GBA 490 Chapter 3
Identify and briefly explain any three factors that lead to strong bargaining power on the part of suppliers.
Supplier bargaining power is stronger when: • Suppliers' products and/or services are in short supply. • Suppliers' products and/or services are differentiated. • Industry members incur high costs in switching their purchases to alternative suppliers. • The supplier industry is more concentrated than the industry it sells to and is dominated by a few large companies. • Industry members do not have the potential to integrate backward in order to self-manufacture their own inputs. • Suppliers' products do not account for more than a small fraction of the total costs of the industry's products. • There are no good substitutes for what the suppliers provide. • Industry members do not account for a big fraction of suppliers' sales.
Identify and briefly explain any three of the factors that influence the bargaining strength and leverage of suppliers.
Supplier bargaining power is stronger when: • Suppliers' products and/or services are in short supply. • Suppliers' products and/or services are differentiated. • Industry members incur high costs in switching their purchases to alternative suppliers. • The supplier industry is more concentrated than the industry it sells to and is dominated by a few large companies. • Industry members do not have the potential to integrate backward in order to self-manufacture their own inputs. • Suppliers' products do not account for more than a small fraction of the total costs of the industry's products. • There are no good substitutes for what the suppliers provide. • Industry members do not account for a big fraction of suppliers' sales.
Identify and briefly explain any three factors that lead to weak bargaining power on the part of suppliers.
Supplier bargaining power is weaker when: • Suppliers' products and/or services are plentiful. • Suppliers' products and/or services are undifferentiated. • Industry members incur low costs in switching their purchases to alternative suppliers. • The supplier industry is less concentrated than the industry it sells to and is not dominated by a few large companies. • Industry members have the potential to integrate backward in order to self-manufacture their own inputs. • Suppliers' products account for a significant fraction of the total costs of the industry's products. • There are good substitutes for what the suppliers provide. • Industry members account for a big fraction of suppliers' sales.
Explain why low switching costs and weakly differentiated products tend to give buyers a high degree of bargaining power.
Switching costs put a cap on how much industry producers can raise prices or reduce quality before they will lose the buyer's business. When industry goods are standardized or differentiation is weak, buyers make their selections on the basis of price, which increases price competition among vendors.
What are the five competitive forces that comprise the five forces model of competition?
The five forces framework holds that competitive pressures on companies within an industry come from five sources. These include (1) competition from rival sellers, (2) competition from potential new entrants to the industry, (3) competition from producers of substitute products, (4) supplier bargaining power, and (5) customer bargaining power.
Draw the five forces model of competition and briefly describe the relevance of each of the five forces in determining the overall strength of competitive pressures a company faces. Which of the five competitive forces is typically the strongest?
The five forces framework holds that competitive pressures on companies within an industry come from five sources. These include (1) competition from rival sellers, (2) competition from potential new entrants to the industry, (3) competition from producers of substitute products, (4) supplier bargaining power, and (5) customer bargaining power. The strongest of the five competitive forces is often the rivalry for buyer patronage among competing sellers of a product or service.
Identify at least five common driving forces and briefly explain how each one can produce important changes in industry and competitive conditions.
The most common drivers of industry change: • Changes in the long-term industry growth rate • Increasing globalization • Emerging new Internet capabilities and applications • Shifts in buyer demographics • Technological change and manufacturing process innovation • Product and marketing innovation • Entry or exit of major firms • Diffusion of technical know-how across companies and countries • Changes in cost and efficiency • Reductions in uncertainty and business risk • Regulatory influences and government policy changes • Changing societal concerns, attitudes, and lifestyles
Explain the meaning and significance of each of the following and their relationship to one another. a. driving forces b. strategic group mapping c. key success factors
The most powerful of the change agents are called driving forces because they have the biggest influences in reshaping the industry landscape and altering competitive conditions. The best technique for revealing the market positions of industry competitors is strategic group mapping. An industry's key success factors (KSFs) are those competitive factors that most affect industry members' ability to survive and prosper in the marketplace: the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak competitor—and between profit and loss.
Identify and briefly describe five common barriers to entering an industry.
Threat of entry is a stronger force when incumbents are unlikely to make retaliatory moves against new entrants and entry barriers are low. Entry barriers are high (and threat of entry is low) when: • Incumbents have large cost advantages over potential entrants due to: - High economies of scale - Significant experience-based cost advantages or learning curve effects - Other cost advantages (e.g., favorable access to inputs, technology, location, or low fixed costs) • Customers have strong brand preferences and/or loyalty to incumbent sellers. • Patents and other forms of intellectual property protection are in place. • There are strong network effects. • Capital requirements are high. • There is limited new access to distribution channels and shelf space. • Government policies are restrictive. • There are restrictive trade policies.
Identify and briefly explain any three factors that intensify competitive pressures stemming from the threat that new firms will enter the industry.
Threat of entry is a stronger force when incumbents are unlikely to make retaliatory moves against new entrants and entry barriers are low. Entry barriers are high (and threat of entry is low) when: • Incumbents have large cost advantages over potential entrants due to: - High economies of scale - Significant experience-based cost advantages or learning curve effects - Other cost advantages (e.g., favorable access to inputs, technology, location, or low fixed costs) • Customers have strong brand preferences and/or loyalty to incumbent sellers. • Patents and other forms of intellectual property protection are in place. • There are strong network effects. • Capital requirements are high. • There is limited new access to distribution channels and shelf space. • Government policies are restrictive. • There are restrictive trade policies.
Identify three conditions that tend to make potential entry a strong competitive force.
Threat of entry is a stronger force when incumbents are unlikely to make retaliatory moves against new entrants and entry barriers are low. Entry barriers are low (and threat of entry is high) when: • Incumbents have small cost advantages over potential entrants due to: - Low economies of scale - Insignificant experience-based cost advantages or learning curve effects - No cost advantages (e.g., favorable access to inputs, technology, location, or low fixed costs) • Customers have weak brand preferences and/or loyalty to incumbent sellers. • No patents and other forms of intellectual property protection are in place. • There are weak network effects. • Capital requirements are low. • There are no limits to new access to distribution channels and shelf space. • Government policies are not restrictive. • There are no restrictive trade policies.
Identify and briefly explain any three factors that weaken the competitive pressures stemming from the threat that new firms will enter the industry.
Threat of entry is a weaker force when incumbents are likely to make retaliatory moves against new entrants and entry barriers are high. Entry barriers are high (and threat of entry is low) when: • Incumbents have large cost advantages over potential entrants due to: - High economies of scale - Significant experience-based cost advantages or learning curve effects - Other cost advantages (e.g., favorable access to inputs, technology, location, or low fixed costs) • Customers have strong brand preferences and/or loyalty to incumbent sellers. • Patents and other forms of intellectual property protection are in place. • There are strong network effects. • Capital requirements are high. • There is limited new access to distribution channels and shelf space. • Government policies are restrictive. • There are restrictive trade policies.
Competitive markets are economic battlefields. True or false? Explain.
When rivalry is strong, the battle for market share is generally so vigorous that the profit margins of most industry members are squeezed to bare-bones levels. When rivalry is moderate, a more normal state, the maneuvering among industry members, while lively and healthy, still allows most industry members to earn acceptable profits. When rivalry is weak, most companies in the industry are relatively well satisfied with their sales growth and market shares and rarely undertake offensives to steal customers away from one another. Weak rivalry means that there is no downward pressure on industry profitability due to this particular competitive force.
Can an industry be attractive to one company and unattractive to another company? Why or why not?
It is a mistake to think of a particular industry as being equally attractive or unattractive to all industry participants and all potential entrants. Attractiveness is relative, not absolute, and conclusions one way or the other have to be drawn from the perspective of a particular company. For instance, a favorably positioned competitor may see ample opportunity to capitalize on the vulnerabilities of weaker rivals even though industry conditions are otherwise somewhat dismal. At the same time, industries attractive to insiders may be unattractive to outsiders because of the difficulty of challenging current market leaders or because they have more attractive opportunities elsewhere.
What is the strategy-making value of identifying an industry's key success factors?
KSFs by their very nature are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure. To indicate the significance of KSFs another way, how well the elements of a company's strategy measure up against an industry's KSFs determines whether the company can meet the basic criteria for surviving and thriving in the industry. Identifying KSFs, in light of the prevailing and anticipated industry and competitive conditions, is therefore always a top priority in analytic and strategy-making considerations. Company strategists need to understand the industry landscape well enough to separate the factors most important to competitive success from those that are less important.
What is the analytical value of studying competitors and trying to predict what moves rivals will make next?
Michael Porter's Framework for Competitor Analysis points to four indicators of a rival's likely strategic moves and countermoves. These include a rival's current strategy, objectives, resources and capabilities, and assumptions about itself and the industry. Doing the necessary detective work can be time-consuming, but scouting competitors well enough to anticipate their next moves allows managers to prepare effective countermoves (perhaps even beat a rival to the punch) and to take rivals' probable actions into account in crafting their own best course of action.
A competitive environment where there is strong rivalry among sellers, low entry barriers, strong competition from substitute products, and considerable bargaining leverage on the part of both suppliers and customers: A. is competitively unattractive from the standpoint of earning good profits. B. offers little ability to build a sustainable competitive advantage. C. is highly conducive to achieving strong product differentiation and high customer loyalty to the company's brand. D. offers moderate to good prospects for making a reasonable profit and building a sustainable competitive advantage. E. requires that industry members have a strongly differentiated product offering in order to be profitable.
A
Amanda owns one of two bakery stores in her neighborhood. Which of the following questions would NOT help Amanda predict the next strategic moves and countermoves of her rivals? A. Which mode of transport does the rival's supplier use? B. How does her rival manage door-to-door deliveries at no extra cost? C. What percentage of customer frequent her rival's store? D. Why are her rival's cupcakes so popular among customers? E. When does her rival undertake special orders for custom cakes?
A
Determining how strong the threat of substitutes will be entails: A. identifying the relative price/performance relationship of the substitutes, the switching costs, and the overall buyer demand for the substitute. B. identifying the attractiveness of other industries. C. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques. D. adopting a substitute product concentration factor to the buyer volume. E. judging whether industry members are capable of self-manufacturing their products.
A
Driving-forces analysis helps managers identify whether: A. the collective impact of the driving forces will act to increase/decrease market demand, increase/decrease competition, and raise/lower industry profitability in the years ahead. B. it will become more or less important to aim the company's strategy at being the industry's low-cost producer. C. the driving forces will have a bigger impact on company profitability than competitive forces. D. the industry is likely to become more or less vertically integrated and why. E. competitive advantages are likely to grow or diminish in importance.
A
In analyzing driving forces, the strategist's role is to: A. identify the driving forces and evaluate their impact on (1) demand for the industry's product, (2) the intensity of competition, and (3) industry profitability. B. predict future marketing innovations and how fast the industry is likely to globalize. C. evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage. D. determine who is likely to exit the industry and what changes can be expected in the industry's strategic group map. E. forecast fluctuations in product demand and how buyer needs will most likely change.
A
In which of the following circumstances are competitive pressures associated with the bargaining power of buyers NOT relatively strong? A. The supply of soccer balls increases during the World Cup season. B. Consumers can easily compare different smartphones' features over the Internet before buying them. C. Apple designs and manufactures its chip processors rather than buying them from IBM. D. Dairy products are usually standardized and therefore differentiated only by price. E. Buyers tend to delay purchases of expensive goods, such as home entertainment systems, until they are on sale.
A
One of the steps of driving-forces analysis is to identify which: A. strategy changes a company may need to make to prepare for the impacts of the driving forces. B. strategic group is the most powerful. C. industry member is likely to become (or remain) the industry leader and why. D. key success factors are most likely to help their company gain a competitive advantage. E. of the five competitive forces will be the strongest driver of industry change.
A
Potential entrants are more likely to be deterred from actually entering an industry when: A. incumbent firms are willing and able to be aggressive in defending their market positions against entry. B. incumbent firms are complacent. C. buyers are not particularly price-sensitive and the industry already contains a dozen or more rivals. D. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage. E. buyer switching costs are moderately low because of strong product differentiation among incumbent firms.
A
Rivalry among competing sellers increases: A. when buyer demand is growing slowly. B. as it becomes more costly for buyers to switch brands. C. as the products of rival sellers become more strongly differentiated. D. when there is underproduction relative to demand.. E. as the number of competitors decreases.
A
The bargaining leverage of suppliers is greater when: A. the suppliers' products/services account for a small percentage of industry members' costs. B. industry members incur low costs in switching their purchases from one supplier to another. C. industry members account for a big fraction of supplier's sales. D. there is extensive seller-supplier collaboration. E. the supplier industry is composed of a large number of relatively small suppliers.
A
The competitive pressures from substitute products tend to be stronger when: A. good substitutes are readily available. B. there are fewer number of substitute products. C. substitutes have lower performance features. D. buyers incur high costs in switching to substitutes. E. substitutes are priced above the market.
A
The intensity of rivalry among competing sellers does NOT depend on whether: A. the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups. B. competitors are diverse in terms of long-term directions, objectives, strategies, and countries of origin. C. strong companies outside the industry have acquired weak firms in the industry and are launching aggressive moves to transform the acquired companies into strong market contenders. D. one or two rivals have particularly powerful and successful strategies to grow the business, attract and retain buyers, and develop a sustained competitive advantage. E. industry conditions attract industry members to use price cuts or other competitive weapons to boost total sales volume and market share.
A
The key success factors in an industry: A. are those competitive factors that most affect industry members' abilities to prosper in the marketplace—the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak one, and between profit and loss. B. are determined by the industry's driving forces, which are essential to surviving and thriving in the industry. C. hinge on how many different strategic groups the industry has operating within the industry and their level of profitability and sustainable advantages. D. depend on how many rivals are trying to move from one strategic group to another without losing momentum. E. are a function of such considerations as how many firms are in the industry, how many have market shares above 5 percent, and whether the business models being used are similar or diverse.
A
The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is: A. the five forces framework. B. PESTEL. C. the driving forces model. D. strategic group mapping. E. competitor analysis.
A
The payoff of good scouting reports on rivals is an improved ability to: A. anticipate what moves rivals are likely to make next. B. determine which rivals are in the best strategic group. C. figure out how many key success factors a rival has. D. determine whether a rival is gaining or losing market share. E. determine whether a rival has the best strategy and is the industry leader.
A
The real payoff of driving forces is to help managers understand: A. what strategy changes are needed to prepare for the impacts of the driving forces. B. the overall strength of the five competitive forces. C. whether the industry's strategic group map will be static or dynamic. D. what conditions exist in the economy at large. E. the extent to which rivals have more than two competitively valuable competencies or capabilities.
A
The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of: A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. B. whether suppliers self-manufacture what they supply or source their items from other manufacturers. C. whether the industry's position in the growth cycle is favorable. D. whether technological change in the businesses of suppliers is rapid or slow. E. whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.
A
Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves: A. building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry. B. building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits. C. evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors. D. assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures. E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.
A
What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry? A. Strategic group mapping B. PESTEL analysis C. Five forces framework D. The value net framework E. Competitor analysis
A
When evaluating whether an industry's environment presents a company with an above-average profitability and an attractive business opportunity, it primarily involves: A. determining the industry outlook for future profitability. B. determining which firms in the industry have a competitive advantage and how they got their advantage. C. determining the overall strength of the five competitive forces. D. constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group to determine the overall attractiveness of all the strategic groups. E. using value chain analysis to determine the relative cost positions of rival firms and to learn who the industry's low-cost producer is.
A
Which of the following conditions acts to weaken buyer bargaining power? A. When buyers are unlikely to integrate backward into the business of sellers B. When buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs C. When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low D. When the products of rival sellers are weakly differentiated and buyers have considerable discretion over whether and when they purchase the product E. When buyers are few in number and/or often purchase in large quantities
A
Which of the following factors represents the strategically relevant political factors in the macro-environment that will influence the performance of all firms across the board? A. The strength of the federal banking system B. The exogenous forces related to the general environmental demand C. Social factors that could fuel a political agenda and create greater transparency D. Bailouts and energy policies that are industry-specific E. Tax policy, fiscal policy, and tariffs providing impetus for anti-trust matters
A
Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the industry's key factors for future competitive success? D. Is the outlook for the industry conducive to providing attractive profitability? E. What are the driving forces in the industry, and what impact will these changes have on competitive intensity and industry profitability?
A
Which of the following is NOT a question asked to deduce a marketing-related key success factor? A. What are the industry product R&D capabilities and expertise in product design? B. On what basis do buyers choose between the competing brands of sellers? C. What product attributes and service characteristics are crucial? D. What resources must a company have to be competitive? E. What shortcomings are almost certain to put a company at a significant disadvantage?
A
Which of the following is NOT one of the five typical sources of competitive pressures? A. The power and influence of industry driving forces B. The bargaining power of suppliers and seller-supplier collaboration C. The threat of new entrants into the market D. The attempts of companies in other industries to win customers over to their own substitute products E. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry
A
Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? A. The industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C. Whether there are more than five key success factors and more than five barriers to entry D. Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group E. Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product
A
Identify at least three benefits of constructing a strategic group map.
A strategic group consists of those industry members with similar competitive approaches and positions in the market. Companies in the same strategic group can resemble one another in a variety of ways. For example, they may have comparable product-line breadth, emphasize the same distribution channels, depend on identical technological approaches, or offer buyers essentially the same product attributes or similar services and technical assistance. Evaluating strategy options entails examining what strategic groups exist, identifying the companies within each group, and determining if a competitive "white space" exists where industry competitors are able to create and capture altogether new demand. As part of this process, the number of strategic groups in an industry and their respective market positions can be displayed on a strategic group map.
Identify five factors that tend to weaken the intensity of competitive rivalry among an industry's member firms.
Rivalry among competing sellers decreases and becomes a weaker force when: • Buyer demand is growing quickly. • Buyers' costs to switch brands are high. • The products of industry members are not commodities or else strongly differentiated. • The firms in the industry do not have excess production capacity and/or inventory. • The firms in the industry have low fixed costs or low storage costs. • Competitors are few or are of unequal size and competitive strength. • Rivals have similar objectives, strategies, and/or countries of origin. • Rivals have few emotional stakes in the business or face low exit barriers.
Identify four factors that affect whether an industry does or does not present a company with a good business opportunity.
An industry's key success factors (KSFs) are those competitive factors that most affect industry members' ability to survive and prosper in the marketplace: the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak competitor—and between profit and loss.
A company's strategy is increasingly effective the more it can match the company strategy to competitive conditions, so the firm can: A. pursue avenues that expose the firm to as many of the different competitive pressures as possible. B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces. C. pursue ways to identify and complement the five forces contradictions and inferences to attract competitive growth opportunities. D. pursue avenues that promote strategic thinking about how to contest competitor strengths and weaknesses and to create a checklist of potential profitability preferences. E. shift societal concerns, attitudes, and lifestyles by altering the pattern of competition.
B
A rival's strategic moves and countermoves are: A. indicators for the visualization of strategic mapping techniques. B. enabled and constrained by the set of capabilities they have at hand. C. measured by the extent to which they can unveil financial objectives. D. responses to the broader definition of the industry opportunities. E. signs of the competitive pressures from the industry.
B
As a rule, the collective impact of competitive pressures associated with the five competitive forces: A. determines the strength of the industry's driving forces. B. determines the extent of the competitive pressure on industry profitability. C. means that fewer companies can achieve a competitive advantage via anything other than being the industry's low-cost leader. D. means there will be a larger number of competitive advantage opportunities for industry members. E. means there will be a greater number of industry key success factors.
B
Evaluating the industry's driving forces, as a whole, requires understanding their influence on the attractiveness of industry environment and generally are: A. determined by the sizes of strategic groups and the power of rival firms' competitive strategies. B. defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years. C. the cause of a reduction in the bargaining power of buyers. D. triggered by movement in the economy, higher or lower interest rates, or important new strategic alliances. E. triggered by such factors as growing competitive pressures from substitute products, and the efforts of rival firms to employ new or different offensive strategies.
B
Factors that cause the rivalry among competing sellers to be weaker include: A. low buyer switching costs. B. low fixed costs or storage costs. C. many industry rivals of roughly equal size and competitive strength. D. weakly differentiated products among rival sellers. E. slow growth in buyer demand.
B
Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because: A. it identifies who the industry's current market share leaders are. B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence. C. it helps identify which rival is in which strategic group. D. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. E. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.
B
In analyzing the strength of competition among rival firms, an important consideration is: A. the potential for buyers to exercise strong bargaining power. B. the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin. C. the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies. D. the extent to which some rivals have more than two competitively valuable competencies or capabilities. E. whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.
B
Identify and briefly explain any four of the factors that influence the strength or intensity of competitive rivalry among an industry's member firms.
Rivalry among competing sellers increases and becomes a stronger force when: • Buyer demand is growing slowly. • Buyers' costs to switch brands are low. • The products of industry members are commodities or else weakly differentiated. • The firms in the industry have excess production capacity and/or inventory. • The firms in the industry have high fixed costs or high storage costs. • Competitors are numerous or are of roughly equal size and competitive strength. • Rivals have diverse objectives, strategies, and/or countries of origin. • Rivals have emotional stakes in the business or face high exit barriers.
In identifying an industry's key success factors, strategists should: A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. D. consider what it will take to overtake the company with the industry's overall best strategy. E. focus their attention on what it will take to capitalize on the impacts of the industry's driving forces.
B
In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products? A. The costs to buyers of switching over to the substitutes are low. B. Buyers are dubious about using substitutes. C. The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements. D. Buyer brand loyalty is weak. E. Substitutes are readily available at competitive prices.
B
Information regarding the four components of the Framework for Competitor Analysis can NOT be: A. gleaned from company press releases. B. gathered from a rival's internal proprietary strategic information. C. assembled from website data. D. observed from public information. E. garnered from competitive intelligence departments.
B
Not all buyers of an industry's product have equal degrees of bargaining power with sellers, because: A. sellers in an industry provide similar products and generally their cost structures are different because of competitive advantages in their operation. B. some sellers may be less sensitive than others to price, quality, or service differences. C. along the various stages of the value chain sellers are conducive to earning attractive profits. D. the industry is a highly cohesive structure with limited fragmentation and few industry members. E. sellers are large and few in number relative to the number of buyers.
B
The concept of strategic groups is relevant to industry and competitive analysis because: A. firms in the same strategic groups are rarely close competitors—a firm's closest competitors are usually in distant strategic groups. B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors. C. competition grows in intensity as the number and diversity of the strategic groups in an industry increases. D. the profit potential of firms in the same strategic group is usually very similar. E. competitive pressures tend to be weaker within strategic groups than across strategic groups.
B
The extent to which firms are meeting objectives suggests they: A. are likely to prosper in the future. B. are likely to continue their present strategy with only minor fine-tuning. C. are virtually certain to make fresh strategic moves. D. recognize "status quo" as the best course of action to adopt. E. realize refocusing will ensure competitive gains.
B
The higher the switching costs for industry members, the more it can: A. limit supplier bargaining power. B. enhance supplier bargaining power. C. enhance the quality of parts and components being supplied, and in effect reduce defect rates. D. provide important cost savings for the collaborative supplier-seller relationship. E. limit the supply of products and/or services.
B
The lower the user's switching costs, the: A. harder it is for the sellers of attractive substitutes to lure buyers to their offering. B. more intense the competitive pressures posed by substitute products. C. less intense the competitive pressures posed by substitute products. D. greater the bargaining power from both suppliers and influential customers. E. lesser the bargaining power from both suppliers and influential customers.
B
The most powerful of the five competitive forces is USUALLY: A. the competitive pressures that stem from the ready availability of attractively priced substitute products. B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. C. the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates. D. the competitive pressures associated with the potential entry of new competitors. E. the bargaining power and leverage that large customers are able to exercise.
B
What makes the marketplace a competitive battlefield is: A. the race of industry members to build strong defenses against the industry's driving forces. B. the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals. C. the ongoing race among rival sellers to have the highest-quality product. D. the ongoing efforts of industry members to introduce new and improved products/services at a faster rate than their rivals. E. the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits.
B
Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. the speed with which general economic conditions and interest rates are changing. B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members. C. how many buyers purchase all of their requirements from a single seller versus how many purchase from several sellers. D. the number of buyers versus the number of sellers. E. whether industry members are spending more or less on advertising.
B
Which of the following can aid industries in identifying key success factors? A. Global distribution capabilities B. Crucial product attributes and service characteristics C. Low distribution costs D. Accurate filling of buyer orders E. Short delivery time capability
B
Which of the following factors is NOT a relevant consideration in determining the strength of buyer bargaining power? A. The relationship between the buyer market and seller market B. The degree to which the seller is a manufacturer of goods and services in substantial quantities C. The degree to which buyers pose a credible threat to integrate backward into the product market of sellers D. The degree to which buyers are well-informed about a seller's products, prices, and costs E. The degree to which industry goods are standardized and undifferentiated
B
Which of the following is MOST likely to qualify as a driving force? A. Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals B. Successful introduction of innovative new products or new ways to market products C. An increase in the prices of substitute products D. Decisions on the part of industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader E. Decisions by one or more outsiders not to attempt to enter the industry
B
Which of the following is NOT a factor that causes buyer bargaining power to be stronger? A. Some buyers are a threat to integrate backward into the business of sellers and become an important competitor. B. Buyers are small and numerous relative to sellers. C. Buyers have considerable discretion over whether and when they purchase the product. D. Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.
B
Which of the following is NOT an integral part of driving-forces analysis? A. Determining whether forces are acting to cause fundamental changes in industry conditions and/or the industry's competitiveness B. Determining whether forces are acting to cause industry rivals to shift to a different strategic group C. Determining whether forces are acting to strengthen or weaken market demand D. Determining whether forces are acting to make competition more or less intense E. Determining whether forces are acting to raise or lower industry profitability
B
A company's "macro-environment" refers to: A. the industry and the competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets where a company operates. C. the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company's industry.
C
A strategic group: A. consists of those industry members that are growing at about the same rate and have similar product line breadth. B. includes all rival firms having comparable profitability. C. is a cluster of industry members with similar competitive approaches and market positions in the market. D. consists of those firms whose market shares are about the same size. E. is made up of those firms having comparable profit margins.
C
An industry's key success factors can always be deduced by asking what factors: A. are a function of market share, entry barriers, and economies of scale, degree of vertical integration, and industry profitability that are advantageous. B. vary according to whether an industry has high or low long-term attractiveness. C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive disadvantage. D. can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies. E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.
C
Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when: A. virtually all buyers have strong brand attachments and are highly brand loyal. B. demand for the product is growing rapidly. C. sales are made to buyer groups with either strong bargaining power or high sensitivity. D. sellers are racing to add the latest and greatest performance features so as to attract the patronage of important or prestigious buyers. E. buyers are very quality conscious.
C
Competitive pressures stemming from buyer bargaining power tend to be weaker in which of the following circumstances? A. Most consumers vary the brands they choose for their cookware and kitchen gadgets. B. There is a global decline in the demand for CD players. C. The investment banking industry offers highly differentiated products. D. The Internet offers a huge amount of information on a variety of products. E. Heinz owns a metal-can manufacturing subsidiary to cut back on supplier costs.
C
Driving-forces analysis has: A. speculative value because it compels the firm to drive strategic intent and collective choice into operating practices. B. theoretical value because it allows managers to visualize the many different dimensions of the preferred forces that allow for industry functionality. C. practical value and is basic to the task of thinking strategically about where the industry is headed and how to prepare for the changes ahead. D. no real analytical value because the driving forces are already established in the marketplace and it is too late to make astute and timely strategy adjustments. E. perceived value and is associated with identifying the close and distant rivals within an operating industry.
C
Each of the following exemplifies the impact of the macro-environment on a company's strategic opportunities EXCEPT: A. sales of Smirnoff dwindle on account of new laws regulating the sale of liquor. B. consumer confidence in GM rises as its stock price soars. C. Nike considers Adidas its most potent rival in the industry. D. footfalls at the outlets of Pizza Express increase following its drive to go vegan. E. sales of Smooth Fitness Treadmills surge on account of a new feature that monitors users' blood pressure.
C
In mapping strategic groups: A. one strategic variable and one financial variable should be used as axes for the map. B. it is important for the variables used as axes to be highly correlated. C. the best variables to use as axes for the map are those that identify the competitive characteristics that delineate strategic approaches used in the industry. D. it is important to use price as the variable for the vertical axis. E. the primary objective is to determine which strategic groups are profitable and which are not.
C
Increasing globalization of the industry can be a driving force because: A. the products of foreign competitors are nearly always cheaper or of better quality than those of domestic companies. B. foreign producers typically have lower costs, greater technological expertise, and more product innovation capabilities than domestic firms. C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities. D. it results in companies having fewer competitors and a strategic group map with fewer circles. E. market growth rates go up, product innovation speeds up, and new firms are likely to enter the industry.
C
Strategic group mapping is a visual technique for displaying: A. how many rivals are pursuing each type of strategy. B. which companies have the biggest market share and who the industry leader really is. C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors. D. which companies have the highest degrees of brand loyalty. E. which companies have failing business models.
C
The "driving forces" in an industry: A. are usually triggered by changing technology or stronger learning/experience curve effects. B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers. C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions. D. appear when an industry begins to mature but are seldom present during early stages of the industry life cycle. E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.
C
The rivalry among competing sellers tends to be less intense when: A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales. B. buyer demand is weak and many sellers have excess capacity and/or inventory. C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance. D. rivals have diverse strategies and objectives and are located in different countries. E. rival sellers have weakly differentiated products.
C
When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous: A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. D. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.
C
Which of the following does NOT qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? A. Changes in who buys the product and how they use it, and changes in the long-term industry growth rate B. Changes brought about by the entry or exit of major firms, product innovation, and marketing innovation and cost efficiency C. Changes in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration D. Changes in buyer preferences for differentiated products instead of mostly standardized or identical products E. Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilities
C
Which of the following factors is NOT a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak? A. Whether certain customers offer sellers important market exposure or prestige B. Whether customers are relatively well-informed about sellers' products, prices, and costs C. Whether buyer needs and expectations are changing rapidly or slowly D. Whether sellers' products are highly differentiated, making it troublesome or costly for buyers to switch to competing brands or to substitute products E. Whether buyers pose a major threat to integrate backward into the product market of sellers
C
Which of the following is LIKELY to have the biggest strategy-shaping impact on mobile service providers? A. Coca-Cola launches mobile campaigns for community-connect and awareness. B. Discovery Channel launches a mobile game to promote its Gold Rush TV show. C. T-Mobile US signs a pact with Nokia Networks for greater spectrum support. D. Hugo Boss announces the launch of its fall/winter collection via mobile. E. Apple enters into a pact with PayPal to market its mobile wallet application.
C
Which of the following is NOT a good example of a substitute product that triggers stronger competitive pressures? A. A salad as a substitute for French fries B. Wireless phones as a substitute for wired telephones C. Coca-Cola as a substitute for Pepsi D. Snowboards as a substitute for snow skis E. Video-on-demand services from a cable TV company as a substitute for going to the movies
C
Which of the following is NOT an appropriate guideline for developing a strategic group map for a given industry? A. The variables chosen as axes for the map should indicate important differences among rival approaches. B. The variables chosen as axes for the map don't have to be either quantitative or continuous. They can be discrete variables. C. The variables chosen as axes for the map should be highly correlated. D. Several maps should be drawn if more than one pair of variables give different exposures to the competitive positioning relationships present in the industry structure. E. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.
C
Which of the following is part of a company's macro-environment? A. Conditions outside the market B. European culture, values, and lifestyles C. The pace of technological change factors and legal and regulatory conditions D. The industry and competitive environment arena outside the company's operating territory E. The company's resource strengths, resource weaknesses, and competitive capabilities
C
Identify and briefly explain any three factors that lead to weak bargaining power on the part of buyers.
Competitive pressures from buyers decrease when they have weak bargaining power and are not price-sensitive. Buyer bargaining power is weaker when: • Buyer demand is strong in relation to industry supply. • The industry's products are differentiated. • Buyer costs of switching to competing products are high. • Buyers are small and many in number relative to the number of industry sellers. • Buyers don't pose a credible threat of integrating backward into the business of sellers. • Buyers are not well informed about the quality, prices, and costs of sellers. • Buyers don't have the ability to postpone purchases. Buyers are not price-sensitive and decrease competitive pressures when: • Buyers earn high profits or high income. • The product doesn't represent a significant fraction of their purchases.
Identify five factors that tend to intensify competitive rivalry among an industry's member firms.
Rivalry among competing sellers increases and becomes a stronger force when: • Buyer demand is growing slowly. • Buyers' costs to switch brands are low. • The products of industry members are commodities or else weakly differentiated. • The firms in the industry have excess production capacity and/or inventory. • The firms in the industry have high fixed costs or high storage costs. • Competitors are numerous or are of roughly equal size and competitive strength. • Rivals have diverse objectives, strategies, and/or countries of origin. • Rivals have emotional stakes in the business or face high exit barriers.
Identify and briefly discuss any three of the factors that influence the bargaining strength and leverage of buyers.
Competitive pressures from buyers increase when they have strong bargaining power and are price-sensitive. Buyer bargaining power is stronger when: • Buyer demand is weak in relation to industry supply. • The industry's products are standardized or undifferentiated. • Buyer costs of switching to competing products are low. • Buyers are large and few in number relative to the number of industry sellers. • Buyers pose a credible threat of integrating backward into the business of sellers. • Buyers are well informed about the quality, prices, and costs of sellers. • Buyers have the ability to postpone purchases. Buyers are price-sensitive and increase competitive pressures when: • Buyers earn low profits or low income. • The product represents a significant fraction of their purchases. Competitive pressures from buyers decrease and become a weaker force under the opposite conditions.
Identify and briefly explain any three factors that lead to strong bargaining power on the part of buyers.
Competitive pressures from buyers increase when they have strong bargaining power and are price-sensitive. Buyer bargaining power is stronger when: • Buyer demand is weak in relation to industry supply. • The industry's products are standardized or undifferentiated. • Buyer costs of switching to competing products are low. • Buyers are large and few in number relative to the number of industry sellers. • Buyers pose a credible threat of integrating backward into the business of sellers. • Buyers are well informed about the quality, prices, and costs of sellers. • Buyers have the ability to postpone purchases. Buyers are price-sensitive and increase competitive pressures when: • Buyers earn low profits or low income. • The product represents a significant fraction of their purchases. Competitive pressures from buyers decrease and become a weaker force under the opposite conditions.
Not all buyers of an industry's product are likely to possess the same degree of bargaining power or leverage over the terms and conditions under which they purchase the product. True or false? Explain.
Competitive pressures from buyers increase when they have strong bargaining power and are price-sensitive. Buyer bargaining power is stronger when: • Buyer demand is weak in relation to industry supply. • The industry's products are standardized or undifferentiated. • Buyers' costs of switching to competing products are low. • Buyers are large and few in number relative to the number of industry sellers. • Buyers pose a credible threat of integrating backward into the business of sellers. • Buyers are well informed about the quality, prices, and costs of sellers. • Buyers have the ability to postpone purchases. Buyers are price-sensitive and increase competitive pressures when: • Buyers earn low profits or low income. • The product represents a significant fraction of their purchases. Competitive pressures from buyers decrease and become a weaker force under the opposite conditions.
Identify and briefly explain any two of the factors that influence the strength of competition from substitute products.
Competitive pressures from substitutes are stronger when: • Good substitutes are readily available and attractively priced. • Substitutes have comparable or better performance features. • Buyers have low costs in switching to substitutes.
A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers: A. lacks powerful driving forces. B. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms. C. makes it challenging for industry members to compete successfully unless they can strongly differentiate their products. D. is conducive to industry members earning attractive profits. E. requires that industry members have low costs in order to be competitively successful.
D
An industry contains one strategic group when all sellers: A. are subject to the same driving forces. B. place about the same emphasis on various distribution channels. C. use the same key success factors to differentiate their products. D. pursue essentially identical strategies and have similar market positions. E. pursue varying distribution channels and product attributes, and have customer service attributes that differentiate them in the marketplace.
D
Correctly diagnosing an industry's key success factors: A. points to those things that every firm in the industry needs to attend to in order to develop product propositions. B. hints at the firm's ability to generate above-average profitability. C. reveals that the firm's capabilities and resources are aligned with operating practices of industry participants. D. raises a company's chances of crafting a sound strategy. E. raises a company's sustainability dimensions and market characteristics in line with industry dynamics.
D
Industry conditions change because of: A. such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers. B. newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups. C. newly emerging industry key success factors. D. important forces enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways. E. changes in the barriers to entry and the degree of competition from substitute products.
D
One of the things that can be gleaned from a strategic group map of industry rivals is: A. which rivals have been in business longer and thus have greater access to experience curve effects. B. which rivals have newer manufacturing facilities and thus have achieved greater product quality. C. which strategic groups have the highest profit margins and the highest customer switching costs and thus represent key operating characteristics. D. that some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces. E. which strategic groups are currently being shunned by customers because of high prices and relatively low product quality.
D
Rivalry among competing sellers is generally more intense when: A. there are relatively few industry key success factors. B. the industry's driving forces are strong and rivals have strongly differentiated products. C. barriers to entry are moderately high and the pool of likely entry candidates is small. D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising, and otherwise gain sales and market share. E. barriers to entry are high and buyer switching costs are high.
D
The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage, suggest the rivalry force: A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies. B. is often weak when rivals have emotional stakes in business or face high exit barriers. C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders. E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.
D
The task of driving-forces analysis is to: A. develop a comprehensive list of all the potential causes of changing industry conditions. B. predict which new driving forces will emerge next. C. determine which of the five competitive forces is the biggest driver of industry change. D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces. E. learn what the industry key success factors are and how they might change in the future.
D
Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. whether the profits of suppliers are relatively high or low. B. the average number of suppliers that each seller/industry member purchases from. C. how aggressively rival industry members are trying to differentiate their products. D. whether demand for supplier products is high and they are in short supply. E. whether the prices of the items being furnished by the suppliers are rising or falling.
D
Which of the following is NOT a common type of driving force? A. Reductions in uncertainty and business risk B. Changing societal concerns, attitudes, and lifestyles C. Diffusion of technical know-how across companies and countries D. Increasing efforts to collaborate closely with suppliers E. Advances in technology and manufacturing process innovation
D
Which of the following is NOT generally a "driving force" capable of producing fundamental changes in industry and competitive conditions? A. Changes in the long-term industry growth rate B. Increasing globalization of the industry C. Product innovation and technological change D. Movement in the economy and in interest rates E. Regulatory influences and government policy changes
D
Which of the following is most UNLIKELY to qualify as driving forces? A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency B. Increasing globalization of the industry and product innovation C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry D. Increasing efforts to collaborate with suppliers via strategic alliances and partnerships, escalating risk levels and normalization of cost and efficiency in the industry E. Marketing innovations and changes in who buys the industry's product and how they use it
D
Which of the following pairs of variables is LEAST likely to be useful in drawing a strategic group map? A. Geographic market scope and degree of vertical integration B. Brand name reputation and distribution channel emphasis C. Product quality and product-line breadth D. Level of profitability and size of market share E. Price/perceived quality and image range and the extent of buyer appeal
D
In doing driving-forces analysis, is it sufficient to simply identify the driving forces that are operating to alter industry and competitive conditions? Why or why not? If not, then explain what else is required for a complete driving-forces assessment.
Driving-forces analysis has three steps: (1) identifying what the driving forces are, (2) assessing whether the drivers of change are, on the whole, acting to make the industry more or less attractive, and (3) determining what strategy changes are needed to prepare for the impact of the driving forces.
Buyer bargaining power is stronger when: A. winning the business of certain high-profile customers offers a seller important market exposure or prestige. B. the extent and importance of collaborative partnerships and alliances between particular sellers and buyers is credible. C. buyers cannot integrate backward into the product market of sellers. D. sellers' products are differentiated, making it easy and inexpensive for buyers to switch to competing brands. E. the industry's products are standardized or undifferentiated.
E
Buyers are in position to exert strong bargaining power in dealing with sellers when: A. their costs to switch to competing brands or to substitute products are relatively high. B. a particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands. C. they buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products, prices, and costs. D. buyer demand is growing rapidly. E. buyers are price-sensitive due to the product representing a significant fraction of their purchases.
E
Competing companies deploy whatever means necessary to strengthen market position, including all of the following EXCEPT: A. marketing tactics including special sales promotions such as introducing new or improved features or increasing the number of styles to provide greater product selection. B. differentiating their products by offering better performance features than rivals. C. improving innovation to increase product performance and quality. D. making efforts to expand dealer networks. E. reducing distribution capabilities and market presence.
E
Competitive pressures associated with the threat of entry are greater in all of the following situations, EXCEPT when: A. incumbent firms are willing to strongly contest the entry of newcomers with moves designed to make entry unprofitable. B. a large pool of potential entrants exists, some of which have the capabilities to overcome high entry barriers. C. entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents. D. existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence. E. customers have low brand preferences and low degrees of loyalty to seller.
E
Good intelligence about the strategic direction and likely moves of key competitors allows a company to determine which competitors have all of the following, EXCEPT: A. the best strategy. B. flawed or weak strategies. C. strong performance objectives. D. reliable resources and capabilities. E. similar competitive approaches.
E
In evaluating whether the industry and competitive environment presents sufficiently attractive prospects for both competitive success and attractive profits usually does NOT involve a consideration of which of the following factors? A. The industry's growth potential and whether competitive pressures will likely grow stronger or weaker, and whether strong competitive forces are squeezing industry profitability to subpar levels B. Whether the company occupies a stronger market position than rivals C. Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces D. The severity of the macro-environment problems confronting the industry E. Whether the industry's product is strongly or weakly differentiated
E
In which of the following instances is rivalry among competing sellers NOT more intense? A. When certain competitors are dissatisfied with their market position and make moves to bolster their standing B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders C. When competitors are fairly equal in size and capability D. When the products of rivals are weakly differentiated, buyer switching costs are low, and market demand is growing slowly E. When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members
E
Managers must chart a company's strategic course by: A. focusing on the local environment in which they are operating. B. ensuring excess production capacity and/or inventory. C. competing fiercely for a share in the market. D. building a bigger dealer network. E. developing a thorough understanding of the company's external and internal environment.
E
Market maneuvering among industry rivals: A. determines whether the industry's strategic group map will be static or dynamic. B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. C. is usually an industry's strongest driving force. D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.
E
Strategic group map analysis does NOT entail drawing conclusions about: A. where on the map is the best place to be and why. B. which companies/strategic groups are destined to prosper because of their positions. C. which companies/strategic groups seem destined to struggle. D. what accounts for why some parts of the map are better than others. E. where on the map is the easiest position to shift from to a more favorably situated position.
E
The best test of whether potential entry is a strong or weak competitive force is: A. the strength of buyer loyalty to existing brands. B. whether the industry's driving forces make it harder or easier for new entrants to be successful. C. whether the strategies of industry members are well-matched to the industry's key success factors. D. whether there are any vacant spaces on the industry's strategic group map. E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.
E
The competitive pressures on companies within an industry come from all of the following, EXCEPT: A. those associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B. those companies in other industries attempting to win buyers over to their substitute products. C. those associated with the threat of new entrants into the marketplace. D. those associated with the bargaining power of suppliers and customers. E. those associated with environmental factors such as water shortages.
E
Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on: A. the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive. B. how many buyers are engaged in collaborative partnerships with sellers. C. whether entry barriers are high or low and the size of the pool of likely entry candidates. D. whether the overall quality of the items being furnished by industry members is rising or falling. E. whether demand-supply conditions represent a buyer's market or a seller's market.
E
Which of the following is NOT one of the principal components of strategic significance in the PESTEL analysis? A. Political factors including the extent to which government intervenes in the economy B. Economic conditions that include the general economic climate and specific factors such as interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can affect consumer confidence C. Sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact business D. Technological factors that include the pace of change and technical developments that have the potential for impacting society E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business
E
Which of the following is generally NOT considered a barrier to entry? A. Restrictive regulatory policies B. High capital requirements C. Strong brand preferences D. Many industry patents in place E. Weak "network effects" in customer demand
E
With the aid of a strategic group map, one can: A. identify easily the entry and exit barriers for each strategic group. B. pinpoint precisely which firms are in profitable strategic groups and which are not. C. identify which competitive forces are strong and which are weak. D. measure accurately whether across-group rivalry is stronger than within-group rivalry, and vice versa. E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.
E
What are the six key questions that form the framework of thinking strategically about a company's industry and competitive environment?
Every company operates in a broad "macro-environment" that comprises six principal components: political factors, economic conditions in the firm's general environment (local, country, regional, worldwide), sociocultural forces, technological factors, environmental factors (concerning the natural environment), and legal/regulatory conditions. Each of these components has the potential to affect the firm's more immediate industry and competitive environment, although some are likely to have a more important effect than others.