one of the questions that needs to be answered in thinking strategically about
a company’s external environment?
A)What kinds of competitive
forces are industry members facing, and how strong is each force?
B)What market positions do
industry rivals occupy—who is strongly/weakly positioned and who is not?
C)What are the strategically
relevant factors in the company’s macro-environment?
D)What are the company’s
competitively valuable resources and capabilities that can be used to form the
foundation of its competitive approach?
E)What forces are driving changes
in the industry, and what impact will these changes have on competitive
intensity and industry profitability?
Q2. In identifying a company’s
broader macro-environment, the following have strategic significance _______________
A) market size and growth rate,
the number of buyers, the scope of competitive rivalry, the number of rivals,
demand-supply conditions, product innovation, the presence of scale economies
and/or learning or experience curve effects, and the pace of technological
change.
B)the threat of additional entry
into the industry and what the industry’s key success factors are.
C)the strength of competitive
pressures from producers of substitute products and which competitors are in
which strategic groups.
D)the extent and importance of
seller-supplier collaborative partnerships, the extent and importance of
seller-buyer collaborative partnerships, and the bargaining leverage of sellers
and buyers.
E)general economic conditions,
societal values and cultural norms, political and legal/regulatory factors,
technological factors, and ecological considerations.
Q3. Which of the following is not
a relevant factor in conducting a PESTEL analysis?
A)how often sellers alter their
prices, how sensitive buyers are to price differences among sellers, whether
the item being purchased is a good or a service, and whether buyers buy
frequently or infrequently.
B)interest rates, exchange rates,
unemployment rates, inflation rates, and economic growth.
C)cultural, lifestyle, and
demographic changes.
D)the birth of new industries,
new knowledge, and disruptive technologies.
E)weather, climate change, and
water shortages.
Q4. Based on both the chapter
discussion and the summary in Figure 3.4, competitive pressures stemming from
substitute products are weaker when _______________
A)substitutes are higher-priced,
buyers don’t believe substitute products have equal or better features, and
buyers’ costs of switching to substitutes are relatively high.
B)the industry consists of a
relatively large number of rival sellers that are fairly equal in size and
competitive capability.
C)entry barriers are moderately
high but by no means prohibitive and there is a fairly small pool of entry
candidates.
D)a number of customers buy in
large volumes and are in a strong bargaining position to win concessions from
sellers.
E)buyer loyalty to the products
they are currently purchasing is relatively low.
Q5. Which of the following is not
a factor in determining whether the suppliers to an industry are a source of
strong, moderate, or weak competitive pressures?
A)Whether certain needed inputs
are in short supply.
B)Whether it is difficult or
costly for industry members to switch their purchases from one supplier to
another or to switch to attractive substitute inputs.
C)Whether the item being supplied
is a standard commodity that is readily available from many suppliers at the
going market price.
D)Whether the industry supply
chain is global or mostly national, whether suppliers have a wide or narrow
product line, and whether industry members place orders frequently or
infrequently with suppliers.
E)Whether certain suppliers
provide a differentiated input that enhances the performance or quality of the
industry’s product.
Q6.Which of the following is not
a reason that industry rivals are often motivated to enter into strategic
partnerships with key suppliers?
A) To enhance the quality of parts
and components being supplied and/or to reduce defect rates.
B) To speed the availability of
next-generation components.
C) To reduce the bargaining power
they face from buyers of their products.
D) To squeeze out important cost
savings for both themselves and their suppliers.
E) To reduce inventory and
logistics costs.
Q7. According to both the text
discussion and the summary in Figure 3.6, competitive pressures associated with
the threat of new entrants grow stronger when _______________
A) buyer demand is growing slowly
and the pool of entry candidates is small.
B) the number of customers for
the industry’s product is large and the product offerings of rival sellers are
strongly differentiated.
C) industry members are looking
to expand their market reach by entering product segments or geographic areas
where they currently do not have a presence, when current industry members are
unable or unwilling to strongly contest the entry of newcomers, and when a
newcomer can reasonably expect to earn attractive profits.
D) there are not many competitors
already in the industry, their products are highly differentiated, and buyers
are brand loyal.
E) a small percentage of
companies in the industry are currently earning above-average profits, entry
barriers are high, and buyers are not brand loyal.
Q8. Which of the following
conditions generally raise the barriers to entering an industry?
A) Low levels of brand loyalty on
the part of customers and the presence of more than 20 rivals in the industry.
B) Rapid market growth, low buyer
switching costs, and weak brand preferences and customer loyalty.
C) Product offerings that are
pretty much standardized from rival to rival.
D) High capital requirements,
difficulties in building a network of distributors-retailers and securing
adequate space on retailers’ shelves, and the likelihood that industry
incumbents will strongly contest the efforts of new entrants to gain a market
foothold.
E) The industry is not
characterized by scale economies and/or sizable learning or experience curve
effects and few firms in the industry hold key patents and/or possess
significant proprietary technology not readily available to a newcomer.
Q9. According to both the text
discussion and the summary in Figure 3.7, which of the following is not among
the factors that determine whether competitive rivalry among industry members
is strong, moderate, or weak?
A) Whether buyer demand for the
product is growing rapidly or slowly.
B) Whether customers’ costs to
switch brands is low or high.
C) How active industry rivals are
in initiating fresh competitive moves and in using the various weapons of
competition to improve their market standing and business performance.
D) Whether there are few or many
rival sellers and whether there are big differences in their sizes and
competitive capabilities.
E) Whether industry members are
vertically integrated and whether the industry is characterized by significant
scale economies and rapid technological change.
Q10. The rivalry among competing
sellers in an industry intensifies _______________
A) when buyer demand for the
product is growing rapidly.
B) when customers are brand loyal
and their costs to switch to competing brands or substitute products are
relatively high.
C) when buyer demand is strong
and sellers have little or no excess capacity and only minimal inventories.
D) as the number of rivals
increases and as they become more equal in size and competitive capability.
E) when the products of rival
sellers are highly differentiated products and the industry consists of so many
rivals that any one company’s actions have little direct impact on rivals’
business.
Q11. Factors that cause the
rivalry among competing sellers to be weak include _______________
A) low buyer switching costs.
B) slow growth in buyer demand.
C) rapid growth in buyer demand,
buyer costs to switch brands are high, and so many industry rivals that any one
company’s actions have little impact on the businesses of its rivals.
D) standardized or else weakly
differentiated products among rival sellers.
E) the presence of one or more
rivals that are dissatisfied with their current position and market share.
Q12. As a rule, the stronger the
collective impact of the five competitive forces, _______________
A) the more strategic groups
there are in an industry.
B) the lower the number of
industry key success factors.
C) the lower the combined
profitability of industry participants and the more “competitively
unattractive” is the industry environment.
D) the weaker the industry’s
driving forces.
E) the higher the barriers to
entry and the less likely it is that industry members will make fresh strategic
moves very frequently.
Q13. The task of driving forces
analysis is to _______________
A) identify all the underlying
factors that can cause industry profitability to rise or fall in the years
ahead.
B) predict what new forces of
competitive and market change will emerge next.
C) determine which of the five
competitive forces is the biggest driver of industry change.
D) identify which companies are
being driven to move from one strategic group to another strategic group.
E) (1) identifying what the
driving forces are, (2) assessing whether the drivers of change are,
individually or collectively, acting to make the industry more or less
attractive, and (3) determining what strategy changes are needed to prepare for
the impact of the driving forces.
Q14. Which of the following is
not among the most common types of driving forces?
A) Product innovation, marketing
innovation, and increasing globalization of the industry.
B) Changes in the long-term
industry growth rate, changes in who buys the product and how they use it, and
growing buyer preferences for differentiated products.
C) Ups and downs in interest
rates, changes in the number of seller-supplier collaborative alliances, and
changes in overall industry profitability.
D) Emerging new Internet
applications and capabilities, technological change, and the diffusion of
technical know-how across more companies and more countries.
E) Changes in cost and
efficiency, the entry or exit of major firms, and changing societal concerns,
attitudes, and lifestyles.
Q15. The procedure for
constructing a strategic group map involves _______________
A) identifying the competitive
characteristics that differentiate firms’ market positions and competitive
approaches.
B) selecting variables for the
map’s axes that are highly correlated.
C) using only variables for the
map’s axes that are quantitative in nature (qualitative measures of market
positions and competitive approaches are too subjective and unreliable).
D) plotting the firms on a
two-variable or two-dimensional map, drawing circles around those firms
occupying about the same strategy space, and making the size of the circles for
each strategic group proportional to the size of its members’ share of total
industry sales revenues.
E) Both A and D.
Q16. A strategic group map is a
helpful analytical tool for _______________
A) assessing why competitive
pressures and driving forces usually impact the biggest strategic groups more
so than the smaller groups.
B) determining which companies
have how big a competitive advantage and how good their prospects are for
increasing their market shares.
C) determining which company is
the most profitable in the industry and why it is doing so well.
D) determining who competes most
closely with whom; evaluating whether industry driving forces and competitive
pressures favor some strategic groups and hurt others; and ascertaining whether
the profit potential of different strategic groups varies due to the strengths
and weaknesses in each group’s respective market positions.
E) pinpointing which of the five
competitive forces is the strongest and which is the weakest.
Q17. Trying to determine what
strategic moves rivals are likely to make next _______________
A) is interesting but usually has
little bearing on a company’s own best strategic moves.
B) usually requires evaluating
the industry’s key success factors as well as determining how many driving
forces are present.
C) is best done by monitoring
each rival’s market share, earnings per share, and stock price—adverse changes
in these measures signal the coming of a fresh move but as long as a company’s
performance on these measures is satisfactory the chance of fresh moves is
slim.
D) cannot be done effectively
without first drawing a strategic group map.
E) entails each rival’s
situation, understanding the thinking of their managers, and evaluating the
relative merits of their strategic options.
Q18. An industry’s key success
factors _______________
A) can best be determined by
studying the strategies of those companies in the industry’s best strategic
group and those in the worst strategic group.
B) concern the particular product
attributes, competencies, competitive capabilities, and intangible assets with
the greatest impact on future success in the industry.
C) are mainly a function of an
industry’s macro-environment and dominant economic features.
D) can best be determined by
identifying the similarities in the strategies of rival companies—those
strategy elements that are most commonly found in the strategies of rivals can
be considered key success factors.
E) usually relate to technology
and manufacturing-related capabilities and rarely to distribution or marketing
capabilities.
Q19. Which of the following is
not a good example of a marketing-related key success factor?
A) A well-known and
well-respected brand name.
B) Breadth of product line and
product selection.
C) Product innovation
capabilities.
D) Clever advertising.
E) Courteous, personalized
customer service.
Q20. Which of the following is
not an important factor for company managers to consider in drawing conclusions
about whether the industry presents an attractive opportunity?
A) Whether powerful competitive
forces are squeezing industry profitability to subpar levels and whether
competition appears destined to grow stronger or weaker.
B) The industry’s growth
potential.
C) Whether industry profitability
will be affected favorably or unfavorably by the prevailing driving forces.
D) How many of the industry’s key
success factors do companies in the industry typically incorporate into their
strategies.
E) The company’s competitive
position in the industry relative to rivals.
