Chapter 2 Quiz

A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of A. backward integration. B. economies of scale. C. forward integration. D. product differentiation.

A. backward integration.

In general, the threat of substitutes is heightened because the Internet A. introduces new ways to accomplish the same task. B. lowers switching costs. C. lowers barriers to entry. D. increases output per unit of cost.

A. introduces new ways to accomplish the same task.

Gathering "competitive intelligence" A. is good business practice. B. is illegal. C. is considered unethical. D. minimizes the need to obtain information in the public domain.

A. is good business practice.

Which of the following would be an entry barrier? A. large economies of scale B. low switching costs C. easy access to raw materials D. low capital requirements

A. large economies of scale

The threat of new entrants is high when there are A. low economies of scale. B. high capital requirements. C. high switching costs. D. high differentiation among competitors' products and services.

A. low economies of scale.

The most intense rivalry results from A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs. B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs. C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers. D. a high level of differentiation.

A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.

_____________ tracks the evolution of environmental trends, sequences of events, or streams of activities. A. Environmental scanning B. Environmental monitoring C. Environmental surveying D. Competitive intelligence

B. Environmental monitoring

Which of the following would be considered part of a firm's general environment? A. Decreased entry barriers. B. Higher unemployment rates. C. Increased bargaining power of the firm's suppliers. D. Increased competitive intensity.

B. Higher unemployment rates.

Which of the following statements about strategic groups is FALSE? A. Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same. B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. C. Strategic groups help chart the future directions of firms' strategies. D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.

B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups.

Strategic groups consist of A. a group of top executives who make strategies for a company. B. a group of firms within an industry that follow similar strategies. C. a group of executives drawn from different companies within an industry that makes decisions on industry standards. D. a group of firms within an industry that decide to collude rather than compete with each other so that they can increase their profits.

B. a group of firms within an industry that follow similar strategies.

The aging of the population, changes in ethnic composition, and effects of the baby boom are A. macroeconomic changes. B. demographic changes. C. global changes. D. sociocultural changes.

B. demographic changes.

Incumbent firms may enjoy increased bargaining power because the Internet A. focuses marketing efforts on end users. B. diminishes the power of many distribution channel intermediaries. C. increases channel conflict. D. has reduced the number of wholesalers and distributors.

B. diminishes the power of many distribution channel intermediaries.

Two of the key inputs to developing forecasts discussed in the text are A. environmental scanning and stakeholder identification. B. environmental scanning and competitor intelligence. C. assessing internal strengths and environmental scanning. D. environmental scanning and a SWOT analysis.

B. environmental scanning and competitor intelligence.

A supplier group would be most powerful when there is/are A. many suppliers. B. few substitute products. C. low differentiation of products supplied. D. high threat of backward integration by the buyers.

B. few substitute products.

Because the Internet lowers barriers to entry in most industries, it A. decreases the threat of new entrants. B. increases the threat of new entrants. C. makes it easier to build customer loyalty. D. increases supplier power.

B. increases the threat of new entrants.

The value net is a game-theoretic approach that A. extends the value chain analysis. B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value. C. helps us to understand the evolution of the five forces over time. D. uses network analysis to understand the relationships among different companies

B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value.

To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________). A. macroeconomic, sociocultural, political/legal B. macroeconomic, political/legal, economic C. macroeconomic, technological, economic D. macroeconomic, global, economic

B. macroeconomic, political/legal, economic

Interest-rate increases have a __________ impact on the residential home construction industry and a __________ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items. A. positive; negligible B. negative; negligible C. negative; positive D. positive; negative

B. negative; negligible

Supplier power has increased because of the Internet for all of the following reasons EXCEPT A. the growth of new Web-based businesses has created more outlets for suppliers to sell to. B. some suppliers have created Web-based purchasing systems that encourage switching. C. the process of disintermediation makes it possible for some suppliers to reach end users directly. D. software that links buyers to a supplier's website has created rapid, low-cost order capabilities.

B. some suppliers have created Web-based purchasing systems that encourage switching.

Scanning the general environment would identify information on A. substitute goods. B. the aging population and ethnic shifts. C. customer and firm bargaining power. D. competitive rivalry.

B. the aging population and ethnic shifts.

Emerging sociocultural changes in the environment include A. changes in the ethnic composition. B. the increasing educational attainment of women in the past decade. C. progressively less disposable income by consumers. D. changes in the geographic distribution of the population.

B. the increasing educational attainment of women in the past decade.

Which of the following firms would likely pose the least competitive threat? A. A firm in the same industry and in the same strategic group. B. A firm that produces substitute goods to your product line. C. A competitor to your product where a high switching cost exists. D. A firm in the same industry and in the nearest strategic group looking to join your group.

C. A competitor to your product where a high switching cost exists.

Which is considered a force in the "Five-Forces" model? A. Increased deregulation in an industry. B. The threat of government intervention. C. Rivalry among competing firms. D. Recent technological innovation.

C. Rivalry among competing firms.

How do infomediaries and consumer information websites increase the intensity of competitive rivalry? A. by shifting customers away from issues of price B. by making competitors in cyberspace seem less equally balanced C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over D. by highlighting a firm's unique selling advantages

C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over

Threat of substitute products comes from A. other companies in the same industry. B. foreign companies which can use cheap labor in their countries. C. firms in other industries that produce products or services that satisfy the same customer need. D. all of these.

C. firms in other industries that produce products or services that satisfy the same customer need.

In the value net analysis, complementors are A. firms that produce substitute products. B. customers who compliment the company for their good products and services. C. firms that produce products or services that have a positive impact on the value of a firm's products or services. D. firms that supply critical inputs to a company.

C. firms that produce products or services that have a positive impact on the value of a firm's products or services.

An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of A. threat of entry. B. backward integration. C. forward integration. D. threat of substitute products.

C. forward integration.

Firms would be most likely to face intense rivalry with competitors when they A. are in a high growth industry with low fixed costs. B. are in a protected market. C. have high fixed costs, in a slow growth industry with high exit barriers. D. have low exit barriers for easy transition to another industry.

C. have high fixed costs, in a slow growth industry with high exit barriers.

A danger of forecasting discussed in the text is that A. in most cases, the expense of collecting the necessary data exceeds the benefit. B. forecasting's retrospective nature provides little information about the future. C. managers may view uncertainty as "black and white" while ignoring important "gray areas." D. it can create legal problems for the firm if regulators discover the company is making forecasts.

C. managers may view uncertainty as "black and white" while ignoring important "gray areas."

Product differentiation by incumbents act as an entry barrier because A. new entrants cannot differentiate their products. B. incumbents will take legal action if new entrants do not differentiate their products. C. new entrants will have to spend heavily to overcome existing customer loyalties. D. it helps a firm to derive greater economies of scale.

C. new entrants will have to spend heavily to overcome existing customer loyalties.

Increasingly larger numbers of women entering the work force since the early 1970s is an example of A. demographic changes. B. political and legal environmental changes. C. sociocultural changes. D. technological developments.

C. sociocultural changes.

All of the following are important elements of the political/legal segment of the general environment EXCEPT A. the deregulation of utilities. B. the Americans with Disabilities Act (ADA). C. the increased use of Internet technology. D. increases in the federally mandated minimum wage.

C. the increased use of Internet technology.

Environmental forecasting involves developing plausible projections about the ________ of environmental change. A. direction B. scope C. speed D. all of these

D. all of these

End users are A. the final consumers in a distribution channel. B. usually the C in B2C. C. likely to have greater bargaining power because of the Internet. D. all of these.

D. all of these.

Exit barriers arise from A. specialized assets with no alternative use. B. governmental and social pressures. C. strategic interrelationships with other business units within the same company. D. all of these.

D. all of these.

The bargaining power of suppliers is enhanced under the following market condition: A. no threat of forward integration. B. low differentiation of the suppliers' products. C. greater availability of substitute products. D. dominance by a few suppliers.

D. dominance by a few suppliers.

Buyer power will be greater when A. the products purchased are highly differentiated. B. there are high switching costs. C. the industry's product is very important to the quality of the buyer's end products or services. D. it is concentrated or purchases large volumes relative to seller sales.

D. it is concentrated or purchases large volumes relative to seller sales.

In Porter's Five-Forces model, conditions under which a supplier group can be powerful include all the following EXCEPT A. lack of importance of the buyer to the supplier group. B. high differentiation by the supplier. C. dominance by a few suppliers. D. readily available substitute products.

D. readily available substitute products.

The bargaining power of the buyer is greater than that of the supplier when A. volume of purchase is low. B. threat of backward integration by buyers is low. C. cost savings from the supplier's product are minimal. D. the buyer's profit margin is low.

D. the buyer's profit margin is low.

The bargaining power of suppliers increases as A. more suppliers enter the market. B. importance of buyers to supplier group increases. C. switching costs for buyers decrease. D. threat of forward integration by suppliers increases.

D. threat of forward integration by suppliers increases.