Question 1

A generation ago, ketchup was an essential element of every American pantry and salsa was a relatively unknown product. The popularity of salsa exploded and has been attributed to trends in demographics such as population size, age, and ethnic mix as well as cultural trends such as attitudes toward obesity and consumer activism. What factor of PESTEL does this represent?

Accepted Answer

The popularity of salsa is attributed to changes in demographics and cultural trends, which are social factors in the PESTEL framework.

Question 2

Which of the following is an example of backward vertical integration?

Accepted Answer

Backward vertical integration occurs when a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, such as a buyer firm entering its supplier's business.

Question 3

Textbook publishers can charge high prices because students enrolled in a class must purchase the specific book that the professor has selected. Used copies are sometimes a lower-cost option, but textbook publishers have cleverly worked to undermine the used textbook market by releasing new editions after very short periods of time. According to Porter what "force" do college students represent?

Accepted Answer

College students represent the "Buyers" force in Porter's Five Forces model, as they are the ones purchasing the textbooks.

Question 4

Why would an executive in charge of an organization want to understand the environment surrounding that organization?

Accepted Answer

The answer of Why would an executive in charge of...

Question 5

What does the environment of any organization consist of? How can a business influence the environment?

Accepted Answer

The answer of What does the environment of any organization...

Question 6

How is the strategic groups analysis different from Porter's five forces analysis?

Accepted Answer

The answer of How is the strategic groups analysis different...

Question 7

Factors in the general environment can have different effects depending on the industry type. Give two examples.

Accepted Answer

The answer of Factors in the general environment can have...

Question 8

Describe four scenarios that help to predict the likelihood that fierce rivalry will erupt between an industry's competitors.

Accepted Answer

The answer of Describe four scenarios that help to predict...

Question 9

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Accepted Answer

When the good or service purchased by the buyers represents a high percentage of the buyer's costs, buyers have more leverage to negotiate better terms, as they are more motivated to reduce costs.

Question 10

Breadmakers, Inc. produces and supplies fresh sandwich breads to various sandwich businesses. Breadmakers has recently decided to open its own stores for selling sandwiches to consumers. This is an example of:

Accepted Answer

Forward vertical integration occurs when a company moves downstream in the supply chain, such as a supplier opening its own retail outlets to sell directly to consumers.

Question 11

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Accepted Answer

The answer of Buyers are more likely to be powerful...

Question 12

Which of the following groups consists of a set of industry competitors that have similar characteristics to each other but differ in important ways from the members of other groups?

Accepted Answer

Strategic groups are clusters of industry competitors that have similar characteristics and strategies, but differ from other groups in the industry.

Question 13

Textbook publishers can charge high prices because students enrolled in a class must purchase the specific book that the professor has selected. Used copies are sometimes a lower-cost option, but textbook publishers have cleverly worked to undermine the used textbook market by releasing new editions after very short periods of time. According to Porter what "force" do textbook publishers represent?

Accepted Answer

Textbook publishers represent the "Suppliers" force in Porter's Five Forces model, as they have significant power over pricing and availability of textbooks, which are essential for students.

Question 14

What is the purpose of conducting Michael Porter's five forces analysis? Describe the five forces that such an analysis focuses on.

Accepted Answer

The answer of What is the purpose of conducting Michael...

Question 15

Textbook publishers can charge high prices because students enrolled in a class must purchase the specific book that the professor has selected. Used copies are sometimes a lower-cost option, but textbook publishers have cleverly worked to undermine the used textbook market by releasing new editions after very short periods of time. According to Porter what "force" do used books industry represent?

Accepted Answer

Used books represent a substitute force in Porter's Five Forces model, as they offer an alternative to buying new textbooks, potentially reducing the demand for new books.

Question 16

Why is understanding the nature of strategic groups within an industry important?

Accepted Answer

The answer of Why is understanding the nature of strategic...

Question 17

Give an example each of forward vertical integration and backward vertical integration.

Accepted Answer

The answer of Give an example each of forward vertical...

Question 18

Describe PESTEL analysis.

Accepted Answer

The answer of Describe PESTEL analysis....

Question 19

When a buyer decides to enter its supplier's business, the strategy is referred to as _____.

Accepted Answer

Backward vertical integration occurs when a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, such as a buyer entering its supplier's business.

Question 20

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Accepted Answer

When goods or services are standardized or undifferentiated, buyers can easily switch between suppliers, increasing their bargaining power.

Quiz 3: Evaluating the External Environment

Which of the following is an example of backward vertical integration?

Why would an executive in charge of an organization want to understand the environment surrounding that organization?

What does the environment of any organization consist of? How can a business influence the environment?

How is the strategic groups analysis different from Porter's five forces analysis?

Factors in the general environment can have different effects depending on the industry type. Give two examples.

Describe four scenarios that help to predict the likelihood that fierce rivalry will erupt between an industry's competitors.

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Breadmakers, Inc. produces and supplies fresh sandwich breads to various sandwich businesses. Breadmakers has recently decided to open its own stores for selling sandwiches to consumers. This is an example of:

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Which of the following groups consists of a set of industry competitors that have similar characteristics to each other but differ in important ways from the members of other groups?

What is the purpose of conducting Michael Porter's five forces analysis? Describe the five forces that such an analysis focuses on.

Why is understanding the nature of strategic groups within an industry important?

Give an example each of forward vertical integration and backward vertical integration.

Describe PESTEL analysis.

When a buyer decides to enter its supplier's business, the strategy is referred to as _____.

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if: