1. Why is identifying the strategic issues a company faces and compiling a "worry list" of
problems and roadblocks an important component of company situation analysis?
A. Without a precise fix on what problems and issues a company confronts, managers can’t know what
the industry’s key success factors are.
B. Without a precise fix on what problems and roadblocks a company confronts, managers are less
clear about what value-chain activities to benchmark.
C. The "worry list" helps company managers clarify their thinking about how best to modify the
company’s value chain.
D. The "worry list" sets management’s agenda for taking actions to improve the company’s
performance and business outlook.
2. Which of the following characteristics is not a relevant consideration in identifying an
industry’s dominant economic features?
A. Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply
conditions
B. Interest rates
C. How many strategic groups the industry has and which ones are most or least profitable
D. Unemployment, trade deficits, and surpluses
3. The two tests of a resource’s competitive power that determine whether a company’s
competitive advantage can be sustained in the face of active competition are whether the
resource or capability is
A. hard to copy and/or can be trumped by different types of resources and
capabilities.
B. competitively valuable and/or is something that rivals lack.
C. competitively valuable and/or there are good substitutes available for the resource.
D. rare and/or is hard to copy.
4. Which of the following statements is true of activity-based costing?
A. It’s an accounting system that assigns expenses to whichever activity in a company’s value chain is
responsible for creating the cost.
B. It involves using benchmarking techniques to develop cost estimates for the value-chain activities
of each major rival.
C. It’s a powerful tool for identifying the different pieces of a company’s value chain and classifying
them as primary or support activities.
D. It involves determining which value-chain activities represent variable costs and which represent
fixed costs.
5. Which one of the following does not cause the rivalry among competing sellers to be
weak?
A. Rapid growth in buyer demand
B. Low barriers to entry
C. Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit
sales
D. High buyer switching costs
6. Using the five-forces model of competition to determine what competition is like in a given
industry involves which of the following steps?
A. Assessing whether the collective impact of all five forces is weak enough to allow industry
members to go on the offensive or use a defensive strategy to insulate against fierce competitive
pressures
B. Evaluating whether competition is being intensified or weakened by the industry’s driving forces
and key success factors
C. Building the picture of competition in two steps: (1) determining which rival has the biggest
competitive advantage and (2) assessing whether the competitive advantages possessed by various
industry members allow most industry members to earn above-average profits.
D. Building the picture of competition in three steps: (1) identifying the specific competitive pressures
associated with each of the five competitive forces; (2) evaluating how strong the pressures
comprising each competitive force are; and (3) determining whether the collective impact of all five
competitive forces is conducive to earning attractive profits.
7. Which of the following situations increases the competitive pressures associated with the
threat of entry?
A. When buyers have a high degree of loyalty to the brands and product offerings of existing industry
members
B. When newcomers can expect to earn attractive profits
C. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of
newcomers
D. When buyer demand for the product is growing fairly slowly
8. Just how strong the competitive pressures are from substitute products depends on
whether
A. the available substitutes are products or services.
B. the available substitutes are strongly or weakly differentiated and whether buyers make purchases
frequently or infrequently.
C. attractively priced substitutes are readily available and the ease with which buyers can switch to
substitutes.
D. the producers of substitutes have ample budgets for new product research and development (R&D).
9. The nature and strength of the competitive forces that prevail in an industry are generally
a joint product of
A. the pressures induced by the market maneuvering and jockeying for buyer patronage that goes on
among rival sellers in the industry.
B. competitive pressures stemming from the bargaining power of both suppliers and buyers.
C. All of the above.
D. the attempts of companies in other industries to win buyers over to their own substitute products.
10. Rivalry among competing sellers grows in intensity when
A. there are only 2–4 rivals, whose products or services are sold at widely varying prices.
B. rivals have highly differentiated products and buyer demand is growing rapidly.
C. buyer demand is growing slowly and the industry is composed of competitors fairly equal in size
and competitive capability.
D. there are so many industry rivals that the impact of any one company’s actions is spread thinly
across the industry.
11. Which of the following statements is true of SWOT analysis?
A. It provides a good overview of whether a company’s situation is fundamentally healthy or
unhealthy.
B. It reveals whether a company is competitively stronger than its closest rivals.
C. It’s a tool for benchmarking whether a firm’s strategy is closely matched to industry key success
factors.
D. It’s a way to measure whether a company’s value chain is longer or shorter than the value chains of
key rivals.
12. Which of the following is not a major question to ask when thinking strategically about
competitive conditions in a given industry?
A. Does the outlook for the industry present the company with sufficiently attractive prospects for
profitability?
B. How many companies in the industry have good track records for revenue growth and profitability?
C. What forces are driving changes in the industry, and what impact will these changes have on
competitive intensity and industry profitability?
D. What strategic moves are rivals likely to make next?
13. A company’s resource strengths are important because they
A. provide extra organizational muscle in turning a core competence into a key success
factor.
B. provide extra muscle in helping to lengthen the company’s value chain.
C. pave the way for establishing a low-cost advantage over rivals.
D. are big determinants of its competitiveness and ability to succeed in the marketplace.
14. The competitive threat that outsiders will enter a market is weaker when
A. financially strong industry members send strong signals that they’ll launch strategic initiatives to
combat the entry of newcomers.
B. the industry’s market growth is rapid.
C. buyers have little loyalty to the brands and product offerings of existing industry members.
D. the industry is characterized by the lack of sizable scale economies and learning/experience curve
effects.
15. Which of the following is not one of the five typical sources of competitive pressures?
A. The threat of new entrants into the market
B. The power and influence of industry driving forces
C. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the
industry
D. The attempts of companies in other industries to win customers over to their own substitute
products
16. A company requires a dynamically evolving portfolio of resources and capabilities to
A. sustain complex manufacturing systems as a strategic recoil.
B. retain the benefits of high market share as an interest in growth strategies.
C. assist the strategic-planning team in overall direction.
D. maintain its competitiveness and help drive improvements in its
performance.
17. In which of the following circumstances are competitive pressures associated with the
bargaining power of buyers not relatively strong?
A. When buyers have considerable discretion over whether and when they purchase the
product
B. When sellers’ products are weakly differentiated
C. When buyer demand is growing rapidly
D. When buyers are well informed about sellers’ products, prices, and costs
18. Which of the following is not part of the task of identifying the strategic issues and
problems that merit front-burner managerial attention?
A. Evaluating the company’s own resources and competitive position
B. Surveying the company’s board members, managers, select employees, and key investors regarding
what strategic issues they think the company faces
C. Assessing what challenges the company has to overcome to be financially and competitively
successful in the years ahead
D. Analyzing the company’s external environment
19. Having good competitive intelligence about rivals’ strategies, latest actions and
announcements, resource strengths and weaknesses, and moves to improve their situation is
important because it
A. identifies who the industry’s current market-share leaders are.
B. enables company managers to determine which rival has the worst strategy and avoid making the
same strategy mistakes.
C. helps a company to craft its own strategic moves with some confidence about what market
maneuvers to expect from its rivals.
D. enables more accurate predictions about how long it will take a particular rival to copy most of
what the strategy leader is doing.
20. Which of the following processes do not qualify as potential driving forces capable of
inducing fundamental changes in industry and competitive conditions?
A. Growing buyer preferences for differentiated products instead of mostly standardized or identical
products
B. Changes in who buys the product and how they use it, changes in the long-term industry growth
rate, and changes in cost and efficiency
C. Changes in economies of scale and experience curve effects brought on by changes in
manufacturing technology, increasing globalization of the industry, and new Internet capabilities
D. Increases in the economic power and bargaining leverage of customers and suppliers, growing
supplier-seller collaboration, and growing buyer-seller collaboration
21. Which one of the following conditions is not a factor in causing supplier bargaining
power to be relatively strong?
A. The input being supplied is a commodity.
B. The inputs needed from suppliers are in short supply.
C. The input being supplied significantly enhances the quality or performance of the products of
industry members.
D. Suppliers are a strong threat to integrate forward into the business of industry members.
22. Which of the following is not one of the five questions that comprise the task of
evaluating a company’s resources and competitive position?
A. Is the company competitively stronger or weaker than key rivals?
B. How well is the company’s present strategy working?
C. What are the company’s most profitable geographic market segments?
D. Are the company’s prices and costs competitive?
23. Which of the following is not a component of evaluating a company’s resources and
competitive position?
A. Evaluating how well the present strategy is working
B. Assessing whether the company’s costs and prices are competitive
C. Evaluating whether the company is competitively stronger or weaker than key rivals
D. Scanning the environment to determine a company’s best and most profitable customers
24. Which of the following choices is not a good example of a marketing-related key
success factor?
A. Breadth of product line and product selection
B. Product research and development (R&D) capabilities and expertise in product
design
C. A well-known, well-respected brand name
D. Courteous, personalized customer service
25. Which of the following conditions acts to weaken buyer bargaining power?
A. Buyers purchase the item frequently and are well-informed about sellers’ products, prices, and
costs.
B. Buyers are unlikely to integrate backward into the business of sellers.
C. The costs incurred by buyers in switching to competing brands or substitute products are relatively
low.
D. The products of rival sellers are weakly differentiated, and buyers have considerable discretion
over whether and when they purchase the product.
