Question 1

A firm's strategic position is likely to be strong when

Accepted Answer

A)   the entry barriers within the industry it operates in are low and the exit barriers are high.
B)   its suppliers and vendors can easily forward integrate and buyers can backward integrate.
C)   all the five forces in Porter's model are strong.
D)   the gap between the value the firm's product generates and the cost to produce it is large.E) A) and B)
F) C) and D)

Question 2

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

Accepted Answer

A)   New auto companies create electric cars powered by simpler motors and gearboxes.
B)   New entrants in the automotive industry expect that incumbents will not or cannot retaliate.
C)   Car manufacturers require large-scale production in order to be cost-competitive.
D)   Few industrial products are as easy to build as cars powered by internal combustion engines.E) A) and B)
F) A) and C)

Question 3

Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry,while at the same time Samsung and Google are increasingly becoming competitive with one another.This scenario best illustrates the process of

Accepted Answer

A)   co-opetition.
B)   perfect competition.
C)   monopolization.
D)   conglomeration.E) A) and D)
F) A) and C)

Question 4

In the aircraft manufacturing industry,at least for large commercial jets,Boeing and Airbus are the only competitors.There is not a significant threat of entry because

Accepted Answer

A)   entering the aircraft manufacturing industry requires huge capital investments.
B)   there is expected to be a huge return on investment within this industry.
C)   there is no credible threat of retaliation from the incumbents.
D)   entering the aircraft manufacturing industry means violating government policies.E) None of the above
F) B) and D)

Question 5

Beans Inc.operates in a perfectly competitive agricultural industry.Classica Apparel Inc.,in contrast,operates in a monopolistically competitive industry.Keeping this information in mind,which of the following statements is true?

Accepted Answer

A)   Beans Inc. will face competition from many sellers, whereas Classica Apparel Inc. will be the only seller in the market.
B)   While Classica Apparel Inc. will have the power to set the prices for its products, Beans Inc. will have little or no ability to do so.
C)   Beans Inc. will have many buyers for its products, whereas Classica Apparel Inc. will have very few buyers for its products.
D)   While Beans Inc. will communicate the degree of product differentiation through advertising, Classica Apparel Inc. will need no advertising.E) A) and D)
F) A) and C)

Question 6

A firm's _____ relates to its ability to create value for customers (V) while containing the cost to do so (C) .

Accepted Answer

A)   strategic position
B)   incumbency
C)   threat of entry
D)   attrition rateE) C) and D)
F) All of the above

Question 7

What is most likely to happen when there is too much money in an economy?

Accepted Answer

A)   There are too many goods and services.
B)   There is a drop in interest rates.
C)   There is high economic growth.
D)   There is an increase in prices.E) A) and B)
F) A) and C)

Question 8

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Accepted Answer

A)   Threat of new entrants will be low.
B)   Bargaining power of suppliers will be high.
C)   Availability of complements will be low.
D)   Threat of substitute products and services will be high.E) None of the above
F) A) and C)

Question 9

Pure Carat Inc.is a company that sells 24-carat gold biscuits to companies that manufacture jewelry.Since the company operates in an industry where many other suppliers sell standardized products,it can most likely

Accepted Answer

A)   easily achieve a temporary competitive advantage.
B)   easily achieve a sustainable competitive advantage.
C)   only achieve competitive parity.
D)   maintain its absolute advantage for long time.E) None of the above
F) A) and B)

Question 10

Buyers are highly price sensitive when

Accepted Answer

A)   their purchase represents a small fraction of their procurement budget.
B)   they earn low profits or are strapped for cash.
C)   the quality of their products and services are highly affected by the quality of the inputs.
D)   the industry's products are highly characterized with non-price competition.E) A) and B)
F) A) and C)

Question 11

The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects,high brand loyalty,high economies of scale,and proprietary technology among incumbent firms.Thus,in the telecom industry,the

Accepted Answer

A)   threat of substitutes is most likely high.
B)   threat of new entrants is most likely low.
C)   bargaining power of buyers is most likely low.
D)   entry barriers are most likely nonexistent.E) None of the above
F) B) and C)

Question 12

Which of the following is an accurate statement about near monopolies?

Accepted Answer

A)   Near monopolies are medium-sized firms that have some market power and thereby can influence the industry structure to a certain extent.
B)   Near monopolies are small firms in an industry that have differentiated products but little or no ability to raise their prices.
C)   Near monopolies are firms that have accrued significant market power and thereby are changing the industry structure in their favor.
D)   Near monopolies are a few large firms that dominate an industry and have differentiated products, high barriers to entry, and some degree of pricing power.E) B) and C)
F) A) and B)

Question 13

Which of the following is an implication of high exit barriers in an industry?

Accepted Answer

A)   The number of underperforming firms in the industry will be low.
B)   The industry will face excess capacity.
C)   The competitive pressure among existing firms will be low.
D)   The industry will be more attractive for new entrants.E) B) and C)
F) None of the above

Question 14

Companies in the same strategic group are _____ to each other.

Accepted Answer

A)   complementors
B)   direct competitors
C)   strategic partners
D)   shareholdersE) A) and D)
F) C) and D)

Question 15

Which type of industry structure is often analyzed using game theory?

Accepted Answer

A)   oligopolistic
B)   monopolistic
C)   perfectly competitive
D)   monopolistically competitiveE) All of the above
F) A) and C)

Question 16

Economies of scale are cost advantages that accrue for firms with

Accepted Answer

A)   high fixed costs.
B)   low employee turnover.
C)   larger output.
D)   high capital risks.E) B) and C)
F) A) and D)

Question 17

Fadia Ammunition Inc.,a firm controlled and managed by the government of Fadia,is the only company that has the license to produce defense arms in the country.Which of the following industry competitive structures does this best illustrate?

Accepted Answer

A)   monopolistic competition
B)   monopoly
C)   oligopoly
D)   perfect competitionE) All of the above
F) C) and D)

Question 18

How can a firm change its industry structure from monopolistically competitive or oligopolistic to a near monopoly?

Accepted Answer

A)   by reducing the entry barriers in its industry
B)   by developing proprietary technology
C)   by implementing frequent price-cuts
D)   by decreasing its pricing powerE) A) and D)
F) B) and D)

Question 19

Which of the following forces was not originally a part of Michael Porter's fives forces model?

Accepted Answer

A)   threat of substitute products or services
B)   bargaining power of buyers
C)   rivalry among existing competitors
D)   strategic role of complementsE) C) and D)
F) All of the above

Question 20

When is the rivalry among existing competitors in an industry likely to be more intense?

Accepted Answer

A)   when the industry growth rate is high
B)   when firms make strategic commitments to compete in an industry
C)   when firms engage in non-price competition as opposed to price-cutting
D)   when the industry has low exit barriersE) B) and C)
F) A) and D)

Exam 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Beans Inc.operates in a perfectly competitive agricultural industry.Classica Apparel Inc.,in contrast,operates in a monopolistically competitive industry.Keeping this information in mind,which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following is an implication of high exit barriers in an industry?

Correct AnswerverifiedShow Answer

Buyers are highly price sensitive when

Correct AnswerverifiedShow Answer

When is the rivalry among existing competitors in an industry likely to be more intense?

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A firm's _____ relates to its ability to create value for customers (V) while containing the cost to do so (C) .

Correct AnswerverifiedShow Answer

Fadia Ammunition Inc.,a firm controlled and managed by the government of Fadia,is the only company that has the license to produce defense arms in the country.Which of the following industry competitive structures does this best illustrate?

Correct AnswerverifiedShow Answer

Pure Carat Inc.is a company that sells 24-carat gold biscuits to companies that manufacture jewelry.Since the company operates in an industry where many other suppliers sell standardized products,it can most likely

Correct AnswerverifiedShow Answer

Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry,while at the same time Samsung and Google are increasingly becoming competitive with one another.This scenario best illustrates the process of

Correct AnswerverifiedShow Answer

How can a firm change its industry structure from monopolistically competitive or oligopolistic to a near monopoly?

Correct AnswerverifiedShow Answer

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Correct AnswerverifiedShow Answer

A firm's strategic position is likely to be strong when

Correct AnswerverifiedShow Answer

Which of the following forces was not originally a part of Michael Porter's fives forces model?

Correct AnswerverifiedShow Answer

What is most likely to happen when there is too much money in an economy?

Correct AnswerverifiedShow Answer

Companies in the same strategic group are _____ to each other.

Correct AnswerverifiedShow Answer

Which of the following is an accurate statement about near monopolies?

Correct AnswerverifiedShow Answer

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

Correct AnswerverifiedShow Answer

Economies of scale are cost advantages that accrue for firms with

Correct AnswerverifiedShow Answer

In the aircraft manufacturing industry,at least for large commercial jets,Boeing and Airbus are the only competitors.There is not a significant threat of entry because

Correct AnswerverifiedShow Answer

Which type of industry structure is often analyzed using game theory?

Correct AnswerverifiedShow Answer

The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects,high brand loyalty,high economies of scale,and proprietary technology among incumbent firms.Thus,in the telecom industry,the

Correct AnswerverifiedShow Answer

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