Question 1

The rivalry among competing sellers tends to be less intense when

Accepted Answer

When industry rivals are not particularly aggressive in drawing sales and market share away from rivals, the intensity of competition among competing sellers tends to be less. This may happen when there is a mutual understanding among competitors to avoid aggressive price competition or when there is a coexistence of niche markets.

Question 2

Industry conditions change

Accepted Answer

The answer of Industry conditions change
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Question 3

Which one of the following increases the competitive pressures associated with the threat of entry?

Accepted Answer

The answer of Which one of the following increases the...

Question 4

Which of the following is generally not considered as a barrier to entry?

Accepted Answer

Rapid market growth is generally seen as an opportunity rather than a barrier to entry, as it indicates a potentially large customer base and room for new entrants to capture market share.

Question 5

The rivalry among competing firms tends to be more intense when

Accepted Answer

The options in A describe factors that contribute to intense rivalry among competing firms, including slow market growth, dissatisfaction with market position, low switching costs for buyers, and aggressive moves by strong firms. These conditions make it more difficult for companies to differentiate themselves and carve out a profitable niche.

Question 6

The "driving forces" in an industry

Accepted Answer

Driving forces are major underlying causes of change in industry and competitive conditions, and they have the biggest influence in reshaping the industry landscape and altering competitive conditions. The other options may also contribute to driving forces, but they are not necessarily the main underlying cause of change in an industry as C suggests.

Question 7

The best test of whether potential entry is a strong or weak competitive force is

Accepted Answer

The answer of The best test of whether potential entry...

Question 8

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers?

Accepted Answer

Reducing the costs of switching suppliers is not typically a motivation for entering into collaborative partnerships with key suppliers. Instead, such partnerships are often formed to enhance mutual benefits like speeding up innovation, improving quality, and achieving cost savings, rather than focusing on reducing the costs associated with changing suppliers.

Question 9

The most powerful of the five competitive forces is usually

Accepted Answer

Rivalry among existing competitors is often the most powerful force because it directly affects the competitive environment and profitability within an industry.

Question 10

The bargaining leverage of suppliers is greater when

Accepted Answer

When only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes, suppliers have greater bargaining leverage. This is because the industry members are highly dependent on the small number of suppliers and have no alternative options, giving the suppliers the ability to dictate favorable terms and prices.

Question 11

As a rule,the stronger the collective impact of competitive pressures associated with the five competitive forces,

Accepted Answer

The stronger the collective impact of competitive pressures associated with the five competitive forces, the lower the combined profitability of industry members. This is because intense competition leads to price wars and reduced profit margins.

Question 12

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

Accepted Answer

A competitive environment with these characteristics makes it difficult for any one company to effectively differentiate themselves or offer lower costs, leading to low profitability for all industry members.

Answer: B 
 The strong rivalry and low entry barriers make it difficult for any one company to build a sustainable competitive advantage, as competitors can easily copy or improve upon any advantage an individual company may have.

Question 13

Factors that cause the rivalry among competing sellers to be weak include

Accepted Answer

Rapid growth in buyer demand and high buyer switching costs reduce rivalry because companies can grow without taking market share from each other, and high switching costs make it difficult for buyers to change suppliers.

Question 14

Which one of the following does not intensify the competitive pressures associated with the threat of entry?

Accepted Answer

If industry members are struggling to earn good profits, it may actually reduce the competitive pressures associated with the threat of entry. This is because new entrants may also struggle to earn profits and may be less likely to enter the industry, reducing the threat of entry. The other options listed all increase competitive pressures associated with the threat of entry.

Question 15

Which one of the following is not a factor that affects the strength of supplier bargaining power?

Accepted Answer

The level of profitability of the industry members has no direct impact on supplier bargaining power. The factors that affect supplier bargaining power are whether the inputs are in short or ample supply, the threat of backward integration by industry members, the costs of switching to alternative suppliers or substitutes, and whether the item supplied is a commodity that is available from multiple suppliers.

Question 16

Rivalry among competing sellers is generally more intense when

Accepted Answer

When industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume, there is generally more intense rivalry among competing sellers. This is because each competitor is trying to gain an advantage over the others, leading to price wars and other competitive tactics. This is especially true when buyer demand is stable or growing slowly, as there is less new business to be won and more pressure to capture existing market share.

Question 17

Which one of the following does not cause the rivalry among competing sellers to be weak?

Accepted Answer

When one or more competitors become dissatisfied with their market position, it often leads to increased rivalry among competing sellers. This could lead to aggressive pricing, advertising, and promotional tactics, making it difficult for other competitors to maintain their market share. Therefore, this option doesn't cause the rivalry among competing sellers to be weak.

Question 18

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

Accepted Answer

A competitive environment with 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 would be conducive to industry members earning attractive profits. The high entry barriers make it difficult for new entrants to compete and the weak competition from substitute products reduces the threat of substitution. Additionally, the weak bargaining power of both suppliers and customers means that industry members can charge higher prices and earn higher profits.

Question 19

The competitive threat that outsiders will enter a market is weaker when

Accepted Answer

Financially strong industry members sending signals that they will launch strategic initiatives to combat the entry of newcomers indicates that they are willing and capable of protecting their market share, which deters potential new entrants.

Question 20

In which one of the following instances is supplier bargaining power and leverage not weakened?

Accepted Answer

If the items purchased from suppliers are in short supply, it gives the supplier more bargaining power as the buyer is more dependent on them.

Quiz 3: Evaluating a Companys External Environment