Chapter 2- EXAM 1
Environmental scanning would be most important for which of the following organizations?
A web design company catering to small businesses
Which of the following represents a competitive intelligence practice that is both legal and ethical?
An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products.
How is consolidation among fuel providers serving airport facilities viewed in the five forces model of competition?
As an increase in the bargaining power of suppliers of a critical input
Which of the following intelligence-gathering techniques is most likely to be legal and ethical?
Attending trade show presentations given by a competitor's employees
Which of the following is NOT an entry barrier to an industry?
Bargaining power of suppliers
Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement about donors is accurate?
Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank.
Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely?
Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes.
Which of the following is NOT an activity used in the external environmental analysis process?
Decrypting
The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?
It will make the airline industry more attractive because of decreased supplier power.
Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis?
Netflix and Microsoft
The large amount of advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry?
Product differentiation
Which of the following would be an example of the application of the next major technological opportunity for organizations?
SpaceX's reusable space vehicle
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here?
Substitutes
Which of the following would NOT be identified in an analysis of the economic portion of the general environment?
The ability of Ford to issue new debt in light of its recent financial performance
Which of the following, identified in an analysis of the general environment, is an opportunity for an entrepreneur who wishes to open a business providing "Fitness for Life" physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people?
The average age of the population in his community is high
Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one-third of sales. With profitability far above the industry average, this product is responsible for one-half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?
The company should monitor the general environment for changes that might affect the revenue and profitability of all products.
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for the project. Which of the following statements is most likely to be true?
The cost of the marble will be expensive because of the bargaining power of the supplier.
Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa's firm's understanding of the competitor's business strategy and would allow Clarissa's employer to gain many of the competitor's clients. What ethical implications may result from this situation?
The ethical dilemma here is the right of competitors not to reveal certain information.
Demographic changes include variations in income distribution. Which of the following statements is true?
The general loss in real income has been somewhat offset by the increase in dual-career couples.
Golden Lotus, an exercise club targeting healthy individuals over 50, is located in a fast-growing city in the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is the most directly controllable by the company?
The power of the customers/buyers
Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is intense?
These companies are trying to find ways to differentiate their products.
Characteristics of the current economic segment include all of the following EXCEPT:
a clear understanding of future economic opportunities and threats.
All of the following are ethical sources of data for external analysis EXCEPT:
a competitor's confidential memos.
An industry is defined as:
a group of firms producing products that are close substitutes.
Once a firm has determined its competitors' future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop:
a response profile.
DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry DWK is likely to encounter here is:
access to distribution channels
All of the following are aspects of the political/legal segment of the general environment EXCEPT:
attitudes and values.
The likelihood of entry of new competitors is affected by ______ and ______.
barriers to entry; expected retaliation of current industry organizations
Product differentiation refers to the:
belief by customers that a product is unique.
The communications industry is broadly defined as encompassing all of the following EXCEPT:
book retailers.
Applications developed for iPhones make the phone more valuable to iPhone users. App developers are ______ to Apple.
complementors
Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its strategy and product characteristics over this time period. However, the company has experienced declines in sales and profits over the last four quarters. The CEO of Acme should
conduct an analysis of the external environment.
In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT:
cultural values.
Competitor intelligence could ethically come from all of the following EXCEPT:
eavesdropping.
The U.S. Hispanic market is the third-largest "Latin American" economy behind Brazil and Mexico. This impacts the ______ aspect of demographic segment analysis
ethnic mix
All of the following are forces that create high rivalry within an industry EXCEPT:
fast industry growth.
For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if:
favorable locations are not available
Competitor analysis focuses on:
firms with which the company competes directly.
Because of threats and risks in the global environment, some firms choose to take a more cautious approach by:
focusing on global niche markets
Firms within strategic groups:
follow similar strategies across certain dimensions.
When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are: engaged in
forecasting.
The ______ environment is composed of dimensions in the broader society that can influence an industry and the firms within it.
general
The three parts of the external environment that affect a firm's strategic actions are:
general, industry, and competitor.
Exit barriers to a firm include all of the following EXCEPT:
generic assets.
New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the ______ aspect of demographic analysis.
geographic distribution
The observation that China reached automotive production overcapacity in 2015, and has a glut of extra cars, is an aspect of the ______ segment of the general environment.
global
The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ______ segment of the general environment in those countries that BP and other oil firms have to manage when contending with scarce resources.
global
The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example of a ______ barrier to entry.
government policy
An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of:
high barriers to exit.
The political/legal segment of an environment represents:
how organizations and governments mutually try to influence each other.
An analysis of the economic segment of the external environment would include all of the following EXCEPT:
income distribution.
Customer loyalty programs such as airline frequent-flyer miles are an attempt to:
increase customers' switching costs.
All of the following are examples of efforts by firms to address the physical segment of the general:
increase in hiring of women and minorities at Microsoft.
The technological segment of environmental analysis includes
institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.
The concepts of Guanxi, Wa, and Inhwa all convey the general idea of:
interpersonal relationships.
Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green:
is likely to raise the level of competitive rivalry in the industry.
After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its tablets. Samsung needed to do this because:
it is in the same strategic group.
According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT:
low barriers to entry.
According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT:
low supplier power due to commodity inputs.
The competition within each strategic group is:
more intense than the competition between strategic groups.
A general environmental analysis can be expected to produce all of the following EXCEPT:
objective answers.
As customers come to believe that a firm's product is unique, this allows the firm to:
obtain loyal customers
A manufacturer of washing machines has expanded its plant and has created excess capacity, just as the general economy has taken a downturn. The company is likely to:
offer rebates and incentives for customers who purchase washing machines.
When consumers change mobile phone and data service providers, they may be required to maintain service with the provider for a specified time period. This is an example of a:
one-time cost customers incur when buying from a different supplier.
Global warming and energy consumption trends are aspects of the ______ segment of the general environment that firms should monitor
physical
Green design, sustainable packaging, waste management, and energy efficiency are aspects of the ______ segment of the general environment that companies have sought to address with environmental sustainability initiatives.
physical
BP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of the following segments of the general environment?
political/legal
One popular approach to taking care of the physical environment is:
producing and selling additional green products
New entrants to an industry are more likely when:
product differentiation in the industry is low
Economies of scale refers to the fact that as the:
quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases.
The Obama administration sought to pursue policies that would:
reduce the amount of work U.S. companies outsource to firms in other nations.
The use of the Internet by Netflix to collect data on customer preferences is an example of:
scanning.
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of:
slow industry growth.
An analysis of society's attitudes and values would be conducted when studying the ______ segment of the general environment.
sociocultural
Coca-Cola and PepsiCo have been accused of contributing to the obesity problem in the United States. This accusation comes from the ______segment of the general environment.
sociocultural
The environmental segments that make up the general environment typically will NOT include:
substitute products or services.
Buyers are powerful when:
switching costs are low.
Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ______ segment of the general environment.
technological
High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means that in the aircraft industry:
the competitive rivalry in the industry is severe.
The highest amount a firm can charge for its products is most directly affected by:
the cost of substitute products
Competitor intelligence is:
the data that the firm gathers to understand competitors' objectives, strategies, assumptions, and capabilities.
The economic environment refers to:
the nature and direction of the economy in which a firm competes or may compete.
In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owners fail to take into account when they began selling the lingerie?
the sociocultural segment
All of the following are implications of strategic groups EXCEPT:
the strength of the five forces is the same across strategic groups.
The threat from substitutes is high when:
the substitute product's price is lower than the industry product's price.
Suppliers are powerful when:
they offer a credible threat of forward integration.
A competitor analysis includes all of the following about competitors EXCEPT:
traditions.
Counterfeiting goods and exporting them from China is:
unethical and illegal.
An analysis of income distribution would include all of the following EXCEPT:
wage differentials between male and female employees working for a large manufacturer.
The next critical technological opportunity for organizations is predicted to be:
wireless communications.