1 Which of the following is not one of the questions that needs to be answered in analyzing a company's industry and competitive environment?
A) What kinds of competitive forces are industry members facing, and how strong is each force?
B) What strengths, weaknesses, opportunities, and threats are evident in the industry environment?
C) What market positions do industry rivals occupy-who is strongly/weakly positioned and what strategic moves are rivals likely to make next?
D) What are the key factors for future competitive success in this industry?
E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
2 In identifying an industry's strategically relevant economic features, there is a need to consider such things as
A) market size and growth rate, the number of buyers and sellers and their relative sizes, whether the industry's products are standardized or differentiated, the presence of scale economies and learning/experience curve effects, the scope of competitive rivalry, 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, the bargaining leverage of sellers and buyers, and.
E) All of these.
3 Which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak?
A) Whether 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 try to improve their market standing and sales volumes
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.
4 The rivalry among competing sellers in an industry is stronger
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 is 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..
5 The competitive threat of entry in a particular industry is stronger when
A) industry demand is growing slowly and the pool of entry candidates is small.
B) the number of customers for the industry's product is large.
C) industry members are looking to expand their market reachby entering product segments or geographic areas where they currently do not have a presence; current industry members are unable or unwilling to strongly contest the entry of newcomers; and 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.
6 Factors that cause the rivalry among competing sellers to be weak include
A) low buyer switching costs.
B) slow growth in buyer demand.
C) high buyer costs to switch brands, rapid growth in buyer demand, and so many industry rivals that any one company's actions have little impact on rivals' business.
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.
7 Which one of the following conditions generally weakens the threat of entry into a market or industry?
A) There are low levels of brand loyalty on the part of customers and more than 20 rivals are already in the industry
B) The market is growing rapidly
C) The products of current industry rivals is pretty much standardized from rival to rival
D) The industry has relatively large capital requirements and firms in the industry hold key patents and/or possess significant proprietary technology and/or have skills and know-how not readily available to a newcomer
E) Industry members can be counted on to strongly contest the efforts of new entrants to gain a market foothold
8 The competitive threat posed by substitute products is weakened when
A) substitutes are not competitively priced, buyers believe substitute products don't have better or even equal 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) customers are in a strong bargaining position to win concessions from sellers.
E) buyer loyalty to the products they are currently purchasing is relatively low.
9 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 the item suppliers provide is a standard commodity that is readily available from many suppliers at the going market price
B) Whether there are good substitute inputs and how costly it is for switch purchases from one supplier to another
C) Whether the industry being supplied is a major customer/user of the item such that suppliers' profitability is heavily dependent on their sales to the industry
D) Whether the industry supply chain is global or mostly national and whether suppliers have a fairly wide line of products to choose from
E) Whether a few large suppliers, because of their reputation or the quality of the items they supply or some other factors, are able to exercise bargaining leverage over price, delivery, and other terms and conditions of supply
10 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 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.
11 Whether the buyers of an industry's product have strong or weak bargaining leverage over the terms and conditions of sale depends on
A) how often that 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) the frequency with which rival firms change strategies and the amount of advertising that sellers utilize.
C) whether all buyers have the same degree of negotiating power, whether the item carries a high or low price tag, and whether there are many or few collaborative partnerships between sellers and buyers.
D) whether buyers purchase in relatively large or small quantities, whether the costs of switching to competing brands or to substitute products are high or low, and how well informed buyers are about sellers' prices, products, and costs.
E) whether buyer demand is sporadic or stable, seasonal or year-round, cyclical or recession-proof.
12 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.
D) the higher the barriers to entry.
E) the more advantageous it becomes for a company to make fresh strategic moves and pursue a competitive advantage via differentiating its product or service from rivals.
13 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) identify the major factors causing fundamental industry and competitive adjustments and assess whether their impact will make the industry environment more or less attractive.
14 Which of the following is not among the most common types of driving forces?
A) Product innovation, marketing innovation, increasing globalization of the industry, and reductions in uncertainty and business risk
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 and the stock market, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability
D) Growing use of the Internet and emerging new Internet technologies, 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 shifts in buyer preferences away from differentiated products to more standardized products
15 The procedure for constructing a strategic group map involves
A) identifying the competitive characteristics that differentiate firms' market positions and competitive approaches.
B) plotting the firms on a two-variable or two-dimensional map using pairs of these differentiating characteristics, 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.
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) selecting variables for the map's axes that are highly correlated.
E) Both A and B
16 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.
17 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 understanding rivals' strategies, watching their actions on a regular basis, sizing up their strengths and weaknesses, gauging how well they are faring in the marketplace, assessing how much pressure they are under to improve their performance, and evaluating the relative merits of their strategic options and alternatives.
18 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 strategy elements, product attributes, resources, competencies, competitive capabilities, and market achievements that spell the difference between being a strong competitor and a weak competitor-and sometimes between profit and loss.
C) are mainly a function of an industry's dominant economic features and they help determine whether it is hard or easy for industry members to earn above-average profits over the long term.
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 characteristics and rarely to distribution or marketing characteristics.
19 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 industry profitability is being squeezed by current competitive forces and whether competitive forces are likely to grow or diminish in strength
B) The industry's growth potential and the degree of uncertainty and risk in the industry's future
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 are incorporated in the company's strategy and in the strategies of close rivals
E) The company's ability to capitalize on the vulnerabilities of weakly positioned rivals and whether the company has sufficient competitive strength to defend against or counteract the factors that make the industry unattractive
20 Which one of the following statements is false?
A) A company's macro-environment includes all relevant external factors and influences that bear upon a company's decision to move to a different strategic group, change its strategic intent, or modify its objectives, strategy, or business model.
B) A company's competitive strategy is increasingly effective the more it provides good defenses against the five competitive forces, shifts competitive pressures in ways that favor the company, and helps create sustainable competitive advantage.
C) The task of driving forces analysis is to separate the major causes of industry change from the minor ones.
D) Five forces analysis is a powerful technique for identifying what economic traits, competitive forces, and driving forces are most likely to dominate the industry in the future.
E) The degree to which an industry is attractive or unattractive is not the same for all industry participants or all potential entrants because the opportunities an industry presents depends partly on a company's ability to capture them.