Test Bank for Strategic Management Theory An Integrated Approach 12th Edition by Charles W L Hill PDF

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 1.Todetermineitsopportunitiesandthreats,afirmshouldfocusoninternalprocessesandcapabilities. a.True b.False ANSWER:False 2.Opportunitiesarisewhenacompanycantakeadvantageofconditionsinitsenvironmenttoformulateandimplement strategiesthatallowittobecomemoreprofitable. a.True b.False ANSWER:True 3.Threatsarisewhenconditionsintheexternalenvironmentendangertheintegrityandprofitabilityofacompany’s business. a.True b.False ANSWER:True 4.ThebottledwaterindustrycreatednewcompetitorsforCoca-Cola,butitdidnotchangethebasicindustry boundaries. a.True b.False ANSWER:False 5.InPorter'scompetitiveforcesframework,thestrongerthefiveforces,theabilityofestablishedcompaniestoraise pricesandearngreaterprofitsbecomesmorelimited. a.True b.False ANSWER:True 6.Substituteproductsarenotathreatifacompanyisthemarketleader. a.True b.False ANSWER:False 7.Suppliersaremostpowerfulwhentheproductsthattheysellhavemanysubstitutes. a.True b.False ANSWER:False

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 8.Costreductionsgainedthroughmass-producingastandardizedoutputareasourceofscaleeconomies. a.True b.False ANSWER:True 9.Theriskofentrybypotentialcompetitorsisafunctionoftheheightofthebarrierstoentry. a.True b.False ANSWER:True 10.Themorecommodity-likethatanindustry'sproductis,thelowertheintensityofanypricewarthatmaydevelop. a.True b.False ANSWER:False 11.Agroupoffirmsallmaketoolsforbaking—pots,pans,measuringcups,andutensils.Thisgroupshouldbereferredto asamarketsegment. a.True b.False ANSWER:False 12.Strongbrandloyaltyandhighcustomerswitchingcostsarelowbarrierstoenteringanindustry. a.True b.False ANSWER:False 13.Growingdemandtendstoreducerivalrybecauseallcompaniescansellmorewithouttakingmarketshareawayfrom eachother. a.True b.False ANSWER:True 14.Governmentderegulationoftelephoneserviceloweredthebarrierstoentryandloweredindustryprofitrates. a.True b.False ANSWER:True

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 15.Whenbuyersareinaweakbargainingposition,companiesintheindustrymustlowertheirpricestoincreaseprofits. a.True b.False ANSWER:False 16.Marketsegmentsaredistinctgroupsofcustomerswithinamarketthatcanbedistinguishedfromeachotherbasedon theirindividualattributesandspecificdemands. a.True b.False ANSWER:True 17.Intenserivalrylowerspricesandraisescosts. a.True b.False ANSWER:True 18.Companiesoperatinginhigh-technologyindustriesaredependentoncomplementaryproductsfortheirmutual success. a.True b.False ANSWER:True 19.Starbucksandanindependentlocalcaféaredifferentintermsoftheirbusinesstechniques.Theybothsellcoffee,and thereforebelongtothesamestrategicgroup. a.True b.False ANSWER:False 20.Acompany’sclosestcompetitorsarethoseinitsstrategicgroup. a.True b.False ANSWER:True 21.Companiesfacinggreaterexitbarriersfindithardertoreducecapacity,andfaceagreaterthreatofsevereprice competition. a.True b.False ANSWER:True

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 22.Rapidgrowthindemandenablescompaniestoexpandtheirrevenuesandprofitswithouttakingmarketshareaway fromcompetitors. a.True b.False ANSWER:True 23.Successfulinnovationcannottransformthenatureofindustrycompetition. a.True b.False ANSWER:False 24.Oneofthedefiningcharacteristicsofthematurestageoftheindustrylife-cycleisthatgrowthisloworzero. a.True b.False ANSWER:True 25.Thepunctuatedequilibriumviewcanbedescribedasafreezing,butnotunfreezing,processinanindustry'slife-cycle a.True b.False ANSWER:False 26.Whenthevalueofthedollarislowcomparedtothevalueofothercurrencies,productsmadeintheUnitedStatesare relativelyinexpensiveandproductsmadeoverseasarerelativelyexpensive. a.True b.False ANSWER:True 27.Changesinthecharacteristicsofapopulation,suchasageorrace,areirrelevanttotheanalysisofanindustry's macroenvironment. a.True b.False ANSWER:False 28.Deregulationofthemortgageindustryisanexampleofhowpoliticalandlegalforcescanimpactanindustry. a.True b.False ANSWER:True

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 29.Atechnologicalchange,suchastheriseoftheInternet,canrepresenteitheranopportunityorathreat. a.True b.False ANSWER:True 30.Interestrateshaveanimpactonthesaleofautomobiles,appliances,andcapitalequipment.Thisrepresentsa macroeconomicforce. a.True b.False ANSWER:True 31.Agroupoffirmsmanufactureswritingimplementssuchaspens,pencils,andmarkers.Thisgroupshouldbereferred toasa(n): a.substitute. b.marketsegment. c.serviceprovider. d.regulator. e.industry. ANSWER:e 32.Asectorreferstoagroupof: a.governmentregulators. b.closelyrelatedindustries. c.manufacturingplantsofacompanybasedinthesamelocation. d.businessunitsownedbyasinglefirm. e.companiesthatmanufacturesimilarproductsunderdifferentbrandnames. ANSWER:b 33.Abakingcompanyhasdifferentproductrangeslikewhole-wheatpizzasforthediet-consciousandrichcookiesfor childrenandyoungsters.Thecompanyiscateringtodifferentgroupsofcustomersknownas: a.investors. b.entrants. c.sectors. d.marketsegments. e.substitutes. ANSWER:d

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 34.Anindustrycanbedefinedasagroupof: a.companiesofferingproductsorservicesthatareclosesubstitutesforeachother. b.manufacturingplantsofasinglecompany. c.differentkindsofcompaniesthatarebasedinthesamegeographiclocation. d.companiesthataredifferentbutgeneratesimilaramountsofrevenues. e.brandsthatofferdifferentproductsbutareownedbyasinglefirm. ANSWER:a 35.Animpactthatthechangingindustryboundarieshavehadisthat: a.ownersofcompaniescannowdefineboundaries. b.thereisanincreaseinthenumberofcompetitorsforcompanies. c.technologicalchangesdonotaffectcompaniesanymore. d.thepatternofcustomerneedsdoesnotaffectcompaniesanymore. e.thenumberofproductsubstitutesavailableforcustomershasreduced. ANSWER:b 36.Porter'sFiveForcesmodeldidnotrecognizeoneforce,whichis: a.thepowerofcomplementproviders. b.theriskofentrybypotentialcompetitors. c.theintensityofrivalryamongestablishedcompanieswithinanindustry. d.thebargainingpowerofsuppliers. e.thethreatofsubstitutes. ANSWER:a 37.Whichofthefollowingstatementsistrueaboutpotentialcompetitorsinanindustry? a.Theythreatentheprofitabilityofestablishedcompanies. b.Theyareusuallyencouragedbyestablishedcompanies. c.Theyfinditeasiertoenteranindustrywhentheentrybarriersarehigh. d.Theyfinditeasiertoenteranindustrywhenestablishedcompanieshaveeconomiesofscale. e.Theyusuallyhaveanabsolutecostadvantageoverestablishedcompanies. ANSWER:a 38.WhichofthefollowingisNOTabarriertoentry? a.Economiesofscale b.Brandloyalty c.Absolutecostadvantages d.Highcustomerbargainingpower e.Highcustomerswitchingcosts ANSWER:d Copyright Cengage Learning. Powered by Cognero.

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 39.Ifeconomiesofscaleareanindustry'sprimaryentrybarrier,anewentrant'smajorconcernis: a.itsinabilitytocounterbrandloyaltythatcustomershaveforestablishedcompaniesintheindustry. b.theinferiorqualityofitsproducts. c.itsinabilitytomatchtheinnovationoftheestablishedfirm. d.itsinabilitytoproduceinsufficientvolumetomatchthecostadvantagesofestablishedproducers. e.itsinabilitytogetbuyerstoswitchtoitsproduct. ANSWER:d 40.Asabarriertonewentry,absolutecostadvantagescanbebasedon: a.continuousadvertisingofbrandandcompanynames,andproductinnovationachievedthroughresearchand development. b.highproductquality,service-orientedinnovations,andgoodafter-salesservice. c.costreductionsthatarisefromthemassproductionofstandardizedoutput. d.theuniqueabilityofestablishedcompaniestospreadfixedcostsoveralargevolume. e.superiorproductionoperationsandprocessesduetoaccumulatedexperience,patents,ortradesecrets. ANSWER:e 41.Whichofthefollowingindustrystructuresconsistsofalargenumberofsmallormedium-sizedcompanies,noneof whichisinapositiontodetermineindustryprice? a.Fragmentedindustry b.Consolidatedindustry c.Oligopoly d.Monopoly e.Sector ANSWER:a 42.Aconsolidatedindustrystructure: a.consistsofalargenumberofsmallcompanies. b.canbeseeninagriculture,drycleaning,healthclubs,andrealestatebrokerage. c.consistsoffewcompaniesthatareinapositiontodetermineindustryprice. d.providesnoscopeforoligopolytoexist. e.ischaracterizedbylow-entrybarriersandcommodity-typeproducts. ANSWER:c

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 43.WhichofthefollowingisNOTadeterminantoftheextentofrivalryamongestablishedcompanies? a.Industrycompetitivestructure b.Demandconditions c.Thecoststructureoffirmsinanindustry d.Exitbarriers e.Thepowerofbuyers ANSWER:e 44.Theextentofrivalryamongestablishedcompaniesislowestwhen: a.theindustry'sproductisacommodity. b.demandisgrowingrapidly. c.exitbarriersaresubstantial. d.theindustryisenteringadeclinestage. e.thefixedcostsarehigh. ANSWER:b 45.Thebargainingpowerofanindustry'ssuppliersisgreaterwhen: a.thesupplyindustryisfragmented. b.switchingcostsareminimalforcompaniesbecauseoflittledifferenceamongproductsofferedbydifferent suppliers. c.theindustrybuysinlargequantities. d.theproductthatsupplierssellhasmanysubstitutesandisnotvitaltothecompanies. e.theindustryisnotanimportantcustomertothesuppliers. ANSWER:e 46.Whichofthefollowingstatementsistrueaboutcomplementors? a.TheirimpactonindustrieswasfirstrecognizedbyPorter'sfiveforcesmodel. b.Theyhavelittleimportanceinhigh-technologyindustries. c.Theyhavethepowertoimpactthesalesoftheindustrytowhichtheysupplycomplementproducts. d.Theytendtoincreasethesalesoftheindustrytheyaresupplyingcomplementstobyproducingfewerlowqualitycomplementproducts. e.Theycannotgainenoughpowertoextractprofitsfromtheindustrytowhichtheysupplycomplement products. ANSWER:c

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 47.Economiesofscalecanarisefrom: a.costreductionsgainedthroughdecreasedproduction. b.highpricesonbulkpurchasesofrawmaterialinputsandcomponentparts. c.anadvantagegainedbyspreadingfixedproductioncostsoveralargeproductionvolume. d.increasedspendingonmarketingandadvertisingactivities. e.poorproductionoperations. ANSWER:c 48.Marketsegmentsaregroupsof: a.customerswithinamarketthatcanbedifferentfromeachotheronthebasisoftheirdistinctattributesand specificdemands. b.companieswithinamarketthatproducesimilargoodsorserviceswhichareclosesubstitutesofeachother. c.companiesthatfollowasimilarbusinessmodelandcatertotheneedsofsimilarcustomers. d.closelyrelatedindustries. e.largecompaniesthatareinapositiontodetermineindustryprice. ANSWER:a 49.Brandloyaltycanbecreatedby: a.minimaladvertising. b.notusingpatentstoprotectproducts. c.cuttingthecostsforresearchanddevelopment. d.emphasizinghighproductquality. e.minimizingafter-salesservice ANSWER:d 50.Whichofthefollowingstatementsistrueaboutgovernmentregulationsinthecontextofentrybarriersofanindustry a.Governmentderegulationinanindustryresultsinsignificantreductionincompetition. b.Governmentregulationisnotamajorentrybarrierforanyindustries. c.Fallingentrybarriersduetogovernmentderegulationresultsinhighercompetitionandlowerindustryprofit rates. d.Thethreatofnewentrantsreduceswhenthegovernmentderegulatesanindustry. e.Companiesthatenjoybrandloyaltyandhavesignificantscaleeconomiesaretheoneswhofacemajorthreatof competitionduetogovernmentderegulation. ANSWER:c

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 51._____arisewhenacustomerinveststime,energy,andmoneyshiftingfromtheproductsofferedbyoneestablished companytotheproductsofferedbyanewentrant. a.Overheadcosts b.Incrementalcosts c.Marginalcosts d.Opportunitycosts e.Switchingcosts ANSWER:e 52.Whichofthefollowingstatementsistrueaboutrivalryinthecontextofestablishedcompanies? a.Itsignificantlyreducesthecostsofestablishedcompanies. b.Itsqueezesprofitsoutofanindustry. c.Itenablescompaniestolowertheirspendingonnon-price-competitivestrategies. d.Itforcescompaniestoreducepriceswhenitislessintense. e.Itisunaffectedbythedemandconditionsofanindustry. ANSWER:b 53.Thecompetitivestructureofanindustryreferstothe: a.numberofmarketsegmentsintheindustry. b.numberandsizedistributionofcompaniesintheindustry. c.numberofconsumersintheindustry. d.numberofmanufacturingplantsintheindustry. e.numberofproductsproducedintheindustry. ANSWER:b 54.Commonexitbarriersinclude: a.minimalinvestmentinassetslikespecificmachines. b.emotionalattachmentstoanindustry. c.lowfixedcostsassociatedwithleavinganindustry. d.thelackofbankruptcyregulations. e.economicindependenceofacompany ANSWER:b

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 55.Anindustry'sbuyershavehighbargainingpowerwhen: a.theypurchaseinsmallquantities. b.switchingcostsarelow. c.itiseconomicallyimpossibleforthemtopurchaseaninputfromseveralcompaniesatonce. d.thesupplyindustrydependsuponbuyersforaverysmallpercentageofitstotalorders. e.theindustryisamonopoly. ANSWER:b 56.Thelevelofindustrydemand: a.haslittleeffectoncompetitionintheindustry. b.isoneofthedeterminantsoftheintensityofrivalryintheindustry. c.increaseswhencustomersexitamarketplace. d.doesnotimpactthemarketsharethatestablishedcompanieshold. e.decreasestherivalryamongestablishedcompanies,whenindecline. ANSWER:b 57.Whenshoppingforclothingsuchasshirtsandjeans,TyroneonlybuysproductsfromEasternClothingCompanyeven ifthereareseveralothercompaniesthatoffersimilarproductsatlowerprices.Tyrone'spreferenceforEastern ClothingCompanydemonstrates: a.lackofdemand. b.bargainingpower. c.riskofentry. d.brandloyalty. e.lackofeconomiesofscale ANSWER:d 58.Suppliersinanindustryaremostpowerfulwhen: a.therearefewsubstitutesfortheproductsthattheysell. b.switchingcostsarelow. c.companiesintheindustrythreatentoenterthesuppliers'industry. d.theirprofitabilityissignificantlyaffectedbythepurchasesofcompaniesinaparticularindustry. e.theyrefrainfromenteringtheircustomers'industrybecauseoflackofresources. ANSWER:a

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 59.Membersofastrategicgroup: a.competeonlywithmembersofotherstrategicgroups. b.areaffectedbyPorter'sfivecompetitiveforcesinthesamewayandtothesamedegreeasthemembersof otherstrategicgroups. c.followabusinessmodelthatissimilartothatpursuedbyothercompaniesinthegroup. d.facenothreatofproductsubstitutesfromothermembers. e.moveeasilybetweengroupswithoutbarriers. ANSWER:c 60.Mobilitybarriers: a.allowindustriestochangetheirstrategyandcompeteinthatstrategicgroup. b.inhibitthemovementofcompaniesbetweenstrategicgroupsinanindustry. c.inhibitcompaniesfromshiftingbetweensuppliersfortherawmaterials. d.arefactorsthatoperateoutsideofanindustry. e.excludethebarrierstoentryintoagroupandthebarrierstoexitfromacompany’sexistinggroup. ANSWER:b 61.Ingrowthindustries: a.theintensityofrivalryisveryhigh. b.technologicalexpertiseisthemostimportantentrybarrier. c.threatfrompotentialcompetitorsistypicallyhighest. d.distributionchannelsarepoorlydeveloped. e.buyersarenotfamiliarwiththeindustry'sproducts. ANSWER:c 62.Entrybarriersinembryonicindustriestendtobebasedon: a.brandloyalty. b.economiesofscale. c.absolutecostadvantages. d.regulatoryadvantage. e.technologicalknowhow. ANSWER:e

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Chapter2-ExternalAnalysis:TheIdentificationofOpportunitiesandThreats 63.Whichofthefollowingistrueofgrowthindustries? a.Theytypicallyhavehighbarrierstoentry. b.Theytendtobecharacterizedbyweakrivalry. c.Theyarecharacterizedbylowdemands. d.Theyincreasepricesbecausecustomersaremoreawareoftheindustry'sproduct. e.Theyinhibitthedevelopmentofdistributionchannels. ANSWER:b 64.Demandreachestotalsaturationinthe____stageoftheindustrylife-cycle. a.embryonic b.growth c.shakeout d.maturity e.decline ANSWER:d 65.Thethreatfrompotentialcompetitorsisgreatestinthe_____stageoftheindustrylifecycle. a.embryonic b.growth c.shakeout d.maturity e.decline ANSWER:b 66.Asanindustryenterstheshakeoutstage: a.rivalryamongcompaniesdeclines. b.demandgrowsatahighrate. c.pricesofproductsincrease. d.excessproductivecapacityemerges. e.newentrantscomeintothemarket. ANSWER:d 67.Asanindustryentersthedeclinestage: a.growthbecomesnegative. b.rivalryamongestablishedcompaniesusuallydecreases. c.competitivepressuresabate. d.capacityreduces. e.demandremainsthesame. ANSWER:a Copyright Cengage Learning. Power...