A company’s “macro-environment” refers to:

C) the strategically relevant factors outside a company’s industry boundaries—

economic conditions, political factors, socio-cultural forces, technological factors,
environmental factors, and legal/regulatory conditions.

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

A) Economic conditions in the economy at large B) Political factors and socio-

cultural forces C) Technological factors and legal/regulatory conditions D) The
immediate industry and competitive environment in which the company
operates E) The company’s resource strengths, resource weaknesses, and
competitive capabilities

Which one of the following is part of a company’s macro-environment?

C) The pace of technological change factors and legal and regulatory conditions.

Which of the following is NOT one of the principal components of strategic

significance in the PESTEL analysis?

E) Environmental forces that include the competitive structure, the degree of

industry fragmentation and the mobility barriers that inhibit business
industry fragmentation, and the mobility barriers that inhibit business

Which of the following is NOT a factor to consider when identifying economic

conditions in the macroenvironment?

D) The combined strength of the competitive factors influencing the firm and their
implications for strategic momentum and the moves and countermoves of rivals
impacted by the economy at large

Which of the following factors represents the strategically relevant political factors
in the macro-environment that will influence the performance of all firms across the
board?

A) The strength of the federal banking system

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?

Thinking strategically about the industry and competitive environment involves in-
depth analysis and evaluation of such consideration as:

C) the market positions of industry rivals and their relative strength, and the
competitive forces rivals are facing and what impact they will have on competitive
intensity and industry profitability.

The most powerful and widely used tool for diagnosing the principle competitive
pressures in a market is the:

A) Five Forces Model.

The competitive pressures on companies within an industry comes from those:

A) associated with the market maneuvering and jockeying for buyer patronage that
goes on among rival firms in the industry. B) companies in other industries
attempting to win buyers over to their substitute products. C) associated with the
threat of new entrants into the marketplace. D) associated with the bargaining
power of suppliers and customers. E) All of these.

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

A) competition from rival sellers. B) competition from potential new entrants. C)

competition from producers of substitute products. D) competitive pressures
stemming from the bargaining power of both suppliers and buyers. 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

The most powerful of the five competitive forces is USUALLY:

B) the competitive pressures associated with the market maneuvering and

jockeying for buyer patronage that goes on among rival sellers in the industry.
Typically, the weakest of the five competitive forces in an industry is/are:

A) the threat posed by potential new entrants. B) the bargaining power and
leverage that suppliers are able to exercise. C) the competitive pressures that stem
from the ready availability of attractively priced substitute products. D) the
bargaining power and leverage that buyers are able to exercise. E) None of these
is typically the weakest.

Using the Five Forces model of competition to determine the character and
strength of the competitive forces within a given industry involves:

A) building the picture of competition in three steps: (1) identify the different
parties involved, along with specific factors that bring about competitive
pressures; (2) evaluate how strong the pressures stemming from each of the
five forces are (strong, moderate or weak); and (3) determining whether the
collective impact of the five competitive forces is conducive to earning
attractive profits in the industry. B) building the picture of competition in two
steps: (1) determining which rival has the biggest competitive advantage and (2)
assessing whether the competitive advantages possessed by various industry
members allow most industry members to earn above-average profits. C)
evaluating whether competition is being intensified or weakened by the industry’s
driving forces and key success factors. D) assessing whether the collective impact
of all five forces is weak enough to allow industry members to go on the offensive
or use a defensive strategy to insulate against fierce competitive pressures. E)
gauging the overall strength of competition based on how many industry rivals are
operating with a competitive advantage and how many are operating at a
competitive disadvantage.

What makes the marketplace a competitive battlefield is:

B) the constant rivalry of firms to strengthen their standing with buyers and win a
competitive edge over rivals.
Market maneuvering among industry rivals:

E) is ongoing and dynamic, with moves and countermoves of rivals producing a

continually evolving competitive landscape that delivers winners and losers.

Rivalry increases:

A) when buyer demand is growing fast or increasing.

Factors that cause the rivalry among competing sellers to be weaker include:

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

conditions that tempt rivals to use price cuts or other competitive weapons to boost
unit sales. D) Low barriers to entry. E) Strongly differentiated products among
rival sellers.

Factors that tend to result in weak rivalry among competing sellers include:

B) rapid growth in buyer demand, high buyer costs to switch brands, and more
strongly differentiated products.
The rivalry among competing sellers tends to be less intense when:

C) industry rivals are not particularly aggressive or active in making fresh moves to
improve their market standing and business performance.

Rivalry among competing sellers is generally more intense when:

D) rivals are active in making fresh moves to lower prices, introduce new products,
increase promotional efforts and advertising, and otherwise gain sales and market
share.

Rivalry among competing sellers grows in intensity when:

E) buyer demand is growing slowly or declining and the number of competitors is

increasing and they become more equal in size and competitive capability.

The rivalry among competing firms tends to be more intense:

A) when demand for the product is growing slowly, buyers have low switching
costs, and the actions of any one company to attract more customers and boost
market share have strong direct impact on their rivals.

Which of the following is NOT among the factors that affect whether competitive
rivalry among participating firms is strong, moderate, or weak?

D) Whether the industry’s key driving forces yield firms in the industry with
adequate profits are strong or weak

Rivalry among competing sellers tends to be more intense when:

C) several competitors are under pressure to improve their market share or
profitability and launch fresh strategic initiatives to attract more buyers and bolster
their business position.

The competitive battles among rival sellers striving for better market positions,
higher sales and market shares, and competitive advantage, suggests the rivalry
force:

D) tends to intensify when strong companies with sizable financial resources,

proven competitive capabilities, and respected brand names hurdle entry barriers
looking for growth opportunities and launch aggressive, well-funded moves to
transform into strong market contenders.

In analyzing the strength of competition among rival firms, an important

consideration is:

B) the diversity of competitors in terms of long-term direction objectives, strategies,

and countries of origin.

The intensity of rivalry among competing sellers does NOT depend on whether:

A) the industry has more than two strong driving forces and whether the
industry has more than two diverse and capable strategic groups. B)
competitors are diverse in terms of long-term directions, objectives, strategies, and
countries of origin. C) strong companies outside the industry have acquired weak
firms in the industry and are launching aggressive moves to transform the acquired
companies into strong market contenders. D) one or two rivals have particularly
powerful and successful strategies to grow the business, attract and retain buyers,
and develop a sustained competitive advantage. E) industry conditions attract
industry members to use price cuts or other competitive weapons to boost total
sales volume and market share.

In which one of the following instances is rivalry among competing sellers NOT
more intense?

E) When there are vast numbers of small rivals so the impact of any one
’ ti i d thi l ll i d t b
company’s actions is spread thinly across all industry members

Competing companies deploy whatever means necessary to strengthen market

position, including all of the following EXCEPT:

A) marketing tactics including special sales promotions such as introducing new or

improved features or increasing the number of styles to provide greater product
selection. B) differentiating their products by offering better performance features
than rivals. C) improving innovation to increase product performance and quality.
D) making efforts to expand dealer networks. E) reduce distribution capabilities
and market presence.

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

A) The reaction of incumbent firms to rapid market growth B) High capital

requirements and restrictive government policies C) Strong brand preferences and
a high degree of customer loyalty D) Cost advantages due to the economies of
scale in production enjoyed by incumbent firms E) Strong “network effects” in
customer demand

Potential entrants are more likely to be deterred from actually entering an industry
when:

A) incumbent firms are willing and able to be aggressive in defending their market
positions against entry.

Competitive pressures associated with the threat of entry are greater when:

A) incumbent firms are unable or unwilling to strongly contest the entry of

newcomers. B) a large pool of potential entrants exists, some of which have the
capabilities to overcome high entry barriers. C) entry barriers are relatively low and
buyer demand for the product is growing rapidly, and newcomers can expect to
earn attractive profits without inviting a strong reaction from incumbents. D)
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) All of these conditions heighten the competitive pressures
i t d ith f h t i t th i d t
associated with fresh entry into the industry.

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

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?

E) When new entrants can expect to earn attractive profits

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

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

Competitive pressures stemming from the threat of entry are weaker when:

C) the industry outlook is risky or uncertain.

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

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

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

C) Coca-Cola as a substitute for Pepsi

The competitive pressures from substitute products tend to be stronger when:

A) good substitutes are readily available and priced above the market.

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

B) Buyers are dubious about using substitutes.

Industry rivals tend to experience weak competitive pressures from substitute

products when

D) buyers incur high costs in switching to substitutes and substitutes are higher
priced relative to the quality, performance, and other attributes they deliver.

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

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

To determine how strong the threat of substitutes will be entails:

A) identifying the relative price/performance relationship of the substitutes, the

switching costs and the overall buyer demand for the substitute.
The lower the price of product substitutes, the higher their quality and performance
and the lower the user’s switching costs, the

B) more intense the competitive pressures posed by substitute products.

Whether supplier-seller relationships in an industry represent a strong or weak

source of competitive pressure is a function of:

D) whether demand for supplier products is high and they are in short supply.

The strength of competitive pressures that suppliers can exert on industry

members is MAINLY a function of:

A) whether needed inputs are in short supply and whether suppliers provide
differentiated input that enhances performance of the product.

The bargaining leverage of suppliers is greater when:

A) there suppliers products/services account for a small percentage of industry

members’ costs.

In which one of the following instances are the competitive pressures stemming
from supplier bargaining power 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
Supplier bargaining power is weaker when:

A) good substitutes for supplier products/services exists.

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

A) Whether demand for supplier products is high and they are in short supply. B)
Whether industry members are a strong threat to integrate backward into the
business of suppliers and self-supply their own requirements. C) Whether
industry members are struggling to make good profits because of slow-
growing marketdemand. D) Whether the costs of industry members to switch
their purchases to alternative suppliers are high or low. E) Whether the item being
supplied is a commodity or is highly differentiated from supplier to supplier.

Which one of the following is NOT a factor in causing supplier bargaining power to
be stronger?

A) The products/services needed from suppliers are in short supply. B) Industry

members can’t integrate backward and self-supply themselves. C) The item being
supplied is a commodity. D) The item being supplied significantly enhances the
quality or performance of the products of industry members. E) Suppliers are not
dependent on the industry for a large portion of their revenues.

When an industry member is a major customer of the supplier, and the relationship
(partnership) is unusually effective and mutually advantageous:

C) there is a strong likelihood such partnerships will put increased competitive

pressure on those industry members who lack productive collaborative
relationships with their suppliers.

The higher the switching costs for industry members, the more it can:
A) limit supplier bargaining power.

Whether buyer-seller relationships in an industry represent a strong or weak

source of competitive pressure is a function of:

B) the extent to which buyers can exercise enough bargaining power to influence
the conditions of sale in their favor and whether strategic partnerships between
certain industry members can adversely affect other industry members.

Whether buyer bargaining power poses a strong or weak source of competitive

pressure on industry members depends in part on:

E) whether demand-supply conditions represent a buyer’s market or a seller’s

market.

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 and
become an important competitor. B) Buyers are small and numerous relative to
sellers. C) Buyers have considerable discretion over whether and when they
purchase the product. D) Buyers purchase the item frequently and 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.

Buyer bargaining power is stronger when:

E) the industry’s products are standardized or undifferentiated.

Which of the following factors is NOT a relevant consideration in determining the

strength of buyer bargaining power?
B) The degree to which the seller is a manufacturer of goods and services in
substantial quantities

Collaborative relationships between particular sellers and buyers in an industry can

represent a source of strong competitive pressure when:

C) sales are made to buyer groups with either strong bargaining power or high
sensitivity.

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

Competitive pressures stemming from buyer bargaining power tend to be weaker

when:

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

Buyers are in position to exert strong bargaining power in dealing with sellers
when:

E) Buyers are price-sensitive due to the product representing a significant fraction

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

A) Whether certain customers offer sellers important market exposure or prestige

B) Whether customers are relatively well-informed about sellers’ products, prices,
and costs C) Whether buyer needs and expectations are changing rapidly or
slowly D) Whether sellers’ products are highly differentiated, making it
troublesome or costly for buyers to switch to competing brands or to substitute
products E) Whether sellers pose little threat of forward integration into the product
market of their customers and whether buyers pose a major threat to integrate
backward into the product market of sellers

Not all buyers of an industry’s product have equal degrees of bargaining power
with sellers, because:

B) some sellers may be less sensitive than others to price, quality, or service
differences.

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:

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.

As a rule, the collective impact of competitive pressures associated with the five
competitive forces:
B) determines the extent of the competitive pressure on industry profitability.

A company’s strategy is increasingly effective the more it can match the company
strategy to competitive conditions, so the firm can:

B) shift the competitive battle in favor of the firm by altering the underlying factors
driving the five forces.

The “driving forces” in an industry:

C) are major underlying causes of changing industry and competitive conditions

and have the biggest influences in reshaping the industry landscape and altering
competitive conditions.

Industry conditions change:

D) because important forces are enticing or pressuring certain industry participants

(competitors, customers, suppliers) to alter their actions in important ways.

The task of driving forces analysis is to:

D) identify the driving forces, assess whether their impact will make the industry
more or less attractive, and determine what strategy changes are needed to
prepare for the impacts 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 impacts 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) Movement in the
economy and in interest rates E) Regulatory influences and government policy
changes

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)
Increasing efforts to collaborate with suppliers via strategic alliances and
partnerships, escalating risk levels and normalization of cost and efficiency
in the industry E) Marketing innovations and changes in who buys the industry’s
product and how they use it

Which of the following do NOT qualify as potential driving forces capable of

inducing fundamental changes in industry and competitive conditions?

C) Changes in the economic power and bargaining leverage of customers and

suppliers, growing supplierseller collaboration, and growing buyer-seller
collaboration

Which of the following is MOST likely to qualify as a driving force?

A) Increases in price-cutting by rival sellers and the launch of major new

advertising campaigns by one or more rivals B) Successful introduction of
innovative new products or new ways to market products C) An increase in
the prices of substitute products D) Decisions on the part of industry’s three biggest
competitors not to pursue a strategy of striving to be the industry’s low-cost leader
E) Decisions by one or more outsiders not to attempt to enter the industry
Which one of the following is NOT a common type of driving force?

A) Reductions in uncertainty and business risk B) Changing societal concerns,

attitudes, and lifestyles C) Diffusion of technical know-how across companies and
countries D) Increasing efforts to collaborate closely with suppliers E)
Advances in technology and manufacturing process innovation

Increasing globalization of the industry can be a driving force because:

C) companies need to spread their operating reach into more and more country
markets to meet consumer demand and take advantage of available operating
activities.

Driving forces analysis helps managers identify whether:

A) the collective impact of the driving forces will act to increase/decrease market
demand, increase/ decrease competition, and raise/lower industry profitability in
the years ahead.

Evaluating the industry’s driving forces, as a whole, requires understanding their

influence on the attractiveness of industry environment and:

B) generally are defined in ways that will strengthen or weaken market demand,
competition, and industry profitability in future years.

In analyzing driving forces, the strategist’s role is to

A) identify the driving forces and evaluate their impact on (1) demand for the
industry’s product, (2) the intensity of competition, and (3) industry profitability.
Which one of the following is NOT an integral part of driving forces analysis?

B) Determining whether forces are acting to cause industry rivals to shift to a

different strategic group

The real payoff of driving forces is to help managers understand:

A) what strategy changes are needed to prepare for the impacts of the driving
forces.

Driving forces analysis:

C) has practical value and is basic to the task of thinking strategically about where
the industry is headed and how to prepare for the changes ahead.

What is the best technique for revealing the different market or competitive position
that rival firms occupy in the industry?

A) Strategic group mapping

A strategic group:

C) is a cluster of industry members with similar competitive approaches and

market positions in the market.

An industry contains one strategic group when all sellers:

D) pursue essentially identical strategies and have similar market positions.

Strategic group mapping is a visual technique for displaying:

C) the different market or competitive positions that rival firms occupy in an

industry and for identifying each rival’s closest competitors.

Which one of the following pairs of variables is LEAST likely to be useful in drawing
a strategic group map?

A) Geographic market scope and degree of vertical integration B) Brand name

reputation and distribution channel emphasis C) Product quality and product-line
breadth D) Level of profitability and size of market share E) Price/perceived
quality and image range and the extent of buyer appeal

The concept of strategic groups is relevant to industry and competitive analysis

because:

B) strategic group maps help identify how each competing firm is positioned and
the relationship to their closest competitors.

In mapping strategic groups:

C) the best variables to use as axes for the map are those that identify the
competitive characteristics that delineate strategic approaches used in the industry.

Which of the following is NOT an appropriate guideline for developing a strategic

group map for a given industry?

C) The variables chosen as axes for the map should be highly correlated.
With the aid of a strategic group map, one can:

E) reveal which companies are close competitors and which are distant rivals, and
that not all positions on the map are equally attractive.

One of the things that can be gleaned from a strategic group map of industry rivals
is:

D) that some strategic groups are more favorably positioned than others because
they confront weaker competitive forces and/or because they are more favorably
impacted by industry driving forces.

Strategic Group mapping analysis does not entail drawing conclusions about:

E) where on the map is the easiest position to shift from to a more favorably
situated position.

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

A) anticipate what moves rivals are likely to make next, thereby providing a
valuable assist in outmaneuvering them in the marketplace.

Having good competitive intelligence about rivals’ strategies and moves to improve
their situation is important because:

B) it allows a company to anticipate what moves rivals are likely to make next and
to craft its own strategic moves with some confidence about what market
maneuvers to expect from its rivals.
Good competitive intelligence about the strategic direction and likely moves of key
competitors allows a company to determine:

A) which competitor has the best strategy and which competitors have flawed or
weak strategies. B) which rivals are poised to gain market share and which seem
destined to lose market share. C) which rivals are likely to rank among the industry
leaders on the road ahead. D) which rivals are likely to initiate fresh strategic
moves and why. E) All of these.

To succeed in predicting the next strategic moves and countermoves of close or

key rivals, it is useful to consider such indicators as:

A) a rival’s current strategy, objectives, capabilities, and assumptions about itself

and the industry.

A rival’s strategic moves and countermoves are both:

B) enabled and constrained by the set of capabilities they have at hand and thus
serve as a strong signal of future strategic actions.

The extent to which firms are meeting objectives (good performance) suggests
they:

B) are likely to continue their present strategy with only minor fine-tuning.

Information regarding the four components of the framework for Competitor

Analysis can NOT:

A) be gleaned from company press releases. B) gathered from rivals internal

proprietary strategic information. C) assembled from website data (especially
management reports and presentations given to financial analysts). D) observed
from public information (especially annual reports and 10K financial reports). E)
garnered from competitive intelligent departments assigned the task to monitor
garnered from competitive intelligent departments assigned the task to monitor
rivals.

The key success factors in an industry:

A) are those competitive factors that most affect industry members’ abilities to
prosper in the marketplace— the particular strategy elements, product attributes,
operational approaches, resources, and competitive capabilities that spell the
difference between being a strong competitor and a weak one, and between profit
and loss.

An industry’s key success factors can always be deduced by asking what factors:

C) such as product attributes and service characteristics are crucial, and what
resources and competitive capabilities are needed, and what shortcomings are
evident to put a company at a competitive disadvantage.

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

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 question asked to deduce a marketing-related key

success factor?

A) What are the industry product R & D capabilities and expertise in product
design? B) What basis do buyers choose between the competing brands of
sellers? C) What product attributes and service characteristics are crucial? D)
What resources must a company have to be competitive? E) What shortcomings
are almost certain to put a company at a significant disadvantage?
Which of the following can aid industries in identifying key success factors?

B) Crucial product attributes and service characteristics

Correctly diagnosing an industry’s key success factors:

D) raises a company’s chances of crafting a sound strategy.

Which of the following is particularly pertinent in evaluating whether an industry

presents a sufficiently attractive business opportunity?

A) The industry’s growth potential, whether competition appears destined to

become stronger or weaker, and whether the industry’s overall profit prospects are
above average, average, or below average

In evaluating whether the industry and competitive environment presents

sufficiently attractive prospects for both competitive success and attractive profits
usually does NOT involve a consideration of which of the following factors?

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

When evaluating whether an industry’s environment presents a company with an

above-average profitability and an attractive business opportunity, it primarily
involves:

A) determining the industry outlook for future profitability.