Chapter-03 -Evaluating-a-Co PDF

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Chapter 03_ Evaluating a Company's External Environment Student: ___________________________________________________________________________

1. 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. Cthe 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. 2. 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 3. 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. 4. 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 BEconomic 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 5. 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 DThe 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

6. 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 7. 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? 8. 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. Cthe 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. 9. 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. 10. 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. 11. 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. 12. 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

13. 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. 14. 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. 15. Using the Five Forces model of competition to determine the character and strength of the competitive forces within a given industry involves: ฀ ฀ Abuilding 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. Bbuilding 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. Dassessing 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. Egauging 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. 16. 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. 17. 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. Dis 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.

18. 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. 19. 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. 20. 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. 21. 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. 22. 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. 23. 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. Drivals 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. 24. 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.

25. The rivalry among competing firms tends to be more intense: ฀ ฀ Awhen 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. 26. 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 27. 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. Cseveral 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. 28. 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. Dtends 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. 29. 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.

30. 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. Cstrong 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. Done 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. 31. 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 BWhen 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 32. Competing companies deploy whatever means necessary to strengthen market position, including all of the following EXCEPT: ฀ ฀ Amarketing 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. 33. 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 34. 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. 35. 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 entran...