Test bank for strategic management theory and cases an integrated approach 11th edition hill

Which of the following industry structures consists of a large number of small or medium-sized companies, none of which is in a position to determine industry price.. They find it easie

Test Bank for Strategic Management Theory and

Cases An Integrated Approach 11th Edition Hill

Multiple Choice Questions

Which of the following statements is true about the

complementors?

1 a Their impact on industries was first recognized by Porter's five forces model

2 b They have little importance in high-technology industries

3 c They have the power to impact the sales of the industry to which they supply complement products

4 d They tend to increase the sales of the industry they are supplying complements

to by producing fewer low

5 quality complement products

6 e They cannot gain enough power to extract profits from the industry to which they supply complement products

As an industry enters the decline stage:

1 a growth becomes negative

2 b rivalry among established companies usually decreases

3 c competitive pressures abate

4 d capacity reduces

5 e demand remains the same

Which of the following industry structures consists of a large

number of small or medium-sized companies, none of which is in a position to determine industry price?

1 a Fragmented industry

2 b Consolidated industry

3 c Oligopoly

4 d Monopoly

5 e Sector

Brand loyalty can be created by:

1 a minimal advertising

2 b not using patents to protect products

3 c cutting the costs for research and development

4 d emphasizing high product quality

5 e minimizing after-sales service

Which of the following statements is true about potential

competitors in an industry?

1 a They threaten the profitability of established companies

2 b They are usually encouraged by established companies

3 c They find it easier to enter an industry when the entry barriers are high

4 d They find it easier to enter an industry when established companies have economies of scale

5 e They usually have an absolute cost advantage over established companies

An industry's buyers have high bargaining power when:

1 a they purchase in small quantities

2 b switching costs are low

3 c it is economically impossible for them to purchase an input from several

companies at once

4 d the supply industry depends upon buyers for a very small percentage of its total orders

5 e the industry is a monopoly

The competitive structure of an industry refers to the:

1 a number of market segments in the industry

2 b number and size distribution of companies in the industry

3 c number of consumers in the industry

4 d number of manufacturing plants in the industry

5 e number of products produced in the industry

As an industry enters the shakeout stage:

1 a rivalry among companies declines

2 b demand grows at a high rate

3 c prices of products increase

4 d excess productive capacity emerges

5 e new entrants come into the market

Entry barriers in embryonic industries tend to be based on:

1 a brand loyalty

2 b economies of scale

3 c absolute cost advantages

4 d regulatory advantage

5 e technological knowhow

Which of the following statements is true about government

regulations in the context of entry barriers of an

industry?

1 a Goverrnnent deregulation in an industry results in significant reduction in

competition

2 b Goverrunent regulation has not constituted a major entry barrier for many industries

3 c Falling entry barriers due to goverrnnent deregulation results in higher

competition and lower industry profit rates

4 d The threat of new entrants reduces when the goverrunent deregulates an industry

5 e Companies that enjoy brand loyalty and have significant scale economies are the ones who face major threat of competition due to goverrnnent deregulation

Suppliers in an industry are most powerful when:

1 a there are few substitutes for the products that they sell

2 b switching costs are low

3 c companies in the industry threaten to enter the suppliers' industry

4 d their profitability is significantly affected by the purchases of companies in a particular industry

5 e they refrain from entering their customers' industry because oflack of resources

The threat from potential competitors is greatest in the stage

of the industry life cycle

1 a embryonic

2 b growth

3 c shakeout

4 d maturity

5 e decline

A sector refers to a group of:

1 a goverrnnent regulators

2 b closely related industries

3 c manufacturing plants of a company based in the same location

4 d business units owned by a single finn

5 e companies that manufacture similar products under different brand names

The bargaining power of an industry's suppliers is greater

when:

1 a the supply industry is fragmented

2 b switching costs are minimal for companies because oflittle difference among products offered by different suppliers

3 c the industry buys in large quantities

4 d the product that suppliers sell has many substitutes and is not vital to the

companies

5 e the industry is not an important customer to the suppliers

Economies of scale can arise from:

1 a cost reductions gained through decreased production

2 b high prices on bulk purchases of raw material inputs and component parts

3 c an advantage gained by spreading fixed production costs over a large

production volume

4 d increased spending on marketing and advertising activities

5 e poor production operations

A group of firms manufactures writing implements such as

pens, pencils, and markers This group should be

referred to as a(n):

1 a substitute

2 b market segment.

3 c service provider

4 d regulator

5 e industry

Mobility barriers:

1 a allow industries to change their strategy and compete in that strategic group

2 b inhibit the movement of companies between strategic groups in an industry

3 c inhibit companies from shifting between suppliers for the raw materials

4 d are factors that operate outside of an industry

5 e exclude the barriers to entry into a group and the barriers to exit from a

company's existing group

A baking company has different product ranges like

whole-wheat pizzas for the diet-conscious and rich cookies for children and youngsters The company is catering

to different groups of customers known as:

1 a investors

2 b entrants

3 c sectors

4 d market segments

5 e substitutes

Which of the following statements is true about rivalry in the

context of established companies?

1 a It significantly reduces the costs of established companies

2 b It squeezes profits out of an industry

3 c It enables companies to lower their spending on non-price-competitive

strategies

4 d It forces companies to reduce prices when it is less intense

5 e It is unaffected by the demand conditions of an industry

Due to a recent relaxation in the pollution control laws by the

government, Alpha Motors has reduced the production

of its electric-powered cars The company is

responding to a change in which of the following

macroenvironmental forces?

1 a J!Iacroeconomic

2 b Demographic

3 c Political and legal

4 d Social

5 e Global

Market segments are groups of:

1 a customers within a market that can be different from each other on the basis of their distinct attributes and specific demands

2 b companies within a market that produce similar goods or services which are close substitutes of each other

3 c companies that follow a similar business model and cater to the needs of similar customers

4 d closely related industries

5 e large companies that are in a position to determine industry price

The extent of rivalry among established companies is lowest

when:

1 a the industry's product is a commodity

2 b demand is growing rapidly

3 c exit barriers are substantial

4 d the industry is entering a decline stage

5 e the fixed costs are high

A consolidated industry structure:

1 a consists of a large number of small companies

2 b can be seen in agriculture, dry cleaning, health clubs, and real estate

brokerage

3 c consists of few companies that are in a position to determine industry price

4 d provides no scope for oligopoly to exist

5 e is characterized by low-entry barriers and commodity-type products

Which of the following is NOT one of the factors in the

economic forces of the macroenvirornnent?

1 a Interest rates

2 b Inflation

3 c Cultural changes

4 d Currency exchange rates

5 e Economic growth rate

Which of the following is NOT a barrier to entry?

1 a Economies of scale

2 b Brand loyalty

3 c Absolute cost advantages

4 d High customer bargaining power

5 e High customer switching costs

Common exit barriers include:

1 a minimal investment in assets like specific machines

2 b emotional attachments to an industry

3 c low fixed costs associated with leaving an industry

4 d the lack of bankruptcy regulations.

5 e economic independence of a company

Which of the following is currently an embryonic industry?

1 a Personal computers

2 b Biotechnology

3 c Internet retailing

4 d Nanotechnology

5 e Wireless communications

arise when a customer invests time, energy, and money

shifting from the products offered by one established company to the products offered by a new entrant

1 a Overhead costs

2 b Incremental costs

3 c Marginal costs

4 d Opportunity costs

5 e Switching costs

As a barrier to new entry, absolute cost advantages can be

based on:

1 a continuous advertising of brand and company names, and product innovation achieved through research and development

2 b high product quality, service-oriented innovations, and good after-sales service

3 c cost reductions that arise from the mass production of standardized output

4 d the unique ability of established companies to spread fixed costs over a large volume

5 e superior production operations and processes due to accumulated experience, patents, or trade secrets

Julian was asked to examine the demographic forces facing

his employer, a clothing manufacturer Which of the following factors is Julian most likely to examine?

1 a Government regulations

2 b Inflation

3 c Manufacturing technology

4 d Age of the population

5 e Society's growing interest in exercise

In growth industries:

1 a the intensity of rivalry is very high

2 b technological expertise is the most important entry barrier

3 c threat from potential competitors is typically highest

4 d distribution channels are poorly developed

5 e buyers are not familiar with the industry's products

Philip Morris capitalized on the growing health

consciousness trend when it acquired Miller Brewing Company, and then redefmed competition in the beer industry with its introduction oflow-calorie beer (Miller Lite) This health trend represents a force

1 a social

2 b political

3 c legal

4 d technological

5 e demographic

When shopping for clothing such as shirts and jeans, Tyrone

only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices Tyrone's preference for Eastern Clothing Company demonstrates:

1 a lack of demand

2 b bargaining power

3 c risk of entry

4 d brand loyalty

5 e lack of economies of scale

Porter's Five Forces model did not recognize one force,

which is:

1 a the power of complement providers

2 b the risk of entry by potential competitors

3 c the intensity of rivalry among established companies within an industry

4 d the bargaining power of suppliers

5 e the threat of substitutes

An impact that the changing industry boundaries have had is

that:

1 a owners of companies can now defme boundaries

2 b there is an increase in the number of competitors for companies

3 c technological changes do not affect companies anymore

4 d the pattern of customer needs does not affect companies anymore

5 e the number of product substitutes available for customers has reduced

The Internet is an example of a:

1 a technological force

2 b social force

3 c macroeconomic force

4 d demographic force

5 e global force.

Many beverage manufacturers are noticing that the sales for

packaged water and fruit-based beverages is

increasing compared to carbonated drinks as

customers are increasingly becoming health

conscious This change in customer preferences can

be attributed to which of the following factors of the macroenvironment?

1 a Economic forces

2 b Demographic forces

3 c Technological forces

4 d Political forces

5 e Social forces

In the late 1800s, when the automobile was first

manufactured, the automobile industry would have been considered a(n):

1 a mature industry

2 b stakeout industry

3 c embryonic industry

4 d growth industry

5 e declining industry

Due to advances in medicine, Americans are currently living

longer now than in the past As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased In the context of an industry's

macroenvironment, age is considered a:

1 a technological force

2 b demographic force

3 c social force

4 d political force

5 e legal force

Which of the following is true of growth industries?

1 a They typically have high barriers to entry

2 b They tend to be characterized by weak rivalry

3 c They are characterized by low demands

4 d They increase prices because customers are more aware of the industry's product

5 e They inhibit the development of distribution channels

Which of the following is NOT a determinant of the extent of

rivalry among established companies?

1 a Industry competitive structure

2 b Demand conditions

3 c The cost structure of firms in an industry

4 d Exit barriers

5 e The power of buyers

An industry can be defmed as a group of:

1 a companies offering products or services that are close substitutes for each other

2 b manufacturing plants of a single company

3 c different kinds of companies that are based in the same geographic location

4 d companies that are different but generate similar amounts of revenues

5 e brands that offer different products but are owned by a single finn

Members of a strategic group:

1 a compete only with members of other strategic groups

2 b are affected by Porter's five competitive forces in the same way and to the same degree as the members of other strategic groups

3 c follow a business model that is similar to that pursued by other companies in the group

4 d face no threat of product substitutes from other members

5 e move easily between groups without barriers

Demand reaches total saturation in the stage of the industry

life cycle

1 a embryonic

2 b growth

3 c shakeout

4 d maturity

5 e decline

The level of industry demand:

1 a has little effect on competition in the industry

2 b is one of the determinants of the intensity of rivalry in the industry

3 c increases when customers exit a marketplace

4 d does not impact the market share that established companies hold

5 e decreases the rivalry among established companies, when in decline

If economies of scale are an industry's primary entry barrier,

a new entrant's major concern is:

1 a its inability to counter brand loyalty that customers have for established

companies in the industry

2 b the inferior quality of its products

3 c its inability to match the innovation of the established finn.

4 d its inability to produce in sufficient volume to match the cost advantages of established producers

5 e its inability to get buyers to switch to its product

True - False Questions

A technological change, such as the rise of the Internet, can

represent either an opportunity or a threat

1 True

2 False

Starbucks and an independent local cafe are different in

terms of their business techniques They both sell

coffee, and therefore belong to the same strategic

group

1 True

2 False

A company's closest competitors are those in its strategic

group, not those in other strategic groups in the

industry

1 True

2 False

Rapid growth in demand enables companies to expand their

revenues and profits without taking market share away from competitors

1 True

2 False

Threats arise when conditions in the external envirornnent

endanger the integrity and profitability of the

company's business

1 True

2 False

One of the defrning characteristics of the mature stage of the

industry life cycle is that growth is low or zero

1 True

2 False