Question 1

A strategic group is a collection of companies that tend to behave in relatively the same way strategically by focusing on the same subsets of key success factors.

Accepted Answer

Strategic groups consist of firms within an industry that have similar business models or strategies, often competing on similar key success factors.

Question 2

The past strategic investments and intentions of firms do not reliably indicate their future strategic directions.

Accepted Answer

The answer of The past strategic investments and intentions of...

Question 3

Imagine a market in which firms are identical in size, produce the same products, and earn no economic profits. This is called

Accepted Answer

In perfect competition, firms are identical, produce homogeneous products, and earn zero economic profits in the long run due to free entry and exit in the market.

Question 4

A market in which only one firm sells a product and, thus, reaps all of the profits to be made is called a

Accepted Answer

A monopoly is a market in which only one firm sells a product and, thus, reaps all of the profits to be made.

Question 5

The rules of thumb for doing business in an industry that reflect the structural conditions of that industry are called

Accepted Answer

Key success factors are the rules of thumb for doing business in an industry that reflect the structural conditions of that industry. They are the critical elements necessary for a company to achieve its goals and compete effectively.

Question 6

The first step toward determining whether an industry is likely to be an attractive place to do business or not is defining the industry. One way to do this is by ascertaining its ________ code.

Accepted Answer

The NAICS (North American Industry Classification System) code is used to define and classify industries, making it a crucial first step in analyzing industry attractiveness.

Question 7

To understand the conditions and trends in an industry that all firms must account for in their planning one must undertake a(n) _________ analysis.

Accepted Answer

Exogenous (or driving) forces analysis involves examining external factors and trends that impact an entire industry, which firms must consider in their strategic planning.

Question 8

Which of the following categories is not a part of a general environmental analysis?

Accepted Answer

Networking is not typically considered a category in a general environmental analysis, which usually includes social, technological, economic, environmental, and political factors.

Question 9

The "baby boomer" generation has had a significant impact on the nature of competition in many industries. The impact of "baby boomers" would most likely be understood within the context of a(n) ________ driving force.

Accepted Answer

The "baby boomer" generation is a demographic group, and their impact on industries is best understood in terms of social and demographic changes, such as shifts in consumer preferences and population age structure.

Question 10

A ________ model helps one to understand those aspects of the competitive environment that make an industry either attractive or unattractive as a place to earn profits.

Accepted Answer

The five-forces model, developed by Michael Porter, analyzes the competitive forces within an industry to determine its attractiveness and potential for profitability.

Question 11

Which of the following is not one of the forces to be examined when performing a competitive analysis?

Accepted Answer

The threat of price wars is not one of the five forces in Porter's Five Forces framework, which includes the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of competitive rivalry.

Question 12

An experience curve acts as an entry barrier because

Accepted Answer

Industry participants gain a cost advantage from cumulative production, which makes it difficult for new entrants to compete on price, thus acting as an entry barrier.

Question 13

An industry faces a high threat from new entrants when

Accepted Answer

When switching costs for industry customers are low, it is easier for new entrants to attract customers away from existing companies, increasing the threat of new entrants.

Question 14

Your local coffee shop gives you a card on which it records your purchases and rewards you with a free cup of coffee after you have bought nine cups. The shop is trying to ensure your loyalty by

Accepted Answer

The coffee shop is imposing a switching cost by offering a reward system that encourages you to continue purchasing from them to earn a free cup, thus discouraging you from buying coffee elsewhere.

Question 15

Which of the following examples best illustrates substitute products or services?

Accepted Answer

Substitute products or services are those that can replace each other to satisfy the same need. Eyeglasses and laser surgery both serve the purpose of correcting vision, making them substitutes.

Question 16

An industry's buyers have low bargaining power when

Accepted Answer

Buyers have low bargaining power when they purchase in small volumes and no single buyer accounts for a large percentage of sales, reducing their influence over the industry.

Question 17

The Federal Trade Commission calculates a measure of industry concentration before deciding whether or not to approve a merger among rivals in an industry. It is called the

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a commonly used measure of market concentration and is used by the Federal Trade Commission to evaluate potential mergers.

Question 18

Suppliers to an industry have high bargaining power when they

Accepted Answer

Suppliers have high bargaining power when they produce a critical component, are few compared to industry participants, and can threaten to forward integrate, as all these factors limit the industry's ability to negotiate favorable terms.

Question 19

Which of the following conditions leads to intense rivalry within an industry?

Accepted Answer

When an industry is operating at capacity, firms compete intensely to capture market share, leading to intense rivalry.

Question 20

Mr. Krabs is thinking about closing The Krusty Krab (much to SpongeBob's chagrin) because he is not making as much money as he once did. Mr. Krabs discovers that there is a large market for used restaurant fixtures and equipment. He also finds that it will be easy to sell his building because it can be converted into any number of other kinds of businesses. Mr. Krabs' research demonstrates the existence of ________ in the restaurant industry.

Accepted Answer

Low exit barriers refer to the ease with which a business can leave an industry. Mr. Krabs finds it easy to sell his equipment and building, indicating low exit barriers in the restaurant industry.

Quiz 4: Industry and Competitive Analysis