Question 1

Which of the following is NOT an entry barrier to an industry?

Accepted Answer

The answer of Which of the following is NOT an...

Question 2

Economies of scale refer to the fact that as the

Accepted Answer

Economies of scale refer to the fact that as the quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases. This is because as production increases, fixed costs (such as the cost of machinery and overhead expenses) are spread over a larger number of units, leading to lower average costs per unit. Additionally, higher production volumes can lead to more efficient use of resources and improved bargaining power with suppliers.

Question 3

Switching costs refer to the

Accepted Answer

Switching costs refer to the costs that a customer incurs when switching from one supplier to another. These costs can include things like retraining employees, changing processes, and adapting to new systems. The other choices are not accurate definitions of switching costs.

Question 4

Customer loyalty programs such as airline frequent flyer miles are an attempt to

Accepted Answer

Customer loyalty programs, such as airline frequent flyer miles, incentivize customers to continue purchasing from a specific brand in order to earn rewards or benefits, thus increasing their switching costs to switch to a competitor.

Question 5

Green restaurant design, sustainable packaging, waste management, and energy efficiency are aspects of the ______________ segment of the general environment that McDonald's has sought to address.

Accepted Answer

The physical segment of the general environment encompasses elements such as natural resources, climate, and geography. Green restaurant design, sustainable packaging, waste management, and energy efficiency all relate to the physical environment and how companies like McDonald's interact with it.

Question 6

The concepts of Guanxi, Wa, and Inhwa all convey the general idea of

Accepted Answer

Guanxi, Wa, and Inhwa are all cultural concepts that emphasize the importance of interpersonal relationships in achieving success in business and society. Guanxi, from China, refers to the network of relationships and connections that one has, while Wa, from Japan, emphasizes harmony and collaboration within a group. Inhwa, from Korea, focuses on maintaining positive relationships and avoiding conflict. None of these concepts directly relate to entrepreneurial risk-taking, the value of hard work, or personal achievement.

Question 7

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by

Accepted Answer

Focusing on global niche markets allows firms to minimize risk by targeting specific markets in which they can effectively compete and differentiate themselves. This approach allows firms to avoid direct competition with larger global firms while still benefiting from globalization.

Question 8

The Strategic Focus case on firm's efforts to take care of the physical environment noted that one popular approach was

Accepted Answer

The case specifically mentions producing and selling additional green products as a popular approach for firms to take care of the physical environment. Option B, lobbying the government to reduce environmental regulations, goes against the core of taking care of the environment, and option C, making donations to environmental organizations, may be seen as just a PR move rather than a concrete action to reduce environmental impact. Option D, increasing health benefits for employees, although important for overall employee wellness, is not directly related to taking care of the physical environment.

Question 9

A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true?

Accepted Answer

The fact that the architect has specified the use of this unique type of marble indicates that there are no substitutes available. This gives the quarry owner significant bargaining power, as the buyer has limited alternatives. Therefore, the cost of the marble is likely to be expensive.

Question 10

An industry is defined as

Accepted Answer

The answer of An industry is defined as
...

Question 11

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale, the products must be sold in retail outlets. The main barrier to entry DWK is likely to encounter here is

Accepted Answer

The main barrier to entry for DWK Foods is likely to be access to distribution channels, as they need to sell their products in retail outlets in order to gain economies of scale. Without access to established distribution channels, DWK may face difficulty in getting their products on the shelves of retail outlets, limiting their ability to reach customers and compete with established brands. The other options listed (government licensing and permits, consumers' switching costs, and cost disadvantages independent of scale) may also present barriers to entry, but are unlikely to be the primary challenge for DWK in this case.

Question 12

Product differentiation refers to the

Accepted Answer

Product differentiation refers to the belief by customers that a product is unique from other products available in the market. This uniqueness can be in the form of quality, design, features, etc. The perception of differentiation can lead to brand loyalty, customer retention, and a competitive advantage for the firm.

Question 13

New entrants to an industry are more likely when

Accepted Answer

The answer of New entrants to an industry are more...

Question 14

All of the following are examples of efforts by firms to address the physical segment of the general environment in the Chapter 2 Strategic Focus case EXCEPT

Accepted Answer

Hiring more women and minorities at Microsoft is an effort to address the sociocultural segment of the general environment, not the physical segment. The other three options all involve initiatives aimed at reducing the environmental impact of the firms' operations, which fall under the physical segment.

Question 15

Global warming and energy consumption trends are aspects of the _____________ segment of the general environment that firms should monitor.

Accepted Answer

Global warming and energy consumption trends are related to the physical segment of the general environment since they are related to the natural resources and physical environment in which businesses operate. The technological segment relates to innovations and advancements in technology, the sociocultural segment relates to societal values and trends, and the economic segment relates to macroeconomic factors such as inflation, unemployment, and economic growth.

Question 16

Suppliers are powerful when

Accepted Answer

Suppliers are powerful when they offer a credible threat of forward integration, which means they have the ability to enter the buyer's industry and compete with them. This gives them leverage in price negotiations and overall bargaining power. Satisfaction of substitutes or being in a highly fragmented industry does not necessarily give a supplier power. A commodity product can also be easily substituted, reducing the supplier's bargaining power.

Question 17

In the case of a retail business dependent on drive-in customers, the major cost disadvantage independent of scale would be

Accepted Answer

In a retail business dependent on drive-in customers, the availability of favorable locations is crucial for attracting customers. Even if the business has the best product and prices, without easy and convenient access for customers, sales will suffer. This cost disadvantage is independent of scale, meaning it affects both small and large businesses equally. Other factors listed, such as proprietary product technology, access to raw materials, and government subsidies may also impact a retail business, but they are not necessarily independent of scale.

Question 18

As customers come to believe that a firm's product is unique, this allows the firm to

Accepted Answer

When customers believe a firm's product is unique, they are more likely to become loyal to that product. This allows the firm to retain customers and potentially increase sales without having to spend as much on advertising or price competition with competitors. Customization may be an option for the firm, but it is not necessarily a direct result of perceived uniqueness. Additionally, forcing others out of the market through price competition is not a sustainable or ethical business strategy.

Question 19

The large expenditures on advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry?

Accepted Answer

The large expenditures on advertising create a barrier to entry because it makes it difficult for new firms to differentiate their products from the established brands. This is an example of product differentiation, where firms that have already established their brands through advertising and marketing have an advantage over new firms that are trying to enter the market.

Question 20

The likelihood of entry of new competitors is affected by ____ and ____.

Accepted Answer

The likelihood of entry of new competitors is affected by the barriers to entry, such as the cost of entering the market, and the expected retaliation of current industry organizations. These factors determine how difficult it is for new firms to enter the market and compete with existing firms.

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