Question 1

The aircraft industry has long been dominated by two large aircraft manufacturers,Boeing and Airbus. The demand for major aircraft is low,and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?

Accepted Answer

The answer of The aircraft industry has long been dominated...

Question 2

High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means that in the aircraft industry

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The answer of High-level maintenance on aircraft is performed by...

Question 3

Media content has moved from paper,tape,and film to a digital world based on Internet technology. From the perspective of the five forces model,which force is most relevant here?

Accepted Answer

The shift from traditional media to digital media represents a change in substitutes, as digital media serves as an alternative to paper, tape, and film.

Question 4

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet,in order to gain economies of scale the products must be sold in retail outlets. The main barrier to entry DWK is likely to encounter here is

Accepted Answer

The main barrier to entry for DWK foods is likely to be access to distribution channels, as in order to gain economies of scale and sell their products in retail outlets, they need to have access to those distribution channels. Government licensing and permits may be required, but can generally be obtained with enough time and resources. Consumer switching costs and cost disadvantages independent of scale are also potential issues, but they are not the main barrier to entry in this case.

Question 5

The threat from substitutes is high when

Accepted Answer

The threat from substitutes is high when the substitute product's price is lower than the industry product's price. This is because customers may switch to the substitute product as it is cheaper and offers similar benefits, putting pressure on the industry to lower their prices or improve their products to compete with the substitute product.

Question 6

Customer loyalty programs such as airline frequent-flyer miles are an attempt to

Accepted Answer

Customer loyalty programs, such as frequent-flyer miles, incentivize customers to continue using a particular company's services in order to earn rewards or benefits. By increasing the customer's switching costs, it makes it more difficult for them to switch to competitors, thus increasing their loyalty to the company.

Question 7

All of the following are forces that create high rivalry within an industry EXCEPT

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The answer of All of the following are forces that...

Question 8

When rival firms compete aggressively by trying to attract competitors' customers,this might be an indication of

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The answer of When rival firms compete aggressively by trying...

Question 9

Blood banks are highly dependent on donors. In the terminology of industry analysis,which statement of donors is accurate?

Accepted Answer

Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank. Blood is a unique and essential product that cannot be manufactured or replicated. As a result, the blood bank is highly reliant on donors, and their power lies in their ability to withhold or provide their blood supply.

Question 10

As customers come to believe that a firm's product is unique,this allows the firm to

Accepted Answer

By establishing a unique product, a firm can build up a loyal customer base who will continue to purchase from the company even if other competitors are offering similar products. This can ultimately lead to increased profits for the firm.

Question 11

A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble,and this marble only,for this project. Which of the following statements is most likely to be true?

Accepted Answer

The architect has specified a unique type of marble that is only available from one particular quarry, giving the supplier significant bargaining power. As a result, the cost of the marble is likely to be expensive.

Question 12

Golden Lotus,an exercise club targeting healthy individuals over 50,is located in a fast-growing city in the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is the most directly controllable by the company?

Accepted Answer

The power of the customers/buyers is the most directly controllable factor by the company as it refers to the company's ability to satisfy customers' needs and preferences, provide high-quality services, and retain their loyalty. The company can control and influence customer satisfaction through its marketing strategies, customer service, pricing, and overall operations. The other factors - sociocultural environment, demographics, and the economy of the local area - are external factors that the company may have limited control over.

Question 13

Product differentiation refers to the

Accepted Answer

Product differentiation refers to customers believing that a product is unique, which sets it apart from other similar products in the market. This can be achieved through branding, packaging, design, features, or other factors that make the product stand out. It helps companies to establish a competitive advantage by attracting and retaining customers who are willing to pay a premium price for a unique and differentiated product.

Question 14

The highest amount a firm can charge for its products is most directly affected by

Accepted Answer

The cost of substitute products is a major factor that influences the pricing decisions of firms. The higher the cost of substitute products, the more a firm can charge for its own products as customers are less likely to switch to the substitute products due to high costs. Therefore, firms consider the cost of substitute products while setting the highest possible price for their products.

Question 15

A manufacturer of washing machines has expanded its plant and has created excess capacity,just as the general economy has taken a downturn. The company is likely to

Accepted Answer

With excess capacity, the manufacturer will want to encourage customers to buy their washing machines through incentives and rebates to avoid a decrease in sales. This strategy can also help them compete against other manufacturers who may be offering similar discounts. Raising prices may not be a viable option in a downturned economy as customers may opt for cheaper alternatives or delay purchasing altogether. New entrants to the market and intense rivalry from international manufacturers are generally not affected by excess capacity unless they offer a significantly better product or are able to compete on price.

Question 16

Buyers are powerful when

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The answer of Buyers are powerful when
...

Question 17

When consumers change phone service providers they are frequently required to maintain service with the provider for a specified time period. This is an example of a

Accepted Answer

This is an example of a one-time cost customers incur when buying from a different supplier. When consumers switch phone service providers, they may be required to pay early termination fees or maintain service with their old provider for a specified time period, which is a one-time cost that they incur when choosing to purchase from a different supplier.

Question 18

Suppliers are powerful when

Accepted Answer

Suppliers are powerful when they offer a credible threat of forward integration, meaning they could potentially enter the same market as their buyers and become a competitor. This gives suppliers leverage in price negotiations and overall power in the industry. The other choices are not necessarily indicators of supplier power.

Question 19

How is consolidation among fuel providers serving airport facilities viewed in the five forces model of competition?

Accepted Answer

Consolidation among fuel providers serving airport facilities increases the concentration of suppliers in the market, thus giving the remaining suppliers greater bargaining power by exerting control over a critical input. This is consistent with the supplier power force in Porter's five forces model.

Question 20

For a retail business dependent on drive-in customers,the major cost disadvantage independent of scale would be if

Accepted Answer

The retail business that is dependent on drive-in customers needs a favorable location to attract customers. If such locations are not available or are scarce, it can be a significant cost disadvantage regardless of the scale of the business. Without a good location, the business may struggle to attract customers, resulting in lower revenues and profitability. Other factors such as proprietary product technology, access to raw materials, and government subsidies may also impact the business's cost structure, but they may not be as significant as the location factor.

Quiz 2: The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis.