TB_ch03.doc

Test Bank, Chapter 3

1

Chapter 3: Evaluating a Company’s External Environment Multiple Choice Questions The Strategically Relevant Components of a Company’s External Environment 1. A company's company's "macroenvi "macroenvironme ronment" nt" refers refers to A) the industry industry and and competitiv competitivee arena in which the the company operate operates. s. B) enera! economic economic conditions conditions p!us the factors drivin chane chane in the the markets where a company company operates. C) a!! the re!eva re!evant nt forces forces and factors factors outside outside a company company's 's oundari oundaries es  enera! enera! economic conditions, popu!ation demoraphics, societa! va!ues and !ifesty!es, techno!oica! factors, overnmenta! !eis!ation !eis!ation and reu!ation, and c!oser to home, the industry and competitive arena in which it operates. #) the competitive competitive market environment environment that that e$ists etween a company and its competitors. competitors. %) the dominant dominant economi economicc features features of a company's company's industr industry y. Answer& C ae& ( * + #ifficu!ty& #ifficu!ty& %asy Ta$onomy& -now!ede AACB& 3

/. 0hich 0hich one of the fo!!owi fo!!owin n is not part part of a company's company's macroenvi macroenvironm ronment ent A) Condition Conditionss in the economy economy at !are !are B) opu!atio opu!ation n demoraphi demoraphics cs and societa! societa! va!ues va!ues and !ifesty! !ifesty!es es C) Techno!oica! factors and overnmenta! reu!ations and !eis!ation !eis!ation #) The industry industry and competitive environment arena in which the the company operates %) The company2 company2ss resource resource strenths, strenths, resource resource weaknesses, weaknesses, and and competitive competitive capai!ities Answer& % ae& ( * + #ifficu!ty& %asy Ta$onomy& -now!ede AACB& 3

Thinking Strategically aout a Company’s Company’s !n"ustry an" Competitive Environment 3. 0hich of the fo!!owin is not a maor 4uestion to ask in thinkin strateica!!y aout industry and competitive conditions in a iven industry A) 5ow many companies in in the industry industry have ood track records for revenue rowth rowth and profitai!ity B) 0hat strate strateic ic moves moves are riva!s riva!s !ike! !ike!y y to make ne$t ne$t C) 0hat are are the key factor factorss for future future competit competitive ive success success #) #oes the out!ook out!ook for the industry present present the company with sufficient!y sufficient!y attractive attractive prospects for profitai!i profitai!ity ty %) 0hat forces are drivin drivin chanes in in the industry industry,, and what impact wi!! these chanes chanes have on on competitive intensity and industry profitai!ity Answer& A ae& +/ #ifficu!ty& #ifficu!ty& 6edium Ta$onomy& Comprehension AACB& 3

Test Bank, Chapter 3

/

(. Thinkin strateica!!y aout industry industry and competitive conditions conditions in in a iven industry invo!ves eva!uatin such considerations as A) the forces forces drivin drivin chan chanee in the indus industry try.. B) the dominant dominant economi economicc features features of the industry industry in which the the company company operates. operates. C) the kinds of competitive competitive forces industry industry memers are facin and the strenth of each competitive force. #) the key factors inf!uencin inf!uencin future future competitive competitive success success in the industry industry.. %) A!! A!! of the the aov aove. e. Answer& % ae& +/ #ifficu!ty& #ifficu!ty& %asy Ta$onomy& Comprehension AACB& 3

Question #: $hat %re the !n"ustry’s &ominant Economic 'eatures( +. 0hich of the fo!!owin fo!!owin is not a factor to consider in in identifyin identifyin an industry's industry's dominant dominant economic features A) 6arket 6arket si7e si7e and and rowt rowth h rate rate B) The e$tent e$tent of ackward ackward and forward forward interatio interation n and uyer needs needs and re4uirement re4uirementss C) 0hether the the products or services of riva! firms are ecomin ecomin more or !ess differentiated differentiated #) 5ow stron stron drivin drivin forces forces and compet competitiv itivee forces are %) The pace of techno!oica! techno!oica! chane, chane, sca!e sca!e economies and e$perience e$perience curve effects, and and product innovation Answer& # ae& +3 #ifficu!ty& #ifficu!ty& 6edium Ta$onomy& Comprehension AACB& 3

8. 0hich of the fo!!owin fo!!owin is not a re!evant consideration in identifyin identifyin an industry's industry's dominant economic features A) 6arket si7e and rowth rate, the eoraphic eoraphic scope scope of competitive competitive riva!ry riva!ry,, and demand*supp!y demand*supp!y conditions B) The e$tent to which economies of sca!e and !earnin9e$perience !earnin9e$perience curve effects effects are present present C) 5ow many strateic roups roups the industry has has and which which ones are are most profita!e profita!e and !east profita!e #) The numer and si7es of uyers, the numer of of riva!s, and the pace of product product innovation innovation %) The preva!enc preva!encee of vertica! vertica! interatio interation n and the pace of techno!o techno!oica! ica! chane chane Answer& C ae& +3 #ifficu!ty& #ifficu!ty& 6edium Ta$onomy& Comprehension AACB& 3

Question ): $hat *in"s of Competitive 'orces %re !n"ustry Memers 'acing( :. The state state of compe competiti tition on in an an industry industry is a functio function n of A) the competitive competitive pressures associated with with the market maneuverin maneuverin and ockeyin ockeyin for for uyer patronae that oes on amon am on riva! firms in the industry. industry. B) competitive pressures pressures comin comin from the attempts of companies in in other industries industries attemptin attemptin to win uyers over to their sustitute products. C) competitive pressures associated with the the threat of new entrants into into the marketp!ace. #) competitive pressures pressures associated associated with the arainin arainin power of supp!iers supp!iers and customers. customers. %) A!! A!! of thes these. e. Answer& % ae& +( #ifficu!ty& #ifficu!ty& %asy Ta$onomy& Comprehension AACB& 3

Test Bank, Chapter 3

3

;. The nature and strenth of the competitive competitive forces forces that prevai! prevai! in an industry industry are enera!!y enera!!y a oint oint product of A) the pressures pressures induced y the market market maneuverin maneuverin and ockeyin ockeyin for uyer patronae patronae that oes on amon riva! se!!ers in the industry. industry. B) the threat threat that firms firms outside outside the industry industry wi!! decide decide to enter enter the market. market. C) the attempts of companies in other industries to win uyers uyers over to their own sustitute sustitute products. #) competitive pressures pressures stemmin stemmin from the the arainin arainin power of oth supp!iers and uyers. %) A!! A!! of thes these. e. Answer& % ae& +( #ifficu!ty& #ifficu!ty& %asy Ta$onomy& Comprehension AACB& 3 . 0hich 0hich of the fo!!ow fo!!owin in  is is not  one  one of the five typica! sources of competitive pressures A) The power power and inf!u inf!uence ence of indus industry try drivin drivin  forces forces B) The arainin arainin power of supp!iers supp!iers and se!!er*supp!i se!!er*supp!ier er co!!aoration co!!aoration C) The threat threat of new new entrants entrants into the market market #) The attempts of of companies in other industries industries to win customers over to to their own sustitute products %) The market maneuverin maneuverin and and ockeyin for uyer patronae that that oes on amon riva! se!!ers se!!ers in the industry Answer& A ae& +( #ifficu!ty& %asy Ta$onomy& -now!ede AACB& 3

1. The most most powerfu! powerfu! of the the five five competitiv competitivee forces forces is usua!!y usua!!y A) the competitive competitive pressures pressures that stem from the ready avai!ai!ity of attractive!y*priced attractive!y*priced sustitute products. B) the competitive competitive pressures pressures associated associated with with the market maneuverin maneuverin and ockeyin for uyer patronae that oes on amon am on riva! se!!ers in the industry. industry. C) the enefits enefits that emere from from c!ose co!!aoration with supp!iers supp!iers and the competitive pressures that such co!!aoration creates. #) the competitive competitive pressures pressures associated associated with with the potentia! entry of new competitors. competitors. %) the arain arainin in power power and !everae !everae that !are !are customers customers are a!e a!e to e$ercise. e$ercise. Answer& B ae& ++ #ifficu!ty& #ifficu!ty& %asy Ta$onomy& -now!ede AACB& 3

11. Typica!!y, ypica!!y, the weakest of the five competitive competitive forces in in an industry industry is9are& is9are& A) the threat threat posed posed y y potentia potentia!! new entran entrants. ts. B) the arain arainin in power power and !everae !everae that supp!ie supp!iers rs are a!e to e$ercise. e$ercise. C) the competitive competitive pressures pressures that stem from the ready avai!ai!ity of attractive!y*priced attractive!y*priced sustitute products. #) the arain arainin in power power and !everae !everae that uyers uyers are a!e to e$ercis e$ercise. e. %)