Deck 4: Rameworks for the Analysis of Industry Environments

Question 1

An industry refers to a group of companies that share similar customers, offer similar products and services, and use similar technologies to provide those products and services.

Answer 1

True

Question 2

The "S" in the acronym SWOT stands for ______________.

A) Structure
B) Synergy
C) Strengths
D) Sample
E) Subjective

Answer 2

C

Question 3

If a SWOT analysis shows that a firm has both numerous environmental opportunities and substantial internal strengths, the firm should pursue a strategy focusing on ______________.

A) restructuring
B) growth
C) diversification
D) overcoming weaknesses
E) None of these

Answer 3

B

Question 4

If a SWOT analysis shows that a firm has both major environmental threats and substantial internal strengths, the firm should pursue a strategy focusing on ______________.

A) restructuring
B) growth
C) diversification
D) overcoming weaknesses
E) None of these

Question 5

If a SWOT analysis shows that a firm has both critical internal weaknesses and numerous environmental opportunities, the firm should pursue a strategy focusing on ______________.

A) restructuring
B) growth
C) diversification
D) overcoming weaknesses
E) None of these

Question 6

If a SWOT analysis shows that a firm has critical internal weaknesses that do not allow it to take advantage of environmental opportunities, the firm should pursue a strategy focusing on ______________.

A) restructuring
B) growth
C) diversification
D) overcoming weaknesses
E) None of these

Question 7

Factors that reduce the threat of entry by new rivals into an industry include ______________.

A) scale economies of incumbent firms
B) customer switching costs
C) government restrictions
D) incumbent firms' marketing and distribution advantages
E) All of these

Question 8

MES is an acronym that stands for ______________.

A) Minimum Entry Standards
B) Maximum Efficiency Scale
C) Minimum Efficient Scale
D) Maximum Entry Standards
E) None of these

Question 9

High-definition televisions would represent which force in a Five Forces analysis of the movie theater industry?

A) Rivalry
B) Buyers
C) Suppliers
D) Substitutes
E) New Entrants

Question 10

The most serious limitation of SWOT is its ______________.

A) lack of precision
B) subjectivity
C) emphasis on objectivity
D) time-limited scope of analysis
E) dependence on environmental phenomenon

Question 11

How important is the influence of industry membership on firm performance?

Question 12

What reasons can be given to support the contention that the industry "structuralist" viewpoint is incomplete?

Question 13

Discuss the drawbacks and limitations of SWOT analysis.

Question 14

Discuss the impact of each of the forces in the Five Forces Model on the conduct or behavior of firms in an industry.

Question 15

What two factors are generally the most critical in determining supplier power?

Question 16

What two factors appear to be most critical in determining the power of buyers?

Question 17

Which of the following is a macroeconomic factor that may determine the performance of firms in certain industries?

A) gas prices
B) exchange rates
C) global demand
D) All of these
E) Only A and D are correct

Question 18

Successful positioning requires that managers understand ______________.

A) the dynamics of their industries
B) the trends in their firms' external environment
C) the basic economics of their firms' markets
D) All of these
E) Only A and C are correct

Question 19

An industry is a group of companies that ______________.

A) share similar customers
B) offer similar products and services
C) use similar technologies to provide similar products and services
D) All of these
E) None of these

Question 20

An industry is an "entity" that is complete within itself.

Question 21

The boundaries of industries become permanently fixed over time.

Question 22

Rapidly growing markets tend to be more competitive and often unattractive to entry by new or existing firms.

Question 23

Structural or economic approaches to strategy cannot completely explain variations in firm performance.

Question 24

The influence of industry membership on firm performance accounts for eighty percent of the variation in the performance of any single firm in that industry.

Question 25

Research has found that variations in average intraindustry profitability are approximately six times greater than the variations in average interindustry profitability.

Question 26

A drawback of SWOT Analysis is that its use is likely to yield few clear-cut recommendations.

Question 27

The logic of the Five Forces model implies that, as the intensity of the forces increases, the industry environment becomes more hostile and overall industry profitability will decline.

Question 28

A firm operating at the level of MES has a serious cost disadvantage relative to any other firms that are already operating above the MES level for the industry.

Question 29

If substitute products or services are readily available, then firms in the industry are likely to suffer lower average profitability.

Question 30

Greater rivalry usually reduces average industry profitability because rivalry will either drive up prices or decrease the costs of doing business (as firms seek to add more features to their products and services without raising prices for those features)

Question 31

Generally, the more firms that there are in an industry, the greater the rivalry will be among the incumbent firms.

Question 32

Vertical integration occurs when a merger occurs between two firms that compete in different but related markets or industries.

Question 33

In a SWOT analysis, managers seldom disagree about the classification of environmental phenomena as threats or opportunities.

Question 34

Average industry performance levels are heavily impacted by the macroeconomic business cycle because some industries are much more cyclical than others.

Question 35

What limitations does the Five Forces Model have in regards to assisting the strategic thinking of managers?