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Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure?


A) competing against each other through product differentiation
B) competing against each other through price-cutting
C) competing against each other through new-product introductions
D) competing against each other through lifestyle advertisements

E) B) and C)
F) A) and D)

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In 2008,BlackBerry's market cap peaked at $75 billion.By 2015 this valuation had fallen more than 90 percent,to less than $7 billion.BlackBerry fell victim to two important PESTEL factors in its external environment: sociocultural and technological.How did technology contribute to BlackBerry's decline?


A) BlackBerry failed to offer strong security features for its device.
B) BlackBerry failed to change its device into one that could perform multiple tasks effectively.
C) BlackBerry failed to adapt to a groundswell that involved workers bringing mobile devices to work.
D) BlackBerry failed to produce an efficient emailing system using a keyboard.

E) A) and D)
F) A) and C)

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Golden Harvest is a restaurant located inside a five-star hotel.It caters mainly to customers who are concerned about quality dining rather than the prices.In this scenario,which of the following will be a part of Golden Harvest's strategic group?


A) a nearby fast-food restaurant
B) a food kiosk in an adjacent subway station
C) a premium rooftop restaurant in the same city
D) a mobile food cart parked opposite to the five-star hotel

E) All of the above
F) B) and C)

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The final step in industry analysis is to


A) draw a strategic-group map.
B) identify the underlying drivers of the five forces.
C) identify the key players in each of the five forces.
D) define the relevant industry.

E) All of the above
F) A) and B)

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The _____ allows the scanning,monitoring,and evaluating of changes and trends in a firm's macro environment.


A) VRIO framework
B) SWOT analysis
C) BCG matrix
D) PESTEL framework

E) A) and D)
F) C) and D)

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Which of the following features about a buyer indicates that the buyer has high bargaining power?


A) when the buyer cannot credibly threaten to backwardly integrate into the industry
B) when the buyer cannot purchase specific products from other sellers
C) when the buyer faces high switching costs
D) when the buyer operates in an industry where products are undifferentiated

E) A) and C)
F) None of the above

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In which of the following situations is the power of suppliers high in an industry?


A) Suppliers offer products that are undifferentiated.
B) Suppliers can credibly threaten to backward integrate into the industry.
C) Suppliers depend heavily on the industry for their revenues.
D) Suppliers' industry is more concentrated than the industry it sells to.

E) B) and C)
F) A) and C)

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Five years ago,Palomino Airline was able to get a strong foothold in the airline industry by hiring a few pilots and crew and renting two airplanes,which flew routes between Denver,Omaha,Pierre,Cheyenne,and Helena.Which of the following summarizes the above factors that enabled Palomino to get started?


A) low entry barriers
B) low competition
C) low fares
D) low flight cancellations

E) B) and D)
F) C) and D)

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Eon Inc.,Electravia Inc.,and FC Inc.,the three largest firms in the consumer electronics industry,hold close to 85 percent of the industry's market share.These companies mainly compete against each other by providing unique features in their products rather than pricing them low.These firms are interdependent,and each firm must consider the strategic actions of its competitors.Which of the following industry competitive structures does this scenario best illustrate?


A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition

E) B) and C)
F) C) and D)

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Quick Market Inc.is a food supply company that wants to sell its products directly to consumers through mail order instead of going through supermarkets and other stores.However,supermarket chains want to make this transaction either illegal or more difficult for Quick Market.To accomplish this,they are using _______ to influence the political process.


A) ecological factors
B) lobbying forces
C) interest rates
D) demographic research

E) A) and B)
F) B) and D)

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What is the rule of thumb behind Porter's five forces model?


A) The stronger the five forces, the greater the industry's profit potential-making the industry less attractive.
B) The stronger the five forces, the lower the industry's profit potential-making the industry more attractive.
C) The weaker the five forces, the greater the industry's profit potential-making the industry more attractive.
D) The weaker the five forces, the lower the industry's profit potential-making the industry less attractive.

E) C) and D)
F) None of the above

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A key feature of an oligopoly is that the competing firms


A) are independent.
B) have no pricing power.
C) are interdependent.
D) have no barriers to entry.

E) None of the above
F) A) and B)

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In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry?


A) if the company is able to put up a credible threat of retaliation
B) if the capital requirements in the industry are high
C) if the customer switching costs in the industry are high
D) if the industry has recently become deregulated

E) B) and C)
F) A) and B)

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Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?


A) The overall industry profitability will increase.
B) The threat of strong competitive forces such as supplier power will increase.
C) The industry will face excess capacity in the future.
D) The structure of the industry will change from consolidated to one that is fragmented.

E) None of the above
F) A) and C)

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Which of the following statements is not true about the five forces in Porter's competitive analysis model?


A) The relative strengths of the five forces that shape competition are context-dependent.
B) The stronger the five forces in an industry, the greater the industry's profit potential.
C) Competition in the model is described as the tug-of-war between the five forces to capture as much as possible of the economic value created in an industry.
D) An analysis of the five forces provides the basis for how a firm should position itself to gain and sustain a competitive advantage.

E) B) and D)
F) C) and D)

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What are network effects?


A) the positive cost effects that accrue for firms with larger output because they can spread fixed costs over more units
B) the positive effect that one user of a product or service has on the value of that product or service for other users
C) the positive effect that the high price of the entry ticket has on incumbent industries
D) the positive cost effects that standardized commodities have on incumbent industries

E) All of the above
F) A) and B)

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Go West Airlines Inc.follows a cost-leadership strategy.Which of the following firms will most likely be its direct competitor?


A) Deerpath Airlines Inc., which follows a cost-increase strategy
B) John Henry Railways, which follows a differentiation strategy
C) Blue Skies Airlines Inc., which follows a low-cost strategy
D) Blue Cabs Inc., which follows a cost-leadership strategy

E) C) and D)
F) B) and C)

Correct Answer

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Keeping in mind the five forces in the airline industry,which of the following best explains the situation in the industry?


A) Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry.
B) Suppliers have weak bargaining power because they offer products that are not differentiated.
C) Entry barriers in the industry are high resulting in hardly any new airlines popping up.
D) Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

E) None of the above
F) All of the above

Correct Answer

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_____ is best described as cooperation by competitors to achieve a strategic objective.


A) Co-opetition
B) Conglomeration
C) Amalgamation
D) Liquidation

E) B) and D)
F) A) and B)

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Which of the following is an example of monopolistic competition?


A) iron ore industry
B) computer hardware industry
C) express delivery industry
D) beverages industry

E) B) and C)
F) C) and D)

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