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Chapter 2 - Evaluating a Firm's External Environment

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Quiz on Chapter 2 - Evaluating a Firm's External Environment, created by Strategy IO on 28/12/2016.
Strategy IO
Quiz by Strategy IO, updated more than 1 year ago
Strategy IO
Created by Strategy IO over 7 years ago
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Question 1

Question
The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.
Answer
  • micro-environment
  • general environment
  • task environment
  • internal environment

Question 2

Question
All of the following are elements of the general environment except
Answer
  • technological trends.
  • demographic trends.
  • industrial trends.
  • cultural trends.

Question 3

Question
________ 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.
Answer
  • Demographics
  • Economics
  • Technological trends
  • Culture

Question 4

Question
The values, beliefs and norms that guide behavior in a society are known as
Answer
  • climate.
  • demographics.
  • economics
  • culture.

Question 5

Question
When activity in an economy is relatively low for a short period of time, the economy is said to be in a
Answer
  • recession.
  • depression
  • prosperous cycle.
  • boom

Question 6

Question
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?
Answer
  • demographics
  • specific international events
  • economics
  • culture

Question 7

Question
In the S-C-P model, ________ refers to the strategies that firms in an industry implement
Answer
  • structure
  • strategy
  • conduct
  • performance

Question 8

Question
In a perfectly competitive industry
Answer
  • 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

Question 9

Question
Within the five forces framework, the five most common threats facing firms from their competitive environment include each of the following except
Answer
  • substitutes
  • complementors
  • suppliers.
  • buyers

Question 10

Question
Firms in industries characterized by ________ can expect to earn only competitive parity
Answer
  • perfect competition
  • monopolistic competition
  • oligopoly
  • monopoly

Question 11

Question
Which type of competition is characterized by a large number of firms, heterogeneous products and low cost of entry and exit?
Answer
  • perfect competition
  • monopolistic competition
  • oligopoly
  • monopoly

Question 12

Question
Which type of competition is characterized by a small number of firms, homogeneous products and costly entry and exit?
Answer
  • perfect competition
  • monopolistic competition
  • oligopoly
  • monopoly

Question 13

Question
A(n) ________ is any individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance
Answer
  • environmental threat
  • environmental opportunity
  • environmental equalizer
  • competitive advantage

Question 14

Question
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
Answer
  • barriers to entry
  • new competitors
  • suppliers
  • buyers

Question 15

Question
________ exist when a firm's costs rise as a function of its volume of production
Answer
  • Economies of scale
  • Economies of scope
  • Diseconomies of scale
  • Learning curve effects

Question 16

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

Question 17

Question
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
Answer
  • high power of buyers.
  • high threat of new entrants
  • high levels of direct competition
  • high threat of substitutes.

Question 18

Question
The threat of direct competition tends to be high when
Answer
  • 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

Question 19

Question
The products or services provided by a firm's direct competitors meet ________ customer needs in ________ ways as the product provided by the firm itself.
Answer
  • different; the same
  • approximately the same; the same
  • different; different
  • approximately the same; different

Question 20

Question
Which of the following statements regarding substitutes is accurate
Answer
  • 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

Question 21

Question
________ make a wide variety of raw materials, labor and other critical assets available to firms
Answer
  • buyers
  • Rivals
  • Suppliers
  • Substitutes

Question 22

Question
Which of the following attributes makes suppliers a stronger threat?
Answer
  • 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

Question 23

Question
Which of the following is the best example of forward vertical integration
Answer
  • 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

Question 24

Question
Buyers tend to have less power when
Answer
  • 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

Question 25

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

Question 26

Question
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
Answer
  • competitor
  • complementor.
  • rival.
  • substitute.

Question 27

Question
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
Answer
  • fragmented
  • consolidated
  • mature
  • emerging

Question 28

Question
The major opportunity facing firms in fragmented industries is
Answer
  • 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.

Question 29

Question
The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages
Answer
  • first-mover
  • competitive
  • comparative
  • emerging

Question 30

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

Question 31

Question
Mature industries are characterized by
Answer
  • 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.

Question 32

Question
The most promising opportunity for a firm in a declining industry is to
Answer
  • 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.

Question 33

Question
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
Answer
  • niche
  • expansion
  • divestment
  • harvest

Question 34

Question
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
Answer
  • fragmented
  • mature
  • emerging
  • declining

Question 35

Question
________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry
Answer
  • Visionary advantages
  • First-mover advantages
  • Comparative advantages
  • Missionary advantages

Question 36

Question
A consolidation strategy is a good option in what type of industry
Answer
  • mature
  • emerging
  • fragmented
  • declining

Question 37

Question
________ are resources required to successfully compete in an industry.
Answer
  • Strategically valuable assets
  • Technological leader strategies
  • Process innovations
  • Product innovations

Question 38

Question
________ costs exist when customers make investments in order to use a firm's particular products or services
Answer
  • First-mover-switching
  • Technological leadership-switching
  • Customer-switching
  • Process-switching

Question 39

Question
Based on the above description, the hardwood furniture industry can best be described as a(n) ________ industry.
Answer
  • emerging
  • fragmented
  • consolidated
  • declining

Question 40

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

Question 41

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

Question 42

Question
If Hickory Divine were to open its own chain of furniture stores, this would be an example of
Answer
  • complementors.
  • backward vertical integration
  • consolidation.
  • forward vertical integration

Question 43

Question
In this example, composite wood furniture would be an example of a(n)
Answer
  • substitute
  • rival.
  • new entrant
  • complementor.

Question 44

Question
The threat of buyers in this industry is best described as
Answer
  • 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

Question 45

Question
Which of the following best describes the competition in the U.S. online auction industry
Answer
  • perfect competition
  • monopolistic competition
  • oligopoly
  • monopoly

Question 46

Question
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
Answer
  • complementors.
  • substitutes
  • rivals
  • suppliers

Question 47

Question
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
Answer
  • first-mover advantages.
  • complementors.
  • substitutes
  • customer-switching costs

Question 48

Question
BidBuy has a ________ advantage
Answer
  • visionary
  • global
  • first-mover
  • comparative

Question 49

Question
The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.
Answer
  • different; the same
  • approximately the same; the same
  • different; different
  • approximately the same; different
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