Test bank for Ch 4 of Strategic Management & Business Policy, 13e (Wheelen/Hunger) PDF

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Test bank for Ch 4 of Strategic Management & Business Policy, 13e (Wheelen/Hunger)...

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Strategic Management & Business Policy, 13e (Wheelen/Hunger) Chapter 4 Environmental Scanning and Industry Analysis 1) Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation. Answer: TRUE Diff: 1 Page Ref: 98 Topic: Environmental Scanning 2) A corporation uses environmental scanning to avoid strategic surprise. Answer: TRUE Diff: 2 Page Ref: 98 Topic: Environmental Scanning AACSB: Analytic Skills 3) Political-legal forces regulate the values, mores, and customs of society. Answer: FALSE Diff: 1 Page Ref: 99 Topic: Environmental Scanning 4) The task environment includes the economic, technological, political-legal, and sociocultural forces. Answer: FALSE Diff: 2 Page Ref: 99 Topic: Environmental Scanning 5) Industry analysis was popularized by Michael Porter. Answer: TRUE Diff: 2 Page Ref: 99 Topic: Environmental Scanning 6) In dynamic environments, the CEO's focus is on forces in the societal environment. Answer: FALSE Diff: 1 Page Ref: 99 Topic: Environmental Scanning 7) Today's organizations must scan the natural environment for factors that might previously have been taken for granted. Answer: TRUE Diff: 1 Page Ref: 99 Topic: Environmental Scanning 8) The transferring of profits from a foreign subsidiary to a corporation's headquarters is known as repatriation of profits. Answer: TRUE Diff: 1 Page Ref: 100 Topic: Environmental Scanning 1 Copyright © 2012 Pearson Education, Inc.

9) An example of an economic variable in the societal environment is antitrust regulation. Answer: FALSE Diff: 2 Page Ref: 102 Topic: Environmental Scanning AACSB: Analytic Skills 10) The growing health consciousness is an example of a political-legal force. Answer: FALSE Diff: 2 Page Ref: 104 Topic: Environmental Scanning AACSB: Analytic Skills 11) One of the demographic variables in the societal environment is the changing household composition. Answer: TRUE Diff: 2 Page Ref: 105 Topic: Environmental Scanning AACSB: Analytic Skills 12) One of the breakthrough developments in technology is the portable information device. Answer: TRUE Diff: 1 Page Ref: 102 Topic: Environmental Scanning AACSB: Use of IT 13) A multinational corporation is a company with significant assets and activities in multiple countries. Answer: TRUE Diff: 1 Page Ref: 105 Topic: Environmental Scanning 14) The origin of competitive advantage lies in the ability to identify and respond to environmental change well in advance of competition. Answer: TRUE Diff: 3 Page Ref: 108 Topic: Environmental Scanning 15) The willingness to reject unfamiliar as well as negative information is called issues priority. Answer: FALSE Diff: 2 Page Ref: 109 Topic: Environmental Scanning

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16) A corporation's internal strategic factors are those key environmental trends that are judged to have both a medium to high probability of occurrence and a medium to high probability of impact on the corporation. Answer: FALSE Diff: 3 Page Ref: 109 Topic: Environmental Scanning 17) An industry is a group of firms producing a similar product or service. Answer: TRUE Diff: 1 Page Ref: 109 Topic: Industry Analysis: Analyzing the Task Environment 18) According to Michael Porter, the weaker each of the competitive forces, the more limited companies are in their ability to raise prices and earn greater profits. Answer: FALSE Diff: 3 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking 19) According to Michael Porter, a high force can be regarded as threat because it is likely to reduce profits. Answer: TRUE Diff: 2 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking 20) An entry barrier is an obstruction that makes it difficult for a company to enter an industry. Answer: TRUE Diff: 1 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment 21) One of the possible barriers to entry is product differentiation. Answer: TRUE Diff: 2 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 22) The need to invest huge financial resources in manufacturing facilities in order to produce large commercial airplanes creates a significant barrier to entry to any competitor for Boeing and Airbus. Answer: TRUE Diff: 3 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking

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23) Governments can do little to erect barriers to entry in an industry. Answer: FALSE Diff: 2 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment 24) NutraSweet can serve as a product substitute for sugar satisfying the same need. Answer: TRUE Diff: 2 Page Ref: 112 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 25) A buyer may be powerful when changing suppliers’ costs a great deal. Answer: FALSE Diff: 2 Page Ref: 113 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking 26) A consolidated industry is dominated by a few large firms, each of which struggles to differentiate its products from the competition. Answer: TRUE Diff: 1 Page Ref: 114 Topic: Industry Analysis: Analyzing the Task Environment 27) Multidomestic industries are specific to each country or group of countries. Answer: TRUE Diff: 1 Page Ref: 114 Topic: Industry Analysis: Analyzing the Task Environment 28) The only factor used to determine whether an industry will be primarily multidomestic or primarily global is the pressure for local responsiveness. Answer: FALSE Diff: 2 Page Ref: 115 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking 29) McDonald's and Olive Garden are in the same strategic group. Answer: FALSE Diff: 3 Page Ref: 116 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 30) Reactors are companies with a limited product line that focus on improving the efficiency of their existing operations. Answer: FALSE Diff: 2 Page Ref: 117 Topic: Industry Analysis: Analyzing the Task Environment

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31) In hypercompetitive industries, competitive advantage comes from an up-to-date knowledge of environmental trends and competitive activity coupled with a willingness to risk a current advantage for a possible new advantage. Answer: TRUE Diff: 1 Page Ref: 118 Topic: Industry Analysis: Analyzing the Task Environment 32) Key success factors seldom vary from industry to industry. Answer: FALSE Diff: 2 Page Ref: 118 Topic: Industry Analysis: Analyzing the Task Environment 33) An industry matrix summarizes the key success factors within a particular industry. Answer: TRUE Diff: 2 Page Ref: 119 Topic: Industry Analysis: Analyzing the Task Environment 34) Competitive intelligence is an informal program of gathering information on a company's competitors. Answer: FALSE Diff: 1 Page Ref: 120 Topic: Competitive Intelligence 35) Business intelligence is one of the fastest growing fields within strategic management. Answer: TRUE Diff: 1 Page Ref: 120 Topic: Competitive Intelligence 36) A.C. Nielsen is an example of an outside organization providing a firm with competitive intelligence. Answer: TRUE Diff: 2 Page Ref: 121 Topic: Competitive Intelligence AACSB: Analytic Skills 37) To combat the increasing theft of company secrets, the U.S. government passed the Economic Espionage Act. Answer: TRUE Diff: 2 Page Ref: 122 Topic: Competitive Intelligence 38) Faulty underlying assumptions are the most frequent cause of forecasting errors. Answer: TRUE Diff: 2 Page Ref: 123 Topic: Forecasting

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39) Extrapolation rests on the assumption that the world is relatively dynamic and changes quickly in the short run. Answer: FALSE Diff: 2 Page Ref: 124 Topic: Forecasting 40) Statistical modeling is a quantitative forecasting technique that attempts to discover causal or at least explanatory factors that link two or more time series together. Answer: TRUE Diff: 2 Page Ref: 124 Topic: Forecasting 41) An industry scenario is a forecasted description of a particular industry's likely future. It is developed by analyzing the probable impact of future societal forces on key groups in a particular industry. Answer: TRUE Diff: 2 Page Ref: 125 Topic: Forecasting 42) The combination of the degree of complexity and the degree of change existing in an organization's external environment is/are called A) strategic factors. B) strategic issues. C) environmental uncertainty. D) strategic fit. E) scenarios. Answer: C Diff: 1 Page Ref: 98 43) According to the text, one reason environmental uncertainty is a threat to strategic managers is because A) it is a costly and time consuming process. B) the strategic manager cannot control the environment. C) it forces the strategic manager to be reactive. D) it hampers their ability to develop long-range plans. E) there are too many uncontrollable variables. Answer: D Diff: 2 Page Ref: 98

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44) Which of the following is NOT descriptive of external environmental scanning? A) Used as a tool to ensure a corporation's long-term health. B) Used to monitor, evaluate, and disseminate information from the external environment to key people within the corporation. C) Used to identify opportunities and threats. D) It is a tool that corporations use to avoid strategic surprise. E) Used to identify strengths and weaknesses. Answer: E Diff: 2 Page Ref: 98 Topic: Environmental Scanning 45) The corporation's task environment A) encompasses the physical working areas of the organization. B) includes those elements or groups within an organization's industry. C) is an advisory committee to top-management. D) is an accounting of the many jobs within an organization. E) is the job requirement specification listing necessary skills and abilities. Answer: B Diff: 1 Page Ref: 99 Topic: Environmental Scanning 46) Which of the following is NOT an element of the organization's task environment? A) local communities B) trade associations C) governments D) technological developments E) special interest groups Answer: D Diff: 2 Page Ref: 99 Topic: Environmental Scanning AACSB: Analytic Skills 47) Which environment was generally perceived by business people to be a given until the 20th century? A) the task environment B) the natural environment C) the industry D) the societal environment E) the external environment Answer: B Diff: 2 Page Ref: 99 Topic: Environmental Scanning AACSB: Ethical Reasoning

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48) Which of the following is NOT a major force in the societal environment? A) political-legal forces B) labor forces C) economic forces D) technological forces E) sociocultural forces Answer: B Diff: 2 Page Ref: 101 Topic: Environmental Scanning 49) All of the following are technological breakthroughs already having a significant impact on many industries EXCEPT A) growing health consciousness. B) alternative energy sources. C) genetically altered organisms. D) smart, mobile robots. E) virtual personal assistants. Answer: A Diff: 1 Page Ref: 102 Topic: Environmental Scanning AACSB: Analytic Skills 50) Which societal force includes demographic trends? A) political-legal forces B) labor forces C) economic forces D) technological forces E) sociocultural forces Answer: E Diff: 2 Page Ref: 103 Topic: Environmental Scanning AACSB: Analytic Skills 51) Which of the following is NOT one of the eight sociocultural trends mentioned in the text? A) Increasing environmental awareness. B) Growth of the seniors market. C) Decline of the mass market. D) Increasing food consumption. E) Impact of Generation Y boomlet. Answer: D Diff: 2 Page Ref: 104-105 Topic: Environmental Scanning

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52) Which is the largest of the current US generations? A) Baby Boomers B) Woofies C) Silent Generation D) Gen X E) Gen Y Answer: A Diff: 1 Page Ref: 103 Topic: Environmental Scanning 53) A company with significant assets and activities in multiple countries is known as a(n) ________. A) multinational corporation B) repatriated corporation C) transferable corporation D) duplicate corporation E) emancipated corporation Answer: A Diff: 1 Page Ref: 105 Topic: Environmental Scanning 54) When strategic managers have a willingness to reject unfamiliar as well as negative information it is referred to as A) strategic paralysis. B) corporate inertia. C) management indifference. D) strategic myopia. E) Corporate apathy Answer: D Diff: 2 Page Ref: 108 Topic: Environmental Scanning 55) The issues priority matrix used in environmental scanning is composed of two axis or dimensions which are labeled A) importance to the industry and likelihood of occurrence. B) industry growth rate and probable competitive position. C) probability of occurrence and probable impact on the corporation. D) probable industry attractiveness and business strength/competitive position. E) issue importance and relative power of stakeholder groups. Answer: C Diff: 3 Page Ref: 109 Topic: Environmental Scanning

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56) What are the key environmental trends that are judged to have a medium to high probability of occurrence and a medium to high probability of impact on the corporation? A) external strategic factors B) scenarios C) industry forces D) strategic issues E) historical concerns Answer: A Diff: 2 Page Ref: 109 Topic: Industry Analysis: Analyzing the Task Environment 57) Industry analysis is primarily concerned with a corporation's A) societal environment. B) task environment. C) sociocultural environment. D) economic environment. E) internal environment. Answer: B Diff: 2 Page Ref: 109 Topic: Industry Analysis: Analyzing the Task Environment 58) According to Porter, the corporation is most concerned with A) the intensity of competition within its industry. B) the aggregate level of demand for a product line. C) a market's position on its life cycle. D) the amount of pressure from the societal environment. E) the level of government action in an industry. Answer: A Diff: 2 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment 59) In addition to Porter's Five Forces, another force added in the text is A) bargaining power of unions. B) other stakeholders. C) threat of prospects. D) threat of shareholders. E) bargaining strength of employees. Answer: B Diff: 1 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment

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60) The collective strength of the interaction of potential entrants, buyers, substitutes, suppliers, firm rivalry, and other stakeholders determine A) the level of government action in an industry. B) the probable industry attractiveness and business strength position. C) the ultimate profit potential in the industry measured in terms of long-run return on invested capital. D) the aggregate level of demand for a product line. E) the amount of pressure from the societal environment. Answer: C Diff: 3 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment 61) According to Porter's model, a strong or high force is likely to reduce profits and can be regarded as a(n) A) benefit. B) opportunity. C) advantage. D) threat. E) risk. Answer: D Diff: 2 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment 62) According to Porter's model, a low force can enable the company to earn greater profits and can be regarded as a(n) A) benefit. B) opportunity. C) advantage. D) threat. E) risk. Answer: B Diff: 2 Page Ref: 110 Topic: Industry Analysis: Analyzing the Task Environment 63) Which of the following is NOT descriptive of the "threat of new entrants?" A) Depends on the presence of entry barriers. B) Have a desire to gain market share. C) Depends on the reaction of existing competitors. D) Does not impact industry attractiveness. E) Brings new capacity and substantial resources. Answer: D Diff: 2 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills

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64) Which barrier to entry uses brand identification to force new entrants to spend heavily to overcome existing customer loyalty? A) rivalry among existing firms B) switching costs C) capital requirements D) product differentiation E) access to distribution channels Answer: D Diff: 2 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 65) Which barrier to entry uses cost advantages associated with large size? A) rivalry among existing firms B) switching costs C) cost disadvantages independent of size D) capital requirements E) economies of scale Answer: E Diff: 3 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 66) Which barrier to entry is demonstrated by Microsoft's MS-DOS operating system? A) government policy B) switching costs C) cost disadvantages independent of size D) capital requirements E) economies of scale Answer: C Diff: 3 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 67) Intel was able to gain a significant cost advantage over its competitors in the production and sale of microprocessors because of A) capital requirements. B) product differentiation. C) switching costs. D) economies of scale. E) access to distribution. Answer: D Diff: 3 Page Ref: 111 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking

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68) Which of the following is NOT descriptive of intense rivalry among firms? A) slow industry growth B) high fixed costs C) high exit barriers D) few competitors or competitors that are roughly equal in size and power E) product offerings that are highly differentiated Answer: E Diff: 3 Page Ref: 112 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 69) Which of the following is NOT descriptive of "threat of substitute products or services?" A) Substitute products appear to be different, but satisfy the same need as another product. B) If the cost of switching is low, substitutes may have a strong effect on an industry. C) Identifying substitutes is relatively easy since they look similar. D) Possible substitute products or services may not appear to be easily substitutable. E) Substitutes limit the potential returns of an industry. Answer: C Diff: 2 Page Ref: 112 Topic: Industry Analysis: Analyzing the Task Environment 70) A sugar company that is worried that consumers may buy artificial sweetener instead of sugar is concerned about the A) threat of new entrants. B) rivalry among existing firms. C) threat of substitute products. D) bargaining power of suppliers. E) bargaining power of buyers. Answer: C Diff: 2 Page Ref: 112 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills 71) Which of the following is NOT descriptive of a high level of bargaining powers of buyers? A) Changing suppliers costs very little. B) Alternative suppliers are plentiful because of standardization of the product. C) The purchased product represents a high percentage of buyer's costs. D) The buyer buys a large proportion of the seller's product or service. E) A buyer earns high profits and is very insensitive to costs and service differences. Answer: E Diff: 2 Page Ref: 113 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Analytic Skills

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72) When General Motors considers making its own automotive parts, Delphi Automotive Supply Company would be concerned with the A) bargaining power of suppliers. B) bargaining power of buyers. C) rivalry among existing competitors. D) threat of substitutes. E) threat of new entrants. Answer: B Diff: 2 Page Ref: 113 Topic: Industry Analysis: Analyzing the Task Environment AACSB: Reflective Thinking 73) Which of the following is NOT descriptive of a high level of bargaining power of suppliers? A) Substitute...