Deck 4: Environmental Scanning and Industry Analysis

Question 1

According to Michael Porter, the weaker each of the competitive forces, the more limited companies are in their ability to raise prices and earn greater profits.

Answer 1

False

Question 2

The societal environment includes the economic, technological, political-legal, and sociocultural forces.

Answer 2

True

Question 3

An entry barrier is an obstruction that makes it difficult for a company to enter an industry.

Answer 3

True

Question 4

In dynamic environments, the CEO's focus is on forces in the societal environment.

Question 5

One of the breakthrough developments in technology is the portable information device and electronic networking.

Question 6

An industry is a group of firms producing a similar product or service.

Question 7

An example of an economic variable in the societal environment is interest rates.

Question 8

Political-legal forces regulate the values, mores, and customs of society.

Question 9

Today's organizations must scan the natural environment for factors that might previously have been taken for granted.

Question 10

Booz & Company found that companies that are most successful at avoiding surprises had a well-defined system that integrated planning, budgeting, and business reviews.

Question 11

Strategic myopia is the willingness to reject unfamiliar as well as negative information.

Question 12

A multinational corporation is a company with significant assets and activities in multiple countries.

Question 13

The growing health consciousness is an example of a political-legal force.

Question 14

A corporation uses environmental scanning to avoid strategic surprise.

Question 15

One of the demographic variables in the societal environment is the changing household composition.

Question 16

The transferring of profits from a foreign subsidiary to a corporation's headquarters is known as repatriation of profits.

Question 17

Industry analysis was popularized by Michael Porter.

Question 18

The origin of competitive advantage lies in the ability to identify and respond to environmental change well in advance of competition.

Question 19

Environmental scanning is the monitoring, evaluating, and disseminating of information from the external environment to key people within the corporation.

Question 20

According to Michael Porter, a high force can be regarded as a threat because it is likely to reduce profits.

Question 21

NutraSweet can serve as a product substitute for sugar satisfying the same need.

Question 22

An industry matrix summarizes the key success factors within a particular industry.

Question 23

Business intelligence is one of the fastest growing fields within strategic management.

Question 24

According to Miles and Snow, reactors are companies with a limited product line that focus on improving the efficiency of their existing operations.

Question 25

McDonald's and Olive Garden are in the same strategic group.

Question 26

Competitive intelligence is a formal program of gathering information on a company's competitors.

Question 27

In hypercompetitive industries, competitive advantage comes from an up-to-date knowledge of environmental trends and competitive activity coupled with a willingness to risk a current advantage for a possible new advantage.

Question 28

Extrapolation rests on the assumption that the world is relatively dynamic and changes quickly in the short run.

Question 29

To combat the increasing theft of company secrets, the U.S.government passed the Economic Espionage Act in 1996.

Question 30

The need to invest huge financial resources in manufacturing facilities in order to produce large commercial airplanes creates a significant barrier to entry to any competitor for Boeing and Airbus.

Question 31

Faulty underlying assumptions are the most frequent cause of forecasting errors.

Question 32

A buyer may be powerful when changing suppliers costs a great deal.

Question 33

Statistical modeling is a quantitative forecasting technique that attempts to discover causal or at least explanatory factors that link two or more time series together.

Question 34

A fragmented industry is dominated by a few large firms, each of which struggles to differentiate its products from the competition.

Question 35

Governments can do little to erect barriers to entry in an industry.

Question 36

A.C.Nielsen is an example of an outside organization providing a firm with competitive intelligence.

Question 37

One of the possible barriers to entry is product differentiation.

Question 38

The only factor used to determine whether an industry will be primarily multidomestic or primarily global is the pressure for local responsiveness.

Question 39

Key success factors seldom vary from industry to industry.

Question 40

Multidomestic industries are specific to each country or group of countries.

Question 41

Which of the following is NOT one of the eight current sociocultural trends mentioned in the text?

A) increasing environmental awareness
B) growth of the seniors market
C) decline of the mass market
D) increasing food consumption
E) impact of Generation Y boomlet

Question 42

According to the text, one reason environmental uncertainty is a threat to strategic managers is because

A) it is a costly and time-consuming process.
B) it creates a new playing field in which creativity and innovation can play a major part in strategic decisions.
C) it forces the strategic manager to be more stable.
D) it hampers their ability to develop long-range plans.
E) there are too many uncontrollable variables.

Question 43

According to Porter, the collective strength of the interaction of potential entrants, buyers, substitutes, suppliers, firm rivalry, and other stakeholders determine

A) the level of government action in an industry.
B) the probable industry attractiveness and business strength position.
C) the ultimate profit potential in the industry measured in terms of long-run return on invested capital.
D) the aggregate level of demand for a product line.
E) the amount of pressure from the societal environment.

Question 44

According to Porter, seeing clothing firms such as Under Armour enter the athletic shoe industry would reflect a

A) medium bargaining power of suppliers.
B) low threat of substitutes.
C) medium bargaining power of buyers.
D) high threat of potential entrants.
E) low competitive intensity.

Question 45

In addition to Porter's Five Forces, another force added in the text is

A) bargaining power of unions.
B) other stakeholders.
C) threat of prospects.
D) threat of shareholders.
E) bargaining strength of employees.

Question 46

The combination of the degree of complexity and the degree of change existing in an organization's external environment is/are called

A) strategic factors.
B) strategic issues.
C) environmental uncertainty.
D) strategic fit.
E) scenarios.

Question 47

Which societal force includes demographic trends?

A) political-legal forces
B) labor forces
C) economic forces
D) technological forces
E) sociocultural forces

Question 48

The corporation's task environment

A) encompasses the physical working areas of the organization.
B) includes those elements or groups within an organization's industry.
C) is an advisory committee to top management.
D) is an accounting of the many jobs within an organization.
E) is the job requirement specification listing necessary skills and abilities.

Question 49

Which of the following is NOT a major force in the societal environment?

A) political-legal forces
B) labor forces
C) economic forces
D) technological forces
E) sociocultural forces

Question 50

All of the following are technological breakthroughs already having a significant impact on many industries EXCEPT

A) growing health consciousness.
B) alternative energy sources.
C) genetically altered organisms.
D) smart, mobile robots.
E) virtual personal assistants.

Question 51

When strategic managers have a willingness to reject unfamiliar as well as negative information it is referred to as

A) strategic paralysis.
B) corporate inertia.
C) management indifference.
D) strategic myopia.
E) corporate apathy.

Question 52

Which of the following is NOT descriptive of external environmental scanning?

A) used as a tool to ensure a corporation's long-term health
B) used to monitor, evaluate, and disseminate information relevant to the organizational development of strategy
C) used to identify major stockholders
D) used as a tool for corporations to avoid strategic surprise
E) used to determine a firm's competitive advantage

Question 53

Which of the following is NOT an element of the organization's task environment?

A) local communities
B) trade associations
C) governments
D) technological developments
E) special interest groups

Question 54

An industry scenario is a forecasted description of a particular industry's likely future.It is developed by analyzing the probable impact of future societal forces on key groups in a particular industry.

Question 55

The origin of competitive advantage lies in the ability to

A) gain major stockholders.
B) identify and respond to environmental change well in advance of competition.
C) launch products quickly.
D) serve customers faster.
E) create surprise for others.

Question 56

A company with significant assets and activities in multiple countries is known as a(n)

A) multinational corporation.
B) repatriated corporation.
C) transferable corporation.
D) duplicate corporation.
E) emancipated corporation.

Question 57

According to Porter, the corporation is most concerned with

A) the intensity of competition within its industry.
B) the aggregate level of demand for a product line.
C) a market's position on its life cycle.
D) the amount of pressure from the societal environment.
E) the level of government action in an industry.

Question 58

Which environment was generally perceived by business people to be something to exploit, not conserve until the twentieth century?

A) the task environment
B) the natural environment
C) the internal environment
D) the societal environment
E) the external environment

Question 59

Which is the largest of the current U.S.generations?

A) Baby Boomers
B) Woofies
C) Silent Generation
D) Gen X
E) Gen Y

Question 60

Industry analysis is primarily concerned with a corporation's

A) societal environment.
B) task environment.
C) sociocultural environment.
D) economic environment.
E) internal environment.

Question 61

When General Motors considers making its own automotive parts, Delphi Automotive Supply Company would be concerned with the

A) bargaining power of suppliers.
B) bargaining power of buyers.
C) rivalry among existing competitors.
D) threat of substitutes.
E) threat of new entrants.

Question 62

Other software companies could not compete with Microsoft based on the hesitation of consumers to try a new software.Which of Porter's forces does this reflect?

A) exit barriers
B) bargaining power of buyers
C) threat of substitutes
D) bargaining power of suppliers
E) rivalry among existing firms

Question 63

An industry dominated by a few large firms, all of which struggle with product differentiation, is known as

A) multidomestic.
B) consolidated.
C) global.
D) indigenous.
E) worldwide.

Question 64

Which barrier to entry do corporations such as P&G use to force new entrants to spend heavily to overcome existing customer loyalty?

A) rivalry among existing firms
B) switching costs
C) capital requirements
D) product differentiation
E) access to distribution channels

Question 65

Which of the following is NOT descriptive of the threat of substitute products or services?

A) Substitute products appear to be different, but satisfy the same need as another product.
B) If the cost of switching is low, substitutes may have a strong effect on an industry.
C) Identifying substitutes is relatively easy since they look similar.
D) Possible substitute products or services may not appear to be easily substitutable.
E) Substitutes limit the potential returns of an industry.

Question 66

Which of the following is NOT descriptive of intense rivalry among firms?

A) slow industry growth
B) high fixed costs
C) high exit barriers
D) few competitors or competitors that are roughly equal in size and power
E) product offerings that are highly differentiated

Question 67

Which of the following is NOT descriptive of the "threat of new entrants"?

A) depends on the presence of entry barriers
B) have a desire to gain market share
C) depends on the reaction of existing competitors
D) does not impact industry attractiveness
E) brings new capacity and substantial resources

Question 68

A company or an industry whose product works well with a firm's product and without which the product would lose much of its value is considered to be a(n)

A) complementor.
B) oligopoly.
C) strategic group.
D) industry leader.
E) staggered company.

Question 69

In a fragmented industry

A) no firm has large market share.
B) prices drop as new competitors enter the market.
C) economies of scale are used to reduce costs.
D) companies integrate to further reduce costs.
E) all of the above

Question 70

The U.S.major home appliance industry is an example of an industry

A) that has evolved from an oligopoly to a monopoly.
B) in which each company maintained a distinct product line.
C) that was once fragmented, but now is consolidated.
D) that has experienced consistent, increasing sales.
E) experiencing a successful strategy of product specialization because of product differentiation.

Question 71

Which barrier to entry uses cost advantages associated with large size?

A) rivalry among existing firms
B) switching costs
C) cost disadvantages independent of size
D) capital requirements
E) economies of scale

Question 72

Which of the following is NOT descriptive of a high level of bargaining powers of buyers?

A) Changing suppliers costs very little.
B) Alternative suppliers are plentiful because of standardization of the product.
C) The purchased product represents a high percentage of buyer's costs.
D) The buyer buys a large proportion of the seller's product or service.
E) A buyer earns high profits and is very insensitive to costs and service differences.

Question 73

Which barrier to entry is demonstrated by Microsoft's MS-DOS operating system?

A) government policy
B) access to distribution channels
C) cost disadvantages independent of size
D) capital requirements
E) economies of scale

Question 74

The strength of each of the six driving forces of industry competition varies according to the

A) effectiveness of the strategic planning.
B) stage of industry evolution.
C) capital requirements.
D) changes in the political environment.
E) amount of government regulation.

Question 75

Which of the following is NOT descriptive of a high level of bargaining power of suppliers?

A) Substitutes are readily available.
B) The product or service is unique.
C) The supplier industry is dominated by a few companies, but sells too many.
D) The purchasing industry buys only a small portion of the supplier group's goods and services.
E) Suppliers are able to integrate forward and compete directly with their present customers.

Question 76

According to Porter's model, a low force can enable the company to earn greater profits and can be regarded as a(n)

A) benefit.
B) opportunity.
C) advantage.
D) threat.
E) risk.

Question 77

A relationship that illustrates the term "complementor" is

A) Microsoft and Intel.
B) General Motors and Ford.
C) Hewlett Packard and Compaq.
D) Gateway and Dell.
E) America Online and CompuServe.

Question 78

A sugar company that is worried that consumers may buy artificial sweetener instead of sugar is concerned about the

A) threat of new entrants.
B) rivalry among existing firms.
C) threat of substitute products.
D) bargaining power of suppliers.
E) bargaining power of buyers.

Question 79

Intel was able to gain a significant cost advantage over its competitors in the production and sale of microprocessors because of

A) capital requirements.
B) product differentiation.
C) switching costs.
D) economies of scale.
E) access to distribution.

Question 80

According to Porter's model, a strong or high force is likely to reduce profits and can be regarded as a(n)

A) benefit.
B) opportunity.
C) advantage.
D) threat.
E) risk.