Question 1

Attractive industries have all the following,except
A)High supplier power
B)Low buyer power
C)High entry barriers
D)Low rivalry

Accepted Answer

High supplier power is not a characteristic of an attractive industry.

Question 2

Firms maintain their completive edge by
A)Providing a good at lower costs than their rivals
B)Providing a superior product at the same cost as your rival
C)Being innovative
D)All the above

Accepted Answer

In order to maintain a competitive edge, firms may adopt multiple strategies. One way is to offer a good at a lower cost than their rivals, which can be achieved through cost-cutting measures or economies of scale. Another way is to provide a superior product at the same cost as their rival, which can be achieved through better design or quality control. Lastly, being innovative can allow a firm to introduce new and improved products or processes that give them an advantage over their competitors. Therefore, all the options listed in the question can contribute to a company's competitive edge.

Question 3

Typical structure characteristics of interest to Industrial Organization researchers include
A)Barriers to entry
B)Product differentiation among firms
C)The number and size distribution of firms
D)All of the above

Accepted Answer

All of the above are typical structure characteristics of interest to Industrial Organization researchers. Barriers to entry, such as patents or economies of scale, can affect competition and market concentration. Product differentiation among firms can also affect competition as firms differentiate their products to attract customers. The number and size distribution of firms can indicate the level of competition in the market.

Question 4

Which of the following is true?
A)Industry structure determines firm conduct which in turn determines firms' performance
B)Industry structure determines firm performance which in turn determines firms' conduct
C)Industry conduct determines firm structure which in turn determines firms' performance
D)Industry performance determines firm conduct which in turn determines firms' structure

Accepted Answer

Industry structure refers to the characteristics of the market such as the number of competitors, barriers to entry, and product differentiation. The structure influences how firms behave, such as pricing strategies and investment decisions, which ultimately affects their performance. Hence, A is the correct answer as it shows the causal chain of effects from industry structure to firm conduct and then to performance.

Question 5

The five forces model is a framework
A)For increasing buyer force in the market
B)For improving competition in the industry
C)For analyzing the attractiveness of an industry
D)Of matching resources and capabilities of the firm

Accepted Answer

The five forces model is a framework for analyzing the attractiveness of an industry, taking into account the bargaining power of suppliers, the bargaining power of customers/buyers, the threat of new entrants, the threat of substitute products, and the intensity of competitive rivalry. It is not intended to increase buyer force or improve competition, nor is it specifically designed for matching resources and capabilities of a firm.

Question 6

Low cost strategies are usually found in industries where
A)Products are not particularly differentiated
B)Price competition tends to be fierce
C)Both a and b
D)None of the above

Accepted Answer

Low cost strategies are effective in industries where products are not highly differentiated and the competition is focused on price. These industries include commodities, fast food, and retail. In these industries, companies need to keep costs as low as possible to offer competitive prices while still maintaining profitability.

Question 7

What are the different methods to measure industry concentration?
A)Four-firm concentration ratio.
B)HHI index.
C)Total output
D)a and b only

Accepted Answer

The four-firm concentration ratio and the HHI index are both commonly used methods to measure industry concentration, and using both together can provide a more comprehensive understanding of market structure. Total output alone does not provide information on the degree of concentration within the industry.

Question 8

The industrial organization economics perspective locates the source of advantage at the
A)Individual firm level
B)Industry level
C)Both a and b
D)None of the above

Accepted Answer

The industrial organization economics perspective focuses on the structure and behavior of industries. It suggests that the source of advantage lies at the industry level rather than the individual firm level. Different industries have different market structures such as monopoly, oligopoly, monopolistic competition, and perfect competition. These market structures affect the behavior of firms within the industry and the competitive environment they operate in. Therefore, industry-level factors play a significant role in determining a firm's success or failure.

Question 9

An industry with a high four-firm concentration ratio implies
A)firms have high supplier power
B)firms have low supplier power
C)buyers have a high supplier power
D)buyers have a low supplier power

Accepted Answer

The answer of An industry with a high four-firm concentration...

Question 10

Cost-reduction generate
A)Increases in long-run profitability
B)Increases in long-run profitability only if the cost reduction is difficult to imitate
C)Increases in product differentiation
D)Reduction in competitive intensity

Accepted Answer

Cost-reduction can lead to long-run profitability if it is difficult for competitors to imitate, as this can provide a sustainable competitive advantage.

Question 11

To stay one step ahead of the forces of competition,a firm can adopt one of these strategies except
A)Cost reduction
B)Product differentiation
C)Advertising
D)Reduction in the intensity of competition

Accepted Answer

The answer of To stay one step ahead of the...

Question 12

The resource-based view indicates that firms exhibit different performances within the same industry because
A)there is less buyer power
B)there are economies of scale present
C)some firms have superior resources
D)there is less competition

Accepted Answer

The resource-based view suggests that the performance of firms within the same industry is due to the fact that some firms possess superior resources such as skills, knowledge, and assets compared to others. Therefore, option C is the correct answer. The other options (A, B, and D) are not directly related to the RBV theory.

Question 13

The resource based view locates the source of advantage at the
A)Individual firm level
B)Industry level
C)Both a and b
D)None of the above

Accepted Answer

The resource based view suggests that a firm's unique resources and capabilities are the source of competitive advantage. These resources can be tangible or intangible and are specific to the individual firm, making it distinct from other firms in the same industry. Therefore, the source of advantage is located at the individual firm level.

Question 14

For a firm to reduce competitive intensity,it should
A)Enact barrier to entry
B)Lobby to the government
C)Acquire patents
D)All the above

Accepted Answer

All the options can help reduce competitive intensity by making it harder for new competitors to enter the market or by gaining exclusive rights to certain technologies or products.

Question 15

What is the 4-firm concentration ratio of an industry with 25 firms each having an equal market share?
A)0.16.
B)0.24.
C)0.20.
D)0.12.

Accepted Answer

The 4-firm concentration ratio is the sum of the market shares of the top 4 firms in an industry. In this case, each firm has an equal market share of 1/25, so the 4-firm concentration ratio is 4 * 1/25 = 0.16.

Question 16

Which of these firms have a low supplier power?
A)Pharmaceutical firms
B)Semiconductor firms
C)Car Dealerships
D)Software firms

Accepted Answer

The answer of Which of these firms have a low...

Question 17

Supplier power tends to be low when
A)Suppliers are less concentrated
B)Inputs provided by the supplier are not vital
C)Inputs are less differentiated
D)All the above

Accepted Answer

When suppliers are less concentrated, there is more competition among them, which reduces their power. When inputs provided by the supplier are not vital, the buyer can easily switch to another supplier without any significant cost or disruption to the business. Similarly, when inputs are less differentiated, the buyer has more options and bargaining power. Therefore, all these factors contribute to low supplier power.

Question 18

Apple continues to be innovative to ensure that their demand curve stays or becomes
A)More inelastic
B)More elastic
C)Unitary elastic
D)None of the above

Accepted Answer

Apple's focus on innovation can help make their products more unique and differentiated from competitors, which can increase their customers' loyalty and willingness to pay higher prices - this can lead to a more inelastic demand curve. Additionally, Apple's innovation can result in products that have no close substitutes, which can also make their demand curve more inelastic.

Question 19

All these increase differentiation,except
A)Product branding
B)Reducing quality
C)Advertising
D)Limiting availability

Accepted Answer

Reducing quality does not increase differentiation, as it can actually make the product less attractive to consumers and reduce its perceived value. The other options - product branding, advertising, and limiting availability - can all help a product stand out and distinguish itself from competitors.

Question 20

The industrial organization economics perspective assumes that the industry _____________ is the most important determinant of long-run profitability.
A)Structure
B)Conduct
C)Performance
D)None of the above

Accepted Answer

The industrial organization economics perspective suggests that the market structure, which includes the number of firms in the industry, their size, market share, and barriers to entry, is the most significant factor determining long-term profitability. This is because a firm's conduct and performance are influenced by the structure of the industry it operates in. Therefore, the correct option is A) Structure.

Quiz 10: Strategy: the Quest to Keep Profit From Eroding

Attractive industries have all the following,except

Firms maintain their completive edge by

Typical structure characteristics of interest to Industrial Organization researchers include

Which of the following is true?

The five forces model is a framework

Low cost strategies are usually found in industries where

What are the different methods to measure industry concentration?

The industrial organization economics perspective locates the source of advantage at the

An industry with a high four-firm concentration ratio implies

Cost-reduction generate

To stay one step ahead of the forces of competition,a firm can adopt one of these strategies except

The resource-based view indicates that firms exhibit different performances within the same industry because

The resource based view locates the source of advantage at the

For a firm to reduce competitive intensity,it should

What is the 4-firm concentration ratio of an industry with 25 firms each having an equal market share?

Which of these firms have a low supplier power?

Supplier power tends to be low when

Apple continues to be innovative to ensure that their demand curve stays or becomes

All these increase differentiation,except

The industrial organization economics perspective assumes that the industry _____________ is the most important determinant of long-run profitability.