Deck 2: Industry Competition

Question 1

A firm's industry

A)is synonymous with its macroeovnrionment.
B)can be difficult to define.
C)always has the greatest influence on a firm's performance.
D)None of the above.

Answer 1

B

Question 2

One weakness of Porter's five-forces model is that it tends to overemphasize partnerships and other relationships between firms.

Answer 2

False

Question 3

Substitute products are offered by close competitors.

Answer 3

True

Question 4

A young industry that is beginning to form is considered to be in the growth stage.

Question 5

One weakness of Porter's five-forces model is that it assumes that firm resources are the primary determinants of industry profitability.

Question 6

One weakness of Porter's five-forces model is that it is based on the assumptions of the industrial organization perspective.

Question 7

The shakeout stage

A)occurs after the maturity stage.
B)occurs when growth no longer supports the increasing number of competitors
C)precedes the growth stage.
D)All of the above.

Question 8

A young industry that is beginning to form is in the

A)growth stage.
B)shakeout stage.
C)maturity stage.
D)decline stage.

Question 9

The objective of Porter's five-forces model is to

A)assess firm profitability.
B)assess the potential for profits within an industry.
C)emphasize the intensity of rivalry within an industry.
D)None of the above.

Question 10

A patent is an example of a cost advantage independent of size.

Question 11

The lack of high capital costs serves as a barrier to entry for an industry.

Question 12

A long-term labor agreement can be an example of an exit barrier.

Question 13

The bargaining power of buyers increases when buyers earn high profits.

Question 14

When storage costs are low,the intensity of rivalry tends to increase.

Question 15

The bargaining power of buyers increases when buyers are concentrated or each one purchases a significant portion of the industry's sales.

Question 16

An industry is

A)not the same as a firm.
B)often difficult to define.
C)not always the most important factor in determining a firm's performance.
D)All of the above.

Question 17

The primary industry includes a firm's key business units,whereas the secondary industry includes the firm's less significant business units.

Question 18

Firms in mature industries often seek new uses for their products.

Question 19

All industries pass through the industry life cycle at roughly the same pace.

Question 20

The bargaining power of suppliers is high when there are no substitutes.

Question 21

The decline in unit costs of a product that occurs as the absolute volume of production increases is known as

A)factor analysis.
B)industry economies.
C)economies of scope.
D)None of the above.

Question 22

Which of the following is not a limitation of Porter's five-forces model?

A)It is based on the assumptions of industrial organization theory.
B)It does not allow for the role of partnerships.
C)It does not account for the fact that a large firm may be able to influence industry structure.
D)It assumes that firm resources explain firm performance.

Question 23

Rivalry increases sharply when

A)competitors are diverse.
B)competitors are similar.
C)competitors operate in multiple industries.
D)None of the above.

Question 24

Is the intensity of rivalry in the fast-food industry low,moderate,or high? Explain.

Question 25

Intensity of rivalry in an industry is a function of all of the following EXCEPT

A)the concentration of competitors.
B)slow industry growth.
C)high exit barriers.
D)government policy.

Question 26

Is the threat of substitutes low,moderate,or high in the U.S.airline industry?

Question 27

Which of the following is not a limitation of Porter's five-forces model?

A)It does not account for the fact that a large firm may be able to influence industry structure.
B)It assumes that industry structure explains firm performance.
C)It incorporates the resource-based perspective on strategic decision-making.
D)It is based on the assumptions of industrial organization theory.

Question 28

When an industry's customers are hesitant to negotiate for lower prices,the

A)bargaining power of buyers is high.
B)bargaining power of suppliers is high.
C)bargaining power of buyers is low.
D)bargaining power of suppliers is low.

Question 29

Barriers to entry may be associated with

A)cost advantages associated with the quantity of production.
B)cost advantages independent of size.
C)Both A & B
D)Neither A nor B

Question 30

When firms that provide key raw materials to an industry constantly negotiate for higher prices,the

A)bargaining power of buyers is high.
B)bargaining power of suppliers is high.
C)bargaining power of buyers is low.
D)bargaining power of suppliers is low.

Question 31

Which of the following does not increase the bargaining power of buyers?

A)Buyers face few switching costs.
B)Buyers earn high profits.
C)Products that the buyer purchase represent a significant percentage of the buyers' costs.
D)Buyers have the ability to engage in backward integration.

Question 32

Pressure from substitute products occurs from

A)inside the industry.
B)primary competitors.
C)primary and secondary competitors.
D)None of the above.

Question 33

What are the limitations of Porter's five forces model? Given these limitations,is it useful or not? Explain.

Question 34

Switching costs are incurred by

A)the buyer.
B)the seller.
C)both the buyer and the seller.
D)neither the buyer nor the seller.

Question 35

Which of the following does not increase the bargaining power of suppliers?

A)An abundance of substitute products
B)Built-in switching costs among the suppliers' products
C)Domination of the supplying industry by a few competitors.
D)All of the above increase the bargaining power of suppliers.

Question 36

The maturity stage occurs

A)immediately after the growth stage.
B)immediately before the shakeout stage.
C)when virtually all purchases are upgrades or replacements.
D)None of the above.

Question 37

Which of the following is not one of Porter's five industry forces?

A)Bargaining power of buyers
B)Threat of substitute products
C)Intensity of rivalry among incumbent firms
D)None of the above

Question 38

Exit barriers in an industry include

A)strategic factors.
B)emotional factors.
C)economic factors.
D)All of the above.

Question 39

Are the barriers to entry in the automobile manufacturing industry low,moderate,or high? Explain.

Question 40

Must all industries proceed through each of the industry life cycle stages? Why or why not? Explain.