Deck 3: Evaluating a Companys External Environment

Question 1

Which of the following is not a factor to consider in identifying an industry's dominant economic features?

A) Market size and growth rate
B) The extent of backward integration of buyer needs and requirements
C) Whether the products or services of rival firms are becoming more or less differentiated
D) Strength of driving forces and competitive forces
E) The pace of technological change, scale economies and experience curve effects, and product innovation

Answer 1

D

Question 2

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

A) the pressures induced by the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.
B) the threat that firms outside the industry will decide to enter the market.
C) the attempts of companies in other industries to win buyers over to their own substitute products.
D) competitive pressures stemming from the bargaining power of both suppliers and buyers.
E) All of these.

Answer 2

E

Question 3

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

Answer 3

A

Question 4

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

A) low buyer switching costs and low barriers to entry.
B) rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on rivals' businesses.
C) weakly 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 trying to turn them into major contenders.

Question 5

Which one of the following is not part of a company's macroenvironment?

A) Conditions in the economy at large
B) Population demographics and societal values and lifestyles
C) Technological factors and governmental regulations and legislation
D) The industry and competitive environment arena in which the company operates
E) The company's resource strengths, resource weaknesses, and competitive capabilities

Question 6

The state of competition in an industry is a function of

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

Question 7

Thinking strategically about industry and competitive conditions in a given industry involves evaluating such considerations as

A) the forces driving change in the industry.
B) the dominant economic features of the industry in which the company operates.
C) the kinds of competitive forces industry members are facing and the strength of each competitive force.
D) the key factors influencing future competitive success in the industry.
E) All of these.

Question 8

A company's "macro-environment" refers to

A) the industry and competitive arena in which the company operates.
B) general economic conditions plus the factors driving change in the markets where a company operates.
C) all the relevant forces and factors outside a company's boundaries-general economic conditions, population demographics, societal values and lifestyles, technological factors, governmental legislation and regulation, and closer to home, the industry and competitive arena in which it operates.
D) the competitive market environment that exists between a company and its competitors.
E) the dominant economic features of a company's industry.

Question 9

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 10

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 strongly differentiated and buyer demand is strong.
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 11

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 weakest.

Question 12

Competitive jockeying and 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 ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.

Question 13

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 jockeying of industry members 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 14

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 15

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 16

Rivalry among competing sellers grows in intensity when

A) rivals' products/services are sold at widely varying prices and there are only 2-4 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 and the industry is composed of 6 to 10 competitors that are fairly equal in size and competitive capability.

Question 17

Which of the following is not a relevant consideration in identifying an industry's dominant economic features?

A) Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply conditions
B) The extent to which economies of scale and learning/experience curve effects are present
C) How many strategic groups the industry has and which ones are most profitable and least profitable
D) The number and sizes of buyers, the number of rivals, and the pace of product innovation
E) The prevalence of technological change

Question 18

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 19

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 key factors for future competitive success?
D) Does the outlook for the industry present the company with sufficiently attractive prospects for profitability?
E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

Question 20

Using the five-forces model of competition to determine what competition is like in a given industry involves

A) building the picture of competition in three steps: (1) identifying the specific competitive pressures associated with each of the five competitive forces; (2) evaluating how strong the pressures comprising each competitive force are; and (3) determining whether the collective impact of all five competitive forces is conducive to earning attractive profits.
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 21

In which one of the following instances are the competitive pressures that industry members experience in their dealings with suppliers 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 22

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 23

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

A) incumbent firms have previously been 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 24

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 visions, strategic intents, objectives, strategies, resources 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 25

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 suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.
E) whether the prices of the items being furnished by the suppliers are rising or falling.

Question 26

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 buyers have a high degree of loyalty to the brands and product offerings of existing industry members
C) When buyer demand for the product is growing fairly slowly
D) When few outsiders have the expertise and resources to hurdle whatever entry barriers exist
E) When newcomers can expect to earn attractive profits

Question 27

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 28

Competitive pressures stemming from the threat of entry are weaker when

A) there are fewer than 20 potential entry candidates and more than 10 firms already in the industry.
B) there are more than 3 entry barriers.
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 29

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

A) Rapid market growth
B) Sizable capital requirements and an array of regulatory requirements
C) Strong buyer loyalty to existing brands
D) Sizable economies of scale in production
E) Difficulties in gaining access to technological know-how

Question 30

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) newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist.
C) entry barriers are relatively low and buyer demand for the product is growing fairly rapidly.
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 31

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 32

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

A) financially strong industry members 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) there are more than 2 entry barriers.
E) buyers have little loyalty to the brands and product offerings of existing industry members.

Question 33

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 are satisfied with their current market position
D) Whether industry driving forces are strong or weak
E) Whether industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales and whether one or two rivals have particularly powerful strategies

Question 34

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 or whether ample supplies are readily available from several different suppliers.
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 buyers of the industry product are changing slowly or rapidly.

Question 35

Rivalry among competing sellers tends to be more intense when

A) competitors are very unequal in size and capability, such that small competitors must really scramble 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) there are fewer than 5 competitors and their products are strongly differentiated.

Question 36

The competitive pressures from substitute products tend to be stronger when

A) buyers are relatively comfortable with using substitutes and the costs to buyers of switching over to the substitutes are low.
B) there are more than 10 sellers of substitute products.
C) the quality and performance of the substitutes is well above what buyers need to meet their requirements.
D) buyers have high psychic costs in severing existing brand relationships and establishing new ones.
E) demand for the industry's product is not very price sensitive.

Question 37

The competitive force of rival firms' jockeying for better market positions,higher sales and market shares,and competitive advantage

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 outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies 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 38

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 performance 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 39

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 40

The bargaining leverage of suppliers is greater when

A) there are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small.
B) industry members incur low costs in switching their purchases from one supplier to another.
C) industry members purchase in large quantities and thus are important customers of the suppliers.
D) there is extensive seller-supplier collaboration.
E) the supplier industry is composed of a large number of relatively small suppliers.

Question 41

Which of the following factors does not affect whether buyer bargaining power and seller-buyer collaboration are an important source of competitive pressure in an industry?

A) Whether winning the business of certain customers, offer a seller important market exposure or prestige
B) The extent and importance of collaborative partnerships and alliances between particular sellers and buyers
C) Whether buyers pose a major threat to integrate backward into the product market of sellers
D) Whether sellers' products are weakly differentiated, making it easy and inexpensive for buyers to switch to competing brands
E) Whether buyers have a strong preference for products of superior quality or just average quality

Question 42

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 43

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

A) whether most buyers possess roughly equal or varying degrees of bargaining power and leverage.
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 44

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

A) the stronger are the industry's driving forces.
B) the lower the combined profitability of industry members.
C) the fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader.
D) the larger the number of competitive advantage opportunities for industry members.
E) the greater the number of industry key success factors.

Question 45

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

A) Whether needed inputs are in ample supply and are readily available from several different suppliers
B) Whether industry members are a strong threat to integrate backward into the business of suppliers and self-manufacture 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 46

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 47

When one or more industry members have unusually effective and mutually advantageous partnerships with their suppliers,

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% or more of total cost.

Question 48

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

A) Whether winning the business of prestigious customers gives a seller important market exposure and heightens its brand name
B) Whether the seller is a manufacturer.
C) Whether buyers pose a major threat to integrate backward into the product market of sellers
D) Whether sellers' products are weakly differentiated, making it easy for buyers to switch to competing brands
E) Whether collaborative partnerships and alliances between particular sellers and buyers put rivals lacking such collaborative relationships at a competitive disadvantage

Question 49

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 50

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 major 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 51

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

A) To reduce the costs of switching suppliers
B) To speed the availability of next-generation components
C) To enhance the quality of parts and components being supplied and reduce defect rates
D) To squeeze out important cost savings for both themselves and their suppliers
E) To reduce inventory and logistics costs

Question 52

Which one of the following is not a factor in causing supplier bargaining power to be relatively strong?

A) The inputs needed from suppliers are in short supply.
B) Suppliers are a strong threat to integrate forward into the business of industry members.
C) The input being supplied is a commodity.
D) The input being supplied significantly enhances the quality or performance of the products of industry members.
E) There are only a few suppliers of the input.

Question 53

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 54

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 a few large buyers and the seller group consists of numerous small firms.

Question 55

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) The industry is composed of a few large sellers and the customer group consists of numerous buyers that purchase in fairly small quantities.
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 56

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

A) low buyer switching costs and rival sellers that are relatively equal is size and capability.
B) rapid growth in buyer demand and high buyer switching costs.
C) few industry rivals that any one company's actions can easily be 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 57

Supplier bargaining power is weaker when

A) good substitute inputs exist or new ones emerge.
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 58

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) the number of buyers is small or when a customer is particularly important to a seller.

Question 59

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 60

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 hard 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 61

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) Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances
E) Marketing innovations and changes in who buys the industry's product and how they use it

Question 62

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 2 strategic groups.
B) competitors are diverse in terms of visions, strategic intents, objectives, strategies, resources 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.
E) industry conditions tempt industry members to use price cuts or other competitive weapons to boost unit sales.

Question 63

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) Entry or exit of major firms, product innovation, and marketing innovation
C) Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
D) Growing 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 64

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) Ups and downs in the economy and in interest rates
E) New government regulations or significant changes in government policy toward the industry

Question 65

What is the best technique for revealing the market position of industry competitors?

A) Strategic group mapping.
B) Global industry change.
C) Dynamic mapping analysis.
D) Distribution analysis.
E) None of these.

Question 66

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.

Question 67

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) Wildly successful introduction of innovative new products by one or more industry rivals that force other rivals to respond quickly or lose a major share of their customers to the innovating rival(s)
C) An increase in the prices of substitute products
D) Decisions on the part the 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 68

A strategic group

A) consists of those industry members that are growing at about the same rate and have similar product line breadth.
B) includes all rival firms having comparable profitability.
C) is a cluster of industry rivals that have similar competitive approaches and market positions.
D) consists of those firms whose market shares are about the same size.
E) is made up of those firms having comparable profit margins.

Question 69

The real payoff for strategy making comes when managers draw conclusions about

A) what strategy adjustments are needed to deal with the changes in conditions.
B) determining the overall strength of the five competitive forces.
C) determining whether the industry's strategic group map will be static or dynamic.
D) conditions in the economy at large.
E) the extent to which rivals have more than two competitively valuable competencies or capabilities

Question 70

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 create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions.
E) chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

Question 71

Which one of the following is not an integral part of driving forces analysis?

A) Identifying the specific factors causing fundamental changes in industry conditions and/or the industry's competitive structure
B) Determining whether the driving forces are acting to cause one or more industry rivals to shift to a different strategic group
C) Determining whether the driving forces are acting to strengthen or weaken market demand
D) Determining whether the driving forces are acting to make competition more or less intense
E) Determining whether the driving forces are acting to raise or lower industry profitability

Question 72

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 73

Increasing globalization of the industry can be a driving force because

A) the products of foreign competitors are nearly always cheaper or of better quality than those of domestic companies.
B) foreign producers typically have lower costs, greater technological expertise, and more product innovation capabilities than domestic firms.
C) it tends to increase rivalry among industry members and often shifts the pattern of competition among an industry's major players, favoring some and disadvantaging others.
D) it results in companies having fewer competitors and a strategic group map with fewer circles.
E) market growth rates go up, product innovation speeds up, and new firms are likely to enter the industry.

Question 74

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

A) Reductions in uncertainty and business risk
B) Changing societal concerns, attitudes, and lifestyles
C) Diffusion of technical know-how across more companies and more countries
D) Increasing efforts on the part of industry members to collaborate closely with their suppliers
E) Technological change and manufacturing process innovation

Question 75

Driving forces analysis helps managers identify whether

A) the combined impacts of the driving forces will act to increase/decrease market demand, increase/decrease competition, and raise/lower industry profitability in the years ahead.
B) it will become more or less important to aim the company's strategy at being the industry's low-cost producer.
C) the driving forces will have a bigger impact on company profitability than competitive forces.
D) the industry is likely to become more or less vertically integrated and why.
E) competitive advantages are likely to grow or diminish in importance.

Question 76

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

A) whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently.
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 77

In analyzing driving forces,the strategist's role is to

A) identify the driving forces and evaluate their impact on (1) demand for the industry's product, (2) the intensity of competition, and (3) industry profitability.
B) predict future marketing innovations and how fast the industry is likely to globalize.
C) evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage.
D) determine who is likely to exit the industry and what changes can be expected in the industry's strategic group map.
E) forecast fluctuations in product demand and how buyer needs will most likely change.

Question 78

An industry's driving forces

A) are generally determined by the sizes of strategic groups and the power of rival firms' competitive strategies.
B) generally act in ways which will strengthen or weaken market demand, competition, and industry profitability in future years.
C) frequently cause a reduction in the bargaining power of buyers.
D) are normally triggered by ups and downs in the economy, higher or lower interest rates, or important new strategic alliances.
E) can be triggered by such factors as growing competitive pressures from substitute products, and the efforts of rival firms to employ new or different offensive strategies.

Question 79

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 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 80

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.