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Quiz on Chapter 2 - Evaluating a Firm's External Environment, created by Strategy IO on 28/12/2016.

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Chapter 2 - Evaluating a Firm's External Environment

Question 1 of 49

1

The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.

Select one of the following:

  • micro-environment

  • general environment

  • task environment

  • internal environment

Explanation

Question 2 of 49

1

All of the following are elements of the general environment except

Select one of the following:

  • technological trends.

  • demographic trends.

  • industrial trends.

  • cultural trends.

Explanation

Question 3 of 49

1

________ is/are the distribution of individuals in a society in terms of age, sex, marital status, income, ethnicity, and other personal attributes that may determine buying patterns.

Select one of the following:

  • Demographics

  • Economics

  • Technological trends

  • Culture

Explanation

Question 4 of 49

1

The values, beliefs and norms that guide behavior in a society are known as

Select one of the following:

  • climate.

  • demographics.

  • economics

  • culture.

Explanation

Question 5 of 49

1

When activity in an economy is relatively low for a short period of time, the economy is said to be in a

Select one of the following:

  • recession.

  • depression

  • prosperous cycle.

  • boom

Explanation

Question 6 of 49

1

Civil wars, political coups, terrorism, wars between countries, famines, and country or regional economic recessions are all examples of which element of the general environment?

Select one of the following:

  • demographics

  • specific international events

  • economics

  • culture

Explanation

Question 7 of 49

1

In the S-C-P model, ________ refers to the strategies that firms in an industry implement

Select one of the following:

  • structure

  • strategy

  • conduct

  • performance

Explanation

Question 8 of 49

1

In a perfectly competitive industry

Select one of the following:

  • there are relatively few firms operating in the industry

  • the products and services sold by firms in the industry are very different from each other

  • it is very costly for firms to enter the industry

  • it is not very costly for firms to enter or exit the industry

Explanation

Question 9 of 49

1

Within the five forces framework, the five most common threats facing firms from their competitive environment include each of the following except

Select one of the following:

  • substitutes

  • complementors

  • suppliers.

  • buyers

Explanation

Question 10 of 49

1

Firms in industries characterized by ________ can expect to earn only competitive parity

Select one of the following:

  • perfect competition

  • monopolistic competition

  • oligopoly

  • monopoly

Explanation

Question 11 of 49

1

Which type of competition is characterized by a large number of firms, heterogeneous products and low cost of entry and exit?

Select one of the following:

  • perfect competition

  • monopolistic competition

  • oligopoly

  • monopoly

Explanation

Question 12 of 49

1

Which type of competition is characterized by a small number of firms, homogeneous products and costly entry and exit?

Select one of the following:

  • perfect competition

  • monopolistic competition

  • oligopoly

  • monopoly

Explanation

Question 13 of 49

1

A(n) ________ is any individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance

Select one of the following:

  • environmental threat

  • environmental opportunity

  • environmental equalizer

  • competitive advantage

Explanation

Question 14 of 49

1

Firms that have either recently begun operations in an industry or that threaten to begin operations in an industry soon are considered to be ________ in the five forces framework

Select one of the following:

  • barriers to entry

  • new competitors

  • suppliers

  • buyers

Explanation

Question 15 of 49

1

________ exist when a firm's costs rise as a function of its volume of production

Select one of the following:

  • Economies of scale

  • Economies of scope

  • Diseconomies of scale

  • Learning curve effects

Explanation

Question 16 of 49

1

All other things being equal, which of the following would lead to lower barriers to entry in an industry

Select one of the following:

  • The existence of economies of scale in the industry

  • Products are highly differentiated in the industry

  • Industry incumbents have learning-curve cost advantages

  • Raw materials are widely and readily available at a competitive price

Explanation

Question 17 of 49

1

Frequent price cutting by firms in an industry, frequent introduction of new products by firms in an industry and intense advertising campaigns are indications of

Select one of the following:

  • high power of buyers.

  • high threat of new entrants

  • high levels of direct competition

  • high threat of substitutes.

Explanation

Question 18 of 49

1

The threat of direct competition tends to be high when

Select one of the following:

  • there are few firms in an industry and these firms tend to be unequal in size

  • the industry growth rate is higher

  • firms are unable to differentiate their products.

  • production capacity can be added in small increments

Explanation

Question 19 of 49

1

The products or services provided by a firm's direct competitors meet ________ customer needs in ________ ways as the product provided by the firm itself.

Select one of the following:

  • different; the same

  • approximately the same; the same

  • different; different

  • approximately the same; different

Explanation

Question 20 of 49

1

Which of the following statements regarding substitutes is accurate

Select one of the following:

  • In the extreme, substitutes can ultimately replace an industry's products or services

  • Substitutes place a floor on the prices firms in an industry can charge and on the profits firms in an industry can earn.

  • Substitutes rarely impact the profitability that firms in an industry can earn

  • The importance of substitutes in reducing the profit potential in a wide variety of industries is decreasing

Explanation

Question 21 of 49

1

________ make a wide variety of raw materials, labor and other critical assets available to firms

Select one of the following:

  • buyers

  • Rivals

  • Suppliers

  • Substitutes

Explanation

Question 22 of 49

1

Which of the following attributes makes suppliers a stronger threat?

Select one of the following:

  • The supplier's industry is dominated by a small number of firms

  • The product or service provided by suppliers is not highly differentiated

  • Suppliers are threatened by substitutes.

  • Suppliers are not able to engage in forward vertical integration

Explanation

Question 23 of 49

1

Which of the following is the best example of forward vertical integration

Select one of the following:

  • a car dealership opening up its own automobile manufacturing plant

  • a car company opening its own dealerships to sell its products directly to customers

  • a car company opening its own chain of video rental stores

  • a car company opening a plant to product motorcycles

Explanation

Question 24 of 49

1

Buyers tend to have less power when

Select one of the following:

  • a firm has only one buyer, or a small number of buyers

  • the products or services being sold to buyers are standard and not differentiated

  • the supplies they purchase are an insignificant portion of the costs of their final products

  • they are not earning significant economic profits

Explanation

Question 25 of 49

1

Overall, the average level of performance in an industry is likely to be highest when

Select one of the following:

  • the threat level of all five forces is high

  • the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.

  • the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers and supplies is low

  • the threat level of all five forces is low.

Explanation

Question 26 of 49

1

If your customers value your products more when they have your product and another firm's product rather than when they have your product alone, the other firm is considered to be a

Select one of the following:

  • competitor

  • complementor.

  • rival.

  • substitute.

Explanation

Question 27 of 49

1

An industry in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies is known as a(n) ________ industry

Select one of the following:

  • fragmented

  • consolidated

  • mature

  • emerging

Explanation

Question 28 of 49

1

The major opportunity facing firms in fragmented industries is

Select one of the following:

  • refining their current products and emphasizing an increase in service quality

  • developing new products and technologies

  • creating a first-mover advantage through technological leadership

  • the implementation of strategies that began to consolidate the industry into a smaller number of firms.

Explanation

Question 29 of 49

1

The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages

Select one of the following:

  • first-mover

  • competitive

  • comparative

  • emerging

Explanation

Question 30 of 49

1

In general, first-mover advantages can arise from any of these sources except

Select one of the following:

  • technological leadership

  • preemption of strategically valuable assets.

  • the creation of customer switching costs

  • using an imitative strategy to introduce improved versions of competitors' new products

Explanation

Question 31 of 49

1

Mature industries are characterized by

Select one of the following:

  • an increase in total industry demand

  • faster increases in production capacity

  • a slowdown in the introduction of new products or services.

  • a decrease in the amount of international competition.

Explanation

Question 32 of 49

1

The most promising opportunity for a firm in a declining industry is to

Select one of the following:

  • establish itself as a first mover in the post-shakeout industry

  • become a market leader in the pre-shakeout industry

  • become a fast follower in the pre-shakeout industry

  • merge with another firm.

Explanation

Question 33 of 49

1

Firms in a declining industry that engage in a long, systematic phased withdrawal from the industry, extracting as much value as possible during the withdrawal period, are following a(n) ________ strategy

Select one of the following:

  • niche

  • expansion

  • divestment

  • harvest

Explanation

Question 34 of 49

1

Industries in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies are called ________ industries

Select one of the following:

  • fragmented

  • mature

  • emerging

  • declining

Explanation

Question 35 of 49

1

________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry

Select one of the following:

  • Visionary advantages

  • First-mover advantages

  • Comparative advantages

  • Missionary advantages

Explanation

Question 36 of 49

1

A consolidation strategy is a good option in what type of industry

Select one of the following:

  • mature

  • emerging

  • fragmented

  • declining

Explanation

Question 37 of 49

1

________ are resources required to successfully compete in an industry.

Select one of the following:

  • Strategically valuable assets

  • Technological leader strategies

  • Process innovations

  • Product innovations

Explanation

Question 38 of 49

1

________ costs exist when customers make investments in order to use a firm's particular products or services

Select one of the following:

  • First-mover-switching

  • Technological leadership-switching

  • Customer-switching

  • Process-switching

Explanation

Question 39 of 49

1

Based on the above description, the hardwood furniture industry can best be described as a(n) ________ industry.

Select one of the following:

  • emerging

  • fragmented

  • consolidated

  • declining

Explanation

Question 40 of 49

1

The level of direct competition in the hardwood furniture industry can best be described

Select one of the following:

  • low because of the numerous firms in the industry and the slowing growth rate

  • low because of the slowing growth rate and the competition from composite wood furniture

  • high because of the numerous firms in the industry and the slowing growth rate

  • moderate because the slowing growth rate offsets the numerous firms in the industry

Explanation

Question 41 of 49

1

The threat of suppliers in the hardwood furniture can best be described as

Select one of the following:

  • low because there are a large number of suppliers selling an undifferentiated product.

  • high because there are a large number of suppliers selling an undifferentiated product

  • moderate because the large number of suppliers is offset by the undifferentiated products they are selling

  • moderate because of the slowing growth rate in the industry and the commodity nature of the products produced by suppliers

Explanation

Question 42 of 49

1

If Hickory Divine were to open its own chain of furniture stores, this would be an example of

Select one of the following:

  • complementors.

  • backward vertical integration

  • consolidation.

  • forward vertical integration

Explanation

Question 43 of 49

1

In this example, composite wood furniture would be an example of a(n)

Select one of the following:

  • substitute

  • rival.

  • new entrant

  • complementor.

Explanation

Question 44 of 49

1

The threat of buyers in this industry is best described as

Select one of the following:

  • high because there are many suppliers, none of which represents a significant portion of the hardwood furniture industry's sales.

  • low because of the slow industry growth and the commodity nature of the suppliers.

  • low because there are many suppliers, none of which represents a significant portion of the hardwood furniture industry's sales

  • high because of the slow industry growth and the commodity nature of the suppliers

Explanation

Question 45 of 49

1

Which of the following best describes the competition in the U.S. online auction industry

Select one of the following:

  • perfect competition

  • monopolistic competition

  • oligopoly

  • monopoly

Explanation

Question 46 of 49

1

For BidBuy, services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as

Select one of the following:

  • complementors.

  • substitutes

  • rivals

  • suppliers

Explanation

Question 47 of 49

1

Factors such as BidBuy's feedback rating system that are valuable to the company's customers but which are not useful on other online auction sites are examples of

Select one of the following:

  • first-mover advantages.

  • complementors.

  • substitutes

  • customer-switching costs

Explanation

Question 48 of 49

1

BidBuy has a ________ advantage

Select one of the following:

  • visionary

  • global

  • first-mover

  • comparative

Explanation

Question 49 of 49

1

The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.

Select one of the following:

  • different; the same

  • approximately the same; the same

  • different; different

  • approximately the same; different

Explanation

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