MGT 400 Ch 3 Learn Smart

ESPN starting a Spanish-Language television channel called ESPN Deportes is an example of how companies react to the ___ trend that the Hispanic population in the US sees their income rising and is growing fast. a. demographic b. sociocultural c. economic

A

Firms within the same strategic group are ___ competitors. a. direct b. indirect

A

Blackberry, once an undisputed leader in the smartphone industry, reacted too late to changing consumer preferences when the iPhone became available. This rapid progress in mobile computing, is a ___ factor in the external environment of businesses in related industries. a. ecological b. technological c. political d. legal

B

Consumers tend to buy homes, automobiles, and computers when interest rates are ___ because credit is inexpensive. a. variable b. low c. fluctuating d. high

B

If the US dollar depreciates compared to the euro, it will take ___ dollars to buy one euro. a. less b. more

B

The external environment affects strategic groups ___. a. the same b. differently

B

A ___ is a product or service that adds value to the original product offering. a. co-operative potential b. significant reduction c. complement d. strategic intent

C

Lean manufacturing, Six Sigma, and biotechnology would be included as ___ factors in a firm's external environment. a. economic b. political c. technological d. legal

C

___ is the lack of change in price levels of goods and services. a. interest rate b. labor growth rate c. currency exchange rate d. price stability

D

Sociocultural factors tend to be fixed. True False

F

Substitutes meet the same basic customer needs as the industry's products in the same way. True False

F

The intensity of rivalry among existing competitors is determine largely by: a. competitive industry structure b. entry barriers. c. exit barriers d. economies of scale e. industry growth f. A, C, and E g. B and D

F

A monopolistic competitive industry has: a. a differentiated product and some obstacles to entry b. a differentiated product with no obstacles to entry c. a similar product with no obstacles to entry d. a similar product and significant obstacles to entry

A

Although ___ coordination such as price fixing is illegal in the US, ___ coordination such as "an unspoken understanding" is not. a. explicit; tacit b. tacit; explicit

A

As utility companies tend to serve a whole market exclusively, they are known as a ___ because the governments involved believe that the product or service would not be supplied otherwise. a. natural monopolies b. perfect competitors c. differentiated oligopolies

A

Exit barriers are composed of ___ factors. a. economic and social b. technological and demographic c. political and legal d. political and economic

A

Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with ___ growth. a. slow or negative b. stable c. fast and positive

A

The NASDAQ peaked at its all-time high of 5,132 points on March 10, 2000. Hundreds of dot com businesses were founded and funded during this time, but very few survived. What is this an example of? a. economic boom periods can overheat and lead to speculative bubbles b. during economic boom periods, investors stay cautious and conservative c. during recessionary periods, companies that focus on low-cost solutions may benefit from rising demand

A

The pressures that industry suppliers can exert on an industry's profit potential, is also called: a. bargaining power of suppliers b. rivalry amongst existing competitors c. threat of new entry d. bargaining power of buyers

A

The threat of entry is ___ when restrictive government policies do not exist or when industries become deregulated. a. high b. low

A

A perfectly competitive industry is ___ and has ___ small firms. a. fragmented; no b. fragmented; many c. whole; many d. whole; no

B

The expected competitive intensity (rivalry) is ___, when the other four forces are ___. a. weaker; stronger b. stronger; stronger c. stronger; weaker

B

When buyers can credibly threaten to backwardly integrate into the industry, the power of buyers is ___. a. insignificant b. high c. moderate d. low

B

Why is it important to understand the forces in the external environment? a. It illustrates the impact of strategic actions. b. It allows managers to mitigate threats and leverage opportunities. c. It allows managers to better understand the firm's internal resources. d. It helps to achieve price stability.

B

In the airline industry, the ___ barrier of offering international routes restricts movement between hub-and-spoke and point-to-point airlines. a. entry b. exit c. mobility

C

The ___ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers. a. power of buyers b. threat of new entrants c. threat of substitutes d. rivalry of existing competitors

C

An example of a force in the general external environment is: a. stakeholders b. customers c. suppliers d. political e. employees

D

When a person that has been using a PC with a Microsoft Windows operating system starts using a Mac, he or she will incur significant customer ___ costs. a. economic b. financial c. learning d. switching

D

Which of Porter's five forces are favorable for new entrants into the airline industry? a. availability of substitutes b. power of buyers c. power of suppliers d. threat of entry

D

The closer firms are on the strategic group map, the more ___ they are competing with each other. a. intensely b. differentiated c. indirectly d. directly e. A and D

E

The five forces model was developed to help managers understand ___. a. the strengths and weaknesses of the firm's resources. b. how they can position their respective firms to gain and sustain a competitive advantage. c. the profit potential of different industries. d. PESTEL forces. e. B & C

E

The risk that potential competitors will enter the industry is also called: a. rivalry among existing competitors b. power of suppliers c. the threat of substitutes d. power of buyers e. the threat of entry

E

Airlines that are strategically committed to the hub-and-spoke model face high fixed costs to maintain their network of routes that affords global coverage. Such strategic commitment leads to high fixed costs and therefore decreased rivalry. True False

F

Deflation is a serious threat to economic growth, because: a. it forces sellers to increase prices to meet a rise in demand b. it distorts expectations about the future. c. companies will invest in new production capacity because they expect a further rise in prices. d. companies will stop investing in new production capacity because they expect a further decline in prices e. A and c f. B and D

F

Tesla's plan to enter the automotive industry was largely dependent on: a. his ability to spend as much money as necessary to achieve the ultimate goal of dominating the car industry b. entering the market with as many different models as possible c. using new technologies to sidestep traditional barriers to entry d. directly competing with the existing companies in areas such as technology, manufacturing, and logistics.

C

It might be a good idea to expand or upgrade a firm's human capital base during a ___ because unemployment is high and therefore human capital is abundant and wages usually ___. a. boom period, rise b. boom period, fall c. downturn, rise d. downturn, fall

D

The fact that business organizations contribute to the pollution of air, water, and land, as well as depletion of the world's natural resources, would be considered in which element of the PESTEL model? a. sociocultural b. technological c. political d. ecological

D

The key take away from the Five Forces Model is: a. the more stable the forces, the greater the new entrants. b. the weaker the forces, the lower the industry's ability to earn profits c. the higher the threat of new supplier, the more buyers exit d. the stronger the forces, the lower the industry's ability to earn profits

D

___ capture a society's, norms, and values. a. Political factors b. Economic factors c. Legal factors d. Sociocultural factors

D

Examples of advantages incumbent firms possess that are independent of size, are: a. preferential access to distribution channels. b. cumulative experience effect. c. fast reaction times to environmental changes due to their small size. d. inertia related to their structure. e. proprietary technology. f. brand loyalty. g. A, B, E, and F only h. all of the above

G

___. among existing competitors describes the intensity with which companies in an industry jockey for market share and profitability. a. Barriers b. Rivalry c. Identification d. Threats

B

The four main competitive industry structures are perfect competition, oligopoly, monopoly, and: a. monopolistic competition b. competitive oligopoly c. oligopolistic competition d. competitive monopoly

A

The stronger the five forces, the ___ the industry's profit potential. a. lower b. higher

A

___ occurs when a buyer moves upstream in the industry value chain into the seller's business. a. backward integration b. entry barriers c. rivalry of existing competitors d. threat of substitutes

A

In an oligopoly, there are: a. no large firms, differentiated products and no barriers to entry b. a few large firms, differentiated products and high barriers to entry c. a few large firms, similar products and collaborative pricing d. many large firms, similar products and collaborative pricing

B

The threat of entry is high when capital requirements are ___ in comparison to the expected returns. a. high b. low

B

What are some of the most important strategic dimensions in mapping strategic groups? i. pricing ii. expenditures on executive salaries and raw materials iii. expenditures on advertising and HR iv. planned emergence and strategic intent v. expenditures on research and development vi. product and service offerings a. ii, iii, and iv b. i, v, and vi c. i, iii, and v d. ii, iv, and vi

B

Examples of important sources of entry barriers are: a. prices b. credible threat of retaliation c. economies of scale d. network effects e. government policy f. capital requirements g. all EXCEPT prices are entry barriers

G

Growth rates, interest rates, and levels of employment would be considered ___ factors in a firm's general environment. a. technological b. political c. sociocultural d. economic

D

The positive effect that one user of a product or service has on the value of that product or service for other users is: a. user effect b. multiplicity effect c. mass effect d. network effect

D

Competitive advantage flows to the firm that is able to create as large a gap as possible between the value the firm's product or service generates and the cost required to produce it. True False

T

High exit barriers lead to intense rivalry. True False

T

When Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry while at the same time becoming increasingly competitive with each other, this is referred to as: a. collaborition b. rivallaboration c. collaboration d. co-opetition

D

Which of the following statements best supports the fact that even during a period of low demand in the US automotive industry, excess capacity remained? a. Complementary products and services like battery charging and service stations wee pervasive. b. Other American automakers of plug-in hybrid sports cars, like Fisker Automative, filed for bankruptcy. c. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry. d. Suppliers in the automotive industry had low bargaining power.

C

Although the five forces model is useful in understanding an industry's profit potential, it provides only a ___. a. point-in-time snapshot of a moving target. b. dynamic view of a moving target. c. point-in-time snapshot of industries that do not change.

A

An industry when there is only one (large) firm supplying the market is called (a): a. monopoly b. oligopoly c. perfect competition d. monopolistic competition

A

In addition to the static nature of the strategic group model, what is its other shortcoming? a. It does not help us understand why there are performance differences among firms in the same strategic group. b. It does not refer to the international nature of the PESTEL factors. c. It does not account for the threat of new entrants or proposed governmental legislation d. It does not affirm the potential of the firm to gain and sustain a competitive advantage.

A

A ___ is a set of companies that pursue a similar strategy within a specific industry to achieve competitive advantage. a. technological force b. strategic group c. dynamic performer d. competitive rival

B

A group of (incumbent) companies that face more or less the same set of suppliers and buyers, is referred to as: a. a state b. industry c. a business group d. a multi-environment

B

Production costs can be increased when: a. suppliers exit the market for other markets b. buyers demand higher quality and more service c. buyers decrease demand d. suppliers increase demand

B

The fact that tax preparation software such as Intuit's TurboTax is a valid alternative for professional services offered by H&R Block and other, is an example of: a. the threat of replacement b. the threat of substitutes c. the threat of alternatives d. the threat of suppliers

B

___ is the process by which formerly unrelated industries begin to satisfy the same customer need. a. complements b. planned emergence c. industry convergence d. competitive parity

C

Examples of factors in a firm's legal environment are: a. laws b. innovative technology c. regulations d. mandates e. demographic trends f. B and E g. A, C, and D

G

Starbucks spending money on upgrading the ambiance and service offerings in its stores helps raise its value in the eyes of the customer and remain competitive toward existing and new entrants, but ___. a. lowers the company's profit margins. b. doesn't result in a higher value. c. increases the industry's profit potential.

A

Examples of economies of scale are: a. spreading fixed costs over less units b. having more negotiating power vis-a-vis suppliers c. employ technology less efficiently d. spreading fixed costs over more units e. benefit from a more specialized division of labor f. B, D, and E are all correct

F

This model provides a relatively straightforward way to scan, monitor, and evaluate the important external factors and trends that might impinge upon a firm. a. PEDESTAL model b. VRIO model c. PESTEL model d. SME model

C

When suppliers do not depend heavily on the industry for a large portion of their revenues, the power of suppliers is ___. a. insignificant b. low c. high d. moderate

C

A ___ occurs when a firm has accrued significant market power and is changing the industry structure in its favor. a. strategic emergent monopoly b. natural monopoly c. near monopoly d. accrued liable monopoly

C

A rise in economic growth is reflected by: a. businesses closing operations due to lack of demand b. businesses staying the same. c. businesses expanding operations to satisfy demand

C

If a member of the Eurozone defaults on their debt obligations, ___. a. the IMF would just pay the balance of the debt. b. it would simply affect members of the Eurozone. c. it could affect the US and other countries in the world. d. it would simply affect members of the European Union.

C

The exertion of political pressure by the US government upon BP in the aftermath of the Gulf of Mexico oil spill, is an example of how governments can affect the firm performance by exerting ___ pressure on companies. a. sociocultural b. technological c. political d. economical e. legal

C

The five forces of Porter's model include the threat of entry and substitutes, rivalry among existing competitors, and the power of ___. a. competitors or rivals b. complementors c. suppliers and buyers d. substitutes

C