Question 1

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.

Accepted Answer

B

Question 2

The state of competition in an industry is a function of
A) the competitive pressures associated with rivalry among competing sellers to attract customers.
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

Accepted Answer

The state of competition in an industry is affected by a combination of all the factors mentioned in the options. The competitive pressures associated with rivalry among competing sellers, the competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products, competitive pressures associated with the threat of new entrants into the marketplace, as well as competitive pressures associated with the bargaining power of suppliers and customers, all contribute to the state of competition in an industry. Therefore, option E is the correct choice.

Question 3

The competitive pressures from substitute products tend to be stronger when
A) buyers are relatively comfortable with the quality and performance of 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) substitutes exhibit the latest in technological innovation.
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.

Accepted Answer

The presence of comfortable and easily switchable substitute products puts pressure on the industry to either differentiate their product or lower their prices to keep their customers. This results in competitive pressures from substitute products being stronger. The other options do not necessarily indicate stronger competitive pressures from substitute products.

Question 4

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) How many strategic groups the industry has and which ones are most profitable and least profitable
C) The number and sizes of buyers, the number of rivals, and the pace of product innovation
D) The pace of technological change
E) The current industry position in its life cycle to reveal the industry's growth prospects

Accepted Answer

The answer of Which of the following is not a...

Question 5

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 being served.
C) all the relevant forces and factors outside a company's boundaries-general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation.
D) the competitive market environment that exists between a company and its competitors.
E) the dominant economic features of a company's industry.

Accepted Answer

The macro-environment refers to all the relevant external factors and forces that impact a company's operations, including general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. This goes beyond just the industry and competition within it, as well as the competitive market environment.

Question 6

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

Accepted Answer

The answer of In which of the following instances are...

Question 7

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?
A) Artificial sweetener as a substitute for sugar
B) Wireless phone service as a substitute for a landline telephone
C) Coca-Cola as a substitute for Pepsi
D) Digital cameras as substitutes for film cameras
E) Video-on-demand services as a substitute for renting movies from a movie rental store

Accepted Answer

Coca-Cola and Pepsi are highly differentiated products with strong brand equity and loyal customer bases, so they do not act as strong substitutes for each other. The other options all represent products that have the potential to directly compete and substitute for each other, causing stronger competitive pressures.

Question 8

Which of the following is not a factor to consider in identifying an industry's dominant economic features?
A) The market size, growth rate and prospects
B) The scope of competitive rivalry including geographic area
C) The market demand-supply conditions
D) How strong driving forces and competitive forces are
E) The role and pace of technological change

Accepted Answer

The answer of Which of the following is not a...

Question 9

Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?
A) Whether the number of buyers is small or if a customer is particularly important to the seller
B) Whether buyers are relatively well informed about sellers' products, prices, and costs
C) Whether buyer needs and expectations are changing rapidly or slowly
D) Whether buyer demand is weak or strong and rapidly growing
E) Whether buyers pose a credible threat of integrating backward into the business of sellers

Accepted Answer

The answer of Which of the following factors is not...

Question 10

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) the extent to which 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.

Accepted Answer

The strength of supplier-seller relationships depends on the bargaining power of suppliers and the level of collaboration between suppliers and sellers in the industry. If suppliers have significant bargaining power and are able to influence the terms of supply, this can create a strong competitive pressure on sellers in the industry. However, if there is a high level of collaboration between suppliers and sellers, this can mitigate the competitive pressure and create a more cooperative relationship. The other options (A, B, C, and E) do not directly determine the strength of supplier-seller relationships.

Question 11

Which one of the following is not part of a company's macro-environment?
A) Conditions in the economy at large
B) Population demographics and societal values and lifestyles
C) Technological factors
D) Governmental regulations and legislation
E) The company's resource strengths, resource weaknesses, and competitive capabilities

Accepted Answer

The company's resource strengths, weaknesses, and competitive capabilities are part of the company's micro-environment. The macro-environment includes larger societal factors that can impact the company, such as the economy, demographics, technology, and government regulations.

Question 12

The nature and strength of the competitive forces that prevail in an industry is generally a joint product of the
A) pressures associated with rivalry among sellers to attract buyer patronage.
B) threat that firms outside the industry will decide to enter the market.
C) 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.

Accepted Answer

All the options listed contribute to the nature and strength of the competitive forces in an industry. Rivalry among sellers, threat of new entrants, substitute products, and bargaining power of suppliers and buyers are all factors that determine the level of competition in an industry.

Question 13

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

Accepted Answer

The answer of In which of the following circumstances are...

Question 14

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 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.

Accepted Answer

When the costs incurred by buyers in switching to competing brands or to substitute products are relatively high, buyers are less likely to exercise their bargaining power as it would be more expensive for them to do so. This reduces competitive pressures on sellers.

Question 15

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

Accepted Answer

The power and influence of industry driving forces is one of the five typical sources of competitive pressures. The other four sources are the bargaining power of suppliers and seller-supplier collaboration, the threat of new entrants into the market, the attempts of companies in other industries to win customers over to their own substitute products, and the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.

Question 16

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.
B) how many buyers are engaged in collaborative partnerships with sellers.
C) whether entry barriers are high or low.
D) whether the overall quality of the items being furnished by industry members is rising or falling.
E) whether buyer demand is strong or declining.

Accepted Answer

The answer of Whether buyer bargaining power poses a strong...

Question 17

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 and strengths of competitive forces industry members are facing.
D) the key factors of success in the industry.
E) All of the above.

Accepted Answer

Thinking strategically about industry and competitive conditions involves evaluating the various factors that can impact the company's performance in the long run. All of the options given (forces driving change, dominant economic features, competitive forces, and key success factors) are essential considerations for understanding the industry landscape and making informed strategic decisions.

Question 18

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
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 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

Accepted Answer

A few large sellers in an industry have more power over buyers as compared to numerous small sellers. Therefore, the bargaining power of buyers is weaker in such a scenario.

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 offer good 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?

Accepted Answer

While revenue growth and profitability are important factors to consider, they are not a major question in thinking strategically about industry and competitive conditions. The other options are all major questions that are relevant to the strategic analysis of an industry.

Question 20

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 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 buyers have the ability to postpone purchases if they don't like the prices offered by sellers
E) When buyers are few in number and/or often purchase in large quantities

Accepted Answer

The answer of Which of the following conditions acts to...

Quiz 3: Evaluating a Companys External Environment

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

The state of competition in an industry is a function of

The competitive pressures from substitute products tend to be stronger when

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

A company's "macro-environment" refers to

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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