Business Policy Chapter 3

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1

An industry's key success factors...

are the strategy elements, product attributes, resource strengths, competitive capabilities, and market achievements with the greatest impact on future competitive success in the marketplace.

2

What makes the marketplace a competitive battlefield is...

The constant jockeying of industry members to deploy whatever means in their business arsenals they believe will attract and retain buyers, strengthen their market positions, improve profitability, and ideally help them win a competitive edge over their rivals.

3

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

The supply side of the marketplace is composed of a few large sellers and the demand side of the marketplace consists of numberous buyers that purchase in fairly small quantities.

4

The rivalry among competing firms tends to be more intense when...

demand for the product is growing slowly,, one or two industry members have powerful competitive strategies that are producing sizeable gains in sales and profitability, and customers have low brand loyalty.

buyer demand is weak and many sellers have excess capacity and/or inventory.

5

Assessing a companies industry and competitive environment involves developing clear answered to such questions as...

what forces are driving change in the industry and what are the key factors influencing future competitive success in the industry.

6

Driving forces analysis entails...

identifying what the driving forces are, assessing whether the drivers of change are, on the whole, acting to make the industry more or less attractive, and determining what strategy changes are needed to prepare for the impacts of the driving forces.

7

Which of the following is not a typical competitive weapon that a company can use to battle rivals and attract buyers?

Charging whatever price the industry leader is charging.

8

The competitive threat that outsiders will enter a market is weaker when..

industry members are likely to strongly contest the efforts of new entrants to gain a market foothold.

9

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

Weak brand preferences and low degrees of customer loyalty to existing brands.

10

Which of the following is particularly important in evaluating whether an industry's outlook is conducive to good profitability?

the industry's growth potential, the anticipated strength of competitive forces, and whether the industry and the company are being favorably or unfavorably impacted by macro-environmental factors

11

Which of the following do NOT qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?

increases in supplier bargaining power, stagnant economic conditions, shifts in interest rates, increases in the prices of substitute products, and increased collaboration between industry members and their key suppliers.

12

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

makes it hard for industry members to earn attractive profits.

13

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

to assess whether the industry's growth and profit prospects are strongly attractive to potential entry candidates

14

Which one of the following is not a useful question for company managers to pose in trying to predict the likely actions of important rivals?

Which competitors are in the best strategic group in the industry?

15

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

buyers have high or low costs in switching to substitutes and whether substitutes are readily available, attractively priced, and have comparable or better performance features.

16

Which of the following factors or conditions acts to weaken the competitive pressures associated with the threat of entry?

A risky or uncertain industry outlook

17

the strongest of the competitive forces in the five-forces model of competition is usally

Rivalry (competitive pressure associated with the market maneuvering for buyer patronage among rival sellers in the industry.)

18

Factors that weaken the rivalry among competing sellers include

rapid growth in buyer demand, high buyer switching costs, and low seller inventories and/or little idle production capacity.

19

Supplier bargaining power is weaker when

industry members are major customers of their suppliers and the item being supplied is a standard item or commodity.

20

In mapping the positions of strategic groups in an industry...

the best variables to use as axes are those where there are big differences among the rival industry members--when rivals differ on both variables, the locations of the rivals will be scattered, thus showing how they are positioned differently.

21

Which one of the following generally does not act to weaken the rivalry among competing sellers?

A situation where one or two rivals have powerful strategies and other rivals are scrambling to stay in the game.

22

The managerial payoff from spending the time and effort to gather and digest competitive intelligence rivals' strategies and situations and gain some inkling of what moves they will be making comes from

(1) avoiding the mistake of flying blind into competitive battle and being surprised by the fresh actions of rivals and (2) helping a company to craft offensive and defensive strategic moves of its own with some confidence about what market maneuvers to expect from its rivals.

23

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

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