Question 1

The main competitive factor facing newspaper companies is the existence of substitute products and services.

Accepted Answer

With the rise of digital media and the proliferation of online news sources, newspapers are in direct competition with a wide variety of substitute products and services, such as social media, blogs, podcasts, and streaming video. This has put significant pressure on traditional newspaper companies to adapt and innovate in order to stay relevant and competitive in today's fast-changing media landscape.

Question 2

Substitution of digital for traditional media has led to industry convergence. For example, mobile phone producers such as Nokia, Samsung, and Motorola now produce smartphones in response to Apple's iPhone (Chapter 2 Strategic Focus).

Accepted Answer

The statement is true. The substitution of digital media for traditional media has led to industry convergence, and mobile phone producers such as Nokia, Samsung, and Motorola have responded by producing smartphones. This is discussed in Chapter 2 on Strategic Focus.

Question 3

Any competitor intelligence practice that is legal is also ethical.

Accepted Answer

Legal practices may not always align with ethical practices. Some actions may be legal but still be considered unethical, such as exploiting a competitor's weaknesses or manipulating information. It is important to consider both legality and ethics when conducting competitor intelligence.

Question 4

The process of competitor analysis should examine the competitor's future objectives, current strategy, assumptions, and capabilities.

Accepted Answer

Competitor analysis involves not just understanding the current state of a competitor's strategy and capabilities, but also anticipating their future direction and objectives. This helps businesses prepare for potential challenges and identify opportunities for differentiation. Examining a competitor's assumptions can also reveal potential blind spots or vulnerabilities in their strategy.

Question 5

Exit barriers are especially low in the airline industry as aircraft are not particularly specialized and can easily be sold to other airlines, air cargo companies, the military, or even to wealthy individuals who want to own a private jet.

Accepted Answer

The statement correctly describes how low exit barriers are in the airline industry due to the ease of selling aircraft to various buyers.

Question 6

The strengths of the five competitive forces are similar across strategic groups within an industry.

Accepted Answer

The strengths of the five competitive forces can vary between strategic groups within an industry based on factors such as the size and resources of the companies within each group, the degree of product differentiation, and the level of customer loyalty.

Question 7

Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, and switching costs are high.

Accepted Answer

This statement correctly outlines the factors that contribute to supplier power according to the Five Forces model developed by Michael Porter. When these conditions exist, suppliers are able to demand higher prices, better terms, and other concessions from their customers, which can reduce their profitability and competitiveness.

Question 8

Eavesdropping is an ethical way to obtain information about competitors' actions.

Accepted Answer

Eavesdropping involves listening in on private conversations without the knowledge or consent of the parties involved, which is considered unethical and potentially illegal. It is not an acceptable method of obtaining information about competitors' actions.

Question 9

An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms.

Accepted Answer

An attractive industry is characterized by low entry barriers, suppliers and buyers with weak bargaining power, low threats from substitute products, and low rivalry among firms. High entry barriers, strong bargaining power of suppliers and buyers, and high threats from substitute products and rivalry among firms make an industry less attractive.

Question 10

One broad theme of the Chapter 2 Strategic Focus is that traditional sources of media (paper, tape, and film) are facing powerful substitutes in the form of digital media.

Accepted Answer

The chapter discusses how traditional sources of media are being replaced by digital media.

Question 11

The more distant strategic groups are in terms of their strategies, the greater the liklihood of rivalry between the groups.

Accepted Answer

Strategic groups that are more similar in their strategies are more likely to engage in rivalry, as they compete for the same customers and resources.

Question 12

Strategic groups are firms in different industries following the same or similar strategies.

Accepted Answer

The answer of Strategic groups are firms in different industries...

Question 13

The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (e.g., Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing).

Accepted Answer

The statement is true. The competitor analysis is a crucial component of the external environment analysis, and it involves studying the strengths and weaknesses of each company that competes directly with the focal firm. By understanding the competitive landscape, a company can make informed strategic decisions and stay ahead of its competitors.

Question 14

High exit barriers are factors that cause a company to remain in an industry even though the profitability of doing may be questionable.

Accepted Answer

High exit barriers, such as high fixed costs, specialized assets, and long-term contracts, make it difficult and costly for companies to leave an industry, even if profitability is low. Hence, companies may choose to remain in the industry despite the challenges.

Question 15

When Delta airlines wants to study Continental Airlines, it must examine both Continental and its complementor, Star Alliance.

Accepted Answer

In order to fully understand Continental Airlines and its competitive landscape, Delta Airlines would need to examine both Continental itself as well as its complementor, Star Alliance.

Question 16

Tablets such as the iPad have had little effect on the sale of PCs in the U.S. and PC producers such as Taiwan's Acer Computers have experienced significant growith.

Accepted Answer

The given statement says that tablets have had little effect on the sale of PCs in the U.S. and PC producers such as Taiwan's Acer Computers have experienced significant growth. This means that the sale of PCs has not been affected by the introduction of tablets and PC producers are still experiencing growth.

Question 17

A firm experiencing intense rivalry with powerful competitors should energetically engage in competitor analysis.

Accepted Answer

Competitor analysis can provide valuable insights into the strategies, strengths, weaknesses, and potential threats posed by powerful competitors. By understanding their competitor's moves and planning accordingly, the firm can better position themselves to compete effectively and improve their overall performance.

Question 18

Typically, fast industry growth increases the vigor of retaliation by existing firms against a new industry rival.

Accepted Answer

In fast-growing industries, existing firms are often more focused on capturing new opportunities and expanding their market share rather than retaliating against new entrants.

Question 19

Generally, the stronger the competitive forces, the higher the profit potential of an industry.

Accepted Answer

Generally, the stronger the competitive forces, the lower the profit potential of an industry. High competition means lower prices and potentially lower profits.

Question 20

One barrier faced by digital device producers is that the firms producing the content (musicians, news organizations and newspapers, television and movie producers, and publishers) have resisted making that content available through all digital devices. (Chapter 2 Strategic Focus).

Accepted Answer

The answer of One barrier faced by digital device producers...

Quiz 2: The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis