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

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 key to determining whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is 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. If suppliers have a significant amount of bargaining power and are more collaborative with the sellers, they will represent a strong source of competitive pressure. If the opposite is true, they will represent a weak source of competitive pressure. Factors such as the profitability of suppliers or the prices of items being furnished by suppliers are not necessarily relevant to this assessment.

Question 3

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 very similar products and are usually seen as direct competitors rather than substitutes. The other examples listed all involve products that serve the same basic function but have important differences in how they are used or in their underlying technology, which creates more competitive pressure.

Question 4

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 5

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

When buyers are relatively comfortable with the quality and performance of substitutes and the costs to buyers of switching over to the substitutes are low, they are more likely to switch to substitutes, which creates stronger competitive pressures for the industry.

Question 6

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 a complex dynamic influenced by the competitive pressures arising from the rivalry among current competitors, the threat of new entrants, the bargaining power of suppliers and customers, and the threat of substitute products from companies in other industries. Therefore, all the choices are correct and contribute to the overall level of competition in an industry.

Question 7

A company's broad "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 strategically significant 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 external factors beyond the company's boundaries that can affect its performance, including general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. It goes beyond just the industry and competitive arena and encompasses broader societal and economic trends.

Question 8

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 9

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 answer of Which of the following is not one...

Question 10

Which one of the following is not part of a company's broad macro-environment?
A) conditions in the economy at large.
B) population demographics and societal values and lifestyles.
C) technological and ecological factors.
D) governmental regulations and legislation.
E) the company's resource strengths,resource weaknesses,and competitive capabilities.

Accepted Answer

The company's resource strengths, resource weaknesses, and competitive capabilities are part of the company's micro-environment, not the broad macro-environment. The broad macro-environment includes external factors that affect the entire industry in which the company operates.

Question 11

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

When buyers are unlikely to integrate backward into the business of sellers, they have less leverage to negotiate better terms, thus weakening their bargaining power.

Question 12

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 tracking revenue growth and profitability is important, it is not a major question to ask when thinking strategically about industry and competitive conditions. The other options (B to E) are all major questions to consider.

Question 13

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 numerous buyers who purchase in small quantities. This means that buyers have less power to negotiate prices or terms. Therefore, the statement "The industry is composed of a few large sellers and the customer group consists of numerous buyers that purchase in fairly small quantities" indicates that buyers have weaker bargaining power.

Question 14

Thinking strategically about industry and competitive conditions in a given industry involves evaluating such considerations as
A) cultural,lifestyle,and demographic changes.
B) the birth of new industries,new knowledge,and disruptive technologies.
C) weather,climate change,and water shortages.
D) interest rates,exchange rates,unemployment rates,inflation rates,and economic growth.
E) how often sellers alter their prices,how sensitive buyers are to price differences among sellers,whether the item being purchased is a good or a service,and whether buyers buy frequently or infrequently.

Accepted Answer

The correct answer refers to actions in a company's industry and competitive environment,whereas all of the other responses refer to characteristics of a company's economic environment,as shown in Figure 3.1.The factors and forces in a company's external environment that have the biggest strategy-shaping impact typically pertain to the company's immediate inner ring industry and competitive environment-competitive pressures,the actions of rival firms,buyer behavior,supplier-related considerations,and so on.

Question 15

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 16

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

The nature and strength of competitive forces in an industry are a joint product of all of these factors: rivalry among existing firms, threat of new entrants, substitutes, bargaining power of suppliers and buyers. Therefore, all of the choices (A, B, C, D) are correct, and the best answer is E.

Question 17

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 18

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 strength of driving forces and competitive forces is more related to industry dynamics and competitive analysis rather than identifying the industry's dominant economic features.

Question 19

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 20

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

Buyer needs and expectations changing rapidly or slowly is more related to market trends and consumer behavior rather than directly affecting the bargaining power of buyers.

Quiz 3: Evaluating a Companys External Environment

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

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

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

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

The competitive pressures from substitute products tend to be stronger when

The state of competition in an industry is a function of

A company's broad "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 one of the five typical sources of competitive pressures?

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

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

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 is not a factor that causes buyer bargaining power to be stronger?

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

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

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?

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

Which of the following is not a relevant consideration 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?