. Evaluate external trends 2. Monitor external factors

In an oligopoly, which of the following conditions exist?

1. Few large firms 2. High barriers to entry 3. Differentiated products

When a new firm enters an industry, what 3 things happen?

1. Industry profit potential declines 2. Incumbent firms spend more to satisfy customers 3. Incumbent firms lower prices

Managers are able to influence what two types of external forces?

1. Strategic group composition 2. The structure of their industry

What are two statements about industry dynamics?

1. The five forces model is a static model 2. Over time, industry structures are not stable

What 2 conditions lead to a strong threat of substitutes?

1. When the price-performance trade-off is attractive 2. When the cost of switching to the substitute is low

Exit barriers are composed of ____ factors (2 things)

Economic and social

In the PESTEL model, political factors are those that relate to _____

Government bodies

Because installing a GPS system in an automobile adds value to the vehicle, the system functions as ______

A complement

Advantages based on brand loyalty, proprietary technology, preferential access to raw materials, and favorable geographic locations are example of what?

Advantages independent of size

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is known as _____

An interest rate

When a buyer moves upstream in the industry value chain, into the supplier's business, ____ occurs

Backward integration

The closer firms are on the strategic group map, the more ____ & _____ they are competing with each other

Directly ; intensely

It might be a good idea to expand or upgrade a firm's human capital base during a ____, because unemployment is high and therefore human capital is abundant and wages usually ____

Downturn ; fall

The ____ is a measure of the change in the amount of goods and services produced by a nation's economy

Economic growth rate

Although ____ coordination, such as price fixing, is illegal in the United States, ____ coordination such as "an unspoken understanding" is not

Explicit ; tacit

What is a true statement about a fragmented industry

It consists of small firms

An example of a recent innovation in process technology is _____

Lean manufacturing

What tends to result from strong competitive rivalry?

Limits to the industry's profit potential

Recessions are less likely to harm ____-cost airlines, which appeal more to budget-conscious travelers than legacy carriers

Low

The threat of entry is high when capital requirements are ____ in comparison to the expected returns

Low

The stronger the five forces in Porter's model, the _____ the industry's profit potential

Lower

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 not be supplied otherwise

Natural Monopolies

What is a true statement about legal factors as an external force

Regulatory changes tend to affect entire industries at once

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 cultures, norms, and values of the society in which a firm competes are considered ____ factors

Sociocultural

A _____ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways

Strategic

There is a ____ relationship between competitive intensity and the power of the five forces

Strong

The threat of ____ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel

Substitutes

What is a positive response to ecological factors in the PESTEL model?

Sustainable economic growth

Governments sometimes set up a natural monopoly when a venture ____

Would otherwise not be profitable


Related study sets

Test one guidelines (z test/ t test)

View Set

Across Five Aprils Chapters 3-4 Review

View Set

Chapter 9 local government test review

View Set