MAN Chapt 3

A company’s “macro-environment” refers to:
A. the industry and the competitive arena in which the company operates.
B. general economic conditions plus the factors driving change in the markets where a company operates.
C. the strategically relevant factors outside a company’s industry boundaries—economic conditions,
political factors, socio-cultural forces, technological factors, environmental factors, and legal/regulatory
conditions.
D. the competitive market environment that exists between a company and its competitors.
E. the dominant economic features of a company’s industry.
C. the strategically relevant factors outside a company’s industry boundaries—economic conditions,
political factors, socio-cultural forces, technological factors, environmental factors, and legal/regulatory
conditions.
Which one of the following is NOT part of a company’s macro-environment?
A. Economic conditions in the economy at large
B. Political factors and socio-cultural forces
C. Technological factors and legal/regulatory conditions
D. The immediate industry and competitive environment in which the company operates
E. The company’s resource strengths, resource weaknesses, and competitive capabilities
E. The company’s resource strengths, resource weaknesses, and competitive capabilities
Which one of the following is part of a company’s macro-environment?
A. Conditions outside the market.
B. European culture, values, and lifestyles.
C. The pace of technological change factors and legal and regulatory conditions.
D. The industry and competitive environment arena outside the company’s operating territory.
E. The company’s resource strengths, resource weaknesses, and competitive capabilities.
C. The pace of technological change factors and legal and regulatory conditions.
Which of the following is NOT one of the principal components of strategic significance in the PESTEL
analysis?
A. Political factors including the extent to which government intervenes in the economy
B. Economic conditions that include the general economic climate and specific factors such as interest
rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can
affect consumer confidence
C. Socio-cultural forces including societal values, attitudes, cultural factors, and lifestyles that impact
business
D. Technological factors includes the pace of change and technical developments that have the potential
for impacting society
E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and
the mobility barriers that inhibit business
E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business
Which of the following is NOT a factor to consider when identifying economic conditions in the macroenvironment?
A. The movement and influence of exchange rates, the inflation rate and per capita domestic product on
the industry
B. The implications of trade deficits or surpluses on the macro-environment
C. The strategically relevant general economic climate outside the firm’s industry boundaries
D. The combined strength of the competitive factors influencing the firm and their implications for
strategic momentum and the moves and countermoves of rivals impacted by the economy at large
E. Conditions in the markets for stocks and bonds, which can affect consumer confidence and
discretionary income
D. The combined strength of the competitive factors influencing the firm and their implications for strategic momentum and the moves and countermoves of rivals impacted by the economy at large
Which of the following factors represents the strategically relevant political factors in the macroenvironment
that will influence the performance of all firms across the board?
A. The strength of the federal banking system
B. The exogenous forces related to the general environmental demand
C. Social factors that could fuel a political agenda and create greater transparency
D. Bailouts and energy policies that are industry-specific
E. Tax policy, fiscal policy, and tariffs providing impetus for anti-trust matters
A. The strength of the federal banking system
Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry?
A. How many companies in the industry have good track records for revenue growth and profitability?
B. What strategic moves are rivals likely to make next?
C. What are the industry’s key factors for future competitive success?
D. Is the outlook for the industry conducive to providing attractive profitability?
E What are the driving forces in the industry, and what impact will these changes have on competitive
intensity and industry profitability?
A. How many companies in the industry have good track records for revenue growth and profitability?
Thinking strategically about the industry and competitive environment involves in-depth analysis and
evaluation of such consideration as:
A. the strength of the equilibrium forces driving change in the environment.
B. the identification of the dominant financial risk components of the industry in which the company
operates.
C. the market positions of industry rivals and their relative strength, and the competitive forces rivals are
facing and what impact they will have on competitive intensity and industry profitability.
D. the critical factors influencing past competitive success in the industry.
E. All of these.
C. the market positions of industry rivals and their relative strength, and the competitive forces rivals are facing and what impact they will have on competitive intensity and industry profitability.
The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is
the:
A. Five Forces Model.
B. SWOT.
C. Competition Intensity Model.
D. Dynamic Simulation Model.
E. Competitor Profiling.
A. Five Forces Model.
The competitive pressures on companies within an industry comes from those:
A. associated with the market maneuvering and jockeying for buyer patronage that goes on among rival
firms in the industry.
B. companies in other industries attempting to win buyers over to their substitute products.
C. associated with the threat of new entrants into the marketplace.
D. associated with the bargaining power of suppliers and customers.
E. All of these.
E. All of these.
The nature and strength of the competitive forces that prevail in an industry is generally a joint product
of:
A. competition from rival sellers.
B. competition from potential new entrants.
C. competition from producers of substitute products.
D. competitive pressures stemming from the bargaining power of both suppliers and buyers.
E. All of these.
E. All of these.
Which of the following is NOT one of the five typical sources of competitive pressures?
A. The power and influence of industry driving forces
B. The bargaining power of suppliers and seller-supplier collaboration
C. The threat of new entrants into the market
D. The attempts of companies in other industries to win customers over to their own substitute products
E. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the
industry
A. The power and influence of industry driving forces
The most powerful of the five competitive forces is USUALLY:
A. the competitive pressures that stem from the ready availability of attractively priced substitute
products.
B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage
that goes on among rival sellers in the industry.
C. the benefits that emerge from close collaboration with suppliers and the competitive pressures that such
collaboration creates.
D. the competitive pressures associated with the potential entry of new competitors.
E. the bargaining power and leverage that large customers are able to exercise.
B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage
that goes on among rival sellers in the industry.
Typically, the weakest of the five competitive forces in an industry is/are:
A. the threat posed by potential new entrants.
B. the bargaining power and leverage that suppliers are able to exercise.
C.the competitive pressures that stem from the ready availability of attractively priced substitute
products.
D. the bargaining power and leverage that buyers are able to exercise.
E. None of these is typically the weakest.
E. None of these is typically the weakest.
Using the Five Forces model of competition to determine the character and strength of the competitive forces within a given industry involves:
A. building the picture of competition in three steps: (1) identify the different parties involved, along with
specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming
from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective
impact of the five competitive forces is conducive to earning attractive profits in the industry.
B. 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.
C. evaluating whether competition is being intensified or weakened by the industry’s driving forces and
key success factors.
D. 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.
E. gauging the overall strength of competition based on how many industry rivals are operating with a
competitive advantage and how many are operating at a competitive disadvantage.
A. building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.
What makes the marketplace a competitive battlefield is:
A. the race of industry members to build strong defenses against the industry’s driving forces.
B. the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over
rivals.
C. the ongoing race among rival sellers to have the highest-quality product.
D. the ongoing efforts of industry members to introduce new and improved products/services at a faster
rate than their rivals.
E. the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits.
B. the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals.
Market maneuvering among industry rivals:
A. determines whether the industry’s strategic group map will be static or dynamic.
B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and
powerful buyers.
C. is usually an industry’s strongest driving force.
D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals
have for one another’s likely next moves.
E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving
competitive landscape that delivers winners and losers.
E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers
Rivalry increases:
A. when buyer demand is growing fast or increasing.
B. as it becomes more costly for buyers to switch brands.
C. as the products of rival sellers becomes more strongly differentiated.
D. when there is excess supply of unused production capacity, especially if high fixed costs exist.
E. All of these.
A. when buyer demand is growing fast or increasing.
Factors that cause the rivalry among competing sellers to be weaker include:
A. low buyer switching costs and rival sellers that are relatively equal in size and capability.
B. rapid growth in buyer demand and high buyer switching costs.
C. few industry rivals, causing any one company’s actions to be easily anticipated and countered by its
rivals.
D. low barriers to entry and weakly differentiated products among rival sellers.
E. slow growth in buyer demand and strongly differentiated products.
B. rapid growth in buyer demand and high buyer switching costs.
Which one of the following does NOT cause the rivalry among competing sellers to be weak?
A. High buyer switching costs.
B. Rapid growth in buyer demand.
C. Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales.
D. Low barriers to entry.
E. Strongly differentiated products among rival sellers.
D. Low barriers to entry.
Factors that tend to result in weak rivalry among competing sellers include:
A. less costly buyer switching costs and when low exit-barriers exist keep unprofitable firms from leaving
the industry.
B. rapid growth in buyer demand, high buyer costs to switch brands, and more strongly differentiated
products.
C. less strongly differentiated products among rival sellers.
D. rivals that are quite diverse in terms of their strategies, objectives, and countries of origin.
E. conditions where outsiders have recently acquired weak competitors and are challenged in migrating
them into major contenders.
B. rapid growth in buyer demand, high buyer costs to switch brands, and more strongly differentiated
products.
The rivalry among competing sellers tends to be less intense when:
A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit
sales.
B. buyer demand is weak and many sellers have excess capacity and/or inventory.
C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market
standing and business performance.
D. rivals have diverse strategies and objectives and are located in different countries.
E. rival sellers have weakly differentiated products.
C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market
Rivalry among competing sellers is generally more intense when:
A. there are relatively few industry key success factors and rivals have highly differentiated products.
B. the industry’s driving forces are strong and rivals have strongly differentiated products.
C. barriers to entry are moderately high and the pool of likely entry candidates is small.
D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional
efforts and advertising, and otherwise gain sales and market share.
E. barriers to entry are high and buyer switching costs are high.
D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional
efforts and advertising, and otherwise gain sales and market share.
Rivalry among competing sellers grows in intensity when:
A. rivals’ products/services are sold at widely varying prices and there are only a few rivals.
B. rivals have highly differentiated products and buyer demand is growing rapidly.
C. there are so many industry rivals that the impact of any one company’s actions is spread thinly across
all industry members.
D. the products/services of rivals are strongly differentiated and buyers have high switching costs.
E. buyer demand is growing slowly or declining and the number of competitors is increasing and they
become more equal in size and competitive capability.
E. buyer demand is growing slowly or declining and the number of competitors is increasing and they become more equal in size and competitive capability.
The rivalry among competing firms tends to be more intense:
A. when demand for the product is growing slowly, buyers have low switching costs, and the actions of
any one company to attract more customers and boost market share have strong direct impact on their
rivals.
B. when the products/services of rival sellers are more strongly differentiated and buyer demand is strong
and growing rapidly.
C. when rivals are relatively content with their market position.
D. when there are so many industry rivals that the impact of any one company’s actions is spread thinly
across all industry members.
E. the smaller the number of firms in the industry and the more unequal their market shares.
A. when demand for the product is growing slowly, buyers have low switching costs, and the actions of any one company to attract more customers and boost market share have strong direct impact on their rivals.
Which of the following is NOT among the factors that affect whether competitive rivalry among participating firms is strong, moderate, or weak?
A. Whether the products of rival sellers are strongly or weakly differentiated
B. Whether demand for the industry’s product is growing rapidly or slowly
C.The degree to which rivals deploy whatever means it believes will attract and retain buyers, strengthen
market position, and yield good profits
D. Whether the industry’s key driving forces yield firms in the industry with adequate profits are strong or
weak
E. Whether industry conditions tempt competitors to use price discounting or other competitive weapons
to boost total sales volume and market share
D. Whether the industry’s key driving forces yield firms in the industry with adequate profits are strong or weak
Rivalry among competing sellers tends to be more intense when:
A. competitors vary in size and capability, such that smaller firms must really struggle to even survive.
B. buyer switching costs are high and market demand is growing rapidly.
C. several competitors are under pressure to improve their market share or profitability and launch fresh
strategic initiatives to attract more buyers and bolster their business position.
D. the products of rival sellers are strongly differentiated.
E. All of these.
C. several competitors are under pressure to improve their market share or profitability and launch fresh
strategic initiatives to attract more buyers and bolster their business position.
The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage, suggests the rivalry force:
A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus
strategies.
B. is typically a weaker competitive force than is the threat of entry of new rivals.
C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive
weapons to boost unit sales.
D. tends to intensify when strong companies with sizable financial resources, proven competitive
capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and
launch aggressive, well-funded moves to transform into strong market contenders.
E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and
buyers have moderate switching costs.
D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders.
In analyzing the strength of competition among rival firms, an important consideration is:
A. the potential for buyers to exercise strong bargaining power.
B. the diversity of competitors in terms of long-term direction objectives, strategies, and countries of
origin.
C. the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership
strategies and focus strategies.
D. the extent to which some rivals have more than two competitively valuable competencies or
capabilities.
E .whether the industry is characterized by a strong learning/experience curve and whether the industry is
composed of many or few strategic groups.
B. the diversity of competitors in terms of long-term direction objectives, strategies, and countries of origin.
The intensity of rivalry among competing sellers does NOT depend on whether:
A. the industry has more than two strong driving forces and whether the industry has more than two
diverse and capable strategic groups.
B. competitors are diverse in terms of long-term directions, objectives, strategies, and countries of origin.
C. strong companies outside the industry have acquired weak firms in the industry and are launching
aggressive moves to transform the acquired companies into strong market contenders.
D. one or two rivals have particularly powerful and successful strategies to grow the business, attract and
retain buyers, and develop a sustained competitive advantage.
E. industry conditions attract industry members to use price cuts or other competitive weapons to boost
total sales volume and market share.
A. the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups.
In which one of the following instances is rivalry among competing sellers NOT more intense?
A. When certain competitors are dissatisfied with their market position and make moves to bolster their
standing
B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive
moves to transform their newly acquired competitors into stronger market contenders
C. When competitors are fairly equal in size and capability
D. When the products of rivals are weakly differentiated, buyer switching costs are low, and market
demand is growing slowly
E. When there are vast numbers of small rivals so the impact of any one company’s actions is spread
thinly across all industry members
E. When there are vast numbers of small rivals so the impact of any one company’s actions is spread
thinly across all industry members
Which of the following is generally NOT considered a barrier to entry?
A. The reaction of incumbent firms to rapid market growth
B. High capital requirements and restrictive government policies
C. Strong brand preferences and a high degree of customer loyalty
D. Cost advantages due to the economies of scale in production enjoyed by incumbent firms
E. Strong “network effects” in customer demand
A. The reaction of incumbent firms to rapid market growth
Potential entrants are more likely to be deterred from actually entering an industry when:
A. incumbent firms are willing and able to be aggressive in defending their market positions against entry.
B. incumbent firms are complacent.
C. buyers are not particularly price sensitive and the industry already contains a dozen or more rivals.
D. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a
meaningful cost advantage.
E. buyer switching costs are moderately low because of strong product differentiation among incumbent
firms.
A. incumbent firms are willing and able to be aggressive in defending their market positions against entry.
Competitive pressures associated with the threat of entry are greater when:
A. incumbent firms are unable or unwilling to strongly contest the entry of newcomers.
B. a large pool of potential entrants exists, some of which have the capabilities to overcome high entry
barriers.
C. entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers
can expect to earn attractive profits without inviting a strong reaction from incumbents.
D. existing industry members are looking to expand their market reach by entering product segments or
geographic areas where they currently do not have a presence.
E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry.
E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry.
Which one of the following does NOT intensify the competitive pressures associated with the threat of
entry?
A. When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the
entry of newcomers
B. When industry members are struggling to earn good profits
C. When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly
D. When existing industry members are looking to expand their market reach by entering product
segments or geographic areas where they currently do not have a presence
E. When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and
resources to hurdle whatever entry barriers exist
B. When industry members are struggling to earn good profits
Which one of the following increases the competitive pressures associated with the threat of entry?
A. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of
newcomers
B. When strong brand preference and a high degree of customer loyalty exists for the product offerings of
incumbents
C. When buyer demand for the product is growing fairly slowly
D. When few outsiders have the expertise and financial resources and capabilities to hurdle whatever
entry barriers exist
E. When new entrants can expect to earn attractive profits
E. When new entrants can expect to earn attractive profits
The competitive threat that outsiders will enter a market is weaker when:
A. financially strong incumbents send strong signals that they will launch strategic initiatives to combat
the entry of newcomers.
B. the industry is characterized by the lack of sizable scale economies and learning/experience curve
effects.
C. the industry’s market growth is rapid.
D. the capital requirements for entering the market are within acceptable levels to provide acceptable
returns on investment.
E. buyers have little loyalty to the brands and product offerings of existing industry members.
A. financially strong incumbents send strong signals that they will launch strategic initiatives to combat the entry of newcomers.
Competitive pressures stemming from the threat of entry are weaker when:
A. the incumbents do not enjoy preferential access to distribution channels (e.g., securing adequate space
on retailer shelves).
B. strong network effects exist.
C. the industry outlook is risky or uncertain.
D. incumbent firms have little ability to leverage distributors, dealers, and/or retailers to retain their
business.
E. the nature of the industry entails few scale economies.
C. the industry outlook is risky or uncertain.
The best test of whether potential entry is a strong or weak competitive force is:
A. the strength of buyer loyalty to existing brands.
B. whether the industry’s driving forces make it harder or easier for new entrants to be successful.
C. whether the strategies of industry members are well-matched to the industry’s key success factors.
D. whether there are any vacant spaces on the industry’s strategic group map.
E. to ask if the industry’s growth and profit prospects are strongly attractive to potential entry candidates.
E. to ask if the industry’s growth and profit prospects are strongly attractive to potential entry candidates.
Which of the following is NOT a good example of a substitute product that triggers stronger competitive
pressures?
A. A salad as a substitute for French fries
B. Wireless phones as a substitute for wired telephones
C. Coca-Cola as a substitute for Pepsi
D. Snowboards as a substitute for snow skis
E. Video-on-demand services from a cable TV company as a substitute for going to the movies
C. Coca-Cola as a substitute for Pepsi
The competitive pressures from substitute products tend to be stronger when:
A. good substitutes are readily available and priced above the market.
B. there are more than 10 sellers of substitute products.
C.
the quality and performance and other attributes of the substitutes is viewed as being comparable or
better in meeting buyer’s requirements.
D. buyers have high psychic costs in severing existing brand relationships and establishing new ones.
E.
Switching costs are high, thereby making it easier for the sellers of attractive substitutes to lure buyers
to the offering.
A. good substitutes are readily available and priced above the market.
In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products?
A. The costs to buyers of switching over to the substitutes are low.
B. Buyers are dubious about using substitutes.
C. The quality and performance of the substitutes is well-matched to what buyers need to meet their
requirements.
D. Buyer brand loyalty is weak.
E. Substitutes are readily available at competitive prices.
B. Buyers are dubious about using substitutes.
Industry rivals tend to experience weak competitive pressures from substitute products when:
A. the available substitute products are weakly differentiated from one another.
B. the buyers of the industry’s products are few in number and they have substantial amounts of leverage with sellers.
C. rival sellers experience strong bargaining power from both suppliers and influential customers.
D. buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the quality, performance, and other attributes they deliver.
E. the producers of substitute products are all pursuing strategies to strongly differentiate their products on the basis of quality and product performance.
D. buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the
Just how strong the competitive pressures are from substitute products depends on:
A. whether the substitutes are strongly or weakly differentiated and whether the relative frequency of buyer purchases is high or low.
B. whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.
C. whether the available substitutes are products or services.
D. whether the producers of substitutes have ample budgets for new product R&D.
E. the speed with which buyer needs and expectations are changing.
B. whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.
To determine how strong the threat of substitutes will be entails:
A. identifying the relative price/performance relationship of the substitutes, the switching costs and the
overall buyer demand for the substitute.
B. identifying the attractiveness of other industries.
C. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques.
D. adopting a substitute product concentration factor to the buyer volume.
E. All of these.
A. identifying the relative price/performance relationship of the substitutes, the switching costs and the overall buyer demand for the substitute.
The lower the price of product substitutes, the higher their quality and performance and the lower the
user’s switching costs, the
A. harder it is for the sellers of attractive substitutes to lure buyers to their offering.
B. more intense the competitive pressures posed by substitute products.
C. less intense the competitive pressures posed by substitute products.
D. greater rival sellers experience strong bargaining power from both suppliers and influential customers.
E. less rival sellers experience weak bargaining power from both suppliers and influential customers.
B. more intense the competitive pressures posed by substitute products.
Whether supplier-seller relationships in an industry represent a strong or weak source of competitive
pressure is a function of:
A. whether the profits of suppliers are relatively high or low.
B. the number of suppliers that each seller/industry member purchases from on average.
C. how aggressively rival industry members are trying to differentiate their products.
D. whether demand for supplier products is high and they are in short supply.
E. whether the prices of the items being furnished by the suppliers are rising or falling.
D. whether demand for supplier products is high and they are in short supply.
The strength of competitive pressures that suppliers can exert on industry members is MAINLY a
function of:
A. whether needed inputs are in short supply and whether suppliers provide differentiated input that
enhances performance of the product.
B. whether suppliers self-manufacture what they supply or source their items from other manufacturers.
C. the industry’s position in the growth cycle.
D. whether technological change in the businesses of suppliers is rapid or slow.
E. whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.
A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product.
The bargaining leverage of suppliers is greater when:
A. there suppliers products/services account for a small percentage of industry members’ costs.
B. industry members incur low costs in switching their purchases from one supplier to another.
C. industry members account for a big fraction of supplier’s sales.
D. there is extensive seller-supplier collaboration.
E. the supplier industry is composed of a large number of relatively small suppliers.
A. there suppliers products/services account for a small percentage of industry members’ costs.
In which one of the following instances are the competitive pressures stemming from supplier bargaining
power NOT weakened?
A. When industry members pose a credible threat of backward integration into the business of suppliers
B. When the cost of switching from one supplier to another is low
C. When the buying firms purchase in large quantities and thus are important customers of the suppliers
D. When the item being supplied is a commodity
E. When the items purchased from suppliers are in short supply
E. When the items purchased from suppliers are in short supply
Supplier bargaining power is weaker when:
A. good substitutes for supplier products/services exists.
B. the cost of switching from one supplier to another is high.
C. suppliers furnish a critical part or component.
D. buying firms are looking for suppliers with good just-in-time supply capabilities.
E. a few large suppliers are the primary sources of a particular item.
A. good substitutes for supplier products/services exists.
Which one of the following is NOT a factor in causing supplier bargaining power to be stronger?
A. The products/services needed from suppliers are in short supply.
B. Industry members can’t integrate backward and self-supply themselves.
C. The item being supplied is a commodity.
D. The item being supplied significantly enhances the quality or performance of the products of industry
members.
E. Suppliers are not dependent on the industry for a large portion of their revenues.
C. The item being supplied is a commodity.
When an industry member is a major customer of the supplier, and the relationship (partnership) is
unusually effective and mutually advantageous:
A. it is rare for such partnerships to have much competitive impact on those industry members not having
such partnerships.
B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in
their dealings with these industry members.
C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry
members who lack productive collaborative relationships with their suppliers.
D. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry
members, provided technological change in the suppliers’ business is rapid and the item being supplied
is a commodity.
E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the
items furnished by supply chain partners amount to 50 percent or more of total cost.
C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry
members who lack productive collaborative relationships with their suppliers.
The higher the switching costs for industry members, the more it can:
A. limit supplier bargaining power.
B. provide a stronger bargaining power for suppliers.
C. enhance the quality of parts and components being supplied, and in effect reduce defect rates.
D. provide important cost savings for the collaborative supplier-seller relationship.
E. All of these.
A. limit supplier bargaining power.
Whether buyer-seller relationships in an industry represent a strong or weak source of competitive
pressure is a function of:
A. the speed with which general economic conditions and interest rates are changing.
B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in
their favor and whether strategic partnerships between certain industry members can adversely affect
other industry members.
C. how many buyers purchase all of their requirements from a single seller versus how many purchase
from several sellers.
D. the number of buyers versus the number of sellers.
E. whether industry members are spending more or less on advertising.
B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members.
Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry
members depends in part on:
A. the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive.
B. how many buyers are engaged in collaborative partnerships with sellers.
C. whether entry barriers are high or low and the size of the pool of likely entry candidates.
D. whether the overall quality of the items being furnished by industry members is rising or falling.
E. whether demand-supply conditions represent a buyer’s market or a seller’s market.
E. whether demand-supply conditions represent a buyer’s market or a seller’s market.
Which of the following is NOT a factor that causes buyer bargaining power to be stronger?
A. Some buyers are a threat to integrate backward into the business of sellers and become an important
competitor.
B. Buyers are small and numerous relative to sellers.
C. Buyers have considerable discretion over whether and when they purchase the product.
D. Buyers purchase the item frequently and are well-informed about sellers’ products, prices, and costs.
E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively
low.
B. Buyers are small and numerous relative to sellers.
Buyer bargaining power is stronger when:
A. winning the business of certain high-profile customers offers a seller important market exposure or prestige.
B. the extent and importance of collaborative partnerships and alliances between particular sellers and
buyers is credible.
C. buyers cannot integrate backward into the product market of sellers.
D. sellers’ products are differentiated, making it easy and inexpensive for buyers to switch to competing brands.
E. the industry’s products are standardized or undifferentiated.
E. the industry’s products are standardized or undifferentiated.
Which of the following factors is NOT a relevant consideration in determining the strength of buyer
bargaining power?
A. The relationship between the buyer market and seller market
B. The degree to which the seller is a manufacturer of goods and services in substantial quantities
C. The degree to which buyers pose a credible threat to integrate backward into the product market of
sellers
D. The degree to which buyers are well-informed about a seller’s products, prices and costs
E. The degree to which industry goods are standardized and undifferentiated
B. The degree to which the seller is a manufacturer of goods and services in substantial quantities
Collaborative relationships between particular sellers and buyers in an industry can represent a source of
strong competitive pressure when:
A. virtually all buyers have strong brand attachments and are highly brand loyal.
B. demand for the product is growing rapidly.
C. sales are made to buyer groups with either strong bargaining power or high sensitivity.
D. sellers are racing to add the latest and greatest performance features so as to attract the patronage of
important or prestigious buyers.
E. buyers are very quality conscious.
C. sales are made to buyer groups with either strong bargaining power or high sensitivity.
In which of the following circumstances are competitive pressures associated with the bargaining power of buyers NOT relatively strong?
A. When buyer demand is growing rapidly
B. When buyers are relatively well-informed about sellers’ products, prices, and costs
C. When buyers pose a credible threat to integrate backward into the product market of sellers
D. When sellers’ products are weakly differentiated, making it easy for buyers to switch to competing
brands
E. When buyers have considerable discretion over whether and when they purchase the product
A. When buyer demand is growing rapidly
Competitive pressures stemming from buyer bargaining power tend to be weaker when:
A. the number of buyers is small, such that each customer’s business tends to be particularly important to
a seller.
B. buyer demand is growing slowly or maybe even declining.
C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively
high.
D. buyers purchase the item frequently and are well-informed about sellers’ products, prices, and costs.
E. the buyer group consists of a few large buyers and the seller group consists of numerous small firms.
C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.
Which of the following conditions acts to weaken buyer bargaining power?
A. When buyers are unlikely to integrate backward into the business of sellers
B. When buyers purchase the item frequently and are well-informed about sellers’ products, prices, and
costs
C. When the costs incurred by buyers in switching to competing brands or to substitute products are
relatively low
D. When the products of rival sellers are weakly differentiated and buyers have considerable discretion
over whether and when they purchase the product
E. When buyers are few in number and/or often purchase in large quantities
A. When buyers are unlikely to integrate backward into the business of sellers
Buyers are in position to exert strong bargaining power in dealing with sellers when:
A. their costs to switch to competing brands or to substitute products are relatively high.
B. a particular seller’s product delivers quality or performance that is very important to the buyer and is
not matched by other brands.
C. they buy the product infrequently or in small quantities and are not particularly well-informed about
sellers’ products, prices, and costs.
D. buyer demand is growing rapidly.
E. Buyers are price-sensitive due to the product representing a significant fraction of their purchases.
E. Buyers are price-sensitive due to the product representing a significant fraction of their purchases.
Which of the following factors is NOT a relevant consideration in judging whether buyer bargaining
power is relatively strong or relatively weak?
A. Whether certain customers offer sellers important market exposure or prestige
B. Whether customers are relatively well-informed about sellers’ products, prices, and costs
C. Whether buyer needs and expectations are changing rapidly or slowly
D. Whether sellers’ products are highly differentiated, making it troublesome or costly for buyers to switch
to competing brands or to substitute products
E. Whether sellers pose little threat of forward integration into the product market of their customers and
whether buyers pose a major threat to integrate backward into the product market of sellers
C. Whether buyer needs and expectations are changing rapidly or slowly
Not all buyers of an industry’s product have equal degrees of bargaining power with sellers, because:
A. sellers in an industry provide similar products and generally their cost structures are different because
of competitive advantages in their operation.
B. some sellers may be less sensitive than others to price, quality, or service differences.
C. along the various stages of the value chain sellers are conducive to earning attractive profits.
D. the industry is a highly cohesive structure with limited fragmentation and few industry members.
E. All of these.
B. some sellers may be less sensitive than others to price, quality, or service differences.
A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers,
weak competition from substitute products, and little bargaining leverage on the part of both suppliers
and customers:
A. lacks powerful driving forces.
B. gives each industry competitor the best potential for building sustainable competitive advantage over
rival firms.
C. makes it challenging for industry members to compete successfully unless they can strongly differentiate their products.
D. is conducive to industry members earning attractive profits.
E. requires that industry members have low costs in order to be competitively successful.
D. is conducive to industry members earning attractive profits.
A competitive environment where there is strong rivalry among sellers, low entry barriers, strong
competition from substitute products, and considerable bargaining leverage on the part of both suppliers
and customers:
A. is competitively unattractive from the standpoint of earning good profits.
B. offers little ability to build a sustainable competitive advantage.
C. is highly conducive to achieving strong product differentiation and high customer loyalty to the company’s brand.
D. offers moderate to good prospects for making a reasonable profit and building a sustainable competitive advantage.
E. requires that industry members have a strongly differentiated product offering in order to be profitable.
A. is competitively unattractive from the standpoint of earning good profits.
As a rule, the collective impact of competitive pressures associated with the five competitive forces:
A. determines the strength of the industry’s driving forces.
B. determines the extent of the competitive pressure on industry profitability.
C. means that fewer companies can achieve a competitive advantage via anything other than being the
industry’s low-cost leader.
D. means there will be a larger number of competitive advantage opportunities for industry members.
E. means there will be a greater number of industry key success factors.
B. determines the extent of the competitive pressure on industry profitability.
A company’s strategy is increasingly effective the more it can match the company strategy to competitive
conditions, so the firm can:
A. pursue avenues that expose the firm to as many of the different competitive pressures as possible.
B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.
C. pursue ways to identify and complement the five forces contradictions and inferences to attract competitive growth opportunities.
D. pursue avenues that promote strategic thinking about how to contest competitor strengths and weaknesses and to create a checklist of potential profitability preferences.
E. None of these.
B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.
The “driving forces” in an industry:
A. are usually triggered by changing technology or stronger learning/experience curve effects.
B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big
reductions in entry barriers.
C. are major underlying causes of changing industry and competitive conditions and have the biggest
influences in reshaping the industry landscape and altering competitive conditions.
D. appear when an industry begins to mature but are seldom present during early stages of the industry
life cycle.
E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute
products.
C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.
Industry conditions change:
A. because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and
downs in the economy, and higher/lower entry barriers.
B. because of newly emerging industry threats and industry opportunities that alter the composition of the
industry’s strategic groups.
C. because new industry key success factors emerge.
D. because important forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways.
E. chiefly because of changes in the barriers to entry and the degree of competition from substitute
products.
D. because important forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways.
The task of driving forces analysis is to:
A. develop a comprehensive list of all the potential causes of changing industry conditions.
B. predict which new driving forces will emerge next.
C. determine which one of the five competitive forces is the biggest driver of industry change.
D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces.
E. learn what the industry key success factors are and how they might change in the future.
D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces.
Driving forces analysis:
A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.
B. identifies which strategic group is the most powerful.
C. helps managers identify which industry member is likely to become (or remain) the industry leader and why.
D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage.
E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.
A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.
Which of the following is NOT generally a “driving force” capable of producing fundamental changes in
industry and competitive conditions?
A. Changes in the long-term industry growth rate
B. Increasing globalization of the industry
C. Product innovation and technological change
D. Movement in the economy and in interest rates
E. Regulatory influences and government policy changes
D. Movement in the economy and in interest rates
Which of the following are most UNLIKELY to qualify as driving forces?
A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency
B. Increasing globalization of the industry and product innovation
C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry
D. Increasing efforts to collaborate with suppliers via strategic alliances and partnerships, escalating risk levels and normalization of cost and efficiency in the industry
E. Marketing innovations and changes in who buys the industry’s product and how they use it
D. Increasing efforts to collaborate with suppliers via strategic alliances and partnerships, escalating risk levels and normalization of cost and efficiency in the industry
Which of the following do NOT qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?
A. Changes in who buys the product and how they use it, and changes in the long-term industry growth rate
B. Changes brought about by the entry or exit of major firms, product innovation, and marketing innovation and cost efficiency.
C. Changes in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
D. Changes in buyer preferences for differentiated products instead of mostly standardized or identical
products
E. Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilities
C. Changes in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
Which of the following is MOST likely to qualify as a driving force?
A. Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or
more rivals
B. Successful introduction of innovative new products or new ways to market products
C. An increase in the prices of substitute products
D. Decisions on the part of industry’s three biggest competitors not to pursue a strategy of striving to be
the industry’s low-cost leader
E. Decisions by one or more outsiders not to attempt to enter the industry
B. Successful introduction of innovative new products or new ways to market products
Which one of the following is NOT a common type of driving force?
A. Reductions in uncertainty and business risk
B. Changing societal concerns, attitudes, and lifestyles
C. Diffusion of technical know-how across companies and countries
D. Increasing efforts to collaborate closely with suppliers
E. Advances in technology and manufacturing process innovation
D. Increasing efforts to collaborate closely with suppliers
Increasing globalization of the industry can be a driving force because:
A. the products of foreign competitors are nearly always cheaper or of better quality than those of
domestic companies.
B. foreign producers typically have lower costs, greater technological expertise, and more product
innovation capabilities than domestic firms.
C. companies need to spread their operating reach into more and more country markets to meet consumer
demand and take advantage of available operating activities.
D. it results in companies having fewer competitors and a strategic group map with fewer circles.
E. market growth rates go up, product innovation speeds up, and new firms are likely to enter the
industry.
C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities.
Driving forces analysis helps managers identify whether:
A. the collective impact of the driving forces will act to increase/decrease market demand, increase/
decrease competition, and raise/lower industry profitability in the years ahead.
B. it will become more or less important to aim the company’s strategy at being the industry’s low-cost
producer.
C. the driving forces will have a bigger impact on company profitability than competitive forces.
D. the industry is likely to become more or less vertically integrated and why.
E. competitive advantages are likely to grow or diminish in importance.
A. the collective impact of the driving forces will act to increase/decrease market demand, increase/
decrease competition, and raise/lower industry profitability in the years ahead.
Evaluating the industry’s driving forces, as a whole, requires understanding their influence on the
attractiveness of industry environment and:
A. generally are determined by the sizes of strategic groups and the power of rival firms’ competitive
strategies.
B. generally are defined in ways that will strengthen or weaken market demand, competition, and industry
profitability in future years.
C. frequently cause a reduction in the bargaining power of buyers.
D. normally are triggered by movement in the economy, higher or lower interest rates, or important new
strategic alliances.
E. can be triggered by such factors as growing competitive pressures from substitute products, and the
efforts of rival firms to employ new or different offensive strategies.
B. generally are defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years.
In analyzing driving forces, the strategist’s role is to
A. identify the driving forces and evaluate their impact on (1) demand for the industry’s product, (2) the
intensity of competition, and (3) industry profitability.
B. predict future marketing innovations and how fast the industry is likely to globalize.
C. evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage.
D. determine who is likely to exit the industry and what changes can be expected in the industry’s
strategic group map.
E. forecast fluctuations in product demand and how buyer needs will most likely change.
A. identify the driving forces and evaluate their impact on (1) demand for the industry’s product, (2) the intensity of competition, and (3) industry profitability.
Which one of the following is NOT an integral part of driving forces analysis?
A. Determining whether forces are acting to cause fundamental changes in industry conditions and/or the
industry’s competitiveness
B. Determining whether forces are acting to cause industry rivals to shift to a different strategic group
C. Determining whether forces are acting to strengthen or weaken market demand
D. Determining whether forces are acting to make competition more or less intense
E. Determining whether forces are acting to raise or lower industry profitability
B. Determining whether forces are acting to cause industry rivals to shift to a different strategic group
The real payoff of driving forces is to help managers understand:
A. what strategy changes are needed to prepare for the impacts of the driving forces.
B. the overall strength of the five competitive forces.
C. whether the industry’s strategic group map will be static or dynamic.
D. what conditions exist in the economy at large.
E. the extent to which rivals have more than two competitively valuable competencies or capabilities
A. what strategy changes are needed to prepare for the impacts of the driving forces.
Driving forces analysis:
A. has speculative value because it compels the firm to drive strategic intent and collective choice into operating practices.
B. has theoretical value because it allows managers to visualize the many different dimensions of the preferred forces that allow for industry functionality.
C. has practical value and is basic to the task of thinking strategically about where the industry is headed
and how to prepare for the changes ahead.
D. has no real analytical value because the driving forces are already established in the marketplace and it is too late to make astute and timely strategy adjustments.
E. All of these.
C. has practical value and is basic to the task of thinking strategically about where the industry is headed and how to prepare for the changes ahead.
What is the best technique for revealing the different market or competitive position that rival firms
occupy in the industry?
A. Strategic group mapping
B. Global industry change
C. Dynamic mapping analysis
D. Distribution analysis
E. None of these.
A. Strategic group mapping
A strategic group:
A. consists of those industry members that are growing at about the same rate and have similar product
line breadth.
B. includes all rival firms having comparable profitability.
C. is a cluster of industry members with similar competitive approaches and market positions in the
market.
D. consists of those firms whose market shares are about the same size.
E. is made up of those firms having comparable profit margins.
C. is a cluster of industry members with similar competitive approaches and market positions in the
market.
An industry contains one strategic group when all sellers:
A. are subject to the same driving forces.
B. are placing about the same emphasis on various distribution channels.
C. use the same key success factors to differentiate their products.
D. pursue essentially identical strategies and have similar market positions.
E. pursue varying distribution channels and product attributes, and where their customer service attributes
differentiate them in the marketplace.
D. pursue essentially identical strategies and have similar market positions.
Strategic group mapping is a visual technique for displaying:
A. how many rivals are pursuing each type of strategy.
B. which companies have the biggest market share and who the industry leader really is.
C. the different market or competitive positions that rival firms occupy in an industry and for identifying
each rival’s closest competitors.
D. which companies have the highest degrees of brand loyalty.
E. which companies have failing business models.
C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival’s closest competitors.
Which one of the following pairs of variables is LEAST likely to be useful in drawing a strategic group map?
A. Geographic market scope and degree of vertical integration
B. Brand name reputation and distribution channel emphasis
C. Product quality and product-line breadth
D. Level of profitability and size of market share
E. Price/perceived quality and image range and the extent of buyer appeal
D. Level of profitability and size of market share
The concept of strategic groups is relevant to industry and competitive analysis because:
A. firms in the same strategic groups are rarely close competitors—a firm’s closest competitors are usually
in distant strategic groups.
B. strategic group maps help identify how each competing firm is positioned and the relationship to their
closest competitors.
C. competition grows in intensity as the number and diversity of the strategic groups in an industry
increases.
D. the profit potential of firms in the same strategic group is usually very similar.
E. competitive pressures tend to be weaker within strategic groups than across strategic groups.
B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors.
In mapping strategic groups:
A. one strategic variable and one financial variable should be used as axes for the map.
B. it is important for the variables used as axes to be highly correlated.
C. the best variables to use as axes for the map are those that identify the competitive characteristics that
delineate strategic approaches used in the industry.
D. it is important to use price as the variable for the vertical axis.
E. the primary objective is to determine which strategic groups are profitable and which are not.
C. the best variables to use as axes for the map are those that identify the competitive characteristics that delineate strategic approaches used in the industry.
Which of the following is NOT an appropriate guideline for developing a strategic group map for a given industry?
A. The variables chosen as axes for the map should indicate important differences among rival
approaches.
B. The variables chosen as axes for the map don’t have to be either quantitative or continuous. They can
be discrete variables.
C. The variables chosen as axes for the map should be highly correlated.
D. Several maps should be drawn if more than one pair of variables give different exposures to the
competitive positioning relationships present in the industry structure.
E. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in
each strategic group.
C. The variables chosen as axes for the map should be highly correlated.
With the aid of a strategic group map, one can:
A. identify easily the entry and exit barriers for each strategic group.
B. pinpoint precisely which firms are in profitable strategic groups and which are not.
C. identify which competitive forces are strong and which are weak.
D. measure accurately whether across-group rivalry is stronger than within-group rivalry, and vice versa.
E. reveal which companies are close competitors and which are distant rivals, and that not all positions on
the map are equally attractive.
E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.
One of the things that can be gleaned from a strategic group map of industry rivals is:
A. which rivals have been in business longer and thus have greater access to experience curve effects.
B. which rivals have newer manufacturing facilities and thus have achieved greater product quality.
C. which strategic groups have the highest profit margins and the highest customer switching costs and
thus represent key operating characteristics.
D. that some strategic groups are more favorably positioned than others because they confront weaker
competitive forces and/or because they are more favorably impacted by industry driving forces.
E. which strategic groups are currently being shunned by customers because of high prices and relatively
low product quality.
D. that some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces.
Strategic Group mapping analysis does not entail drawing conclusions about:
A. where on the map is the best place to be and why.
B. which companies/strategic groups are destined to prosper because of their positions.
C. which companies/strategic groups seem destined to struggle.
D. what accounts for why some parts of the map are better than others.
E. where on the map is the easiest position to shift from to a more favorably situated position.
E. where on the map is the easiest position to shift from to a more favorably situated position.
The payoff of good scouting reports on rivals is an improved ability to:
A. anticipate what moves rivals are likely to make next, thereby providing a valuable assist in outmaneuvering them in the marketplace.
B. determine which rivals are in the best strategic group.
C. figure out how many key success factors a rival has.
D. determine whether a rival is gaining or losing market share.
E. determine whether a rival has the best strategy and is the industry leader.
A. anticipate what moves rivals are likely to make next, thereby providing a valuable assist in
Having good competitive intelligence about rivals’ strategies and moves to improve their situation is
important because:
A. it identifies who the industry’s current market share leaders are.
B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic
moves with some confidence about what market maneuvers to expect from its rivals.
C. good scouting reports help identify which rival is in which strategic group.
D. it enables company managers to determine which rival has the worst strategy and how to avoid making
the same strategy mistakes.
E. it enables more accurate predictions about how long it will take a particular rival to copy most of what
the strategy leader is doing.
B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence about what market maneuvers to expect from its rivals.
Good competitive intelligence about the strategic direction and likely moves of key competitors allows a company to determine:
A. which competitor has the best strategy and which competitors have flawed or weak strategies.
B. which rivals are poised to gain market share and which seem destined to lose market share.
C. which rivals are likely to rank among the industry leaders on the road ahead.
D. which rivals are likely to initiate fresh strategic moves and why.
E. All of these.
E. All of these.
To succeed in predicting the next strategic moves and countermoves of close or key rivals, it is useful to
consider such indicators as:
A. a rival’s current strategy, objectives, capabilities, and assumptions about itself and the industry.
B. a rival’s market share, customer segmentation, business model, and product proposition.
C. a rival’s appetite as an acquisition candidate.
D. a rival’s geographic market, product offerings, and strategic grouping.
E. All of these.
A. a rival’s current strategy, objectives, capabilities, and assumptions about itself and the industry.
A rival’s strategic moves and countermoves are both:
A. indicators and a strategic sign for the visualization of strategic mapping techniques.
B. enabled and constrained by the set of capabilities they have at hand and thus serve as a strong signal of
future strategic actions.
C. measured by the extent to which they can unveil strategic and financial objectives.
D. responses to the broader definition of the industry opportunities.
E. All of these.
B. enabled and constrained by the set of capabilities they have at hand and thus serve as a strong signal of future strategic actions.
The extent to which firms are meeting objectives (good performance) suggests they:
A. are likely to prosper in the future.
B. are likely to continue their present strategy with only minor fine-tuning.
C. are virtually certain to make fresh strategic moves.
D. recognize “status quo” as the best course of action to adopt.
E. realize refocusing will ensure competitive gains.
B. are likely to continue their present strategy with only minor fine-tuning.
Information regarding the four components of the framework for Competitor Analysis can NOT:
A. be gleaned from company press releases.
B. gathered from rivals internal proprietary strategic information.
C. assembled from website data (especially management reports and presentations given to financial
analysts).
D. observed from public information (especially annual reports and 10K financial reports).
E. garnered from competitive intelligent departments assigned the task to monitor rivals.
B. gathered from rivals internal proprietary strategic information.
The key success factors in an industry:
A. are those competitive factors that most affect industry members’ abilities to prosper in the marketplace—
the particular strategy elements, product attributes, operational approaches, resources, and competitive
capabilities that spell the difference between being a strong competitor and a weak one, and between
profit and loss.
B. are determined by the industry’s driving forces, which are essential to surviving and thriving in the
industry.
C. hinge on how many different strategic groups the industry has operating within the industry and their
level of profitability and sustainable advantages.
D. depend on how many rivals are trying to move from one strategic group to another without losing
momentum.
E. are a function of such considerations as how many firms are in the industry, how many have market
shares above 5 percent, and whether the business models being used are similar or diverse.
A. are those competitive factors that most affect industry members’ abilities to prosper in the marketplace—
the particular strategy elements, product attributes, operational approaches, resources, and competitive
capabilities that spell the difference between being a strong competitor and a weak one, and between
profit and loss.
An industry’s key success factors can always be deduced by asking what factors:
A. are a function of market share, entry barriers, and economies of scale, degree of vertical integration,
and industry profitability that are advantageous.
B. vary according to whether an industry has high or low long-term attractiveness.
C. such as product attributes and service characteristics are crucial, and what resources and competitive
capabilities are needed, and what shortcomings are evident to put a company at a competitive
disadvantage.
D. can be determined from studying the “winning” strategies of the industry leaders and ruling out as
potential key success factors the strategy elements of those firms considered to have “losing” strategies.
E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to
competitive attack.
C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive
disadvantage.
In identifying an industry’s key success factors, strategists should:
A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly.
B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage.
C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak.
D. consider what it will take to overtake the company with the industry’s overall best strategy.
E. focus their attention on what it will take to capitalize on the impacts of the industry’s driving forces.
B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage.
Which of the following is NOT a question asked to deduce a marketing-related key success factor?
A. What are the industry product R&D capabilities and expertise in product design?
B. What basis do buyers choose between the competing brands of sellers?
C. What product attributes and service characteristics are crucial?
D. What resources must a company have to be competitive?
E. What shortcomings are almost certain to put a company at a significant disadvantage?
A. What are the industry product R&D capabilities and expertise in product design?
Which of the following can aid industries in identifying key success factors?
A. Global distribution capabilities
B. Crucial product attributes and service characteristics
C. Low distribution costs
D. Accurate filling of buyer orders
E. Short delivery time capability
B. Crucial product attributes and service characteristics
Correctly diagnosing an industry’s key success factors:
A. points to those things that every firm in the industry needs to attend to in order to develop product
propositions.
B. hints at the firm’s ability to generate above-average profitability.
C. reveals the firms capabilities and resources are aligned with operating practices of industry
participants.
D. raises a company’s chances of crafting a sound strategy.
E. raises a company’s sustainability dimensions and market characteristics in line with industry dynamics.
D. raises a company’s chances of crafting a sound strategy.
Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently
attractive business opportunity?
A. The industry’s growth potential, whether competition appears destined to become stronger or weaker,
and whether the industry’s overall profit prospects are above average, average, or below average
B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the
number of strategic groups in the industry is increasing or decreasing, and whether economies of scale
and experience curve effects are a key success factor
C. Whether there are more than five key success factors and more than five barriers to entry
D. Constructing a strategic group map and assessing the attractiveness of the competitive position of each
strategic group
E. Whether the market leaders
A. The industry’s growth potential, whether competition appears destined to become stronger or weaker, and whether the industry’s overall profit prospects are above average, average, or below average
In evaluating whether the industry and competitive environment presents sufficiently attractive prospects
for both competitive success and attractive profits usually does NOT involve a consideration of which of
the following factors?
A. The industry’s growth potential and whether competitive pressures will likely grow stronger or weaker,
and whether strong competitive forces are squeezing industry profitability to subpar levels
B. Whether the company occupies a stronger market position than rivals
C. Whether the industry’s future profitability will be favorably or unfavorably affected by the prevailing
driving forces
D. The severity of the macro-environment problems confronting the industry
E. Whether the industry’s product is strongly or weakly differentiated
E. Whether the industry’s product is strongly or weakly differentiated
When evaluating whether an industry’s environment presents a company with an above-average
profitability and an attractive business opportunity, it primarily involves:
A. determining the industry outlook for future profitability.
B. determining which firms in the industry have a competitive advantage and how they got their
advantage.
C. determining the overall strength of the five competitive forces.
D. constructing a strategic group map and assessing the attractiveness of the competitive position of each
strategic group to determine the overall attractiveness of all the strategic groups.
E. using value chain analysis to determine the relative cost positions of rival firms and to learn who the
industry’s low-cost producer is.
A. determining the industry outlook for future profitability.
Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry?
A. How many companies in the industry have good track records for revenue growth and profitability?
B. What strategic moves are rivals likely to make next?
C. What are the key factors for future competitive success?
D. Does the outlook for the industry present the company with sufficiently attractive prospects for profitability?
E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
A. How many companies in the industry have good track records for revenue growth and profitability?
Which of the following is not a factor to consider in identifying an industry’s dominant economic features?
A. Market size and growth rate
B. The extent of backward and forward integration and buyer needs and requirements
C. Whether the products or services of rival firms are becoming more or less differentiated
D. Strength of driving forces and competitive forces
E. The pace of technological change, scale economies and experience curve effects, and product innovation
D. Strength of driving forces and competitive forces
Which of the following 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. The extent to which economies of scale and learning/experience curve effects are present
C. How many strategic groups the industry has and which ones are most profitable and least profitable
D. The number and sizes of buyers, the number of rivals, and the pace of product innovation
E. The prevalence of vertical integration and the pace of technological change
C. How many strategic groups the industry has and which ones are most profitable and least profitable
The state of competition in an industry is a function of
A. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry.
B. competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products.
C. competitive pressures associated with the threat of new entrants into the marketplace.
D.
competitive pressures associated with the bargaining power of suppliers and customers.
E. All of these.
E. All of these.
Using the five-forces model of competition to determine what competition is like in a given industry involves
A . 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.
B. 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.
C. evaluating whether competition is being intensified or weakened by the industry’s driving forces and key success factors.
D. 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.
E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.
A . 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.
Competitive jockeying and market maneuvering among industry rivals
A. determines whether the industry’s strategic group map will be static or dynamic.
B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers.
C. is usually an industry’s strongest driving force.
D. is usually one of the two or three weakest competitive forces because of the close familiarity that
rivals have for one another’s likely next moves.
E. is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.
E. is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.
The competitive force of rival firms’ jockeying for better market positions, higher sales and market shares, and competitive advantage
A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies.
B. is typically a weaker competitive force than is the threat of entry of new rivals.
C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other
competitive weapons to boost unit sales.
D. tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders.
E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.
D. tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders.
Which of the following is generally not considered as a barrier to entry?
A. Rapid market growth
B. Sizable capital requirements and an array of regulatory requirements
C. Strong buyer loyalty to existing brands
D. Sizable economies of scale in production
E. Difficulties in gaining access to technological know-how
A. Rapid market growth
Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of
A. whether the profits of suppliers are relatively high or low.
B. the number of suppliers that each seller/industry member purchases from on average.
C. how aggressively rival industry members are trying to differentiate their products.
D. whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.
E. whether the prices of the items being furnished by the suppliers are rising or falling.
D. whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.
In which one of the following instances are the competitive pressures that industry members experience in their dealings with suppliers not weakened?
A. When industry members pose a credible threat of backward integration into the business of suppliers
B. When the cost of switching from one supplier to another is low
C. When the buying firms purchase in large quantities and thus are important customers of the suppliers
D. When the item being supplied is a commodity
E. When the items purchased from suppliers are in short supply
E. When the items purchased from suppliers are in short supply
Supplier bargaining power is weaker when
A. good substitute inputs exist or new ones emerge.
B. the cost of switching from one supplier to another is high.
C. suppliers furnish a critical part or component.
D. buying firms are looking for suppliers with good just-in-time supply capabilities.
E. a few large suppliers are the primary sources of a particular item.
A. good substitute inputs exist or new ones emerge
Which one of the following is not a factor that affects the strength of supplier bargaining power?
A. Whether needed inputs are in ample supply and are readily available from several different suppliers
B. Whether industry members are a strong threat to integrate backward into the business of suppliers and
self-manufacture their own requirements
C. Whether industry members are struggling to make good profits because of slow-growing market demand
D. Whether the costs of industry members to switch their purchases to alternative suppliers are high or low
E. Whether the item being supplied is a commodity or is highly differentiated from supplier to supplier
C. Whether industry members are struggling to make good profits because of slow-growing market demand
When one or more industry members have unusually effective and mutually advantageous partnerships with their suppliers,
A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships.
B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power
in their dealings with these industry members.
C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers.
D. there is a high likelihood of such partnerships reducing competitive pressures on all industry members, provided technological change in the suppliers’ business is rapid and the item being supplied is a commodity.
E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50% or more of total cost.
C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers.
Which one of the following is not a reason why industry members are often motivated to enter into collaborative partnerships with key suppliers?
A. To reduce the costs of switching suppliers
B. To speed the availability of next-generation components
C. To enhance the quality of parts and components being supplied and reduce defect rates
D. To squeeze out important cost savings for both themselves and their suppliers
E. To reduce inventory and logistics costs
A. To reduce the costs of switching suppliers
Which of the following factors does not affect whether buyer bargaining power and seller-buyer collaboration are an important source of competitive pressure in an industry?
A. Whether winning the business of certain customers offers a seller important market exposure or prestige
B. The extent and importance of collaborative partnerships and alliances between particular sellers and buyers
C. Whether buyers pose a major threat to integrate backward into the product market of sellers
D. Whether sellers’ products are weakly differentiated, making it easy and inexpensive for buyers to
switch to competing brands
E. Whether buyers have a strong preference for products of superior quality or just average quality
E. Whether buyers have a strong preference for products of superior quality or just average quality
Which of the following factors is not a relevant consideration in determining the strength of buyer bargaining power?
A. Whether winning the business of prestigious customers gives a seller important market exposure and
heightens its brand name
B. Whether the seller is a manufacturer or a wholesaler/distributor
C. Whether buyers pose a major threat to integrate backward into the product market of sellers
D. Whether sellers’ products are weakly differentiated, making it easy for buyers to switch to competing brands
E. Whether collaborative partnerships and alliances between particular sellers and buyers put rivals lacking such collaborative relationships at a competitive disadvantage
B. Whether the seller is a manufacturer or a wholesaler/distributor
Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?
A. Whether certain customers offer sellers important market exposure or prestige
B. Whether customers are relatively well informed about sellers’ products, prices, and costs
C. Whether buyer needs and expectations are changing rapidly or slowly
D. Whether sellers’ products are highly differentiated, making it troublesome or costly for buyers to switch to competing brands or to substitute products
E. Whether sellers pose little threat of forward integration into the product market of their customers and whether buyers pose a major threat to integrate backward into the product market of sellers
C. Whether buyer needs and expectations are changing rapidly or slowly
A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers
A. lacks powerful driving forces.
B. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms.
C. makes it hard for industry members to compete successfully unless they can strongly differentiate
their products.
D. is conducive to industry members earning attractive profits.
E. requires that industry members have low costs in order to be competitively successful.
D. is conducive to industry members earning attractive profits.
As a rule, the stronger the collective impact of competitive pressures associated with the five competitive forces,
A. the stronger are the industry’s driving forces.
B. the lower the combined profitability of industry members.
C. the fewer companies that can achieve a competitive advantage via anything other than being the industry’s low-cost leader.
D. the larger the number of competitive advantage opportunities for industry members.
E. the greater the number of industry key success factors.
B. the lower the combined profitability of industry members.
Driving forces analysis
A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.
B. identifies which strategic group is the most powerful.
C. helps managers identify which industry member is likely to become (or remain) the industry leader and why.
D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage.
E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.
A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.
Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?
A. Changes in who buys the product and how they use it and changes in the long-term industry growth rate
B. Entry or exit of major firms, product innovation, and marketing innovation
C. Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
D. Growing buyer preferences for differentiated products instead of mostly standardized or identical products
E. Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilitie
C. Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration
Which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak?
A) Whether buyer 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 improve their market standing and business performance
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
E) Whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change
The rivalry among competing sellers in an industry intensifies
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 are 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.
D) as the number of rivals increases and as they become more equal in size and competitive capability.
Competitive pressures associated with the threat of new entrants grow stronger when
A) buyer demand is growing slowly and the pool of entry candidates is small.
B) the number of customers for the industry’s product is large and the product offerings of rival sellers are strongly differentiated.
C) Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence yet.
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, entry barriers are high, and buyers are not brand loyal.
C) Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence yet.
Which of the following conditions generally raise the barriers to entering an industry?
A) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry
B) Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty
C) Product offerings that are pretty much standardized from rival to rival
D) High capital requirements, and difficulties in building a network of distributors-retailers and securing adequate space on retailers’ shelves,
E) The industry is not characterized by scale economies and/or sizable learning/experience curve effects and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer
D) High capital requirements, and difficulties in building a network of distributors-retailers and securing adequate space on retailers’ shelves,
Competitive pressures stemming from substitute products are weaker when
A) buyers don’t believe substitute products have equal or better 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 similar in competitive capability.
C) entry barriers are moderately high but by no means prohibitive and there is a fairly small pool of entry candidates.
D) a number of customers buy in large volumes and are in a strong bargaining position to win concessions from sellers.
E) buyer loyalty to the products they are currently purchasing buyers’ costs of switching to substitutes are relatively low.
A) buyers don’t believe substitute products have equal or better features, and buyers’ costs of switching to substitutes are relatively high.
Factors that cause the rivalry among competing sellers to be weak include:
A) low buyer switching costs.
B) slow growth in buyer demand.
C) strong buyer loyalty, rapid growth in buyer demand, and so many industry rivals that any one company’s actions have little impact on the businesses of its rivals.
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.
C) strong buyer loyalty, rapid growth in buyer demand, and so many industry rivals that any one company’s actions have little impact on the businesses of its rivals.
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 certain needed inputs are in short supply and whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price
B) Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs
C) Whether industry members are major customers of suppliers and whether suppliers’ sales to members of this one industry constitute a big percentage of their total sales
D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers
E) Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry’s product
D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers
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, and how well informed buyers are about sellers’ prices, products, and costs.
E) whether buyer demand is seasonal or year-round, whether entry barriers are high or low, and whether competitive pressures from substitutes are strong or weak.
D) whether buyers purchase in relatively large or small quantities, and how well informed buyers are about sellers’ prices, products, and costs.
The task of driving forces analysis is to
A) identify all the underlying factors that can cause industry and company 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 and to assess the impact on the company.
D) identify which companies are being driven to move from one strategic group to another strategic group.
E) determine how the collective impact of the driving forces will change market demand, competition and industry profitability
E) determine how the collective impact of the driving forces will change market demand, competition and industry profitability
Strategic group mapping 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) revealing the market positions of key industry competitors.
E) pinpointing which of the five competitive forces is the strongest and which is the weakest.
D) revealing the market positions of key industry competitors.
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) are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure.
C) are mainly a function of an industry’s macro-environment and dominant economic features.
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 capabilities and rarely to distribution or marketing capabilities.
B) are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure.
Which of the following is not one of the questions that needs to be answered in thinking strategically about 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 emerging opportunities and threats are evident in the industry environment?
C) What market positions do industry rivals occupy—who is strongly/weakly positioned and who is not?
D) What are the key factors for future competitive success?
E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
B) What emerging opportunities and threats are evident in the industry environment?
In identifying an industry’s dominant economic features, there is a need to consider such things as
A) market size and growth rate, the number of buyers, the scope of competitive rivalry, the number of rivals, demand-supply conditions, product innovation, the degree of product differentiation, the presence of scale economies and/or learning/experience curve effects, 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, and the bargaining leverage of sellers and buyers.
E) All of these.
A) market size and growth rate, the number of buyers, the scope of competitive rivalry, the number of rivals, demand-supply conditions, product innovation, the degree of product differentiation, the presence of scale economies and/or learning/experience curve effects, and the pace of technological change.
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/or to 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
C) To reduce the bargaining power they face from buyers of their products
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 and the more “competitively unattractive” is the industry environment.
D) the weaker the industry’s driving forces.
E) the higher the barriers to entry and the less likely it is that industry members will make fresh strategic moves very frequently.
C) the lower the combined profitability of industry participants and the more “competitively unattractive” is the industry environment.
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, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability
D) Emerging new Internet applications and capabilities, 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 changing societal concerns, attitudes, and lifestyles
C) Ups and downs in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability
The procedure for constructing a strategic group map involves
A) identifying the competitive characteristics that differentiate firms’ market positions and competitive approaches.
B) selecting variables for the map’s axes that are highly correlated.
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) plotting the firms on a two-variable or two-dimensional map, 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.
E) Both A and D
E) Both A and D
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.
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.
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 so as to better predict their likely next moves.
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 so as to better predict their likely next moves.
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 powerful competitive forces are squeezing industry profitability to subpar levels and whether competition appears destined to grow stronger or weaker
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 do companies in the industry typically incorporate into their strategies
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
D) How many of the industry’s key success factors do companies in the industry typically incorporate into their strategies
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 strategy is increasingly effective the more it provides some insulation from competitive pressures and shifts the competitive battle in the company’s favor.
C) The task of driving forces analysis is to separate the major causes of industry change from the minor ones.
D) Scouting competitors well enough to anticipate their next moves allows managers to prepare effective countermoves (perhaps even beat a rival to the punch) and to take rivals’ probable actions into account in crafting their own best course of action.
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 attractiveness of the opportunities an industry presents depends heavily on whether a company has the resource strengths and competitive capabilities to capture them.
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.
Competing companies deploy whatever means necessary to strengthen market position, including all of
the following EXCEPT:
A. marketing tactics including special sales promotions such as introducing new or improved features or
increasing the number of styles to provide greater product selection.
B. differentiating their products by offering better performance features than rivals.
C. improving innovation to increase product performance and quality.
D. making efforts to expand dealer networks.
E. reduce distribution capabilities and market presence.
E. reduce distribution capabilities and market presence.