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 can vary between strategic groups within an industry based on factors such as customer preferences, geographic location, and distribution channels.

Question 2

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

Accepted Answer

The stronger the competitive forces, the lower the profit potential of an industry. This is because competition drives down prices and limits the ability of companies to earn high profits.

Question 3

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 contractual obligations can make it difficult for a company to leave an industry even if it is not profitable, leading it to remain in the industry.

Question 4

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

Accepted Answer

Eavesdropping is an unethical practice and can even be illegal in some cases. It is not a legitimate way to obtain information about competitors' actions.

Question 5

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 resulted in industry convergence, and mobile phone producers such as Nokia, Samsung, and Motorola have responded to the popularity of Apple's iPhone by producing smartphones.

Question 6

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

As stated in the sentence, aircraft in the airline industry are not particularly specialized and can easily be sold to other entities, making exit barriers low in the industry.

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 accurately describes the conditions under which suppliers are powerful. When there are few large buyers in the industry, suppliers have more bargaining power, especially if there are no satisfactory substitutes or switching costs are high. This can give suppliers the ability to influence prices, terms, and conditions of sale, as well as access to key resources or technology.

Question 8

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 9

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

Accepted Answer

Delta airlines must examine Continental Airlines and its complementor, Star Alliance, as studying only Continental Airlines may not provide a holistic view of the competitive landscape and market conditions in which Continental operates.

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 2 Strategic Focus discusses the shift towards digital media and the impact it has on the traditional sources of media.

Question 11

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

Accepted Answer

With the rise of digital media and online news sources, consumers have more options for obtaining information than traditional print newspapers. This creates a competitive threat for newspaper companies who must adapt and innovate in order to retain their audience and revenue.

Question 12

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 correct. The competitor analysis is indeed the final part of the external environment analysis and is focused on analyzing each company against which a firm directly competes.

Question 13

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

Accepted Answer

The answer of The more distant strategic groups are in...

Question 14

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...

Question 15

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

Accepted Answer

Competitor analysis can provide valuable insights into the strengths and weaknesses of competitors, their strategies, and their likely future moves. This information can then be used to develop effective competitive strategies to stay ahead of rivals. In intensely competitive industries, competitor analysis becomes even more critical as competitors are likely to be constantly looking for new ways to gain an advantage.

Question 16

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

Accepted Answer

Competitor analysis should not only focus on the current state of the competitor but also their future plans, goals, and potential strategies. Understanding their assumptions and capabilities can also help in identifying their strengths and weaknesses.

Question 17

Any competitor intelligence practice that is legal is also ethical.

Accepted Answer

While competitor intelligence practices may be legal, they may not always be ethical. For example, stealing trade secrets or using deceptive tactics to gather information would be considered illegal and unethical. It is important to ensure that competitor intelligence practices align with ethical standards and do not harm competitors or violate laws.

Question 18

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 answer of Tablets such as the iPad have had...

Question 19

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

Accepted Answer

The answer of Typically, fast industry growth increases the vigor...

Question 20

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.

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