Deck 3: Evaluating a Companys External Environment

Question 1

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.

Answer 1

E
Explanation: In order to chart a company's strategic course wisely, managers must first develop a deep understanding of the company's present situation. Two facets of a company's situation are especially pertinent: (1) its external environment-most notably, the competitive conditions of the industry in which the company operates; and (2) its internal environment-particularly the company's resources and organizational capabilities.

Question 2

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.

Answer 2

C
Explanation: The six principal components of the macro-environment are political, economic, sociocultural, technological, environmental (concerning the natural environment), and legal/regulatory. Rival firms are part of the immediate industry and competitive environment.

Question 3

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.

Answer 3

B
Explanation: The strongest of the five competitive forces is often the rivalry for buyer patronage among competing sellers of a product or service.

Question 4

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

Question 5

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.

Question 6

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.

Question 7

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.

Question 8

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

Question 9

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.

Question 10

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.

Question 11

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.

Question 12

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

Question 13

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?

Question 14

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.

Question 15

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.

Question 16

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.

Question 17

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.

Question 18

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.

Question 19

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

Question 20

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.

Question 21

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.

Question 22

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.

Question 23

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.

Question 24

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.

Question 25

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.

Question 26

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.

Question 27

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.

Question 28

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.

Question 29

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.

Question 30

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.

Question 31

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.

Question 32

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.

Question 33

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.

Question 34

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.

Question 35

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

Question 36

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.

Question 37

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

Question 38

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.

Question 39

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.

Question 40

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

Question 41

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.

Question 42

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.

Question 43

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.

Question 44

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

Question 45

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

Question 46

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.

Question 47

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.

Question 48

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.

Question 49

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.

Question 50

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.

Question 51

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.

Question 52

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

Question 53

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.

Question 54

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.

Question 55

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.

Question 56

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.

Question 57

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.

Question 58

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

Question 59

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

Question 60

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.

Question 61

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.

Question 62

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

Question 63

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.

Question 64

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.

Question 65

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

Question 66

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

Question 67

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

Question 68

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.

Question 69

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

Question 70

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.

Question 71

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.

Question 72

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.

Question 73

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.

Question 74

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

Question 75

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.

Question 76

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.

Question 77

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.

Question 78

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.

Question 79

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.

Question 80

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.