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Q:
Diseconomies of scale exist in an industry when a firm's costs fall as a function of that firm's volume of production.
Q:
The threat of entry in an industry depends on the cost of entry, and the cost of entry, in turn, depends upon the existence and "height" of barriers to entry.
Q:
Incumbent firms may have a whole range of cost advantages compared to new competitors.
Q:
Monopolistically competitive industries consist of only a single firm.
Q:
Within the five forces framework, when all five threats are very high, competition in the industry begins to approach a monopoly.
Q:
The five forces framework is based on the S-C-P model and identifies the five most common threats facing firms from their local competitive environment and the conditions under which these threats are more or less likely to be present.
Q:
According to the S-C-P model, attributes of the industry structure within which a firm operates define the range of options and constraints facing a firm.
Q:
The S-C-P model assumes that any competitive advantages a firm has in an industry must benefit society.
Q:
In a perfectly competitive industry, a large number of firms have products and services that are similar to each other and it is not very costly for firms to enter into or exit these markets.
Q:
In the structure-conduct-performance model, the term "performance" refers solely to the performance of individual firms.
Q:
In the structure-conduct-performance model, the term "structure" refers to industry structure, which can be measured by such factors as the number of competitors in an industry.
Q:
Understanding a firm's general environment can help the firm identify some of the threats and opportunities it faces.
Q:
Culture is largely the same across the world.
Q:
The aging of the "baby boomer" generation in American society is an example of a demographic trend.
Q:
In general, technological change creates opportunities, but not threats.
Q:
A firm's general environment consists of broad trends in the context within which the firm operates that can have an impact on the firm's strategic choices.
Q:
What is a harvest strategy?
Q:
What are customer-switching costs?
Q:
Identify and clearly distinguish between the four strategic options available to firms in a declining industry.
Q:
Identify the four generic industry structures and the specific strategic opportunities in each of these industries.
Q:
Describe the difference between a competitor and a complementor and identify the role complementors play in an industry.
Q:
Discuss the difference between a company's existing direct competitors and its substitutes and discuss the role substitutes play in an industry.
Q:
Identify the four types of competition, the attributes of each type and the expected performance under each.
Q:
Identify the five most common threats facing firms from their local competitive environment that are represented in the five forces framework, and discuss under what conditions firms in a specific industry are most likely to earn an above average profit and when they are likely to earn a below average profit.
Q:
Identify and define the three elements of the S-C-P model.
Q:
Identify the six interrelated elements that comprise a firm's general environment.
Q:
BidBuy has a ________ advantage.
A) visionary
B) global
C) first-mover
D) comparative
Q:
Factors such as BidBuy's feedback rating system that are valuable to the company's customers but which are not useful on other online auction sites are examples of
A) first-mover advantages.
B) complementors.
C) substitutes.
D) customer-switching costs.
Q:
For BidBuy, services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as
A) complementors.
B) substitutes.
C) rivals.
D) suppliers.
Q:
Which of the following best describes the competition in the U.S. online auction industry?
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
Q:
The threat of buyers in this industry is best described as
A) high because there are many suppliers, none of which represents a significant portion of the hardwood furniture industry's sales.
B) low because of the slow industry growth and the commodity nature of the suppliers.
C) low because there are many suppliers, none of which represents a significant portion of the hardwood furniture industry's sales.
D) high because of the slow industry growth and the commodity nature of the suppliers.
Q:
In this example, composite wood furniture would be an example of a(n)
A) substitute.
B) rival.
C) new entrant.
D) complementor.
Q:
If Hickory Divine were to open its own chain of furniture stores, this would be an example of
A) complementors.
B) backward vertical integration.
C) consolidation.
D) forward vertical integration.
Q:
The threat of suppliers in the hardwood furniture can best be described as
A) low because there are a large number of suppliers selling an undifferentiated product.
B) high because there are a large number of suppliers selling an undifferentiated product.
C) moderate because the large number of suppliers is offset by the undifferentiated products they are selling.
D) moderate because of the slowing growth rate in the industry and the commodity nature of the products produced by suppliers.
Q:
The level of direct competition in the hardwood furniture industry can best be described as
A) low because of the numerous firms in the industry and the slowing growth rate.
B) low because of the slowing growth rate and the competition from composite wood furniture.
C) high because of the numerous firms in the industry and the slowing growth rate.
D) moderate because the slowing growth rate offsets the numerous firms in the industry.
Q:
Based on the above description, the hardwood furniture industry can best be described as a(n) ________ industry.
A) emerging
B) fragmented
C) consolidated
D) declining
Q:
________ costs exist when customers make investments in order to use a firm's particular products or services.
A) First-mover-switching
B) Technological leadership-switching
C) Customer-switching
D) Process-switching
Q:
________ are resources required to successfully compete in an industry.
A) Strategically valuable assets
B) Technological leader strategies
C) Process innovations
D) Product innovations
Q:
A consolidation strategy is a good option in what type of industry?
A) mature
B) emerging
C) fragmented
D) declining
Q:
________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry.
A) Visionary advantages
B) First-mover advantages
C) Comparative advantages
D) Missionary advantages
Q:
Industries in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies are called ________ industries.
A) fragmented
B) mature
C) emerging
D) declining
Q:
Firms in a declining industry that engage in a long, systematic phased withdrawal from the industry, extracting as much value as possible during the withdrawal period, are following a(n) ________ strategy.
A) niche
B) expansion
C) divestment
D) harvest
Q:
The most promising opportunity for a firm in a declining industry is to
A) establish itself as a first mover in the post-shakeout industry.
B) become a market leader in the pre-shakeout industry.
C) become a fast follower in the pre-shakeout industry.
D) merge with another firm.
Q:
Mature industries are characterized by
A) an increase in total industry demand.
B) faster increases in production capacity.
C) a slowdown in the introduction of new products or services.
D) a decrease in the amount of international competition.
Q:
In general, first-mover advantages can arise from any of these sources except
A) technological leadership.
B) preemption of strategically valuable assets.
C) the creation of customer switching costs.
D) using an imitative strategy to introduce improved versions of competitors' new products.
Q:
The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.
A) first-mover
B) competitive
C) comparative
D) emerging
Q:
The major opportunity facing firms in fragmented industries is
A) refining their current products and emphasizing an increase in service quality.
B) developing new products and technologies.
C) creating a first-mover advantage through technological leadership.
D) the implementation of strategies that began to consolidate the industry into a smaller number of firms.
Q:
An industry in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies is known as a(n) ________ industry.
A) fragmented
B) consolidated
C) mature
D) emerging
Q:
If your customers value your products more when they have your product and another firm's product rather than when they have your product alone, the other firm is considered to be a
A) competitor.
B) complementor.
C) rival.
D) substitute.
Q:
Overall, the average level of performance in an industry is likely to be highest when
A) the threat level of all five forces is high.
B) the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.
C) the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers and supplies is low.
D) the threat level of all five forces is low.
Q:
Buyers tend to have less power when
A) a firm has only one buyer, or a small number of buyers.
B) the products or services being sold to buyers are standard and not differentiated.
C) the supplies they purchase are an insignificant portion of the costs of their final products.
D) they are not earning significant economic profits.
Q:
Which of the following is the best example of forward vertical integration?
A) a car dealership opening up its own automobile manufacturing plant
B) a car company opening its own dealerships to sell its products directly to customers
C) a car company opening its own chain of video rental stores
D) a car company opening a plant to product motorcycles
Q:
Which of the following attributes makes suppliers a stronger threat?
A) The supplier's industry is dominated by a small number of firms.
B) The product or service provided by suppliers is not highly differentiated.
C) Suppliers are threatened by substitutes.
D) Suppliers are not able to engage in forward vertical integration.
Q:
________ make a wide variety of raw materials, labor and other critical assets available to firms.
A) Buyers
B) Rivals
C) Suppliers
D) Substitutes
Q:
Which of the following statements regarding substitutes is accurate?
A) In the extreme, substitutes can ultimately replace an industry's products or services.
B) Substitutes place a floor on the prices firms in an industry can charge and on the profits firms in an industry can earn.
C) Substitutes rarely impact the profitability that firms in an industry can earn.
D) The importance of substitutes in reducing the profit potential in a wide variety of industries is decreasing.
Q:
The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.
A) different; the same
B) approximately the same; the same
C) different; different
D) approximately the same; different
Q:
The products or services provided by a firm's direct competitors meet ________ customer needs in ________ ways as the product provided by the firm itself.
A) different; the same
B) approximately the same; the same
C) different; different
D) approximately the same; different
Q:
The threat of direct competition tends to be high when
A) there are few firms in an industry and these firms tend to be unequal in size.
B) the industry growth rate is higher.
C) firms are unable to differentiate their products.
D) production capacity can be added in small increments.
Q:
Frequent price cutting by firms in an industry, frequent introduction of new products by firms in an industry and intense advertising campaigns are indications of
A) high power of buyers.
B) high threat of new entrants.
C) high levels of direct competition.
D) high threat of substitutes.
Q:
What is the residual claimants view of equity holders?
Q:
Why is it important to understand a firm's strategy, even if you are not a senior manager in a firm?
Q:
Describe the difference between emergent and intended strategies. Why might firms employ an emergent strategy?
Q:
Identify two approaches to estimating a firm's competitive advantages and discuss the strengths and weaknesses of each.
Q:
Discuss a firm's competitive advantage. Identify when a firm has a competitive advantage and distinguish between a temporary competitive advantage and a sustainable competitive advantage.
Q:
Define strategy implementation and discuss three specific organizational policies and practices that are particularly important in implementing a strategy.
Q:
Differentiate between business level and corporate level strategies and give examples of each.
Q:
What are objectives, what role do they play in the strategic management process and what differentiates high quality objectives from low quality objectives?
Q:
Define the term "mission" and discuss how a firm's mission can both positively and negatively impact a firm's performance.
Q:
Define the term "strategy," discuss the set of assumptions and hypotheses that a strategy is based on and discuss what makes a good strategy.
Q:
Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy?
A) business level strategy
B) cost leadership strategy
C) product differentiation strategy
D) corporate level strategy
Q:
Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing a(n)
A) internal analysis.
B) external analysis.
C) WACC analysis.
D) economic analysis.
Q:
Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a(n)
A) internal analysis.
B) external analysis.
C) WACC analysis.
D) economic analysis.
Q:
Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance?
A) increasing profitability
B) growing market share annually
C) improving product quality every quarter
D) growth in earnings per share averaging 15% or better annually for the next five years
Q:
Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is
A) defining its mission.
B) setting objectives.
C) measuring performance.
D) defining its business level strategy.
Q:
If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp's ROE is 17.3%, Thermacorp is said to have
A) below average accounting performance.
B) above average economic performance.
C) above average accounting performance.
D) below average economic performance.
Q:
Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.
A) liquidity
B) profitability
C) activity
D) leverage
Q:
Thermacorp's weighted average cost of capital is 13.5. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning
A) above normal economic performance.
B) above normal accounting performance.
C) below normal economic performance.
D) below normal accounting performance.
Q:
Accounts receivable turnover is an example of which type of ratio?
A) profitability
B) activity
C) liquidity
D) leverage
Q:
Which ratio signals a greater risk of bankruptcy as it increases?
A) debt to equity
B) quick ratio
C) debt to assets
D) cash flow per share
Q:
One of the first scholars to examine the longevity of competitive advantage was
A) Dennis Mueller.
B) Geoffrey Waring.
C) Peter Roberts.
D) Rich Houston.