Question 1

What is part of a firm's business environment?

Accepted Answer

All of these are part of a firm's business environment. The market environment refers to factors such as competitors, customers, suppliers, and other stakeholders in the industry. Legal frameworks refer to the laws and regulations that govern business activities in a particular country or region. Institutional structures refer to the organizations and agencies that support business activities, such as government agencies, trade associations, and industry groups. All of these factors can have a significant impact on a firm's operations and strategy.

Question 2

Strategists refer to ______ as factors shaping ______ for the organization's goods and services in the environments in which the organization operates.

Accepted Answer

Demand drivers are the factors that influence the demand for an organization's goods and services in the market. Strategists need to consider these demand drivers while shaping their strategies for achieving the desired level of demand. They include demographic factors, economic conditions, competitive landscape, technological changes, and cultural factors. Therefore, option B is the correct choice. Options A, C, and D do not correctly define the relationship between the factors and the organization's goods and services.

Question 3

______ are relationships with other entities, such as competing firms or government.

Accepted Answer

B

Question 4

______ are about the management of suppliers and buyers.

Accepted Answer

Vertical relationships refer to the connections between suppliers and buyers, where one entity is a supplier and the other is a buyer. It involves the acquisition of resources, products, or services from suppliers to meet the needs of buyers. Hence, option A is the correct answer.

Question 5

______ takes an external perspective and is concerned with the industry within which firms operate and behave as producers, sellers and buyers of goods and services.

Accepted Answer

The industrial organization perspective focuses on the external industry context in which firms operate and how they behave as producers, sellers, and buyers of goods and services. It analyzes industry structure, competitive dynamics, and strategic interactions among firms. Resource-based view is inward-looking and analyzes the firm's internal resources and capabilities, while value chain looks at the firm's internal activities and processes. Macro economics deals with the overall performance and behavior of the economy as a whole.

Question 6

According to industrial organization theory, which factor does NOT influence market structure?

Accepted Answer

According to industrial organization theory, market structure is influenced by factors such as supply conditions, demand for a product, and the degree of differentiation of products. However, the manufacturing base of the leading firm is not considered to be a significant factor in determining market structure.

Question 7

______ refers to the characteristics of the product and is the way through which firms improve the quality of their offerings over time (usually by means of innovation).

Accepted Answer

The answer of ______ refers to the characteristics of the...

Question 8

What do we call firms that invest in a variety of different product markets to reduce exposure to risk in single product markets?

Accepted Answer

Firms that invest in a variety of different product markets to reduce exposure to risk in single product markets are called diversified firms. Diversification helps spread risk across multiple products and reduces the impact of negative events that may happen in a single market. As a result, diversified firms tend to be more stable and resilient than firms that focus on a single product market.

Question 9

National, regional and local governments, as well as economic or political unions like the European Union (EU) or the North American Free Trade Agreement (NAFTA), often enforce regulations that can do which of the following?

Accepted Answer

National, regional and local governments, as well as economic or political unions like the European Union (EU) or the North American Free Trade Agreement (NAFTA), often enforce regulations that can guide and restrict competition, impose taxes and subsidies, and regulate employment. Therefore, all three options are correct and the best choice is D, all of these.

Question 10

Michael Porter (1980, 1985) suggested that factors such as initial capital requirements, the threat of price-cutting by established firms and the level of product differentiation represent ______ for new-firm entrants into markets.

Accepted Answer

Michael Porter suggested that factors such as initial capital requirements, the threat of price-cutting by established firms and the level of product differentiation represent barriers to entry for new-firm entrants into markets.

Question 11

The concentration among competing players in a market and the extent to which one or a few large producers dominate this market helps us understand what?

Accepted Answer

The concentration among competing players in a market and the extent to which one or a few large producers dominate this market helps us understand whether competing in a market is economically and strategically profitable. It does not directly relate to the degree of governmental intervention or the capital that needs to be invested by the market follower.

Question 12

In the global airline industry a firm may have many choices as to which segments to compete in. However, this also means it will be more difficult for the firm to find a ______.

Accepted Answer

In the global airline industry, the presence of many segments to compete in increases competition and market saturation, making it more challenging for a firm to identify and maintain a profitable competitive position. This is because the firm must differentiate itself and excel in a specific area to outperform competitors, which becomes harder as the number of competitors and segments increases.

Question 13

Business objectives might relate to:

Accepted Answer

All of these options are common and valid business objectives. Maximizing profits, increasing sales revenues, and growing market share are all key goals for many companies.

Question 14

The acronym S-C-P refers to:

Accepted Answer

SCP stands for Structure-Conduct-Performance, a framework used to analyze market structures, firm conduct and their effects on firm performance.

Question 15

Strategic ______ are decisions made by the top management team with respect to important factor conditions such as markets and technology.

Accepted Answer

Strategic choices refer to the decisions made by top-level management related to important factors such as markets and technology. Therefore, option B, choices, is the most appropriate answer. Option A, avenues, refers to possible courses of action, which is not specific to top-level management decisions. Option C, possibilities, is too broad and does not specify the context of top-level management decisions. Option D, imperatives, implies a sense of obligation, which may not always be the case with strategic decisions.

Question 16

What term is used to refer to conditions when one party has superior information to the other party, creating an imbalance of power, as the better-informed party gains strategic advantage?

Accepted Answer

The term used to refer to this condition is asymmetry of information. Power asymmetry (A) refers to a situation where one party has more power than the other, but it doesn't necessarily imply a difference in access to information. Imbalanced market dynamics (B) may refer to a variety of different factors that could impact the functioning of a market, but again it does not necessarily imply a difference in access to information. Information overload (D) refers to a situation where a person is overwhelmed by too much information, but it does not imply an imbalance of power between two parties.

Question 17

How can firm performance affect market structure?

Accepted Answer

The answer of How can firm performance affect market structure?
...

Question 18

The S-C-P concept enables a firm to do what?

Accepted Answer

The S-C-P concept helps a firm identify opportunities as a new player, determine industry attractiveness, and gain a competitive advantage through product/service differentiation. Therefore, all of these options are correct.

Question 19

Sustainable competitive advantage is what allows a firm to maintain and improve its ______ in a market against competitors in the long term.

Accepted Answer

Sustainable competitive advantage allows a firm to maintain its competitive position in the market against competitors over a long period of time. It is not directly related to profitability, environmental sustainability or corporate social responsibility, although those factors may contribute to a firm's competitive advantage.

Question 20

______ is the situation where an organization earns above market returns.

Accepted Answer

Economic rent refers to the situation where an organization earns above market returns. It can be due to factors such as control over scarce resources or a unique competitive advantage. Market dominance refers to a situation where an organization has a significant share in a particular market or industry. Financial capacity refers to an organization's ability to meet its financial obligations and invest in future growth. Market returnability is not a commonly used term in business or finance.

Quiz 2: Strategy, Competitive Forces and Positioning