Deck 4: Tools for Environment Analysis

Question 1

In industries with high barriers to exit, competitive rivalry is

A) too difficult to gauge
B) low
C) moderate
D) high

Answer 1

D

Question 2

The bargaining power of suppliers can negatively impact industry profitability by

A) introducing new procedures
B) increasing price
C) lowering transportation costs
D) reducing the number of inspections

Answer 2

B

Question 3

High switching costs are considered an example of

A) barrier to entry
B) buyer power
C) supplier power
D) threat of substitution

Answer 3

C

Question 4

Buying groups that have full information and earn low profits are considered to

A) be unattractive as customers
B) have power in the buying-selling process
C) be candidates for backward integration
D) have little or no power in the buying-selling process

Question 5

For new entrants, an attractive industry is one with

A) limited buyer power, high supplier power, and low barriers to entry
B) high switching costs, low investments, and low economies of scale
C) low barriers to entry, high product differentiation, and low supplier power
D) few substitutes, limited buyer power, and low competitive rivalry

Question 6

Cost disadvantages for new entrants can arise from

A) technology, location, and raw materials
B) learning, government subsidies, and socio-cultural factors
C) location, raw materials, and demographic factors
D) technology, government subsidies, and competitive rivalry

Question 7

Suppliers who provide a differentiated product may have power if they

A) sell to a number of different industries
B) price the product at the industry average
C) sell to a limited number of industries
D) price the product above the industry average

Question 8

Substitute products reduce profitability by

A) lowering switching costs
B) increasing advertising costs
C) increasing competitive rivalry
D) setting the ceiling price

Question 9

For existing firms, an attractive industry is one with

A) high barriers to entry, low supplier power, and low buyer power
B) low supplier power, high buyer power, and high competitive rivalry
C) high barriers to entry, high competitive rivalry, and high exit costs
D) low growth, low barriers to entry, and high supplier power

Question 10

Compared to new entrants, existing firms that have made substantial investments in their operations have a

A) timing advantage
B) technological disadvantage
C) cost advantage
D) competitive disadvantage

Question 11

Porter's Five Forces model will determine the profitability of the

A) firm
B) industry
C) competitors
D) suppliers

Question 12

An analysis of the environment in which an organization operates is also known as

A) political-legal
B) general
C) socio-cultural
D) industry

Question 13

New entrants forced to enter an industry at a larger scale than they would have preferred are facing a barrier known as

A) competitive rivalry
B) an investment hurdle
C) economies of scale
D) a network effect

Question 14

The purpose of an organization's value chain is to demonstrate how the activities

A) structure the organization
B) differ from the organization's competitors
C) are integrated
D) contribute to costs

Question 15

In emerging industries where demand is growing, competitive rivalry is

A) too difficult to gauge
B) low
C) moderate
D) high

Question 16

The primary activities of an organization's value chain often include

A) logistics, operations, and marketing
B) operations, sales, and human resource management
C) procurement, operations, and service
D) marketing, technology development, and logistics

Question 17

Porter's five competitive forces that shape all industries are

A) regulations, suppliers, inflation rate, consumer preference, and technology
B) threat of new entrants, power of buyers and suppliers, substitutes, and competitive rivalry
C) power of buyers, number of suppliers, maturity of the industry, product differentiation, and economies of scale
D) threat of technology, supplier substitutions, buyer power, increasing number of competitors, and demographics

Question 18

Substitutes are considered to be products

A) from inside the industry that meet the same need
B) are the product and service offerings of competitors
C) from outside the industry that meet the same need
D) that are better than the product and service offerings of competitors

Question 19

Raw material shortages usually benefit

A) new entrants
B) consumers
C) buyers
D) suppliers

Question 20

The percentage of a firm's profitability that is generally attributed to industry is

A) 30-40%
B) 10-20%
C) less than 10%
D) unknown

Question 21

Government policies, such as licensing issues, are most likely to impact

A) bargaining power of buyers
B) bargaining power of suppliers
C) threat of substitute products or services
D) threat of new entrants

Question 22

Suppliers have power if they can pass cost increases on to their customers.

Question 23

Intensive advertising and price wars suggest competitive rivalry is high.

Question 24

Each activity in a firm's value chain should contribute to margin.

Question 25

To create value for the consumer, firms seek to

A) lower costs and lower price
B) increase price to match the competition and standardize the features
C) lower costs and increase consumer willingness to pay
D) increase price and remove high-cost features

Question 26

Because consumers have choice, they also have considerable power to influence market prices.

Question 27

Firms competing in the same industry will have identical value chains.

Question 28

New entrants who are diversifying from outside an industry are not always at a cost disadvantage.

Question 29

The likelihood of superior performance for firms in an industry where the competitive forces are weak is high.

Question 30

A Red Ocean Strategy will include

A) creating uncontested market spaces
B) making the competition irrelevant
C) focusing on non-customers
D) aligning activities with its strategic choice or low cost

Question 31

The threat of competitive retaliation is not considered a barrier to entry.

Question 32

Network effects exist when the likelihood of consumers purchasing a product increases with volume.

Question 33

Stakeholders can be categorized based on

A) preferences, language, and utility
B) position, location, and understanding
C) purpose, interests, and discretion
D) power, legitimacy, and urgency

Question 34

A technology that introduces a novel package of attributes for a traditional product is known as a

A) commercial success
B) product failure
C) disruptive technology
D) sustainable technology

Question 35

The likelihood of a competitive reaction to a firm's strategy is higher in an industry

A) that produces highly differentiated products
B) characterized by small order size
C) with non-standard operating procedures
D) that produces an homogenous product

Question 36

External forces that can impact an industry include

A) political, energy, sustainability, and training
B) procedure, environmental, supplier, and tactical
C) position, economic, service, and procedural
D) political, economic, social, and technical

Question 37

Game theory is concerned with

A) predicting the results of all companies in an industry
B) choosing of an optimal strategy in an industry
C) introducing cooperation in an industry
D) engaging in collusion in an industry

Question 38

It is relatively inexpensive to establish a market presence in an industry with strong product differentiation.

Question 39

A Blue Ocean Strategy will include

A) focusing on existing customers
B) beating the competition
C) creating and capturing new demand
D) competing in existing markets

Question 40

Constant changes in the disk drive industry is a new economy example of

A) the new economics of information
B) the long tail
C) disruptive innovation
D) unbundling

Question 41

Dominant stakeholders are often vocal but have little legitimacy or power.

Question 42

The purpose of conducting an industry analysis is to generate insights that will suggest opportunities for the firm.

Question 43

One aspect of an industry value chain can be more profitable than another.

Question 44

Externalities are strategy spill-over effects on society.

Question 45

Willingness to pay doesn't apply when the product or service is undifferentiated.

Question 46

The key challenge for global firms lies in managing the tradeoff between global integration and local responsiveness.

Question 47

Competitors are not considered stakeholders for the purpose of stakeholder analysis.

Question 48

Competitive cooperation is considered illegal in many jurisdictions.

Question 49

Analytical frameworks have a tendency to add complexity to the evaluation of an industry.

Question 50

The impact of changes in social forces on an industry occurs over a relatively long period of time.

Question 51

In Porter's view, strategy in industries dominated by internet technologies is fundamentally different from strategy in other industries.

Question 52

Technology and electronic commerce have the potential to transform a firm's value chain.

Question 53

With a blue ocean strategy, firms seek to exploit existing demand among existing customers.

Question 54

Large inventories and order backlogs reduce competitive pressures.

Question 55

Scenario planning incorporates alternative futures into the strategic planning process.