Deck 4: Tools for Environment Analysis

Question 1

In emerging industries where demand is growing, competitive rivalry is

A) too difficult to gauge
B) low
C) moderate
D) high

Answer 1

B

Question 2

For new entrants, an attractive industry is one with

A) limited buyer power, high supplier power, and low barriers to entry
B) high switching costs, low investments, and low economies of scale
C) low barriers to entry, high product differentiation, and low supplier power
D) few substitutes, limited buyer power, and low competitive rivalry

Answer 2

D

Question 3

Cost disadvantages for new entrants can arise from

A) technology, location, and raw materials
B) learning, government subsidies, and socio-cultural factors
C) location, raw materials, and demographic factors
D) technology, government subsidies, and competitive rivalry

Answer 3

A

Question 4

The bargaining power of suppliers can negatively impact industry profitability by

A) introducing new procedures
B) increasing price
C) lowering transportation costs
D) reducing the number of inspections

Question 5

Raw material shortages usually benefit

A) new entrants
B) consumers
C) buyers
D) suppliers

Question 6

Buying groups that have full information and earn low profits are considered to

A) be unattractive as customers
B) have power in the buying-selling process
C) be candidates for backward integration
D) have little or no power in the buying-selling process

Question 7

Porter's Five Forces model will determine the profitability of the

A) firm
B) industry
C) competitors
D) suppliers

Question 8

Suppliers who provide a differentiated product may have power if they

A) sell to a number of different industries
B) price the product at the industry average
C) sell to a limited number of industries
D) price the product above the industry average

Question 9

The percentage of a firm's profitability that is generally attributed to industry is

A) 30-40%
B) 10-20%
C) less than 10%
D) unknown

Question 10

In industries with high barriers to exit, competitive rivalry is

A) too difficult to gauge
B) low
C) moderate
D) high

Question 11

High switching costs are considered an example of

A) barrier to entry
B) buyer power
C) supplier power
D) threat of substitution

Question 12

Compared to new entrants, existing firms that have made substantial investments in their operations have a

A) timing advantage
B) technological disadvantage
C) cost advantage
D) competitive disadvantage

Question 13

An analysis of the environment in which an organization operates is also known as

A) political-legal
B) general
C) socio-cultural
D) industry

Question 14

Substitute products reduce profitability by

A) lowering switching costs
B) increasing advertising costs
C) increasing competitive rivalry
D) setting the ceiling price

Question 15

For existing firms, an attractive industry is one with

A) high barriers to entry, low supplier power, and low buyer power
B) low supplier power, high buyer power, and high competitive rivalry
C) high barriers to entry, high competitive rivalry, and high exit costs
D) low growth, low barriers to entry, and high supplier power

Question 16

Porter's five competitive forces that shape all industries are

A) regulations, suppliers, inflation rate, consumer preference, and technology
B) threat of new entrants, power of buyers and suppliers, substitutes, and competitive rivalry
C) power of buyers, number of suppliers, maturity of the industry, product differentiation, and economies of scale
D) threat of technology, supplier substitutions, buyer power, increasing number of competitors, and demographics

Question 17

Substitutes are considered to be products

A) from inside the industry that meet the same need
B) are the product and service offerings of competitors
C) from outside the industry that meet the same need
D) that are better than the product and service offerings of competitors

Question 18

The primary activities of an organization's value chain often include

A) logistics, operations, and marketing
B) operations, sales, and human resource management
C) procurement, operations, and service
D) marketing, technology development, and logistics

Question 19

The purpose of an organization's value chain is to demonstrate how the activities

A) structure the organization
B) differ from the organization's competitors
C) are integrated
D) contribute to costs

Question 20

New entrants forced to enter an industry at a larger scale than they would have preferred are facing a barrier known as

A) competitive rivalry
B) an investment hurdle
C) economies of scale
D) a network effect

Question 21

Intensive advertising and price wars suggest competitive rivalry is high.

Question 22

The likelihood of a competitive reaction to a firm's strategy is higher in an industry

A) that produces highly differentiated products
B) characterized by small order size
C) with non-standard operating procedures
D) that produces an homogenous product

Question 23

Large inventories and order backlogs reduce competitive pressures.

Question 24

Willingness to pay doesn't apply when the product or service is undifferentiated.

Question 25

Network effects exist when the likelihood of consumers purchasing a product increases with volume.

Question 26

Stakeholders can be categorized based on

A) preferences, language, and utility
B) position, location, and understanding
C) purpose, interests, and discretion
D) power, legitimacy, and urgency

Question 27

Because consumers have choice, they also have considerable power to influence market prices.

Question 28

The impact of changes in social forces on an industry occurs over a relatively long period of time.

Question 29

Each activity in a firm's value chain should contribute to margin.

Question 30

Firms competing in the same industry will have identical value chains.

Question 31

A technology that introduces a novel package of attributes for a traditional product is known as a

A) commercial success
B) product failure
C) disruptive technology
D) sustainable technology

Question 32

External forces that can impact an industry include

A) political, energy, sustainability, and training
B) procedure, environmental, supplier, and tactical
C) position, economic, service, and procedural
D) political, economic, social, and technical

Question 33

Scenario planning incorporates alternative futures into the strategic planning process.

Question 34

The threat of competitive retaliation is not considered a barrier to entry.

Question 35

The likelihood of superior performance for firms in an industry where the competitive forces are weak is high.

Question 36

In Porter's view, strategy in industries dominated by internet technologies is fundamentally different from strategy in other industries.

Question 37

New entrants who are diversifying from outside an industry are not always at a cost disadvantage.

Question 38

It is relatively inexpensive to establish a market presence in an industry with strong product differentiation.

Question 39

To create value for the consumer, firms seek to

A) lower costs and lower price
B) increase price to match the competition and standardize the features
C) lower costs and increase consumer willingness to pay
D) increase price and remove high-cost features

Question 40

Suppliers have power if they can pass cost increases on to their customers.

Question 41

Competitive cooperation is considered illegal in many jurisdictions.

Question 42

The key challenge for global firms lies in managing the tradeoff between global integration and local responsiveness.

Question 43

Analytical frameworks have a tendency to add complexity to the evaluation of an industry.

Question 44

Dominant stakeholders are often vocal but have little legitimacy or power.

Question 45

One aspect of an industry value chain can be more profitable than another.

Question 46

With a blue ocean strategy, firms seek to exploit existing demand among existing customers.

Question 47

Technology and electronic commerce have the potential to transform a firm's value chain.

Question 48

The purpose of conducting an industry analysis is to generate insights that will suggest opportunities for the firm.

Question 49

Externalities are strategy spill-over effects on society.

Question 50

Competitors are not considered stakeholders for the purpose of stakeholder analysis.