SM2016 Chap 3

C. all the strategically significant forces and factors outside a company's boundaries — general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation.

A company's broad "macro-environment" refers to A. the industry and competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets being served. C. all the strategically significant forces and factors outside a company's boundaries — general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company's industry.

Which one of the following is not part of a company's broad macro-environment?

A. conditions in the economy at large.

B. population demographics and societal values and lifestyles.

C. technological and ecological factors.

D. governmental regulations and legislation.

E. the company's resource strengths, resource weaknesses, and competitive capabilities.

E. 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?

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 key factors for future competitive success?

D. Does the outlook for the industry offer good prospects for profitability?

E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A. 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

A. cultural, lifestyle, and demographic changes.

B. the birth of new industries, new knowledge, and disruptive technologies.

C. weather, climate change, and water shortages.

D. interest rates, exchange rates, unemployment rates, inflation rates, and economic growth.

E. how often sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently.

E. how often sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently.

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

A. The market size, growth rate and prospects

B. The scope of competitive rivalry including geographic area

C. The market demand-supply conditions

D. How strong driving forces and competitive forces are

E. The role and pace of technological change

D. How strong driving forces and competitive forces are

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

A. Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply conditions

B. How many strategic groups the industry has and which ones are most profitable and least profitable

C. The number and sizes of buyers, the number of rivals, and the pace of product innovation

D. The pace of technological change

E. The current industry position in its life cycle to reveal the industry's growth prospects

C. The number and sizes of buyers, the number of rivals, and the pace of product innovation

The state of competition in an industry is a function of

A. the competitive pressures associated with rivalry among competing sellers to attract customers.

B. competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products.

C. competitive pressures associated with the threat of new entrants into the marketplace.

D. competitive pressures associated with the bargaining power of suppliers and customers.

E. All of these

E. All of these

The nature and strength of the competitive forces that prevail in an industry is generally a joint product of the

A. pressures associated with rivalry among sellers to attract buyer patronage.

B. threat that firms outside the industry will decide to enter the market.

C. attempts of companies in other industries to win buyers over to their own substitute products.

D. competitive pressures stemming from the bargaining power of both suppliers and buyers.

E. All of these.

E. All of these.

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

A. The power and influence of industry driving forces

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on

A. whether most buyers possess roughly equal or varying degrees of bargaining power.

B. how many buyers are engaged in collaborative partnerships with sellers.

C. whether entry barriers are high or low.

D. whether the overall quality of the items being furnished by industry members is rising or falling.

E. whether buyer demand is strong or declining.

E. whether buyer demand is strong or declining.

Competitive pressures stemming from buyer bargaining power tend to be weaker when

A. the number of buyers is small, such that each customer's business tends to be particularly important to a seller.

B. buyer demand is growing slowly or maybe even declining.

C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.

D. buyers are well informed about sellers' products, prices, and costs.

E. the buyer group consists of a few large buyers and the seller group consists of numerous small firms.

C. 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?

A. When buyers are unlikely to integrate backward into the business of sellers

B. When buyers are well informed about sellers' products, prices, and costs

C. When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low

D. When buyers have the ability to postpone purchases if they don't like the prices offered by sellers

E. When buyers are few in number and/or often purchase in large quantities

A. When buyers are unlikely to integrate backward into the business of sellers

Which of the following is not a factor that causes buyer bargaining power to be stronger?

A. Some buyers are a threat to integrate backward into the business of sellers

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

C. Buyers have considerable discretion over whether and when they purchase the product

D. Buyers are well informed about sellers' products, prices, and costs

E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low

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

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong?

A. When buyer demand is growing rapidly

B. When buyers are relatively well informed about sellers' products, prices, and costs

C. When buyers pose a major threat to integrate backward into the product market of sellers

D. When sellers' products are weakly differentiated, making it easy for buyers to switch to competing brands

E. When buyers have considerable discretion over whether and when they purchase the product

A. When buyer demand is growing rapidly

Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?

A. Whether the number of buyers is small or if a customer is particularly important to the seller

B. Whether buyers are relatively well informed about sellers' products, prices, and costs

C. Whether buyer needs and expectations are changing rapidly or slowly

D. Whether buyer demand is weak or strong and rapidly growing

E. Whether buyers pose a credible threat of integrating backward into the business of sellers

C. Whether buyer needs and expectations are changing rapidly or slowly

The competitive pressures from substitute products tend to be stronger when

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

B. there are more than 10 sellers of substitute products.

C. substitutes exhibit the latest in technological innovation.

D. buyers have high psychic costs in severing existing brand relationships and establishing new ones.

E. demand for the industry's product is not very price sensitive.

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

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

A. whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently.

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

C. whether the available substitutes are products or services.

D. whether the producers of substitutes have ample budgets for new product R&D.

E. the speed with which buyer needs and expectations are changing.

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

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?

A. Artificial sweetener as a substitute for sugar

B. Wireless phone service as a substitute for a landline telephone

C. Coca-Cola as a substitute for Pepsi

D. Digital cameras as substitutes for film cameras

E. Video-on-demand services as a substitute for renting movies from a movie rental store

C. Coca-Cola as a substitute for Pepsi

In which of the following instances are industry members not subject to stronger competitive pressures from substitute products?

A. The costs to buyers of switching over to the substitutes are low

B. Buyers are dubious about using substitutes

C. The quality and performance of the substitutes is well matched to what buyers need to meet their requirements

D. Buyer brand loyalty is weak

E. Substitutes are readily available at competitive prices

B. Buyers are dubious about using substitutes

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

A. whether the profits of suppliers are relatively high or low.

B. the number of suppliers that each seller/industry member purchases from on average.

C. how aggressively rival industry members are trying to differentiate their products.

D. the extent to which 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.

E. whether the prices of the items being furnished by the suppliers are rising or falling.

D. the extent to which 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 bargaining leverage of suppliers is greater when

A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.

B. industry members incur low costs in switching their purchases from one supplier to another.

C. industry members purchase in large quantities and thus are important customers of the suppliers.

D. it makes good economic sense for industry members to vertically integrate backward.

E. the supplier industry is composed of a large number of relatively small suppliers.

A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.

In which one of the following instances is supplier bargaining power and leverage not weakened?

A. When industry members pose a credible threat of backward integration into the business of suppliers

B. When the cost of switching from one supplier to another is low

C. When the buying firms purchase in large quantities and thus are important customers of the suppliers

D. When the item being supplied is a commodity

E. When the items purchased from suppliers are in short supply

E. When the items purchased from suppliers are in short supply

Which one of the following is not a factor that affects the strength of supplier bargaining power?

A. Whether needed inputs are in short or ample supply

B. Whether industry members are a strong threat to integrate backward into the business of suppliers

C. Whether industry members are struggling to make good profits because of slow-growing market demand

D. Whether the costs of industry members to switch their purchases to alternative suppliers or substitutes are high or low

E. Whether the item being supplied is a commodity that is readily available from many suppliers

C. Whether industry members are struggling to make good profits because of slow-growing market demand

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers?

A. To reduce the costs of switching suppliers

B. To speed the availability of next-generation components

C. To enhance the quality of parts and components being supplied and reduce defect rates

D. To squeeze out important cost savings for both themselves and their suppliers

E. To reduce inventory and logistics costs

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers? A. To reduce the costs of switching suppliers B. To speed the availability of next-generation components C. To enhance the quality of parts and components being supplied and reduce defect rates D. To squeeze out important cost savings for both themselves and their suppliers E. To reduce inventory and logistics costs

Which one of the following does not intensify the competitive pressures associated with the threat of entry?

A. When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers

B. When industry members are struggling to earn good profits

C. When entry barriers are relatively low

D. When existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence

E. When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

B. When industry members are struggling to earn good profits

Which one of the following increases the competitive pressures associated with the threat of entry?

A. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers

B. When buyers have a high degree of loyalty to the brands and product offerings of existing industry members

C. When buyer demand for the product is growing fairly slowly

D. When few outsiders have the expertise and resources to hurdle whatever entry barriers exist

E. When newcomers can expect to earn attractive profits

E. 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.

B. the pool of entry candidates is large and some have resources that would make them formidable market contenders.

C. the industry's market growth is rapid.

D. newcomers can be expected to earn attractive profits.

E. buyers have little loyalty to the brands and product offerings of existing industry members.

A. financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers.

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

A. Rapid market growth

B. Sizable capital requirements and an array of regulatory requirements

C. Strong buyer loyalty to existing brands

D. Sizable economies of scale in production

E. Difficulties in gaining access to distribution and securing adequate space of retailers' shelves

A. Rapid market growth

The best test of whether potential entry is a strong or weak competitive force is

A. the strength of buyer loyalty to existing brands.

B. whether the industry's driving forces make it harder or easier for new entrants to be successful.

C. whether the strategies of industry members are well matched to the industry's key success factors.

D. whether the industry offers an opportunity for a blue ocean strategy.

E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

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 rivalry among competing sellers in the industry for buyer patronage.

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.

B. the competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage.

Factors that cause the rivalry among competing sellers to be weak 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. a recent acquisition of a weak rivals by an industry outsider with the intent of turning the acquisition into a major contender.

D. low barriers to entry and weakly differentiated products among rival sellers.

E. slow growth in buyer demand and strongly differentiated products.

B. 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?

A. High buyer switching costs

B. Rapid growth in buyer demand

C. Industry members aren't aggressive in drawing sales and market share away from rivals

D. When one or more competitors become dissatisfied with their market position

E. Strongly differentiated products among rival sellers

D. When one or more competitors become dissatisfied with their market position

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 in drawing sales and market share away from rivals.

D. rivals have diverse strategies and objectives and are located in different countries.

E. rival sellers have weakly differentiated products.

C. industry rivals are not particularly aggressive in drawing sales and market share away from rivals.

Rivalry among competing sellers is generally more intense when

A. buyer demand is growing rapidly.

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.

D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.

E. barriers to entry are high and buyer switching costs are high.

D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.

The rivalry among competing firms tends to be more intense when

A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.

B. the products/services of rival sellers are strongly differentiated and buyer demand is strong.

C. rivals are relatively content with their market position.

D. there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members.

E. there are fewer firms in the industry that have unequal market shares.

A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.

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

A. lacks powerful driving forces.

B. gives each industry competitor the best potential for building sustainable competitive advantage.

C. makes it hard for industry members to pursue a differentiation strategy.

D. is conducive to industry members earning attractive profits.

E. requires that industry members have low costs.

D. 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

A. is competitively unattractive from the standpoint of earning good profits.

B. offers little ability to build a sustainable competitive advantage.

C. is highly conducive to achieving strong product differentiation and high brand loyalty.

D. offers moderate to good prospects for achieving low costs and building a sustainable competitive advantage.

E. requires that industry members have a strongly differentiated product offering in order to be profitable.

A. 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,

A. the stronger are the industry's driving forces.

B. the lower the combined profitability of industry members.

C. the fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader.

D. the larger the number of competitive advantage opportunities for industry members.

E. the greater the number of industry key success factors.

B. the lower the combined profitability of industry members.

The "driving forces" in an industry

A. are usually triggered by changing technology or stronger learning/experience curve effects.

B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers.

C. are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

D. appear when an industry begins to mature but are seldom present during early stages of the industry life cycle.

E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.

C. are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

Industry conditions change

A. because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers.

B. because of newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups.

C. because new industry key success factors emerge.

D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways.

E. chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways.

The steps involved in driving forces analysis are

A. developing a comprehensive list of all the potential causes of changing industry conditions.

B. predicting which new driving forces will emerge next.

C. determining which of the five competitive forces is the biggest driver of industry change.

D. identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces.

E. All of these.

D. identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces.

Driving forces analysis

A. 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 impact of the driving forces.

B. identifies which strategic group is the most powerful.

C. helps managers identify which industry member is likely to become (or remain) the industry leader and why.

D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage.

E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.

A. 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 impact of the driving forces.

Which of the following is not generally a "driving force" capable of producing fundamental changes in industry and competitive conditions?

A. Changes in the long-term industry growth rate

B. Increasing globalization of the industry

C. Product innovation and technological change

D. Ups and downs in the economy and in interest rates

E. New government regulations or significant changes in government policy toward the industry

D. Ups and downs in the economy and in interest rates

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

A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency

B. Increasing globalization of the industry and product innovation

C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry

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

E. Changes in who buys the industry's product and how they use it

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?

A. Changes in who buys the product and how they use it, changes in the long-term industry growth rate, and changes in cost and efficiency

B. Entry or exit of major firms, product innovation, and marketing innovation

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

D. Diffusion of technical know-how and changing societal concerns, attitudes, and lifestyles

E. Changes in manufacturing processes brought on by technological change, increasing globalization of the industry, and new Internet capabilities

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

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

A. Entry or exit of major firms

B. Changing societal concerns, attitudes, and lifestyles

C. Diffusion of technical know-how across more companies and more countries

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

E. Technological change and manufacturing process innovation

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

An industry's driving forces

A. are generally determined by competitive pressures, the sizes of strategic groups, and the power of rival firms' competitive strategies.

B. generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.

C. frequently cause a leveling off of industry growth and a reduction in the bargaining power of buyers.

D. are normally triggered by ups and downs in the economy, higher or lower inflation rates, higher or lower interest rates, or important new strategic alliances.

E. can be triggered by such factors as growing competitive pressures from substitute products, greater seller-supplier collaboration, and the efforts of rival firms to employ new or different offensive strategies.

B. generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.

A strategic group

A. consists of those industry members that are growing at about the same rate and have similar product line breadth.

B. includes all rival firms having comparable profitability.

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

D. consists of those firms whose market shares are about the same size.

E. is made up of those firms having comparable profit margins.

C. 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

A. are subject to the same driving forces.

B. are placing about the same emphasis on each distribution channel.

C. use the same key success factors to differentiate their products.

D. employ similar competitive approaches and occupy similar positions in the market.

E. have similar size market shares.

D. employ similar competitive approaches and occupy similar positions in the market.

Which of the following is not an appropriate guideline for developing a strategic group map for a given industry?

A. The variables chosen as axes for the map should indicate big differences in how rivals have positioned themselves to compete in the marketplace.

B. The variables chosen as axes for the map can be quantitative, qualitative, or discrete and defined in terms of distinct classes and combinations.

C. The variables chosen as axes for the map should be highly correlated.

D. Several maps should be drawn if more than one pair of variables can help illuminate differences in the competitive positioning of industry members.

E. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.

C. The variables chosen as axes for the map should be highly correlated.

Not all positions on a strategic group map are equally attractive because

A. entry and exit barriers are different for each strategic group.

B. key success factors are usually quite different for differently positioned industry participants.

C. small strategic groups are always less profitable than large strategic groups.

D. across-group rivalry is strongest at the outer edges of the strategic group map.

E. industry driving forces and competitive pressures favor some companies or groups and hurt others and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position.

E. industry driving forces and competitive pressures favor some companies or groups and hurt others and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position.

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

A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps.

B. determine which rivals are in the best strategic group.

C. figure out how many key success factors a rival has.

D. determine whether a rival is gaining or losing market share, whether rivals are increasing or decreasing R&D spending, and what new marketing promotions are in the works.

E. determine whether a rival has the best strategy and is the industry leader.

A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps.

Having good competitive intelligence about rivals' strategies, latest actions and announcements, resource strengths and weaknesses, and moves to improve their situation is important because

A. it identifies who the industry's current market share leaders are.

B. it helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves.

C. good scouting reports help identify which rival is in which strategic group.

D. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes.

E. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.

B. it helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves.

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

A. Which rivals badly need to increase their unit sales and market share?

B. Are there predictable trends in the timing of rivals' new-product launches or marketing promotions?

C. Which rivals have a strong incentive, along with the resources, to make major strategic changes?

D. Which rivals are likely to enter new geographic markets or expand their product offerings?

E. All of these

E. All of these

The key success factors in an industry

A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace.

B. are determined by the industry's driving forces.

C. hinge on how many different strategic groups the industry has.

D. depend on how many rivals are trying to move from one strategic group to another.

E. are a function of such considerations as how many firms are in the industry, how many have market shares above 5%, and whether the business models being used are similar or diverse.

A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace.

An industry's key success factors

A. are a function of market share, entry barriers, economies of scale, degree of vertical integration, and industry profitability.

B. vary according to whether an industry has high or low long-term attractiveness.

C. can be determined through identifying an industry's dominant economic characteristics, assessing the five competitive forces, considering the impacts of the driving forces, comparing the market positions of industry members, and forecasting the likely next moves of industry rivals.

D. can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies.

E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.

C. can be determined through identifying an industry's dominant economic characteristics, assessing the five competitive forces, considering the impacts of the driving forces, comparing the market positions of industry members, and forecasting the likely next moves of industry rivals.

In identifying an industry's key success factors, strategists should

A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly.

B. 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.

C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak.

D. consider what it will take to overtake the company with the industry's overall best strategy.

E. focus their attention on what it will take to capitalize on impacts of the industry's driving forces.

B. 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?

A. High utilization of fixed assets

B. A well-known and well-respected brand name

C. Breadth of product line and product selection

D. Clever advertising

E. Courteous, personalized customer service

A. High utilization of fixed assets

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

A. Global distribution capabilities

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

C. Low distribution costs

D. Accurate filling of buyer orders

E. Short delivery time capability

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

Which of the following factors should a company consider when determining if an industry offers good prospects for attractive profits?

A. The industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors

B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor

C. Whether there are more than five key success factors and more than five barriers to entry

D. Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group

E. Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product

A. The industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors

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

A. The industry's growth potential

B. Whether competitive pressures will likely grow stronger or weaker

C. Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces

D. The company's competitive position in the industry and its ability to perform industry key success factors

E. Whether the industry's product is strongly or weakly differentiated

E. Whether the industry's product is strongly or weakly differentiated

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SM2016 Chap 3

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C. all the strategically significant forces and factors outside a company’s boundaries — general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation.

A company’s broad "macro-environment" refers to A. the industry and competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets being served. C. all the strategically significant forces and factors outside a company’s boundaries — general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company’s industry.

Which one of the following is not part of a company’s broad macro-environment?

A. conditions in the economy at large.

B. population demographics and societal values and lifestyles.

C. technological and ecological factors.

D. governmental regulations and legislation.

E. the company’s resource strengths, resource weaknesses, and competitive capabilities.

E. 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?

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 key factors for future competitive success?

D. Does the outlook for the industry offer good prospects for profitability?

E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A. 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

A. cultural, lifestyle, and demographic changes.

B. the birth of new industries, new knowledge, and disruptive technologies.

C. weather, climate change, and water shortages.

D. interest rates, exchange rates, unemployment rates, inflation rates, and economic growth.

E. how often sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently.

E. how often sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently.

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

A. The market size, growth rate and prospects

B. The scope of competitive rivalry including geographic area

C. The market demand-supply conditions

D. How strong driving forces and competitive forces are

E. The role and pace of technological change

D. How strong driving forces and competitive forces are

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

A. Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply conditions

B. How many strategic groups the industry has and which ones are most profitable and least profitable

C. The number and sizes of buyers, the number of rivals, and the pace of product innovation

D. The pace of technological change

E. The current industry position in its life cycle to reveal the industry’s growth prospects

C. The number and sizes of buyers, the number of rivals, and the pace of product innovation

The state of competition in an industry is a function of

A. the competitive pressures associated with rivalry among competing sellers to attract customers.

B. competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products.

C. competitive pressures associated with the threat of new entrants into the marketplace.

D. competitive pressures associated with the bargaining power of suppliers and customers.

E. All of these

E. All of these

The nature and strength of the competitive forces that prevail in an industry is generally a joint product of the

A. pressures associated with rivalry among sellers to attract buyer patronage.

B. threat that firms outside the industry will decide to enter the market.

C. attempts of companies in other industries to win buyers over to their own substitute products.

D. competitive pressures stemming from the bargaining power of both suppliers and buyers.

E. All of these.

E. All of these.

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

A. The power and influence of industry driving forces

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on

A. whether most buyers possess roughly equal or varying degrees of bargaining power.

B. how many buyers are engaged in collaborative partnerships with sellers.

C. whether entry barriers are high or low.

D. whether the overall quality of the items being furnished by industry members is rising or falling.

E. whether buyer demand is strong or declining.

E. whether buyer demand is strong or declining.

Competitive pressures stemming from buyer bargaining power tend to be weaker when

A. the number of buyers is small, such that each customer’s business tends to be particularly important to a seller.

B. buyer demand is growing slowly or maybe even declining.

C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.

D. buyers are well informed about sellers’ products, prices, and costs.

E. the buyer group consists of a few large buyers and the seller group consists of numerous small firms.

C. 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?

A. When buyers are unlikely to integrate backward into the business of sellers

B. When buyers are well informed about sellers’ products, prices, and costs

C. When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low

D. When buyers have the ability to postpone purchases if they don’t like the prices offered by sellers

E. When buyers are few in number and/or often purchase in large quantities

A. When buyers are unlikely to integrate backward into the business of sellers

Which of the following is not a factor that causes buyer bargaining power to be stronger?

A. Some buyers are a threat to integrate backward into the business of sellers

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

C. Buyers have considerable discretion over whether and when they purchase the product

D. Buyers are well informed about sellers’ products, prices, and costs

E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low

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

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong?

A. When buyer demand is growing rapidly

B. When buyers are relatively well informed about sellers’ products, prices, and costs

C. When buyers pose a major threat to integrate backward into the product market of sellers

D. When sellers’ products are weakly differentiated, making it easy for buyers to switch to competing brands

E. When buyers have considerable discretion over whether and when they purchase the product

A. When buyer demand is growing rapidly

Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?

A. Whether the number of buyers is small or if a customer is particularly important to the seller

B. Whether buyers are relatively well informed about sellers’ products, prices, and costs

C. Whether buyer needs and expectations are changing rapidly or slowly

D. Whether buyer demand is weak or strong and rapidly growing

E. Whether buyers pose a credible threat of integrating backward into the business of sellers

C. Whether buyer needs and expectations are changing rapidly or slowly

The competitive pressures from substitute products tend to be stronger when

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

B. there are more than 10 sellers of substitute products.

C. substitutes exhibit the latest in technological innovation.

D. buyers have high psychic costs in severing existing brand relationships and establishing new ones.

E. demand for the industry’s product is not very price sensitive.

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

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

A. whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently.

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

C. whether the available substitutes are products or services.

D. whether the producers of substitutes have ample budgets for new product R&D.

E. the speed with which buyer needs and expectations are changing.

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

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?

A. Artificial sweetener as a substitute for sugar

B. Wireless phone service as a substitute for a landline telephone

C. Coca-Cola as a substitute for Pepsi

D. Digital cameras as substitutes for film cameras

E. Video-on-demand services as a substitute for renting movies from a movie rental store

C. Coca-Cola as a substitute for Pepsi

In which of the following instances are industry members not subject to stronger competitive pressures from substitute products?

A. The costs to buyers of switching over to the substitutes are low

B. Buyers are dubious about using substitutes

C. The quality and performance of the substitutes is well matched to what buyers need to meet their requirements

D. Buyer brand loyalty is weak

E. Substitutes are readily available at competitive prices

B. Buyers are dubious about using substitutes

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

A. whether the profits of suppliers are relatively high or low.

B. the number of suppliers that each seller/industry member purchases from on average.

C. how aggressively rival industry members are trying to differentiate their products.

D. the extent to which 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.

E. whether the prices of the items being furnished by the suppliers are rising or falling.

D. the extent to which 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 bargaining leverage of suppliers is greater when

A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.

B. industry members incur low costs in switching their purchases from one supplier to another.

C. industry members purchase in large quantities and thus are important customers of the suppliers.

D. it makes good economic sense for industry members to vertically integrate backward.

E. the supplier industry is composed of a large number of relatively small suppliers.

A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.

In which one of the following instances is supplier bargaining power and leverage not weakened?

A. When industry members pose a credible threat of backward integration into the business of suppliers

B. When the cost of switching from one supplier to another is low

C. When the buying firms purchase in large quantities and thus are important customers of the suppliers

D. When the item being supplied is a commodity

E. When the items purchased from suppliers are in short supply

E. When the items purchased from suppliers are in short supply

Which one of the following is not a factor that affects the strength of supplier bargaining power?

A. Whether needed inputs are in short or ample supply

B. Whether industry members are a strong threat to integrate backward into the business of suppliers

C. Whether industry members are struggling to make good profits because of slow-growing market demand

D. Whether the costs of industry members to switch their purchases to alternative suppliers or substitutes are high or low

E. Whether the item being supplied is a commodity that is readily available from many suppliers

C. Whether industry members are struggling to make good profits because of slow-growing market demand

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers?

A. To reduce the costs of switching suppliers

B. To speed the availability of next-generation components

C. To enhance the quality of parts and components being supplied and reduce defect rates

D. To squeeze out important cost savings for both themselves and their suppliers

E. To reduce inventory and logistics costs

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers? A. To reduce the costs of switching suppliers B. To speed the availability of next-generation components C. To enhance the quality of parts and components being supplied and reduce defect rates D. To squeeze out important cost savings for both themselves and their suppliers E. To reduce inventory and logistics costs

Which one of the following does not intensify the competitive pressures associated with the threat of entry?

A. When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers

B. When industry members are struggling to earn good profits

C. When entry barriers are relatively low

D. When existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence

E. When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

B. When industry members are struggling to earn good profits

Which one of the following increases the competitive pressures associated with the threat of entry?

A. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers

B. When buyers have a high degree of loyalty to the brands and product offerings of existing industry members

C. When buyer demand for the product is growing fairly slowly

D. When few outsiders have the expertise and resources to hurdle whatever entry barriers exist

E. When newcomers can expect to earn attractive profits

E. 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.

B. the pool of entry candidates is large and some have resources that would make them formidable market contenders.

C. the industry’s market growth is rapid.

D. newcomers can be expected to earn attractive profits.

E. buyers have little loyalty to the brands and product offerings of existing industry members.

A. financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers.

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

A. Rapid market growth

B. Sizable capital requirements and an array of regulatory requirements

C. Strong buyer loyalty to existing brands

D. Sizable economies of scale in production

E. Difficulties in gaining access to distribution and securing adequate space of retailers’ shelves

A. Rapid market growth

The best test of whether potential entry is a strong or weak competitive force is

A. the strength of buyer loyalty to existing brands.

B. whether the industry’s driving forces make it harder or easier for new entrants to be successful.

C. whether the strategies of industry members are well matched to the industry’s key success factors.

D. whether the industry offers an opportunity for a blue ocean strategy.

E. to ask if the industry’s growth and profit prospects are strongly attractive to potential entry candidates.

E. to ask if the industry’s growth and profit prospects are strongly attractive to potential entry candidates.

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 rivalry among competing sellers in the industry for buyer patronage.

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.

B. the competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage.

Factors that cause the rivalry among competing sellers to be weak 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. a recent acquisition of a weak rivals by an industry outsider with the intent of turning the acquisition into a major contender.

D. low barriers to entry and weakly differentiated products among rival sellers.

E. slow growth in buyer demand and strongly differentiated products.

B. 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?

A. High buyer switching costs

B. Rapid growth in buyer demand

C. Industry members aren’t aggressive in drawing sales and market share away from rivals

D. When one or more competitors become dissatisfied with their market position

E. Strongly differentiated products among rival sellers

D. When one or more competitors become dissatisfied with their market position

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 in drawing sales and market share away from rivals.

D. rivals have diverse strategies and objectives and are located in different countries.

E. rival sellers have weakly differentiated products.

C. industry rivals are not particularly aggressive in drawing sales and market share away from rivals.

Rivalry among competing sellers is generally more intense when

A. buyer demand is growing rapidly.

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.

D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.

E. barriers to entry are high and buyer switching costs are high.

D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.

The rivalry among competing firms tends to be more intense when

A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.

B. the products/services of rival sellers are strongly differentiated and buyer demand is strong.

C. rivals are relatively content with their market position.

D. there are so many industry rivals that the impact of any one company’s actions is spread thinly across all industry members.

E. there are fewer firms in the industry that have unequal market shares.

A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.

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

A. lacks powerful driving forces.

B. gives each industry competitor the best potential for building sustainable competitive advantage.

C. makes it hard for industry members to pursue a differentiation strategy.

D. is conducive to industry members earning attractive profits.

E. requires that industry members have low costs.

D. 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

A. is competitively unattractive from the standpoint of earning good profits.

B. offers little ability to build a sustainable competitive advantage.

C. is highly conducive to achieving strong product differentiation and high brand loyalty.

D. offers moderate to good prospects for achieving low costs and building a sustainable competitive advantage.

E. requires that industry members have a strongly differentiated product offering in order to be profitable.

A. 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,

A. the stronger are the industry’s driving forces.

B. the lower the combined profitability of industry members.

C. the fewer companies that can achieve a competitive advantage via anything other than being the industry’s low-cost leader.

D. the larger the number of competitive advantage opportunities for industry members.

E. the greater the number of industry key success factors.

B. the lower the combined profitability of industry members.

The "driving forces" in an industry

A. are usually triggered by changing technology or stronger learning/experience curve effects.

B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers.

C. are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

D. appear when an industry begins to mature but are seldom present during early stages of the industry life cycle.

E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.

C. are major underlying causes of change in industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

Industry conditions change

A. because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers.

B. because of newly emerging industry threats and industry opportunities that alter the composition of the industry’s strategic groups.

C. because new industry key success factors emerge.

D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways.

E. chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways.

The steps involved in driving forces analysis are

A. developing a comprehensive list of all the potential causes of changing industry conditions.

B. predicting which new driving forces will emerge next.

C. determining which of the five competitive forces is the biggest driver of industry change.

D. identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces.

E. All of these.

D. identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impact of the driving forces.

Driving forces analysis

A. 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 impact of the driving forces.

B. identifies which strategic group is the most powerful.

C. helps managers identify which industry member is likely to become (or remain) the industry leader and why.

D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage.

E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.

A. 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 impact of the driving forces.

Which of the following is not generally a "driving force" capable of producing fundamental changes in industry and competitive conditions?

A. Changes in the long-term industry growth rate

B. Increasing globalization of the industry

C. Product innovation and technological change

D. Ups and downs in the economy and in interest rates

E. New government regulations or significant changes in government policy toward the industry

D. Ups and downs in the economy and in interest rates

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

A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency

B. Increasing globalization of the industry and product innovation

C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry

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

E. Changes in who buys the industry’s product and how they use it

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?

A. Changes in who buys the product and how they use it, changes in the long-term industry growth rate, and changes in cost and efficiency

B. Entry or exit of major firms, product innovation, and marketing innovation

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

D. Diffusion of technical know-how and changing societal concerns, attitudes, and lifestyles

E. Changes in manufacturing processes brought on by technological change, increasing globalization of the industry, and new Internet capabilities

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

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

A. Entry or exit of major firms

B. Changing societal concerns, attitudes, and lifestyles

C. Diffusion of technical know-how across more companies and more countries

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

E. Technological change and manufacturing process innovation

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

An industry’s driving forces

A. are generally determined by competitive pressures, the sizes of strategic groups, and the power of rival firms’ competitive strategies.

B. generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.

C. frequently cause a leveling off of industry growth and a reduction in the bargaining power of buyers.

D. are normally triggered by ups and downs in the economy, higher or lower inflation rates, higher or lower interest rates, or important new strategic alliances.

E. can be triggered by such factors as growing competitive pressures from substitute products, greater seller-supplier collaboration, and the efforts of rival firms to employ new or different offensive strategies.

B. generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.

A strategic group

A. consists of those industry members that are growing at about the same rate and have similar product line breadth.

B. includes all rival firms having comparable profitability.

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

D. consists of those firms whose market shares are about the same size.

E. is made up of those firms having comparable profit margins.

C. 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

A. are subject to the same driving forces.

B. are placing about the same emphasis on each distribution channel.

C. use the same key success factors to differentiate their products.

D. employ similar competitive approaches and occupy similar positions in the market.

E. have similar size market shares.

D. employ similar competitive approaches and occupy similar positions in the market.

Which of the following is not an appropriate guideline for developing a strategic group map for a given industry?

A. The variables chosen as axes for the map should indicate big differences in how rivals have positioned themselves to compete in the marketplace.

B. The variables chosen as axes for the map can be quantitative, qualitative, or discrete and defined in terms of distinct classes and combinations.

C. The variables chosen as axes for the map should be highly correlated.

D. Several maps should be drawn if more than one pair of variables can help illuminate differences in the competitive positioning of industry members.

E. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.

C. The variables chosen as axes for the map should be highly correlated.

Not all positions on a strategic group map are equally attractive because

A. entry and exit barriers are different for each strategic group.

B. key success factors are usually quite different for differently positioned industry participants.

C. small strategic groups are always less profitable than large strategic groups.

D. across-group rivalry is strongest at the outer edges of the strategic group map.

E. industry driving forces and competitive pressures favor some companies or groups and hurt others and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group’s position.

E. industry driving forces and competitive pressures favor some companies or groups and hurt others and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group’s position.

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

A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals’ missteps.

B. determine which rivals are in the best strategic group.

C. figure out how many key success factors a rival has.

D. determine whether a rival is gaining or losing market share, whether rivals are increasing or decreasing R&D spending, and what new marketing promotions are in the works.

E. determine whether a rival has the best strategy and is the industry leader.

A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals’ missteps.

Having good competitive intelligence about rivals’ strategies, latest actions and announcements, resource strengths and weaknesses, and moves to improve their situation is important because

A. it identifies who the industry’s current market share leaders are.

B. it helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves.

C. good scouting reports help identify which rival is in which strategic group.

D. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes.

E. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.

B. it helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves.

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

A. Which rivals badly need to increase their unit sales and market share?

B. Are there predictable trends in the timing of rivals’ new-product launches or marketing promotions?

C. Which rivals have a strong incentive, along with the resources, to make major strategic changes?

D. Which rivals are likely to enter new geographic markets or expand their product offerings?

E. All of these

E. All of these

The key success factors in an industry

A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members’ abilities to prosper in the marketplace.

B. are determined by the industry’s driving forces.

C. hinge on how many different strategic groups the industry has.

D. depend on how many rivals are trying to move from one strategic group to another.

E. are a function of such considerations as how many firms are in the industry, how many have market shares above 5%, and whether the business models being used are similar or diverse.

A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members’ abilities to prosper in the marketplace.

An industry’s key success factors

A. are a function of market share, entry barriers, economies of scale, degree of vertical integration, and industry profitability.

B. vary according to whether an industry has high or low long-term attractiveness.

C. can be determined through identifying an industry’s dominant economic characteristics, assessing the five competitive forces, considering the impacts of the driving forces, comparing the market positions of industry members, and forecasting the likely next moves of industry rivals.

D. can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies.

E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.

C. can be determined through identifying an industry’s dominant economic characteristics, assessing the five competitive forces, considering the impacts of the driving forces, comparing the market positions of industry members, and forecasting the likely next moves of industry rivals.

In identifying an industry’s key success factors, strategists should

A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly.

B. 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.

C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak.

D. consider what it will take to overtake the company with the industry’s overall best strategy.

E. focus their attention on what it will take to capitalize on impacts of the industry’s driving forces.

B. 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?

A. High utilization of fixed assets

B. A well-known and well-respected brand name

C. Breadth of product line and product selection

D. Clever advertising

E. Courteous, personalized customer service

A. High utilization of fixed assets

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

A. Global distribution capabilities

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

C. Low distribution costs

D. Accurate filling of buyer orders

E. Short delivery time capability

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

Which of the following factors should a company consider when determining if an industry offers good prospects for attractive profits?

A. The industry’s growth potential, whether competition appears destined to become stronger or weaker, how the industry’s driving forces might affect overall industry profitability, the company’s competitive position relative to rivals, and the company’s proficiency in performing industry key success factors

B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor

C. Whether there are more than five key success factors and more than five barriers to entry

D. Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group

E. Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product

A. The industry’s growth potential, whether competition appears destined to become stronger or weaker, how the industry’s driving forces might affect overall industry profitability, the company’s competitive position relative to rivals, and the company’s proficiency in performing industry key success factors

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

A. The industry’s growth potential

B. Whether competitive pressures will likely grow stronger or weaker

C. Whether the industry’s future profitability will be favorably or unfavorably affected by the prevailing driving forces

D. The company’s competitive position in the industry and its ability to perform industry key success factors

E. Whether the industry’s product is strongly or weakly differentiated

E. Whether the industry’s product is strongly or weakly differentiated

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