Deck 3: Evaluating a Companys External Environment

Question 1

Thinking strategically about the industry and competitive environment involves in-depth analysis and evaluation of such consideration as:

A) the strength of the equilibrium forces driving change in the environment.
B) the identification of the dominant financial risk components of the industry in which the company operates.
C) the market positions of industry rivals and their relative strength,and the competitive forces rivals are facing and what impact they will have on competitive intensity and industry profitability.
D) the critical factors influencing past competitive success in the industry.
E) All of these.

Answer 1

C

Question 2

Rivalry increases:

A) when buyer demand is growing fast or increasing.
B) as it becomes more costly for buyers to switch brands.
C) as the products of rival sellers becomes more strongly differentiated.
D) when there is excess supply of unused production capacity,especially if high fixed costs exist.
E) All of these.

Answer 2

A

Question 3

Which of the following factors represents the strategically relevant political factors in the macro-environment that will influence the performance of all firms across the board?

A) The strength of the federal banking system
B) The exogenous forces related to the general environmental demand
C) Social factors that could fuel a political agenda and create greater transparency
D) Bailouts and energy policies that are industry-specific
E) Tax policy,fiscal policy,and tariffs providing impetus for anti-trust matters

Answer 3

A

Question 4

A company's "macro-environment" refers to:

A) the industry and the competitive arena in which the company operates.
B) general economic conditions plus the factors driving change in the markets where a company operates.
C) the strategically relevant factors outside a company's industry boundaries-economic conditions,political factors,socio-cultural forces,technological factors,environmental factors,and legal/regulatory conditions.
D) the competitive market environment that exists between a company and its competitors.
E) the dominant economic features of a company's industry.

Question 5

Which one of the following is part of a company's macro-environment?

A) Conditions outside the market.
B) European culture,values,and lifestyles.
C) The pace of technological change factors and legal and regulatory conditions.
D) The industry and competitive environment arena outside the company's operating territory.
E) The company's resource strengths,resource weaknesses,and competitive capabilities.

Question 6

Which of the following is NOT one of the principal components of strategic significance in the PESTEL analysis?

A) Political factors including the extent to which government intervenes in the economy
B) Economic conditions that include the general economic climate and specific factors such as interest rates,inflation rate,and unemployment rate,as well as conditions in the stock and bond markets that can affect consumer confidence
C) Socio-cultural forces including societal values,attitudes,cultural factors,and lifestyles that impact business
D) Technological factors includes the pace of change and technical developments that have the potential for impacting society
E) Environmental forces that include the competitive structure,the degree of industry fragmentation,and the mobility barriers that inhibit business

Question 7

The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is the:

A) Five Forces Model.
B) SWOT.
C) Competition Intensity Model.
D) Dynamic Simulation Model.
E) Competitor Profiling.

Question 8

The nature and strength of the competitive forces that prevail in an industry is generally a joint product of:

A) competition from rival sellers.
B) competition from potential new entrants.
C) competition from producers of substitute products.
D) competitive pressures stemming from the bargaining power of both suppliers and buyers.
E) All of these.

Question 9

The most powerful of the five competitive forces is USUALLY:

A) the competitive pressures that stem from the ready availability of attractively priced substitute products.
B) the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.
C) the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates.
D) the competitive pressures associated with the potential entry of new competitors.
E) the bargaining power and leverage that large customers are able to exercise.

Question 10

Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry?

A) How many companies in the industry have good track records for revenue growth and profitability?
B) What strategic moves are rivals likely to make next?
C) What are the industry's key factors for future competitive success?
D) Is the outlook for the industry conducive to providing attractive profitability?
E) What are the driving forces in the industry,and what impact will these changes have on competitive intensity and industry profitability?

Question 11

Market maneuvering among industry rivals:

A) determines whether the industry's strategic group map will be static or dynamic.
B) centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers.
C) is usually an industry's strongest driving force.
D) is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves.
E) is ongoing and dynamic,with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.

Question 12

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

A) High buyer switching costs.
B) Rapid growth in buyer demand.
C) Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales.
D) Low barriers to entry.
E) Strongly differentiated products among rival sellers.

Question 13

Which of the following is NOT one of the five typical sources of competitive pressures?

A) The power and influence of industry driving forces
B) The bargaining power of suppliers and seller-supplier collaboration
C) The threat of new entrants into the market
D) The attempts of companies in other industries to win customers over to their own substitute products
E) The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry

Question 14

Which one of the following is NOT part of a company's macro-environment?

A) Economic conditions in the economy at large
B) Political factors and socio-cultural forces
C) Technological factors and legal/regulatory conditions
D) The immediate industry and competitive environment in which the company operates
E) The company's resource strengths,resource weaknesses,and competitive capabilities

Question 15

What makes the marketplace a competitive battlefield is:

A) the race of industry members to build strong defenses against the industry's driving forces.
B) the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals.
C) the ongoing race among rival sellers to have the highest-quality product.
D) the ongoing efforts of industry members to introduce new and improved products/services at a faster rate than their rivals.
E) the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits.

Question 16

The competitive pressures on companies within an industry comes from those:

A) associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry.
B) companies in other industries attempting to win buyers over to their substitute products.
C) associated with the threat of new entrants into the marketplace.
D) associated with the bargaining power of suppliers and customers.
E) All of these.

Question 17

Which of the following is NOT a factor to consider when identifying economic conditions in the macro-environment?

A) The movement and influence of exchange rates,the inflation rate and per capita domestic product on the industry
B) The implications of trade deficits or surpluses on the macro-environment
C) The strategically relevant general economic climate outside the firm's industry boundaries
D) The combined strength of the competitive factors influencing the firm and their implications for strategic momentum and the moves and countermoves of rivals impacted by the economy at large
E) Conditions in the markets for stocks and bonds,which can affect consumer confidence and discretionary income

Question 18

Typically,the weakest of the five competitive forces in an industry is/are:

A) the threat posed by potential new entrants.
B) the bargaining power and leverage that suppliers are able to exercise.
C) the competitive pressures that stem from the ready availability of attractively priced substitute products.
D) the bargaining power and leverage that buyers are able to exercise.
E) None of these is typically the weakest.

Question 19

Using the Five Forces model of competition to determine the character and strength of the competitive forces within a given industry involves:

A) building the picture of competition in three steps: (1)identify the different parties involved,along with specific factors that bring about competitive pressures;(2)evaluate how strong the pressures stemming from each of the five forces are (strong,moderate or weak);and (3)determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.
B) building the picture of competition in two steps: (1)determining which rival has the biggest competitive advantage and (2)assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits.
C) evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors.
D) assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures.
E) gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

Question 20

Factors that cause the rivalry among competing sellers to be weaker include:

A) low buyer switching costs and rival sellers that are relatively equal in size and capability.
B) rapid growth in buyer demand and high buyer switching costs.
C) few industry rivals,causing any one company's actions to be easily anticipated and countered by its rivals.
D) low barriers to entry and weakly differentiated products among rival sellers.
E) slow growth in buyer demand and strongly differentiated products.

Question 21

The intensity of rivalry among competing sellers does NOT depend on whether:

A) the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups.
B) competitors are diverse in terms of long-term directions,objectives,strategies,and countries of origin.
C) strong companies outside the industry have acquired weak firms in the industry and are launching aggressive moves to transform the acquired companies into strong market contenders.
D) one or two rivals have particularly powerful and successful strategies to grow the business,attract and retain buyers,and develop a sustained competitive advantage.
E) industry conditions attract industry members to use price cuts or other competitive weapons to boost total sales volume and market share.

Question 22

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

A) financially strong incumbents send strong signals that they will launch strategic initiatives to combat the entry of newcomers.
B) the industry is characterized by the lack of sizable scale economies and learning/experience curve effects.
C) the industry's market growth is rapid.
D) the capital requirements for entering the market are within acceptable levels to provide acceptable returns on investment.
E) buyers have little loyalty to the brands and product offerings of existing industry members.

Question 23

Competitive pressures stemming from the threat of entry are weaker when:

A) the incumbents do not enjoy preferential access to distribution channels (e.g. ,securing adequate space on retailer shelves).
B) strong network effects exist.
C) the industry outlook is risky or uncertain.
D) incumbent firms have little ability to leverage distributors,dealers,and/or retailers to retain their business.
E) the nature of the industry entails few scale economies.

Question 24

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

A) The reaction of incumbent firms to rapid market growth
B) High capital requirements and restrictive government policies
C) Strong brand preferences and a high degree of customer loyalty
D) Cost advantages due to the economies of scale in production enjoyed by incumbent firms
E) Strong "network effects" in customer demand

Question 25

Which of the following is NOT among the factors that affect whether competitive rivalry among participating firms is strong,moderate,or weak?

A) Whether the products of rival sellers are strongly or weakly differentiated
B) Whether demand for the industry's product is growing rapidly or slowly
C) The degree to which rivals deploy whatever means it believes will attract and retain buyers,strengthen market position,and yield good profits
D) Whether the industry's key driving forces yield firms in the industry with adequate profits are strong or weak
E) Whether industry conditions tempt competitors to use price discounting or other competitive weapons to boost total sales volume and market share

Question 26

Factors that tend to result in weak rivalry among competing sellers include:

A) less costly buyer switching costs and when low exit-barriers exist keep unprofitable firms from leaving the industry.
B) rapid growth in buyer demand,high buyer costs to switch brands,and more strongly differentiated products.
C) less strongly differentiated products among rival sellers.
D) rivals that are quite diverse in terms of their strategies,objectives,and countries of origin.
E) conditions where outsiders have recently acquired weak competitors and are challenged in migrating them into major contenders.

Question 27

Competitive pressures associated with the threat of entry are greater when:

A) incumbent firms are unable or unwilling to strongly contest the entry of newcomers.
B) a large pool of potential entrants exists,some of which have the capabilities to overcome high entry barriers.
C) entry barriers are relatively low and buyer demand for the product is growing rapidly,and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents.
D) existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.
E) All of these conditions heighten the competitive pressures associated with fresh entry into the industry.

Question 28

In analyzing the strength of competition among rival firms,an important consideration is:

A) the potential for buyers to exercise strong bargaining power.
B) the diversity of competitors in terms of long-term direction objectives,strategies,and countries of origin.
C) the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies.
D) the extent to which some rivals have more than two competitively valuable competencies or capabilities.
E) whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.

Question 29

The rivalry among competing firms tends to be more intense:

A) when demand for the product is growing slowly,buyers have low switching costs,and the actions of any one company to attract more customers and boost market share have strong direct impact on their rivals.
B) when the products/services of rival sellers are more strongly differentiated and buyer demand is strong and growing rapidly.
C) when rivals are relatively content with their market position.
D) when there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members.
E) the smaller the number of firms in the industry and the more unequal their market shares.

Question 30

The rivalry among competing sellers tends to be less intense when:

A) industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales.
B) buyer demand is weak and many sellers have excess capacity and/or inventory.
C) industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance.
D) rivals have diverse strategies and objectives and are located in different countries.
E) rival sellers have weakly differentiated products.

Question 31

Potential entrants are more likely to be deterred from actually entering an industry when:

A) incumbent firms are willing and able to be aggressive in defending their market positions against entry.
B) incumbent firms are complacent.
C) buyers are not particularly price sensitive and the industry already contains a dozen or more rivals.
D) the relative cost positions of incumbent firms are about the same,such that no one incumbent has a meaningful cost advantage.
E) buyer switching costs are moderately low because of strong product differentiation among incumbent firms.

Question 32

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

A) When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers
B) When industry members are struggling to earn good profits
C) When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly
D) When existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence
E) When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

Question 33

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

A) the strength of buyer loyalty to existing brands.
B) whether the industry's driving forces make it harder or easier for new entrants to be successful.
C) whether the strategies of industry members are well-matched to the industry's key success factors.
D) whether there are any vacant spaces on the industry's strategic group map.
E) to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

Question 34

In which one of the following instances is rivalry among competing sellers NOT more intense?

A) When certain competitors are dissatisfied with their market position and make moves to bolster their standing
B) When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders
C) When competitors are fairly equal in size and capability
D) When the products of rivals are weakly differentiated,buyer switching costs are low,and market demand is growing slowly
E) When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

Question 35

The competitive battles among rival sellers striving for better market positions,higher sales and market shares,and competitive advantage,suggests the rivalry force:

A) is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies.
B) is typically a weaker competitive force than is the threat of entry of new rivals.
C) is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales.
D) tends to intensify when strong companies with sizable financial resources,proven competitive capabilities,and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive,well-funded moves to transform into strong market contenders.
E) is weaker when more firms have weakly differentiated products,buyer demand is growing slowly,and buyers have moderate switching costs.

Question 36

Competing companies deploy whatever means necessary to strengthen market position,including all of the following EXCEPT:

A) marketing tactics including special sales promotions such as introducing new or improved features or increasing the number of styles to provide greater product selection.
B) differentiating their products by offering better performance features than rivals.
C) improving innovation to increase product performance and quality.
D) making efforts to expand dealer networks.
E) reduce distribution capabilities and market presence.

Question 37

Rivalry among competing sellers tends to be more intense when:

A) competitors vary in size and capability,such that smaller firms must really struggle to even survive.
B) buyer switching costs are high and market demand is growing rapidly.
C) several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position.
D) the products of rival sellers are strongly differentiated.
E) All of these.

Question 38

Rivalry among competing sellers is generally more intense when:

A) there are relatively few industry key success factors and rivals have highly differentiated products.
B) the industry's driving forces are strong and rivals have strongly differentiated products.
C) barriers to entry are moderately high and the pool of likely entry candidates is small.
D) rivals are active in making fresh moves to lower prices,introduce new products,increase promotional efforts and advertising,and otherwise gain sales and market share.
E) barriers to entry are high and buyer switching costs are high.

Question 39

Rivalry among competing sellers grows in intensity when:

A) rivals' products/services are sold at widely varying prices and there are only a few rivals.
B) rivals have highly differentiated products and buyer demand is growing rapidly.
C) there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members.
D) the products/services of rivals are strongly differentiated and buyers have high switching costs.
E) buyer demand is growing slowly or declining and the number of competitors is increasing and they become more equal in size and competitive capability.

Question 40

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

A) When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers
B) When strong brand preference and a high degree of customer loyalty exists for the product offerings of incumbents
C) When buyer demand for the product is growing fairly slowly
D) When few outsiders have the expertise and financial resources and capabilities to hurdle whatever entry barriers exist
E) When new entrants can expect to earn attractive profits

Question 41

Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of:

A) the speed with which general economic conditions and interest rates are changing.
B) the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members.
C) how many buyers purchase all of their requirements from a single seller versus how many purchase from several sellers.
D) the number of buyers versus the number of sellers.
E) whether industry members are spending more or less on advertising.

Question 42

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on:

A) the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive.
B) how many buyers are engaged in collaborative partnerships with sellers.
C) whether entry barriers are high or low and the size of the pool of likely entry candidates.
D) whether the overall quality of the items being furnished by industry members is rising or falling.
E) whether demand-supply conditions represent a buyer's market or a seller's market.

Question 43

Which one of the following is NOT a factor in causing supplier bargaining power to be stronger?

A) The products/services needed from suppliers are in short supply.
B) Industry members can't integrate backward and self-supply themselves.
C) The item being supplied is a commodity.
D) The item being supplied significantly enhances the quality or performance of the products of industry members.
E) Suppliers are not dependent on the industry for a large portion of their revenues.

Question 44

The higher the switching costs for industry members,the more it can:

A) limit supplier bargaining power.
B) provide a stronger bargaining power for suppliers.
C) enhance the quality of parts and components being supplied,and in effect reduce defect rates.
D) provide important cost savings for the collaborative supplier-seller relationship.
E) All of these.

Question 45

Which of the following is NOT a factor that causes buyer bargaining power to be stronger?

A) Some buyers are a threat to integrate backward into the business of sellers and become an important competitor.
B) Buyers are small and numerous relative to sellers.
C) Buyers have considerable discretion over whether and when they purchase the product.
D) Buyers purchase the item frequently and are well-informed about sellers' products,prices,and costs.
E) The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.

Question 46

The lower the price of product substitutes,the higher their quality and performance and the lower the user's switching costs,the

A) harder it is for the sellers of attractive substitutes to lure buyers to their offering.
B) more intense the competitive pressures posed by substitute products.
C) less intense the competitive pressures posed by substitute products.
D) greater rival sellers experience strong bargaining power from both suppliers and influential customers.
E) less rival sellers experience weak bargaining power from both suppliers and influential customers.

Question 47

The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of:

A) whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product.
B) whether suppliers self-manufacture what they supply or source their items from other manufacturers.
C) the industry's position in the growth cycle.
D) whether technological change in the businesses of suppliers is rapid or slow.
E) whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.

Question 48

The competitive pressures from substitute products tend to be stronger when:

A) good substitutes are readily available and priced above the market.
B) there are more than 10 sellers of substitute products.
C) the quality and performance and other attributes of the substitutes is viewed as being comparable or better in meeting buyer's requirements.
D) buyers have high psychic costs in severing existing brand relationships and establishing new ones.
E) Switching costs are high,thereby making it easier for the sellers of attractive substitutes to lure buyers to the offering.

Question 49

Supplier bargaining power is weaker when:

A) good substitutes for supplier products/services exists.
B) the cost of switching from one supplier to another is high.
C) suppliers furnish a critical part or component.
D) buying firms are looking for suppliers with good just-in-time supply capabilities.
E) a few large suppliers are the primary sources of a particular item.

Question 50

Industry rivals tend to experience weak competitive pressures from substitute products when:

A) the available substitute products are weakly differentiated from one another.
B) the buyers of the industry's products are few in number and they have substantial amounts of leverage with sellers.
C) rival sellers experience strong bargaining power from both suppliers and influential customers.
D) buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the quality,performance,and other attributes they deliver.
E) the producers of substitute products are all pursuing strategies to strongly differentiate their products on the basis of quality and product performance.

Question 51

Just how strong the competitive pressures are from substitute products depends on:

A) whether the substitutes are strongly or weakly differentiated and whether the relative frequency of buyer purchases is high or low.
B) whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.
C) whether the available substitutes are products or services.
D) whether the producers of substitutes have ample budgets for new product R&D.
E) the speed with which buyer needs and expectations are changing.

Question 52

In which one of the following instances are the competitive pressures stemming from supplier bargaining power NOT weakened?

A) When industry members pose a credible threat of backward integration into the business of suppliers
B) When the cost of switching from one supplier to another is low
C) When the buying firms purchase in large quantities and thus are important customers of the suppliers
D) When the item being supplied is a commodity
E) When the items purchased from suppliers are in short supply

Question 53

In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products?

A) The costs to buyers of switching over to the substitutes are low.
B) Buyers are dubious about using substitutes.
C) The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements.
D) Buyer brand loyalty is weak.
E) Substitutes are readily available at competitive prices.

Question 54

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of:

A) whether the profits of suppliers are relatively high or low.
B) the number of suppliers that each seller/industry member purchases from on average.
C) how aggressively rival industry members are trying to differentiate their products.
D) whether demand for supplier products is high and they are in short supply.
E) whether the prices of the items being furnished by the suppliers are rising or falling.

Question 55

The bargaining leverage of suppliers is greater when:

A) there suppliers products/services account for a small percentage of industry members' costs.
B) industry members incur low costs in switching their purchases from one supplier to another.
C) industry members account for a big fraction of supplier's sales.
D) there is extensive seller-supplier collaboration.
E) the supplier industry is composed of a large number of relatively small suppliers.

Question 56

To determine how strong the threat of substitutes will be entails:

A) identifying the relative price/performance relationship of the substitutes,the switching costs and the overall buyer demand for the substitute.
B) identifying the attractiveness of other industries.
C) measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques.
D) adopting a substitute product concentration factor to the buyer volume.
E) All of these.

Question 57

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

A) Whether demand for supplier products is high and they are in short supply.
B) Whether industry members are a strong threat to integrate backward into the business of suppliers and self-supply their own requirements.
C) Whether industry members are struggling to make good profits because of slow-growing market demand.
D) Whether the costs of industry members to switch their purchases to alternative suppliers are high or low.
E) Whether the item being supplied is a commodity or is highly differentiated from supplier to supplier.

Question 58

Buyer bargaining power is stronger when:

A) winning the business of certain high-profile customers offers a seller important market exposure or prestige.
B) the extent and importance of collaborative partnerships and alliances between particular sellers and buyers is credible.
C) buyers cannot integrate backward into the product market of sellers.
D) sellers' products are differentiated,making it easy and inexpensive for buyers to switch to competing brands.
E) the industry's products are standardized or undifferentiated.

Question 59

Which of the following is NOT a good example of a substitute product that triggers stronger competitive pressures?

A) A salad as a substitute for French fries
B) Wireless phones as a substitute for wired telephones
C) Coca-Cola as a substitute for Pepsi
D) Snowboards as a substitute for snow skis
E) Video-on-demand services from a cable TV company as a substitute for going to the movies

Question 60

When an industry member is a major customer of the supplier,and the relationship (partnership)is unusually effective and mutually advantageous:

A) it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships.
B) one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members.
C) there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers.
D) there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members,provided technological change in the suppliers' business is rapid and the item being supplied is a commodity.
E) the usual result is to reduce competitive pressures on all industry members,provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.

Question 61

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

A) Changes in who buys the product and how they use it,and changes in the long-term industry growth rate
B) Changes brought about by the entry or exit of major firms,product innovation,and marketing innovation and cost efficiency.
C) Changes in the economic power and bargaining leverage of customers and suppliers,growing supplier-seller collaboration,and growing buyer-seller collaboration
D) Changes in buyer preferences for differentiated products instead of mostly standardized or identical products
E) Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilities

Question 62

A company's strategy is increasingly effective the more it can match the company strategy to competitive conditions,so the firm can:

A) pursue avenues that expose the firm to as many of the different competitive pressures as possible.
B) shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.
C) pursue ways to identify and complement the five forces contradictions and inferences to attract competitive growth opportunities.
D) pursue avenues that promote strategic thinking about how to contest competitor strengths and weaknesses and to create a checklist of potential profitability preferences.
E) None of these.

Question 63

Not all buyers of an industry's product have equal degrees of bargaining power with sellers,because:

A) sellers in an industry provide similar products and generally their cost structures are different because of competitive advantages in their operation.
B) some sellers may be less sensitive than others to price,quality,or service differences.
C) along the various stages of the value chain sellers are conducive to earning attractive profits.
D) the industry is a highly cohesive structure with limited fragmentation and few industry members.
E) All of these.

Question 64

Competitive pressures stemming from buyer bargaining power tend to be weaker when:

A) the number of buyers is small,such that each customer's business tends to be particularly important to a seller.
B) buyer demand is growing slowly or maybe even declining.
C) the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.
D) buyers purchase the item frequently and are well-informed about sellers' products,prices,and costs.
E) the buyer group consists of a few large buyers and the seller group consists of numerous small firms.

Question 65

Which of the following factors is NOT a relevant consideration in determining the strength of buyer bargaining power?

A) The relationship between the buyer market and seller market
B) The degree to which the seller is a manufacturer of goods and services in substantial quantities
C) The degree to which buyers pose a credible threat to integrate backward into the product market of sellers
D) The degree to which buyers are well-informed about a seller's products,prices and costs
E) The degree to which industry goods are standardized and undifferentiated

Question 66

Which of the following is MOST likely to qualify as a driving force?

A) Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals
B) Successful introduction of innovative new products or new ways to market products
C) An increase in the prices of substitute products
D) Decisions on the part of industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader
E) Decisions by one or more outsiders not to attempt to enter the industry

Question 67

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

A) Changes in the long-term industry growth rate
B) Increasing globalization of the industry
C) Product innovation and technological change
D) Movement in the economy and in interest rates
E) Regulatory influences and government policy changes

Question 68

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

A) Changes in the long-term industry growth rate,the entry or exit of major firms,and changes in cost and efficiency
B) Increasing globalization of the industry and product innovation
C) New Internet technology applications,new government regulations,and significant changes in government policy toward the industry
D) Increasing efforts to collaborate with suppliers via strategic alliances and partnerships,escalating risk levels and normalization of cost and efficiency in the industry
E) Marketing innovations and changes in who buys the industry's product and how they use it

Question 69

The task of driving forces analysis is to:

A) develop a comprehensive list of all the potential causes of changing industry conditions.
B) predict which new driving forces will emerge next.
C) determine which one of the five competitive forces is the biggest driver of industry change.
D) identify the driving forces,assess whether their impact will make the industry more or less attractive,and determine what strategy changes are needed to prepare for the impacts of the driving forces.
E) learn what the industry key success factors are and how they might change in the future.

Question 70

Driving forces analysis:

A) involves identifying the driving forces,assessing whether their impact will make the industry more or less attractive,and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.
B) identifies which strategic group is the most powerful.
C) helps managers identify which industry member is likely to become (or remain)the industry leader and why.
D) helps managers identify which key success factors are most likely to help their company gain a competitive advantage.
E) helps managers identify which of the five competitive forces will be the strongest driver of industry change.

Question 71

Which of the following conditions acts to weaken buyer bargaining power?

A) When buyers are unlikely to integrate backward into the business of sellers
B) When buyers purchase the item frequently and are well-informed about sellers' products,prices,and costs
C) When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low
D) When the products of rival sellers are weakly differentiated and buyers have considerable discretion over whether and when they purchase the product
E) When buyers are few in number and/or often purchase in large quantities

Question 72

Industry conditions change:

A) because of such powerful driving forces as swings in buyer demand,changing interest rates,ups and downs in the economy,and higher/lower entry barriers.
B) because of newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups.
C) because new industry key success factors emerge.
D) because important forces are enticing or pressuring certain industry participants (competitors,customers,suppliers)to alter their actions in important ways.
E) chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

Question 73

Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when:

A) virtually all buyers have strong brand attachments and are highly brand loyal.
B) demand for the product is growing rapidly.
C) sales are made to buyer groups with either strong bargaining power or high sensitivity.
D) sellers are racing to add the latest and greatest performance features so as to attract the patronage of important or prestigious buyers.
E) buyers are very quality conscious.

Question 74

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers NOT relatively strong?

A) When buyer demand is growing rapidly
B) When buyers are relatively well-informed about sellers' products,prices,and costs
C) When buyers pose a credible threat to integrate backward into the product market of sellers
D) When sellers' products are weakly differentiated,making it easy for buyers to switch to competing brands
E) When buyers have considerable discretion over whether and when they purchase the product

Question 75

Which of the following factors is NOT a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?

A) Whether certain customers offer sellers important market exposure or prestige
B) Whether customers are relatively well-informed about sellers' products,prices,and costs
C) Whether buyer needs and expectations are changing rapidly or slowly
D) Whether sellers' products are highly differentiated,making it troublesome or costly for buyers to switch to competing brands or to substitute products
E) Whether sellers pose little threat of forward integration into the product market of their customers and whether buyers pose a major threat to integrate backward into the product market of sellers

Question 76

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:

A) is competitively unattractive from the standpoint of earning good profits.
B) offers little ability to build a sustainable competitive advantage.
C) is highly conducive to achieving strong product differentiation and high customer loyalty to the company's brand.
D) offers moderate to good prospects for making a reasonable profit and building a sustainable competitive advantage.
E) requires that industry members have a strongly differentiated product offering in order to be profitable.

Question 77

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

A) determines the strength of the industry's driving forces.
B) determines the extent of the competitive pressure on industry profitability.
C) means that fewer companies can achieve a competitive advantage via anything other than being the industry's low-cost leader.
D) means there will be a larger number of competitive advantage opportunities for industry members.
E) means there will be a greater number of industry key success factors.

Question 78

Buyers are in position to exert strong bargaining power in dealing with sellers when:

A) their costs to switch to competing brands or to substitute products are relatively high.
B) a particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands.
C) they buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products,prices,and costs.
D) buyer demand is growing rapidly.
E) Buyers are price-sensitive due to the product representing a significant fraction of their purchases.

Question 79

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:

A) lacks powerful driving forces.
B) gives each industry competitor the best potential for building sustainable competitive advantage over rival firms.
C) makes it challenging for industry members to compete successfully unless they can strongly differentiate their products.
D) is conducive to industry members earning attractive profits.
E) requires that industry members have low costs in order to be competitively successful.

Question 80

The "driving forces" in an industry:

A) are usually triggered by changing technology or stronger learning/experience curve effects.
B) usually are spawned by growing demand for the product,the outbreak of price-cutting,and big reductions in entry barriers.
C) are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.
D) appear when an industry begins to mature but are seldom present during early stages of the industry life cycle.
E) are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.