Question 1

A barrier to entry is a condition that prevents customers from using a firm's products or services.

Accepted Answer

Barriers to entry are conditions that prevent new companies from entering an industry. Some major barriers to entry are government policy, capital requirements, brand identification, cost disadvantages, and distribution channels.

Question 2

Despite government crackdowns, immigration is one reason why the labor force will be more ethnically diverse in the future than it is today.

Accepted Answer

Immigration is one reason why the labor force in the future will be more ethnically diverse than it is today. The demographic importance of immigration intersects with legal issues governing who is permitted to work in the United States.

Question 3

When investors bid up stock prices, companies have less capital to fuel their strategies.

Accepted Answer

An important economic influence is the stock market. When investors bid up stock prices, they are paying more to own shares in companies, which means the companies have more capital to fuel their strategies.

Question 4

U.S. government policies both impose strategic constraints and provide opportunities for organizations.

Accepted Answer

U.S. government policies impose strategic constraints on organizations but may also provide opportunities. The government can affect business opportunities through tax laws, economic policies, and international trade rulings. An example of restraint on business action is the U.S. government's standards regarding bribery.

Question 5

Organizations are open systems that affect and are affected by their external environments.

Accepted Answer

Organizations are open systems; that is, they are affected by and in turn affect their external environments. For example, they take in inputs from their environment and use them to create products and services that are outputs to their environment, as shown in Figure 2.1.

Question 6

The fastest-growing age group in the U.S. civilian labor force is the group between 30 and 40 years old.

Accepted Answer

The fastest-growing age group is workers who are 55 and older, who are expected to represent close to one-fourth of the labor force in 2018.

Question 7

The percentage of women participating in the U.S. workforce has increased sharply since 1999.

Accepted Answer

Throughout the 1970s and 1980s, women became much more likely to take paying jobs. In the 1970s only about one-third of women were in the labor force, but 60 percent had jobs in 1999. Since then, women's labor force participation rate has stayed near that level, declining only slightly.

Question 8

Red Bull, an energy drink, is a competitor to Pepsi.

Accepted Answer

Coca-Cola and Pepsi are obvious competitors, but consumer tastes have shifted away from soda to energy drinks and other beverages. Thus energy drinks are now a competitor to colas.

Question 9

An organization's macroenvironment includes its customers and suppliers.

Accepted Answer

An organization's macroenvironment includes external factors such as economic, social, political, and technological forces. Customers and suppliers are part of the organization's microenvironment.

Question 10

Porter's model for competitive analysis is one example of analyzing the competitive environment for adapting to and even influencing the nature of competition.

Accepted Answer

In strategic decision making, Porter's model is an excellent method to help managers analyze the competitive environment and adapt to or influence the nature of their competition.

Question 11

While the stock market can impact a firm, it has no effect on the behavior of individual managers.

Accepted Answer

The stock market can have a profound effect on the behavior of individual managers. In publicly held companies, managers throughout the organization may feel required to meet Wall Street's earnings expectations.

Question 12

A more diverse workforce presents managers with challenges as well as opportunities.

Accepted Answer

A more diverse workforce has many advantages, but managers have to make certain they provide equality for women and minorities with respect to employment, advancement, opportunities, and compensation.

Question 13

Regulatory agencies set rules but are typically weak institutions since they do not have the power to investigate company practices or to take legal action to ensure compliance with the law.

Accepted Answer

Regulators are specific government organizations in a firm's more immediate task environment. Regulatory agencies have the power to investigate company practices and take legal action to ensure compliance with laws.

Question 14

Firms that develop strategies that do not include technological advances will realize obsolescence and extinction.

Accepted Answer

Today a company cannot succeed without incorporating into its strategy the astonishing technologies that exist and continue to evolve. Technological advances create new products, advanced production techniques, and better ways of managing and communicating.

Question 15

Strategy is an example of an input to an organization.

Accepted Answer

The answer of Strategy is an example of an input...

Question 16

Social metrics are measures of various characteristics of the people who make up groups or other social units.

Accepted Answer

Demographics are measures of various characteristics of the people who make up groups or other social units. Work groups, organizations, countries, markets, and societies can be described statistically by referring to demographic measures such as their members' age, gender, family size, income, education, occupation, and so forth.

Question 17

The first question in understanding competitive environments from Porter's model is "How strong is the competition?"

Accepted Answer

The first question to consider is "Who is the competition?"

Question 18

A firm's competitive environment includes new entrants, as well as substitutes and complements.

Accepted Answer

A firm's competitive environment can be affected by new entrants who could offer competing products/services. Substitutes and complements can also affect a firm's market share and pricing power.

Question 19

Family leave, flexible working hours, and child care assistance have been introduced as a direct result of the growing ethnic diversity in the workplace.

Accepted Answer

Today more women are having children and then returning to the workforce. As a result companies have introduced more supportive policies, including family leave, flexible working hours, and child care assistance.

Question 20

The external environment includes all relevant forces outside the organization's boundaries.

Accepted Answer

The term external environment means more than an organization's clients or customers; the external environment includes all relevant forces outside the organization's boundaries.

Quiz 2: The External and Internal Environments