Question 1

The impact of a demographic trend varies across industries.

Accepted Answer

The impact of a demographic trend, like all segments of the general environment, varies across industries. Rising levels of affluence in many developed countries bode well for brokerage services as well as for upscale pets and supplies. However, this trend may adversely affect fast-food restaurants because people can afford to dine at higher-priced restaurants.

Question 2

A soft trend is a projection based on measureable facts,events,or objects.It is something that will happen.

Accepted Answer

A hard trend is a projection based on measureable facts, events, or objects. It is something that will happen.

Question 3

Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain.

Accepted Answer

Competitive intelligence is frequently done effectively through public sources of information. Examples are evident in daily newspapers and periodicals such as The Wall Street Journal, BusinessWeek, and Fortune. For example, banks continually track home loan, auto loan, and certificate of deposit (CD) interest rates charged by rivals. Major airlines change hundreds of fares daily in response to competitor tactics.

Question 4

A hard trend is something that might happen and for which the probability that it might happen can be estimated.

Accepted Answer

A soft trend is something that might happen and for which the probability that it might happen can be estimated.

Question 5

Scenario planning is usually concerned with short-term forecasts.

Accepted Answer

Scenario analysis is an in-depth approach to environmental forecasting that involves detailed assessments by experts of societal trends, economics, politics, technology, or other dimensions of the external environment.

Question 6

Crowdsourcing is used by companies to develop products.

Accepted Answer

In June 2006, Wired magazine defined crowdsourcing as the tapping of the latent talent of the (online) crowd. It has become the term of choice for a process that is infiltrating many aspects of business life and has claimed some well-known successes, particularly on the product development front.

Question 7

Although changes in the general environment may often adversely or favorably impact a firm,they seldom alter an entire industry.

Accepted Answer

The general environment is composed of factors that can have dramatic effects on firm strategy.

Question 8

A number of choices government officials make are based on projections about future interest rates.The projections are soft trends.

Accepted Answer

A soft trend is something that might happen and for which the probability that it might happen can be estimated.

Question 9

To understand the business environment of a particular firm,you need to analyze both the general environment and the firm industry and competitive environment.

Accepted Answer

Generally, firms compete with other firms in the same industry. An industry is composed of a set of firms that produce similar products or services, sell to similar customers, and use similar methods of production. Gathering industry information and understanding competitive dynamics among the different companies in your industry is key to successful strategic management. To understand the business environment of a particular firm, you need to analyze both the general environment and the firm industry and competitive environment.

Question 10

A major sociocultural trend in the United States is the increased educational attainment by women.

Accepted Answer

Increased educational attainment by women in the workplace has led to more women in upper management positions. Given such educational attainment, it is hardly surprising that companies owned by women have been one of the driving forces of the U.S. economy.

Question 11

The aging of the population is a hard trend.

Accepted Answer

A hard trend is a projection based on measureable facts, events, or objects. It is something that will happen.

Question 12

Competitor Intelligence (CI)is a tool that can provide management with early warnings about both threats and opportunities.

Accepted Answer

Competitive intelligence (CI) helps firms define and understand their industry and identify strengths and weaknesses of rivals. Done properly, competitive intelligence helps a company avoid surprises by anticipating competitor moves and decreasing response time.

Question 13

There is generally a weak relationship between equity markets (e.g.,New York Stock Exchange)and economic indicators.

Accepted Answer

Economic indicators are associated with equity markets. When stock market indexes increase, consumer discretionary income rises and there is often an increased demand for luxury items such as jewelry and automobiles.

Question 14

The opportunities and threats of a SWOT analysis refer to the internal conditions of the firm.

Accepted Answer

The Opportunities and Threats are environmental conditions external to the firm. These could be factors either in the general or competitive environment. In the general environment, one might experience developments beneficial for most companies such as improving economic conditions, that lower borrowing costs or trends that benefit some companies and harm others.

Question 15

The Internet is a leading component in the rising emergence of digital technology.

Accepted Answer

The Internet has been a leading and highly visible component of a broader technological phenomenon-the emergence of digital technology. These technologies are altering the way business is conducted and are having an effect on nearly every business domain.

Question 16

The strengths and weaknesses of a SWOT analysis refer to the external conditions of the firm.

Accepted Answer

The Strengths and Weaknesses refer to the internal conditions of the firm in which a firm excels (strengths) and where it may be lacking relative to competitors (weaknesses).

Question 17

Environmental scanning and competitor intelligence provide important inputs for forecasting activities.

Accepted Answer

Three important processes (scanning, monitoring, and gathering competitive intelligence) are used to develop forecasts.

Question 18

Even with all of the advances in recent years,forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions.

Accepted Answer

Environmental forecasting involves the development of plausible projections about the direction, scope, speed, and intensity of environmental change. Its purpose is to predict change.

Question 19

Technological innovations can create entirely new industries and alter the boundaries of industries.

Accepted Answer

Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries.

Question 20

Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process.

Accepted Answer

Environmental monitoring tracks the evolution of environmental trends, sequences of events, or streams of activities.

Quiz 2: Analyzing the External Environment Ofthe Firm: Creating Competitive Advantages