Question 1

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

Accepted Answer

The strengths of the five competitive forces may differ across strategic groups within an industry due to variations in factors such as market share, product differentiation, and pricing strategies.

Question 2

Any competitor intelligence practice that is legal is also ethical.

Accepted Answer

Just because a competitor intelligence practice is legal does not mean that it is ethical. There may be certain manipulative or deceitful tactics that are legal but still considered unethical in the industry. Additionally, what is considered legal can vary by country or region, so a practice that is legal in one location may not be ethical in another.

Question 3

The three parts of the external environment which affect a firms strategic actions are

Accepted Answer

The three parts of the external environment include the general environment (economic, technological, sociocultural, demographic, and political/legal forces), the industry environment (competitors, new entrants, suppliers, customers, and substitutes), and the competitor environment (market share, goals, strengths/weaknesses, and business strategies). Option B correctly identifies the three parts of the external environment that affect a firm's strategic actions.

Question 4

As the Opening Case in chapter 2 notes, Philip Morris International's commitment to sustainable tobacco farming, efficient use of natural resources, reducing waste in manufacturing, eliminating child labor, and giving back to its communities is part of its actions in the ________________segment of the general environment.

Accepted Answer

The answer of As the Opening Case in chapter 2...

Question 5

Analysis of the _____________segment of the general environment led Philip Morris International to conclude that fewer people would risk disease by consuming tobacco products.

Accepted Answer

The sociocultural segment of the general environment encompasses cultural norms, values, and beliefs that influence consumer behavior. As attitudes towards health and wellness have shifted in recent decades, individuals have become more concerned with the potential health risks associated with tobacco consumption. This shift in societal values likely led Philip Morris International to conclude that fewer people would be willing to consume tobacco products, as they would perceive them as a health risk.

Question 6

The environmental segments that comprise the general environment typically will NOT include

Accepted Answer

The environmental segments that comprise the general environment include demographic, sociocultural, technological, economic, political/legal, and global segments. However, substitute products or services are part of the competitive environment, not the general environment.

Question 7

Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one third of sales. With profitability far above the industry average, this product is responsible for one half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?

Accepted Answer

Aardvark should monitor the general environment for changes that might affect both the revenue and profitability of all products, as all three products are important to the company's overall success. Changes in the general environment could impact consumer demand, production costs, and other factors that affect both revenue and profitability. Therefore, monitoring the general environment for all products is crucial for Aardvark's success.

Question 8

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

Accepted Answer

The process of competitor analysis involves analyzing the competitor's future objectives, current strategy, assumptions, and capabilities, as well as their strengths and weaknesses. This helps a company to identify potential threats and opportunities in the market and develop strategies to gain a competitive advantage.

Question 9

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

Accepted Answer

Engaging in competitor analysis can provide valuable insights into the strategies and tactics of competitors, allowing the firm to identify opportunities for differentiation and competitive advantage. This can be especially important in an environment of intense rivalry where the firm needs to stay on top of its competitors' moves and respond quickly to changes in the market.

Question 10

The use of the Internet by Netflix to collect data on customer preferences is an example of

Accepted Answer

The answer of The use of the Internet by Netflix...

Question 11

The ____ environment is composed of dimensions in the broader society that can influence an industry and the firms within it.

Accepted Answer

The general environment consists of broader societal dimensions that can influence an industry and the firms within it. These dimensions include technological, economic, political, legal, demographic, and sociocultural factors that affect organizations and their operations. Therefore, option A is the best choice. The competitor environment focuses on the industry-specific factors, such as the intensity of competition, market concentration, and the bargaining power of suppliers and buyers. The sociocultural environment is only one aspect of the general environment. The industry environment focuses on the industry structure, its dynamics, and the competitive forces that shape it.

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

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

Accepted Answer

Delta airlines wanting to study Continental Airlines must also examine its complementor, Star Alliance as it provides important context and information on the competitive environment in which Continental operates.

Question 14

Which of the following is NOT an activity used in the external environmental analysis process?

Accepted Answer

Scanning, monitoring, and assessing are all activities used in the external environmental analysis process. Decrypting is not a commonly used activity in this process.

Question 15

Environmental scanning would be most important for which of the following organizations?

Accepted Answer

The answer of Environmental scanning would be most important for...

Question 16

Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its traditional strategy and product characteristics over this time period. But, Acme has experienced declines in sales and profits over the last four quarters. The CEO of Acme should

Accepted Answer

Acme Valves, Inc. has been experiencing a decline in sales and profits over the last four quarters. Therefore, the CEO must conduct an analysis of the external environment to identify the factors that might be affecting the company's profitability. This analysis will help the company to identify potential opportunities and threats in the market, which can inform decisions about future strategies. Continuing with the proven strategy may not be effective in the current market environment, and making incremental adjustments without a thorough analysis of the external environment may not be successful. Therefore, a comprehensive analysis of the external environment should be the first step in developing a new strategy. Focusing on improving efficiency and cost control may be a part of the new strategy, but a thorough analysis is necessary before making any strategic decisions.

Question 17

When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are engaged in

Accepted Answer

Forecasting involves developing projections of future events based on observed changes and trends. Scanning involves a broader process of systematically searching for and identifying new information or emerging issues. Monitoring involves tracking and observing changes as they occur, but may not necessarily involve making projections about the future. Assessing involves evaluating the effectiveness or outcomes of a particular program or intervention.

Question 18

The Strategic Focus case notes that several companies have used the environmental analysis process (scanning, monitoring, forecasting, and assessing) to respond to customers' desire for more value from brand-name products. All of the following are examples of "different" values that companies are providing as a result of this process EXCEPT

Accepted Answer

The other three examples all involve providing more value to the customer without increasing prices or with a minimal increase in price. However, the example in D is not providing a different value but instead is responding to a trend in the market for larger houses.

Question 19

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

Accepted Answer

Eavesdropping is not an ethical way to obtain information about competitors' actions. It violates privacy and can result in legal consequences. There are other ethical ways such as conducting market research and analyzing publicly available information.

Question 20

According to the chapter's Opening Case on Philip Morris International, the company's joint venture with Swedish Match to market smokeless tobacco is a move to address which segment of the general environment?

Accepted Answer

The joint venture with Swedish Match to market smokeless tobacco is a move to address the changing sociocultural attitudes towards traditional smoking and the increasing demand for smokeless alternatives, as mentioned in the chapter's Opening Case on Philip Morris International.

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