Deck 2: The External Environment

Question 1

Technology is human knowledge about products and services and the ways they are made and delivered.

Answer 1

True

Question 2

The broad environment consists of all of the following except:

A)Technological trends
B)Political and legal forces
C)Competitors
D)Economic forces
E)Sociocultural forces

Answer 2

C

Question 3

What is a primary reason that an organization should monitor the broad environment?

A)To anticipate concerns and trends
B)To determine the firm's internal strengths
C)To determine the firm's internal weaknesses
D)To identify key employees within the firm
E)To determine the firm's focus on manufacturing and materials management

Answer 3

A

Question 4

Organizations that are in a weak position relative to their suppliers can attempt to balance power through vertical integration.

Question 5

Discriminating and demanding buyers in the home country of a firm can help the firm to succeed as it competes in foreign markets.

Question 6

Which of the following is part of the broad environment?

A)Competitors
B)Suppliers
C)Technological forces
D)Government agencies
E)Unions

Question 7

The three major forces that drive industry competition and profitability are government regulators,direct competitors and social forces.

Question 8

Low levels of competition may be caused by high fixed costs.

Question 9

Individual organizations typically have only a marginal impact on the broad environment.

Question 10

Analysis of society is important for all of the following reasons except:

A)Awareness of what is happening in society virtually guarantees that an organization will be able to successfully compete in its own industry
B)Most of the other stakeholder groups are also members of society
C)Awareness of and compliance with the attitudes of society can help an organization avoid problems associated with being a bad corporate citizen
D)Changes in society can provide opportunities for organizations
E)Correct assessment of social trends can help businesses avoid restrictive legislation

Question 11

The task environment consists of stakeholders with whom organizations interact on a fairly regular basis.

Question 12

An organization can typically have:

A)Little influence over events in its task environment
B)Little influence over major occurrences and patterns in the broad environment
C)Significant influence over major occurrences and patterns in the remote environment
D)Significant influence over major social trends
E)Significant influence on government policy in a nation as a whole

Question 13

Awareness of and compliance with the attitudes of society can help an organization avoid problems associated with a bad ethical reputation.

Question 14

The power of a single customer is greater when there are many customers than when there are few.

Question 15

A strategic group map involves plotting industry rivals based on two or more strategic dimensions that are important to the industry.

Question 16

The broad environment consists of sociocultural forces,competitive forces,technological trends,and political/legal forces.

Question 17

Exchange rates can influence the ability of a firm profitably to remove profits from foreign countries.

Question 18

Government intervention in business is increasing worldwide.

Question 19

The higher the entry barriers,the more intense is competition in an industry.

Question 20

Industries may be defined as a group of organizations that compete directly with one another to win orders or sales in the marketplace.

Question 21

According to Michael Porter,what are the conditions that create advantages for firms in certain countries and industries? Please explain each of them.

Question 22

All of the following are true about environmental uncertainty except:

A)It makes managerial decision making more difficult
B)Organizations feel most of its influence directly from the broad environment
C)Political power of stakeholders influences it
D)Economic power of stakeholders influences it
E)Network centrality of stakeholders influences it

Question 23

Which of the following is not included as a major force that drives industry competition and profitability?

A)Existing competitors
B)Economic power of suppliers
C)Potential competitors
D)Unions
E)Indirect competitors

Question 24

Suppliers tend to exhibit greater power if:

A)There are few suppliers of the raw material,product,or service
B)There are many substitutes for the product or service that suppliers sell
C)Suppliers are small businesses with regards to total sales volume
D)The suppliers' products are undifferentiated and plentiful
E)Suppliers cannot integrate forward

Question 25

According to Michael Porter,conditions that create advantages for firms in certain countries and industries include:

A)Suppliers to a particular industry are the very best in the world
B)Strong industry competition
C)Buyers are among the most demanding in the world
D)Ability to attract the most talented managers
E)All of the above

Question 26

What should organizations do with stakeholders that have a large influence on environmental uncertainty?

A)Fight against them with competitive weapons
B)Ignore them
C)Just monitor their activities
D)Cooperate with them
E)None of the above

Question 27

Among the following,the best definition of technology is:

A)Human knowledge about products and services and the ways they are made and delivered
B)Technical equipment such as computers and electronics
C)Knowledge about computers,electronics,and information systems
D)Knowledge about computers,electronics,and information systems as well as the equipment and systems themselves
E)All equipment that is used to create products and services

Question 28

Customers tend to exhibit a powerful force on competition in the industry if:

A)There are a large number of customers that buy the product
B)Few similar products exist
C)Purchases customers make from the industry are large relative to the amount spent for items from other industries
D)The sellers' products are highly differentiated
E)The customers are earning high profits

Question 29

When two or more firms form a legally independent company to pursue common objectives,in is called:

A)A semiautonomous partnership
B)A social network
C)An equity alliance
D)A business network
E)None of these

Question 30

According to Michael Porter,all of the following are conditions that create advantages for firms in certain countries and industries except:

A)Suppliers to a particular industry are the very best in the world
B)Strong industry competition
C)Buyers are among the most demanding in the world
D)Shortages of critical raw materials or other supplies
E)Ability to attract the most talented managers

Question 31

Among the most critical economic factors to monitor are:

A)Interest rates
B)Economic growth
C)Foreign trade balances
D)Inflation rates
E)All of these factors are important

Question 32

High levels of competition may be caused by:

A)Rapid industry growth
B)Low fixed costs
C)A small number of competitors
D)A lack of product differentiation
E)Low exit barriers

Question 33

When do customers exhibit a powerful force on competition in an industry?

Question 34

The influence of potential competitors on industry competition is determined primarily by:

A)Buyer power
B)Supplier power
C)Strength of entry barriers
D)Strength of exit barriers
E)Threat of substitutes

Question 35

What is a firm's broad environment? To what extent can the broad environment influence a firm? To what extent can one firm influence the broad environment?

Question 36

Why is analysis of social trends important? Give examples.

Question 37

Which of the following makes an industry more attractive to enter?

A)Strong supplier power
B)Strong customer power
C)No close substitutes
D)Many strong competitors
E)Low sales growth

Question 38

What are strategic groups? Why are strategic group maps useful?

Question 39

What are some of the most critical economic factors for a firm to track? Why are they important?

Question 40

Analysis of social trends is important because:

A)The values and beliefs of key stakeholders are derived from societal influences
B)Correct assessment of social trends can help businesses avoid restrictive legislation
C)Changes in society can create either opportunities or threats for organizations
D)All of these are correct
E)Only A and C are correct