Question 1

Which one of the following is not a common type of driving force?

Accepted Answer

Increasing efforts on the part of industry members to collaborate closely with their suppliers is not a common type of driving force. The other options, such as entry or exit of major firms, changing societal concerns, attitudes, and lifestyles, diffusion of technical know-how, and technological change and innovation are common driving forces that can impact industries and companies.

Question 2

The collective impact of the five competitive forces on competitive pressures tends to

Accepted Answer

The collective impact of the five competitive forces is to increase competitive pressures, which reduces the profitability of industry members. This makes it difficult for companies to achieve a competitive advantage, as they must either be the low-cost leader or find other innovative ways to stand out. The forces do not necessarily strengthen driving forces, increase opportunities for incumbents, or raise the number of key success factors.

Question 3

The driving forces in an industry

Accepted Answer

The driving forces in an industry are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions. The other options may also contribute to driving forces, but they are not as comprehensive or influential as option C.

Question 4

Which of the following is not generally a driving force capable of producing fundamental changes in industry and competitive conditions?

Accepted Answer

Ups and downs in the economy and interest rates may have short-term effects on industry and competitive conditions, but they are not generally a driving force capable of producing fundamental changes. The other options - changes in industry growth rate, increasing globalization, product innovation and technological change, and new government regulations or policies - all have the potential to significantly impact industries and lead to fundamental changes in competitive conditions.

Question 5

Driving forces analysis

Accepted Answer

Driving forces analysis involves identifying the key forces that will impact the industry and assessing their impact on the industry's attractiveness. Based on this assessment, companies can determine what strategy changes they need to make to prepare for the impact of the driving forces. The other options (B, C, D, and E) are not part of the driving forces analysis.

Question 6

Steps involved in driving forces analysis include

Accepted Answer

The steps involved in driving forces analysis are identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces. Developing a comprehensive list of potential causes of changing industry conditions and predicting new driving forces are not part of driving forces analysis. Making it difficult to achieve a competitive advantage via anything other than being the industry's low-cost leader is a result of the analysis, not a step in the process. Discerning which among the five competitive forces is most potent and which is least potent is part of Porter's Five Forces analysis, which is a separate analysis from driving forces analysis.

Question 7

A strategic group consists of those firms in an industry that

Accepted Answer

Strategic groups are composed of firms that employ similar competitive approaches and occupy similar positions in the market. They compete with each other more directly than with firms outside the group.

Question 8

Which of the following are most unlikely to qualify as driving forces?

Accepted Answer

Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances are less likely to qualify as driving forces compared to other options listed. Driving forces are usually external factors that shape the future of the industry, while these options are more internal factors that the industry can control.

Question 9

A competitive environment in which 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, high entry barriers, weak competition from substitutes, and little bargaining power for suppliers and customers is conducive to industry members earning attractive profits. This is because there is less pressure to lower prices or differentiate products, which allows for higher profit margins. Additionally, the high entry barriers make it difficult for new competitors to enter the market and further increase competition, giving existing players more market power.

Question 10

A competitive environment in which 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

The given description of the competitive environment indicates intense competition and lack of barriers to entry, making it difficult for firms to earn good profits.

Question 11

Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?

Accepted Answer

Increases in economic power and bargaining leverage of customers and suppliers, as well as growing collaborations, are more about shifts in power dynamics rather than fundamental changes in industry structure or competitive conditions.

Question 12

Increasing globalization can be a driving force in an industry because

Accepted Answer

The answer of Increasing globalization can be a driving force...

Question 13

Based on an analysis of the five forces that increase or decrease competitive pressures in an industry,in which of the following industries is profitability likely to be highest?

Accepted Answer

The answer of Based on an analysis of the five...

Question 14

An industry's driving forces

Accepted Answer

Industry's driving forces refer to the factors that shape an industry's competitive structure and determine the levels of competition intensity and profitability. These driving forces can act in ways that will either strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability. Therefore, option B is the best choice as it captures the essence of the industry's driving forces. The other options include additional factors or consequences that may be influenced by the driving forces but do not define them.

Question 15

Rivalry among competing firms tends to be more intense when

Accepted Answer

In this scenario, the slow growth of demand, market dissatisfaction, low switching costs for buyers, and aggressive moves by strong companies outside the industry to build market share create intense rivalry among competing firms. When the market is attractive, it tends to be crowded, and the competition is fierce. A low-growth market tends to intensify the competition among the existing players, and the threat of new entrants is low. Therefore, A is the best choice.

Question 16

A strategic group

Accepted Answer

A strategic group is a group of companies within an industry that share a similar business model and strategies. This includes market positioning, competitive approaches, product line breadth, and growth rates. Therefore, option C is the correct choice as it highlights the importance of competitive approaches and market positioning. Option A, D, and E are incorrect as they only consider growth rates, market shares and profit margins, respectively, which are not the only factors that determine a strategic group. Option B is also incorrect as profitability alone does not determine a strategic group, as firms can have different business models and strategies despite similar levels of profitability.

Question 17

Industry conditions change

Accepted Answer

Industry conditions change primarily because forces create pressures or incentives for industry participants to alter their actions, which can include competitors, customers, and suppliers.

Question 18

Not all positions on a strategic group map are equally attractive because

Accepted Answer

Industry driving forces and competitive pressures affect each strategic group differently, and their strengths and weaknesses vary. Therefore, the profit potential of different strategic groups is not equal. Factors such as entry and exit barriers and key success factors may also differ among strategic groups, but they do not necessarily determine the overall attractiveness of each group's position.

Question 19

Which of the following is not an appropriate guideline for developing a strategic group map for a given industry?

Accepted Answer

Variables selected as axes for the map should not be highly correlated. Correlated variables do not provide distinct differences in how competitors have positioned themselves and can lead to inaccurate strategic groupings.

Question 20

Based on an analysis of the five forces that increase or decrease competitive pressures in an industry,in which of the following industries is profitability likely to be lowest?

Accepted Answer

The pizza restaurant industry is likely to have the lowest profitability given the intense competitive pressures from multiple forces. The bargaining power of suppliers is low in this industry since ingredients such as cheese, tomato sauce, and bread are widely available. However, the threat of new entrants is high since starting a pizza restaurant requires little capital investment and the industry is already saturated with many competitors. Additionally, the bargaining power of customers is high since there is little differentiation between pizza restaurants and customers have many options to choose from. Furthermore, the threat of substitutes is also high since customers can opt for other fast-food options such as sandwiches, burgers, or fried chicken. Finally, the intensity of rivalry is also high since there are many competitors with similar offerings fighting for the same customers. Therefore, due to these forces, profitability in the pizza restaurant industry is likely to be lower compared to the other industries listed.

Quiz 3: Evaluating a Companys External Environment