Question 1

The threat of new entrants is high when there are
A) low economies of scale.
B) high capital requirements.
C) high switching costs.
D) high differentiation among competitors' products and services.

Accepted Answer

High entry barriers discourage new competitors. Among the major sources of entry barriers are economies of scale, product differentiation, capital requirements, and switching costs.

Question 2

Which is considered a force in the "Five Forces model"?
A) Increased deregulation in an industry
B) The threat of government intervention
C) Rivalry among competing firms
D) Recent technological innovation

Accepted Answer

Rivalry among competing firms is one of the five forces in the Five Forces model of industry analysis, which examines the competitive environment in an industry. This force considers the intensity of competition between existing firms in the industry, which can affect pricing, market share, and profitability.

The other options are not considered forces in the Five Forces model. Increased deregulation and recent technological innovation may be factors that impact the industry, but they are not considered forces that shape the competitive environment. The threat of government intervention may be a consideration for firms in certain industries, but it is not one of the five forces in the model.

Question 3

Which of the following would be an entry barrier?
A) Large economies of scale
B) Low switching costs
C) Easy access to raw materials
D) Low capital requirements

Accepted Answer

Large economies of scale can create a barrier to entry for new firms because established firms already producing at large scales will have cost advantages over new entrants, making it difficult for new firms to compete on price. This creates a high barrier to entry for new firms. Conversely, options B, C, and D are not barriers to entry as low switching costs and easy access to raw materials make it easier for new firms to enter the market, and low capital requirements make it easier for new firms to set up shop.

Question 4

Two key inputs to developing forecasts discussed in the text are
A) environmental scanning and stakeholder identification.
B) environmental scanning and competitor intelligence.
C) assessing internal strengths and environmental scanning.
D) environmental scanning and a SWOT analysis.

Accepted Answer

The text identifies environmental scanning and competitor intelligence as two key inputs to developing forecasts. Environmental scanning refers to monitoring and analyzing external factors such as economic trends, political events, and technological developments that may impact the organization. Competitor intelligence involves gathering information on the strengths, weaknesses, strategies, and actions of rival companies in the industry. By considering both of these inputs, organizations can better anticipate changes in the market and plan accordingly. Options A, C, and D include environmental scanning as a key input, but do not mention competitor intelligence, which is also highlighted in the text. Therefore, B is the best choice.

Question 5

In the Air Canada-WestJet conflict,the issue is
A) Air Canada claims its employee website was hacked
B) WestJet claims its employee website was hacked
C) Air Canada claims its email was stolen
D) Air Canada claims WestJet used employee access information to obtain flight info

Accepted Answer

Air Canada has accused WestJet of using employee access information to monitor Air Canada's flights and schedules. Air Canada claims that WestJet employees accessed the Air Canada employee website in order to obtain this information, which WestJet denies. Therefore, the issue is related to the alleged unauthorized use of employee access information by WestJet.

Question 6

Gathering "competitive intelligence"
A) is good business practice.
B) is illegal.
C) is considered unethical.
D) minimizes the need to obtain information in the public domain.

Accepted Answer

Gathering competitive intelligence is good business practice as it allows organizations to stay informed about their competitors, market trends, and industry developments. However, it is important to ensure that the information is obtained through ethical means and does not breach any laws or regulations.

Question 7

Rivalry between the firms Air Canada and WestJet
A) is characterized as distractive.
B) includes allegations that Air Canada set up a screen-scraper program to automatically lift data.
C) includes allegations that Westjet sent investigators to pilfer an Air Canada Executive's garbage looking for data.
D) is an example of a low level of competitive rivalry.

Accepted Answer

The answer of Rivalry between the firms Air Canada and...

Question 8

Interest rate increases have a _____ impact on the residential home construction industry and a _____ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items.
A) positive; neutral
B) negative; neutral
C) negative; positive
D) positive; negative

Accepted Answer

Interest rate increases make it more expensive for consumers to borrow money, resulting in fewer people taking out loans to finance new home construction projects. This has a negative impact on the residential home construction industry. However, industries that produce consumer necessities such as prescription drugs or basic grocery items are less likely to be affected by interest rate increases, hence they have a neutral effect.

Question 9

A SWOT analysis includes listing
A) strategies, opportunities, and tactics
B) strategies, opportunities, and threats
C) strengths, opportunities, and tactics
D) strengths, opportunities, and threats

Accepted Answer

A SWOT analysis is a tool used to evaluate a company's or organization's internal strengths and weaknesses, as well as external opportunities and threats. Therefore, the best choice is D, which includes strengths, opportunities, and threats. Option A is incorrect because it includes tactics instead of threats. Option B is incorrect because it doesn't include strengths, which are an essential part of a SWOT analysis. Option C is incorrect because it includes tactics instead of threats.

Question 10

A danger of forecasting discussed in the text is that
A) in most cases, the expense of collecting the necessary data exceeds the benefit
B) forecasting's retrospective nature provides little information about the future
C) managers may view uncertainty as "black and white" while ignoring important "grey areas"
D) it can create legal problems for the firm if regulators discover the company is making forecast

Accepted Answer

The text discusses the danger of managers viewing uncertainty as "black and white" and ignoring important "grey areas" in their forecasting, which can lead to poor decision making. The other answer choices are not discussed as dangers of forecasting in the text.

Question 11

Which of the following would be considered part of a firm's general environment?
A) Decreased entry barriers
B) Increased trade deficit
C) Increased bargaining power of the firm's suppliers
D) Increased competitive intensity

Accepted Answer

The general environment is made up of external factors that affect all organizations, including economic, socio-cultural, political/legal, technological, and demographic factors. Of the options given, only an increased trade deficit falls under the economic factor of the general environment. Decreased entry barriers, increased bargaining power of the firm's suppliers, and increased competitive intensity are all specific to the industry or firm's task environment.

Question 12

The aging of the population,changes in ethnic composition,and effects of the baby boom are
A) macroeconomic changes.
B) demographic changes.
C) global changes.
D) sociocultural changes.

Accepted Answer

The aging of the population, changes in ethnic composition, and effects of the baby boom are all demographic changes, which refer to changes in the size, structure, and characteristics of populations over time. These changes have important implications for areas such as healthcare, labor markets, and social programs.

Question 13

_____ tracks the evolution of environmental trends,sequences of events,or streams of activities.
A) Environmental scanning
B) Environmental monitoring
C) Environmental surveying
D) Competitive intelligence

Accepted Answer

Environmental monitoring tracks the evolution of environmental trends, sequences of events, or streams of activities. Monitoring enables firms to evaluate how dramatically environmental trends are changing the competitive landscape.

Question 14

A large fabricator of building components purchased a steel company to provide raw materials for its production process.This is an example of
A) backward integration.
B) economies of scale.
C) forward integration.
D) product differentiation.

Accepted Answer

Backward integration involves a company acquiring a supplier or a raw material provider to ensure a more efficient and secure supply chain for their production process. In this case, the fabricator of building components acquired a steel company to have a direct source of raw materials for their products.

Question 15

Increasingly larger numbers of women entering the work force since the early 1970s is an example of
A) demographic changes.
B) political and legal environmental changes.
C) sociocultural changes.
D) technological developments.

Accepted Answer

The increasing number of women entering the workforce since the early 1970s is a sociocultural change as it reflects a shift in societal norms and values regarding gender roles and expectations. While political and legal environmental changes may have played a role in creating opportunities for women in the workforce, the trend itself is driven by sociocultural factors. Demographic changes and technological developments may have also facilitated the trend, but sociocultural change is the most significant driver.

Question 16

Emerging sociocultural changes in the environment include
A) changes in the ethnic composition.
B) the increasing educational attainment of women in the past decade.
C) progressively less disposable income by consumers.
D) changes in the geographic distribution of the population.

Accepted Answer

Sociocultural forces influence the values, beliefs, and lifestyles of a society. Examples include an increased educational attainment by women in the workplace.

Question 17

When the US congress passed the Sarbanes-Oxley Act in 2002
A) Canada deregulated the associations
B) no similar Canadian legislation was developed
C) Canada followed with similar provisions
D) the provincial governments developed similar laws

Accepted Answer

Canada followed with similar provisions and passed the Canadian equivalent, known as the Corporate Accountability, Responsibility and Transparency Act (CARTA) in 2004. The legislation addressed issues such as internal control reporting and auditor independence, which were also key aspects of the Sarbanes-Oxley Act.

Question 18

An independent group of suppliers,such as farmers,gather to form a cooperative to sell their products to buyers directly,replacing their former distributor.This is an example of
A) threat of entry.
B) backward integration.
C) forward integration.
D) threat of substitute products.

Accepted Answer

Forward integration is when a company takes control of the distribution and retailing of its products, and this is exactly what the group of suppliers has done by forming a cooperative to sell their products directly to buyers. They are now in charge of the final stages of the supply chain, which is an example of forward integration.

Question 19

Environmental forecasting involves developing plausible projections about the _____ of environmental change.
A) direction, scope, speed, and intensity
B) type and magnitude
C) competitive rivalry
D) severity and rivalry

Accepted Answer

Environmental forecasting involves projecting the direction (where the change is headed), scope (the range of things affected), speed (how fast it will happen), and intensity (how strong the impact will be) of environmental change.

Question 20

Which of the following firms would likely pose the least competitive threat?
A) A firm in the same industry and in the same strategic group
B) A firm that produces substitute goods to your product line
C) A competitor to your product where a high switching cost exists
D) A firm in the same industry and in the nearest strategic group looking to join your group

Accepted Answer

A competitor with high switching costs presents less of a threat because customers are less likely to switch to a competing product. This gives the company more time to respond to changes in the marketplace and improve their own offerings. A firm in the same industry and strategic group, or one looking to join your group, is likely to have a similar product and customer base, making them a more direct threat. A firm that produces substitute goods may not have the same product capabilities but can still attract and serve the same customer base, making them a potential competitor.

Quiz 2: Analyzing the External Environment of the Firm

The threat of new entrants is high when there are

Which is considered a force in the "Five Forces model"?

Which of the following would be an entry barrier?

Two key inputs to developing forecasts discussed in the text are

In the Air Canada-WestJet conflict,the issue is

Gathering "competitive intelligence"

Rivalry between the firms Air Canada and WestJet

Interest rate increases have a _ impact on the residential home construction industry and a _ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items.

A SWOT analysis includes listing

A danger of forecasting discussed in the text is that

Which of the following would be considered part of a firm's general environment?

The aging of the population,changes in ethnic composition,and effects of the baby boom are

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

A large fabricator of building components purchased a steel company to provide raw materials for its production process.This is an example of

Increasingly larger numbers of women entering the work force since the early 1970s is an example of

Emerging sociocultural changes in the environment include

When the US congress passed the Sarbanes-Oxley Act in 2002

An independent group of suppliers,such as farmers,gather to form a cooperative to sell their products to buyers directly,replacing their former distributor.This is an example of

Environmental forecasting involves developing plausible projections about the _____ of environmental change.

Which of the following firms would likely pose the least competitive threat?