Deck 3: The External Assessment

Question 1

Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.

Answer 1

False

Question 2

As many managers and employees as possible should be involved in the process of performing an external audit.

Answer 2

True

Question 3

Industry analysis is also referred to as external strategic management audit.

Answer 3

True

Question 4

By 2075,the United States will have no racial or ethnic majority.

Question 5

A low value of the dollar means lower exports and higher imports.

Question 6

The I/O approach to competitive advantage advocates that internal factors are more important than external factors in a firm achieving competitive advantage.

Question 7

The United States is getting older and less Caucasian.

Question 8

The low value of the dollar benefits the U.S.economy in many ways.

Question 9

Economic factors do not have much impact on the attractiveness of strategies.

Question 10

External audits attempt to identify key variables that offer actionable responses.

Question 11

Five major categories of external variables are: 1)economic forces,2)social and cultural forces,3)political,governmental and legal forces,4)technological forces and 5)demographic forces.

Question 12

An economic trend in America is the increasing numbers of two-income households.

Question 13

An external audit focuses on identifying and evaluating trends and events within the control of management.

Question 14

To perform an external audit,a company first must gather competitive intelligence and information about social,cultural,demographic,environmental,economic,political,legal,governmental and technological trends.

Question 15

The average age of the residents in Texas makes it one of the five youngest states.

Question 16

It is predicted that,by 2025,over 18% of the population in the United States will be 65 years or older.

Question 17

Freund argues that key external factors must not be hierarchical.

Question 18

The aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.

Question 19

The average age of the residents in Maine makes it one of the five youngest states.

Question 20

An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.

Question 21

Major competitors' strengths may represent key threats.

Question 22

In practice,critical technology decisions are too often delegated to lower organizational levels or are made without an understanding of their strategic implications.

Question 23

Governments are extremely unlikely to take control of companies,even those considered vital to the nation's financial stability.

Question 24

Hiring top executives from rival firms is a way companies obtain competitive intelligence.

Question 25

Apartment complexes for the elderly have increased across the United States.

Question 26

Political relations between Japan and China have deteriorated considerably in recent years.

Question 27

The worldwide recession is reducing international immigration.

Question 28

Political,governmental,and legal factors can represent key threats or opportunities for most small and large organizations.

Question 29

In the United States,the population has been moving from the South and West to the Northeast and Midwest.

Question 30

Recent consumption trends in the United States indicate that wine consumption is increasing at 5% while beer consumption is increasing at 10%.

Question 31

A characteristic that describes the most competitive companies in America is "whether it's broke or not,fix it - make it better; not just products,but the whole company if necessary."

Question 32

The Internet is changing the very nature of many industries by altering product life cycles and changing the historical trade-off between production standardization and flexibility.

Question 33

Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.

Question 34

"Innovate or evaporate; particularly in technology-driven businesses,nothing quite recedes like success," is a characteristic that describes the most competitive companies in America.

Question 35

Internal opportunities can be represented by major competitors' weaknesses.

Question 36

In the face of a deepening global recession,countries worldwide are resorting to protectionism to safeguard their own industries.

Question 37

An effective CI program allows all areas of a firm to access consistent and verifiable information in making decisions.

Question 38

Pepsi Bottling is the top beverage company in the U.S.

Question 39

Corporate intelligence can be defined as a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals.

Question 40

More Americans are moving than staying in place.

Question 41

The first step for using Porter's Five-Forces Model is to evaluate the relative strength of each competitive force.

Question 42

While some forecasts might not be perfect,they are never wildly inaccurate.

Question 43

Qualitative forecasts are most appropriate when historical data are available and when the relationships among key variables are expected to remain the same in the future.

Question 44

Quantitative forecasts become less accurate as historical relationships become less stable.

Question 45

Intelligence gathering is an unethical business practice.

Question 46

Organizations never develop their own projections.

Question 47

Competitive intelligence is not considered corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public.

Question 48

Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses.

Question 49

Running a competitive intelligence program requires lots of people,computers,and other resources.

Question 50

Forecasts are educated assumptions about future trends and events.

Question 51

The bargaining power of consumers can be the most important force impacting competitive advantage.

Question 52

Forward integration is used by firms to gain control or ownership of suppliers.

Question 53

Some sources that forecast external variables are publications and websites.

Question 54

Bargaining power of consumers is usually the most powerful of Porter's five competitive forces.

Question 55

Market commonality is the extent to which the type and amount of a firm's internal resources are comparable to a rival.

Question 56

Linear regression is based on the assumption that the future will be different from the past.

Question 57

According to Michael Porter,five competitive forces create vital opportunities and threats to organizations: 1)new entrants,2)substitute products or services,3)bargaining power of suppliers,4)bargaining power of buyers,and 5)rivalry among existing firms.

Question 58

Without reasonable assumptions,the strategy-formulation process could not proceed effectively.

Question 59

Significant barriers to entry are not always sufficient to keep some new firms from entering industries with higher-quality products,lower prices and substantial marketing resources.

Question 60

Linear regression is a popular technique for qualitative forecasts.

Question 61

According to I/O theorists,which of the following contributes least to firm performance?

A) Economies of scale
B) Barriers to market entry
C) Product differentiation
D) Internal resources
E) Level of competitiveness

Question 62

Assumptions should never be part of the planning process.

Question 63

Freund emphasizes that key external factors should be all of these except:

A) important to achieving long-term and annual objectives.
B) measurable.
C) relatively few in number.
D) applicable to all competing firms.
E) hierarchical in the sense that some will pertain to the overall company while others will be more narrowly focused.

Question 64

A total weighted score of 1.0 for an EFE Matrix indicates that the firm is responding in an outstanding way to existing opportunities and threats in its industry.

Question 65

The I/O approach to competitive advantage advocates that external factors are ________ internal factors in a firm achieving competitive advantage.

A) less important than
B) as important as
C) more important than
D) more common than
E) less common than

Question 66

In general,what happens to American goods in overseas markets when there is a strong dollar?

A) They are less expensive.
B) They are more attractive.
C) They are cheaper.
D) They are more expensive.
E) They are desirable.

Question 67

The process of performing an external audit needs to include

A) only top level managers, as it is a planning function.
B) as many managers and employees as possible.
C) primarily front-line supervisors.
D) between 15 to 20 managers for it to be valid.
E) stockholders and external government agencies.

Question 68

It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?

A) None
B) One
C) Two
D) Three
E) Five

Question 69

To perform an external audit,a company first must

A) get an approval from the Securities and Exchange Commission.
B) perform an internal audit.
C) gather competitive intelligence and information about external trends.
D) hire a consultant to develop a comprehensive strategic plan.
E) all of the above

Question 70

What happens when interest rates rise?

A) Discretionary income increases
B) The demand for discretionary goods increases
C) Discretionary income is unchanged
D) The demand for discretionary goods decreases
E) discretionary income increases and the demand for discretionary goods decreases

Question 71

________ is not part of an external audit.

A) Analyzing competitors
B) Analyzing financial ratios
C) Analyzing available technologies
D) Studying the political environment
E) Analyzing social, cultural, demographic and geographic forces

Question 72

Which of the states below has the youngest average population?

A) Florida
B) Utah
C) West Virginia
D) Maine
E) Pennsylvania

Question 73

The weights and total weighted scores in both a Competitive Profile Matrix and an EFE Matrix have the same meaning.

Question 74

Which type of trend is exemplified by the increasing number of two-income households in America?

A) Social
B) Economic
C) Cultural
D) Technological
E) Historical

Question 75

A Competitive Profile Matrix allows strategists to summarize and evaluate economic,social,cultural,demographic,environmental,political,governmental,legal,technological,and competitive information.

Question 76

Identifying and evaluating key social,political,economic,technological and competitive trends and events comprise

A) developing an effective mission statement.
B) conducting an internal audit.
C) performing an external audit.
D) formulating strategy.
E) implementing strategy.

Question 77

In an EFE Matrix,opportunities often receive higher weights than threats,but threats too can receive high weights if they are especially severe or threatening.

Question 78

Regardless of the number of key opportunities and threats included in an External Factor Evaluation Matrix,the highest possible total weighted score for an organization is 4.0,and the lowest possible total weighted score is 0.0.

Question 79

What effect do trends in the dollar's value have on companies in different industries and in different locations?

A) Significant and equal
B) Marginal and equal
C) Significant and unequal
D) Insignificant and unequal
E) No significant impact

Question 80

The critical success factors in a Competitive Profile Matrix are often the same as those in an EFE Matrix.