Packet 1

A company’s “macro-environment” refers to:
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 party of the company’s macro-environment?
The company’s resources strengths, resource weaknesses and competitive capabilities
Which one of the following is part of a company’s macro-environment?
The pace of technological change factors and legal and regulatory conditions
Which of the following is not a factor to consider when identifying economic conditions in the macro-environment?
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?
The strength of the federal banking system
Which of the following is not a major question to ask in thinking strategiclaly about industry and competitive conditions in a given industry?
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:
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
Five Forces Model
The competitive pressures on companies within an industry comes from those
All of these
The nature and strength of the competitive forces that prevail in an industry is generally a joint product of:
All of these
Which of the following is not one of the five typical sources of competitive pressures?
The power and influence of industry driving forces
The most powerful of the five competitive forces is usually:
the competitive pressures associate with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry
Typcially, the weakest of the five competitive forces in an industry is/are:
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:
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 5 forces are
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:
the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals
Market maneuvering among industry rivals
is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers
Rivalry increases
all of these
factors that cause the rivalry among competing sellers to be weaker include
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
rapid growth in buyer demand
factors that tend to result in weak rivalry among competing sellers include:
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
industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance
rivalry among competing sellers is generally more intense when
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 grow in intensity when:
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
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?
whether the industry’s key driving forces yield firms in the industry adequate profits are strong or weak
rivalry among competing sellers tend to be more intense when
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 suggest the rivalry forces
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
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
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?
when there are vast numbers of small rivals so the impact of anyone company’s actions is spread thinly across all industry members
which of the following is generally not considered a barrier to entry?
the reaction of incumbent firms to rapid market growth
potential entrants are more likely to be deterred from actually entering an industry when
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
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
when industry members are struggling to earn good profits
which one of the following increases the competitive pressures associated with the threat of entry
when new entrants can expect to earn attractive profits
the competitive threat that outsiders will enter a market is weaker when
financially strong incumbents send strong signals that they launch strategic initiatives to combat the entry of newcomers
competitive pressures stemming from the threat of entry are weaker when
the industry outlook is risky or uncertain
the best test of whether potential entry is a strong or weak competitive force is
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
coca cola as a substitue for pepsi
in which of the following instances are industry members not subject to stronger competitive pressures from substitute products
buyers are dubious about using substitutes
industry rivals tend to experience weak competitive pressures from substitute products when
buyers incur high costs in switching to substitutes are higher priced relative to to the quality
just how strong the competitive pressures are from susbtitute products depends on
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
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 the quality and performance and the lower the user’s switching costs the
more intense the competitive pressures posed by substitute prodcuts
whether supplier seller relationships in an industry represent a strong or weak source of competitive pressure is a function of
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
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
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?
when the items purchased from suppliers are in short supply
supplier bargaining power is weaker when
good substitutes for supplier products/services exists
which one of the following is not a factor that affects the strength of supplier bargaining power
whether industry members are struggling to make good profits because of slow growing market demand
which one of the following is not a factor in causing supplier bargaining power to be stronger
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
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
the higher the switching costs for industry members, the more it can
limit supplier bargaining power
whether buyer seller relationships in an industry represent a strong or weak source of competitive pressure is a function of
the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships 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:
whether demand supply conditions represent a buyers market or a sellers markt
which of the following is not a factor that causes buyer bargaining power to be stronger
buyers are small and numerous relative to sellers
buyer bargaining power is stronger when
the industry’s products are standardized or undifferentiated
which of the following factors in not a relevant consideration in determining the strength of buyer bargaining power
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
sales are made to buyer groups with either strong bargaining power or high senstivity
in which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong
when buyer demand is growing rapidly
competitive pressures stemming from buyer bargaining power tend to be weaker when
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?
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
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
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
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 he part of both suppliers and customers
is conducive to industry members earning attractive profits
a competitive envrionment where there is a strong rivalry among sellers, low entry barriers, strong competition from substitute products and considerable bargaining leverage on the part of both suppliers and customers
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
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
shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces
the driving forces in an industry
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
because important forces are enticing or pressuring certain industry participants to alter their actions in important ways
the task of driving forces analysis is to
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
involves identifying the driving forces, assessing whether the 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 captable of producing fundamental changes in industry and competitive conditions?
movement in the economy and in interest rates
which of the following are more unlikely to qualify as driving forces
changes in the long term industry growth rate, the entry or exit of major firms and changes in cost and efficiency
which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions
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
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
increasing efforts to collaborate closely with suppliers
increasing globalization of the industry can be a driving force because
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
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
generally are definied in ways that will strengthen or weaken market demand, competition, and industry profitability in future years
in analyzing driving forces, the strategists role is to
identify the driving forces and evaluate their impact on
1) demand for the industry’s product
2)the intensity of competition
3) industry profitablity
which one of the following is not an integral part of driving forces analysis?
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
what strategy changes are needed to prepare for the impacts of the driving forces
driving forces analysis
has practical value and is basic to the task of thinking strategically about where the industry is headed and how to prepare or the changes ahead
what is the best technique for revealing the different market or competitive position that rival firms occupy in the industry
strategic group mapping
a strategic group
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
pursue essentially identical strategies and have similar market positions
strategic group mapping is a visual technique for displaying
the different market or competitive positions that rival firms occupy in an industry and for identifying each rivals closest competitors
which one of the following pairs of variables are least likely to be useful in drawing a strategic group map
level of profitability and size of market share
the concept of strategic groups is relevant to industry and competitive analysis because
strategic group maps help identify how each competing firm is positioned and the relationship to their closes competitors
in maping strategic groups
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 appropiate guideline for developing a strategic group map for a given industry
the variables chosen as axes for the map should be highly correlated
with the aid of a strategic group map, one can
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
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
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
anticipate what moves rivals are likely to make next, thereby providing a valuable assist in outmaneuvering them in the marketpalce
having good competitive intelligence about rivals strategies and moves to improve their situation is important because
it allows a company to anticipate what moves rivals are likely to make next and to craft is 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
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 rivals current strategy, objectives, capabilities and assumptions about itself and the industry
a rivals strategic moves and countermoves are both
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 suggests they
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
gathered from rivals internal proprietary strategic information
the key sucess factors in an industry
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
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
consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be combatively successful and what share coming 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
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
crucial product attributes and service characteristics
correctly diagnosing an industry’s key success factors
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?
the industry’s growth potential, whether competition appears destined to become stronger or weaker, and whether the industry’s overall profit prospects are about aver, average or below average
in evaluating whether the industry and competitive environment presents sufficiently attractive prospects for both compeititve success and attractive profits usually does not involve a consideration of which of the following factors?
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
determining the industry outlook for future profitability