MAN4720 Ch 3 Quiz
Effective use of the PESTEL framework can help us identify - only a few effective trends - emerging opportunities and threats within an industry - emerging substitute products - new competitors - how a trend is changing buyer behavior in an industry
Emerging opportunities and threats within an industry
A fragmented industry turns into a consolidated industry when - there are no restrictive government policies introduced in the industry - firms reduce competition within the industry through mergers and acquisitions - the barriers to enter the industry are reduced - the products/services are seen as commodities
Firms reduce competition within the industry through mergers and acquisitions
The impact of baby boomers getting older on an industry would be classified in which PESTEL factor? - Political - Economic - Sociocultural - Legal - Technological
Sociocultural
Which of the following firms most likely has the lowest bargaining power as a buyer? - an automobile company that can backwardly integrate to produce its own component parts - a fast food chain that has multiple suppliers for processed meat - a government agency that buys large quantities of cement from a private supplier - a cell phone company that requires highly customized software for its phones
A cell phone company that requires highly customized software for its phones
Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of political rather than economic considerations? - A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing - Airbus and Boeing are likely to exit the aircraft manufacturing industry when industry profit potential falls to zero - The traditional U.S. airlines Delta, United, and American Airlines have large fixed costs to maintain their network of routes that affords global coverage, frequently in conjunction with foreign partner airlines - Given their strategic commitments, neither Delta nor United is likely to merge with other airlines
A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing
The kinds of factors that might be reviewed when considering the 'Economic' aspect of the PESTEL include - changes in the average age of different consumer groups - judicial outcomes that impact product liability within an industry - changes in the speed of internet communication capabilities - changes in disposable income per capita - the election of a conservative congress
Changes in disposable income per capita
What term is used to describe cooperation by competitors who want to achieve a strategic objective? - Co-opetition - Strategic competition - Complementary assets - Strategic commitment
Co-opetition
________ tends to be more fierce when exit barriers in the industry are high, resulting in some firms being locked into the industry. - Competitive rivalry - Strategic complements - Co-opetition - Strategic commitments
Competitive rivalry
Strategic-group mapping establishes that - competitive pressures within an industry are similar among all strategic groups - competitive rivalry is strongest between firms that are within the same strategic group - product features and prices are irrelevant to a strategic group - rivals inside a strategic group serve different customers
Competitive rivalry is strongest between firms that are within the same strategic group
Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem. - complement - value chain - mobility barrier - technological factor
Complement
According to the video, which of the following is an example of a threat of substitute product or service? - driving instead of flying between two nearby cities - using social media instead of newspaper advertisements for marketing - buying instead of renting airplanes and gate space at airports - using artificial sweeteners instead of corn syrup in soft drinks
Driving instead of flying between two nearby cities
Which of these is a way to reconfigure a value chain? - thinking about new combinations of resources and capabilities that a firm already possesses, such as repurposing a movie theater as a location for off-site corporate meetings - creating a partnership through strategic alliances, such as a bakery partnering with a restaurant - preparing to leave an industry rather than supply unreliable or substandard products to customers - entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups
Entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups
Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? - Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost - Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand - Ez Solutions Inc. will experience less competition from rival companies - Ez Solutions Inc. will find it easier to raise prices to increase profits
Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost
MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to - forward integrate - crowdsource - outsource - backward integrate
Forward integrate
Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? - Suppliers in the automotive industry had low bargaining power - Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy - Complementary products and services like battery charging and service stations were pervasive - GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry
GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry
The relative bargaining power of suppliers is most likely low when - the suppliers provide products that are differentiated - incumbent firms face low switching costs when changing suppliers - there are no readily available substitutes for the products and services they offer - the suppliers' industry is more concentrated than the industry it sells to
Incumbent firms face low switching costs when changing suppliers
ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) - plant - focus group - industry - occupational group
Industry
The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n) - interest rate - service tax - royalty fee - surcharge
Interest rate
Which of the following is a feature of a fragmented industry? - It tends to generate high profitability - It consists of many small firms - It allows firms to set prices - One large firm dominates the industry
It consists of many small firms
According to the video, which of the following is true of price-based competition? - It is intense in the airline industry due to high information transparence and low marginal costs - It is intense in the soft drink industry due to low brand preference among consumers - It is intense in the airline industry because it is confusing for customers to compare flight ticket prices using Internet travel websites - It is intense in the soft drink industry because price is the main competitive factor
It is intense in the airline industry due to high information transparence and low marginal costs
Which of the following statements is true of an oligopoly? - Price-competition is the preferred mode of competition - It is often analyzed using game theory - Competing firms are most often independent of one another - It is characterized by low entry barriers
It is often analyzed using game theory
According to the video, which of the following is an example of a buyer who will be able to successfully negotiate for lower prices? - large corporate customers with extensive service requirements - individual consumers with strong brand preference - large corporate customers who can increase industry profitability - individual consumers who buy in small quantities
Large corporate customers with extensive service requirements
_________ are industry-specific factors that separate one strategic group from another. - Mobility barriers - Competitive differences - Complementary products/services - Barriers to entry
Mobility barriers
In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) - perfectly competitive structure - monopolistically competitive structure - monogopoly - oligopoly
Monopolistically competitive structure
Owners of coffee plantations in the country of Cantonica grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Cantonica best illustrates a(n) ________ structure. - monopolistically competitive - oligopolistic - monopolistic - perfectly competitive
Perfectly competitive
Restrictions imposed by the government, such as export quotas on certain products, are a part of the ________ environment of the PESTEL framework. - economic - sociocultural - ecological - political
Political
A consolidated industry turns into a fragmented industry when - restrictive government policies are introduced in the industry - firms reduce competition within the industry through mergers and acquisitions - technological advances lead to industry convergence - network effects enjoyed by incumbent firms within the industry become stronger
Restrictive government policies are introduced in the industry
When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect? - Substitutes were not readily available because customers cannot use other means of transport - Substitutes made it difficult for generating a profit potential in Spain's airline industry - The combination of the competitive forces leads to collusion among existing airlines - Entry barriers in Spain's airline industry are relatively high because of the high costs involved
Substitutes made it difficult for generating a profit potential in Spain's airline industry
Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? - they cannot employ technology efficiently - they can spread fixed costs over lesser units - they benefit from a less specialized division of labor - they can demand better terms from their suppliers
They can demand better terms from their suppliers
How do complements affect a primary product or service? - They reduce the value of the primary product - They act as the strategic equivalent of the primary product - They increase the demand for the primary product - They lower the utility of the primary product
They increase the demand for the primary product
Generally speaking, which of these situations is likely to lead to greater profits? - an industry that is about to undergo deregulation - a situation that encourages operating at excess capacity - a fragmented industry rather than a consolidated one - an industry with fewer but larger competitors
an industry with fewer but larger competitors
