Policy and Strat Ch 3

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A company's "macroenvironment" refers to

all the relevant forces and factors outside a company's boundaries—general economic conditions,
population demographics, societal values and lifestyles, technological factors, governmental legislation
and regulation, and closer to home, the industry and competitive arena in which it operates

Which one of the following is not part of a company's macroenvironment

The company's resource strengths, resource weaknesses, and competitive capabilities

Which of the following is not a major question to ask in thinking strategically 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 industry and competitive conditions in a given industry involves evaluating
such considerations as

All of the above

Which of the following is not a factor to consider in identifying an industry's dominant economic features?

Strength of driving forces and competitive forces

Which of the following is not a relevant consideration in identifying an industry's dominant economic
features?

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

All of these

The nature and strength of the competitive forces that prevail in an industry are 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 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

None of the above is typically weakest.

Using the five-forces model of competition to determine what competition is like in a given industry
involves

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

What makes the marketplace a competitive battlefield is

B.the constant jockeying of industry members to strengthen their standing with buyers and win a
competitive edge over rivals.

Competitive jockeying and market maneuvering among industry rival

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.

Factors that cause the rivalry among competing sellers to be weak 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

Low barriers to entry

Factors that tend to result in weak rivalry among competing sellers include

rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any
one company's actions have little impact on rivals' businesses.

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 grows in intensity when

buyer demand is growing slowly and the industry is composed of 6 to 10 competitors that are fairly 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 industry driving forces are strong or weak

Rivalry among competing sellers tends 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 force of rival firms' jockeying for better market positions, higher sales and market shares,
and competitive advantage

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.

In analyzing the strength of competition among rival firms, an important consideration is

the diversity of competitors in terms of visions, strategic intents, objectives, strategies, resources 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 2 strategic
groups.

In which one of the following instances is rivalry among competing sellers not more intense?

When certain competitors are dissatisfied with their market position and make moves to bolster their
standing

Which of the following is generally not considered as a barrier to entry?

Rapid market growth

Potential entrants are more likely to be deterred from actually entering an industry when

incumbent firms have previously been 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 newcomers can expect to earn attractive profits

The competitive threat that outsiders will enter a market is weaker when

A.financially strong industry members 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

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 substitute for Pepsi

The competitive pressures from substitute products tend to be stronger when

A.buyers are relatively comfortable with using substitutes and the costs to buyers of switching over to the
substitutes are low.

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

D.buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the
performance they deliver.

Just how strong the competitive pressures are from substitute products depends on

B.whether attractively priced substitutes are readily available and the ease with which buyers can switch to
substitutes.

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive
pressure is a function of

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.

The strength of competitive pressures that suppliers can exert on industry members is mainly a function of

whether needed inputs are in short supply or whether ample supplies are readily available from several
different suppliers.

The bargaining leverage of suppliers is greater when

there are no good substitutes for the items being furnished by the suppliers and the number of suppliers
is relatively small.

In which one of the following instances are the competitive pressures that industry members experience in
their dealings with suppliers not weakened?

When the items purchased from suppliers are in short supply

Supplier bargaining power is weaker when

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?

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 relatively strong?

The input being supplied is a commodity.

When one or more industry members have unusually effective and mutually advantageous partnerships
with their suppliers,

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?

To reduce the costs of switching suppliers

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 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

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

The industry is composed of a few large sellers and the customer group consists of numerous buyers that
purchase in fairly small quantities.

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?

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?

Whether the seller is a manufacturer or a wholesaler/distributor

Collaborative relationships between particular sellers and buyers in an industry can represent a source of
strong competitive pressure when

one or more rival sellers form mutually advantageous partnerships with important or prestigious buyers
such that rivals lacking such partnerships are placed at a competitive disadvantage.

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

the number of buyers is small or when a customer is particularly important to a seller.

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

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

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

is competitively unattractive from the standpoint of earning good profits

As a rule, the stronger the collective impact of competitive pressures associated with the five competitive
forces,

the lower the combined profitability of industry members.

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 create pressures or incentives for industry participants (competitors, customers,
suppliers) to alter their actions.

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 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?

Ups and downs in the economy and in interest rates

Which of the following are most unlikely to qualify as driving forces?

D.Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic
alliances

Which of the following do not qualify as potential driving forces capable of inducing fundamental changes
in industry and competitive conditions?

Increases in the economic power and bargaining leverage of customers and suppliers, growing supplierseller
collaboration, and growing buyer-seller collaboration

Which of the following is most likely to qualify as a driving force?

Wildly successful introduction of innovative new products by one or more industry rivals that force
other rivals to respond quickly or lose a major share of their customers to the innovating rival(s)

Which one of the following is not a common type of driving force?

Increasing efforts on the part of industry members to collaborate closely with their suppliers

Increasing globalization of the industry can be a driving force because

it tends to increase rivalry among industry members and often shifts the pattern of competition among an
industry's major players, favoring some and disadvantaging others.

Driving forces analysis helps managers identify whether

the combined impacts of the driving forces will act to increase/decrease market demand, increase/
decrease competition, and raise/lower industry profitability in the years ahead.

An industry's driving forces

generally act in ways which will strengthen or weaken market demand, competition, and industry
profitability in future years

In analyzing driving forces, the strategist's role is to

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

Determining whether the driving forces are acting to cause one or more industry rivals to shift to a
different strategic group

A strategic group

is a cluster of industry rivals that have similar competitive approaches and market positions.

A strategic group consists of those firms in an industry that

employ similar competitive approaches and occupy similar positions in the market

Strategic group mapping is a technique for displaying

the different market or competitive positions that rival firms occupy in an industry and 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?

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 each company's market position and its closest competitors

In mapping strategic groups

best variables to use as axes for the map are those that differentiate how rivals have positioned
themselves in the marketplace

Which of the following is not an appropriate 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

often learn to what extent industry driving forces and competitive pressures favor some companies or
groups and hurt others

One of the things that can be gleaned from a strategic group map of industry rivals is

whether profit prospects vary among strategic groups due to strengths and weaknesses in their respective
market positions on the map (perhaps because competitive pressures are acting to favor some strategic
groups and to disadvantage other groups).

The payoff of good scouting reports on rivals is improved ability to

anticipate what moves rivals are likely to make next, thereby providing a valuable assist in
outmaneuvering them in the marketplace.

Having good competitive intelligence about rivals' strategies and moves to improve their situation is
important because

it helps 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 strategies and competitive strengths and weaknesses of rival
companies helps management determine

All of these.

In seeking to predict the next moves of close or key rivals, it is useful to consider such questions as:

All of these.

The key success factors in an industry

are those competitive aspects that most affect industry members' abilities to prosper in the marketplace—
specific strategy elements, product attributes, competencies, competitive capabilities, and market
achievements that spell the difference between being a strong competitor and a weak competitor

An industry's key success factors

can be determined from an analysis of an industry's dominant economic characteristics, what competition
is like, the impacts of the driving forces, the comparative market positions of industry members, and the
likely next moves of industry rivals

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 competitively successful, and what shortcomings are almost certain to put a
company at a significant competitive disadvantage

Which of the following is not a good example of a marketing-related key success factor?

Product R & D capabilities and expertise in product design

Which of the following is a good example of a manufacturing-related key success factor?

High labor productivity (especially if the production process has high labor content)

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 above average, average, or below average

Evaluating whether an industry presents a sufficiently attractive business opportunity usually does not
involve a consideration of which of the following factors?

Whether the industry's product is strongly or weakly differentiated

Evaluating whether an industry's environment presents a company with a sufficiently attractive business
opportunity involves

sizing up overall industry and competitive conditions to determine whether the industry's overall profit
prospects are above average, average, or below average.

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