Ch. 3 Quiz - MGMT 498
restrictive government policies are introduced in the industry.
A consolidated industry turns into a fragmented industry when
industry
ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)
reduced profit potential
An industry with high exit barriers has ________ because excess capacity often remains much longer than economically justifiable.
horizontal mergers and acquisitions.
Because a consolidated industry tends to be more profitable than a fragmented one, firms have a tendency to change the industry structure in their favor, making it more consolidated through
Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.
Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.?
an industry with fewer but larger competitors
Generally speaking, which of these situations is likely to lead to greater profits?
They increase the demand for the primary product.
How do complements affect a primary product or service?
monopolistically competitive structure.
In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services such as home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)
forward-integrate.
MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to
perfectly competitive
Owners of coffee plantations in the country of Cantonica grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Cantonica best illustrates a(n) ________ structure.
complement
Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem.
competitive rivalry is strongest between firms that are within the same strategic group.
Strategic group mapping establishes that
interest rate.
The amount that creditors earn for lending their money and the amount that debtors pay to use that money, adjusted for inflation, is best described as a(n)
incumbent firms face low switching costs when changing suppliers.
The relative bargaining power of suppliers is most likely low when
Economies of scale are cost advantages that accrue to firms with larger output because they can spread fixed costs over more units, employ technology more efficiently, benefit from a more specialized division of labor, and demand better terms from their suppliers.
What are economies of scale?
Substitutes made it difficult for generating a profit potential in Spain's airline industry.
When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect?
a cell phone company that requires highly customized software for its phones
Which of the following firms most likely has the lowest bargaining power as a buyer?
It consists of many small firms.
Which of the following is a feature of a fragmented industry?
GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.
Which of the following statements best supports the fact that, even during a period of low demand in the U.S. automotive industry, excess capacity remained?
There is only one, often large firm supplying the market.
Which of the following statements is true of a monopoly?
Mobility barriers
________ are industry-specific factors that separate one strategic group from another.
Political
________ factors in the PESTEL framework result from the pressure that various groups, such as government bodies, nongovernmental organizations, and social movements, can exert to influence the decisions and behaviors of firms.
