ch 3 Flashcards
(117 cards)
1
Q
T/F
Industry analysis is also referred to as external strategic management audit.
A
TRUE
2
Q
T/F
An external audit focuses on identifying and evaluating trends and events within the control of management.
A
FALSE
3
Q
T/F
The aim of an external audit is to develop an exhaustive list of every possible factor that could
influence the business.
A
FALSE
4
Q
T/F
External audits attempt to identify key variables that offer actionable responses.
A
TRUE
5
Q
T/F
Five major categories of external variables are: 1) economic forces, 2) social and cultural
forces, 3) political, governmental and legal forces, 4) technological forces and 5) demographic
forces.
A
FALSE
6
Q
T/F
As many managers and employees as possible should be involved in the process of
performing an external audit.
A
TRUE
7
Q
T/F
To perform an external audit, a company first must gather competitive intelligence and
information about social, cultural, demographic, environmental, economic, political, legal,
governmental and technological trends.
A
TRUE
8
Q
T/F
Freund argues that key external factors must not be hierarchical.
A
FALSE
9
Q
T/F
The I/O approach to competitive advantage advocates that internal factors are more important
than external factors in a firm achieving competitive advantage.
A
FALSE
10
Q
T/F
An economic trend in America is the increasing numbers of two-income households.
A
TRUE
11
Q
T/F
Economic factors do not have much impact on the attractiveness of strategies.
A
FALSE
12
Q
T/F
An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.
A
FALSE
13
Q
T/F
Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.
A
FALSE
14
Q
T/F
A low value of the dollar means lower exports and higher imports.
A
FALSE
15
Q
T/F
The low value of the dollar benefits the U.S. economy in many ways.
A
TRUE
16
Q
T/F
The United States is getting older and less Caucasian.
A
TRUE
17
Q
T/F
It is predicted that, by 2025, over 18% of the population in the United States will be 65 years
or older.
A
TRUE
18
Q
T/F
The average age of the residents in Maine makes it one of the five youngest states.
A
FALSE
19
Q
T/F
The average age of the residents in Texas makes it one of the five youngest states.
A
TRUE
20
Q
T/F
By 2075, the United States will have no racial or ethnic majority.
A
TRUE
21
Q
T/F
Recent consumption trends in the United States indicate that wine consumption is increasing
at 5% while beer consumption is increasing at 10%.
A
FALSE
22
Q
T/F
In the United States, the population has been moving from the South and West to the
Northeast and Midwest.
A
FALSE
23
Q
T/F
More Americans are moving than staying in place.
A
FALSE
24
Q
T/F
The worldwide recession is reducing international immigration.
A
TRUE
25
T/F
Apartment complexes for the elderly have increased across the United States.
TRUE
26
T/F
Political, governmental, and legal factors can represent key threats or opportunities for most
small and large organizations.
TRUE
27
T/F
Political forecasts can be the most important part of an external audit for firms that depend
heavily on government contracts.
TRUE
28
T/F
In the face of a deepening global recession, countries worldwide are resorting to
protectionism to safeguard their own industries.
TRUE
29
T/F
Governments are extremely unlikely to take control of companies, even those considered
vital to the nation's financial stability.
FALSE
30
T/F
Political relations between Japan and China have deteriorated considerably in recent years.
FALSE
31
T/F
The Internet is changing the very nature of many industries by altering product life cycles
and changing the historical trade-off between production standardization and flexibility.
TRUE
32
T/F
In practice, critical technology decisions are too often delegated to lower organizational
levels or are made without an understanding of their strategic implications.
TRUE
33
T/F
Pepsi Bottling is the top beverage company in the U.S.
FALSE
34
T/F
A characteristic that describes the most competitive companies in America is "whether it's
broke or not, fix it make it better; not just products, but the whole company if necessary."
TRUE
35
T/F
"Innovate or evaporate; particularly in technology-driven businesses, nothing quite recedes
like success," is a characteristic that describes the most competitive companies in America.
TRUE
36
T/F
Corporate intelligence can be defined as a systematic and ethical process for gathering and
analyzing information about the competition's activities and general business trends to further a business's own goals.
FALSE
37
T/F
Internal opportunities can be represented by major competitors' weaknesses.
FALSE
38
T/F
Major competitors' strengths may represent key threats.
TRUE
39
T/F
Hiring top executives from rival firms is a way companies obtain competitive intelligence.
TRUE
40
T/F
An effective CI program allows all areas of a firm to access consistent and verifiable information in making decisions.
TRUE
41
T/F
Competitive intelligence is not considered corporate espionage because 95 percent of the
information a company needs to make strategic decisions is available and accessible to the
public.
TRUE
42
T/F
Running a competitive intelligence program requires lots of people, computers, and other
resources.
FALSE
43
T/F
Intelligence gathering is an unethical business practice.
FALSE
44
T/F
Market commonality is the extent to which the type and amount of a firm's internal resources
are comparable to a rival.
FALSE
45
T/F
According to Michael Porter, five competitive forces create vital opportunities and threats to organizations: 1) new entrants, 2) substitute products or services, 3) bargaining power of
suppliers, 4) bargaining power of buyers, and 5) rivalry among existing firms.
TRUE
46
T/F
The first step for using Porter's Five-Forces Model is to evaluate the relative strength of each
competitive force.
FALSE
47
T/F
Bargaining power of consumers is usually the most powerful of Porter's five competitive
forces.
FALSE
48
T/F
Significant barriers to entry are not always sufficient to keep some new firms from entering
industries with higher-quality products, lower prices and substantial marketing resources.
TRUE
49
T/F
Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses.
TRUE
50
T/F
Forward integration is used by firms to gain control or ownership of suppliers.
FALSE
51
T/F
The bargaining power of consumers can be the most important force impacting competitive
advantage.
TRUE
52
T/F
Forecasts are educated assumptions about future trends and events.
TRUE
53
T/F
Qualitative forecasts are most appropriate when historical data are available and when the
relationships among key variables are expected to remain the same in the future.
FALSE
54
T/F
Quantitative forecasts become less accurate as historical relationships become less stable.
TRUE
55
T/F
Linear regression is based on the assumption that the future will be different from the past.
FALSE
56
T/F
Linear regression is a popular technique for qualitative forecasts.
FALSE
57
T/F
Without reasonable assumptions, the strategy-formulation process could not proceed effectively.
TRUE
58
T/F
While some forecasts might not be perfect, they are never wildly inaccurate.
FALSE
59
T/F
Some sources that forecast external variables are publications and websites.
TRUE
60
T/F
Organizations never develop their own projections.
FALSE
61
T/F
Assumptions should never be part of the planning process.
FALSE
62
T/F
A total weighted score of 1.0 for an EFE Matrix indicates that the firm is responding in an
outstanding way to existing opportunities and threats in its industry.
FALSE
63
T/F
In an EFE Matrix, opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening.
TRUE
64
T/F
Regardless of the number of key opportunities and threats included in an External Factor
Evaluation Matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible total weighted score is 0.0.
FALSE
65
T/F
A Competitive Profile Matrix allows strategists to summarize and evaluate economic, social,
cultural, demographic, environmental, political, governmental, legal, technological, and
competitive information.
FALSE
66
T/F
The weights and total weighted scores in both a Competitive Profile Matrix and an EFE
Matrix have the same meaning.
TRUE
67
T/F
The critical success factors in a Competitive Profile Matrix are often the same as those in an
EFE Matrix.
FALSE
68
________ is not part of an external audit.
A) Analyzing competitors
B) Analyzing financial ratios
C) Analyzing available technologies
D) Studying the political environment
E) Analyzing social, cultural, demographic and geographic forces
B) Analyzing financial ratios
69
Identifying and evaluating key social, political, economic, technological and competitive
trends and events comprise
performing an external audit.
70
The process of performing an external audit needs to include
A) only top level managers, as it is a planning function.
B) as many managers and employees as possible.
C) primarily front-line supervisors.
D) between 15 to 20 managers for it to be valid.
E) stockholders and external government agencies.
B) as many managers and employees as possible.
71
To perform an external audit, a company first must
A) get an approval from the Securities and Exchange Commission.
B) perform an internal audit.
C) gather competitive intelligence and information about external trends.
D) hire a consultant to develop a comprehensive strategic plan.
E) all of the above
C) gather competitive intelligence and information about external trends
72
72) Freund emphasizes that key external factors should be all of these except:
A) important to achieving long-term and annual objectives.
B) measurable.
C) relatively few in number.
D) applicable to all competing firms.
E) hierarchical in the sense that some will pertain to the overall company while others will be
more narrowly focused.
C) relatively few in number.
73
The I/O approach to competitive advantage advocates that external factors are ________
internal factors in a firm achieving competitive advantage.
more important than
74
According to I/O theorists, which of the following contributes least to firm performance?
Internal resources
75
Which type of trend is exemplified by the increasing number of two-income households in America?
Economic
76
76) What happens when interest rates rise?
A) Discretionary income increases
B) The demand for discretionary goods increases
C) Discretionary income is unchanged
D) The demand for discretionary goods decreases
E) discretionary income increases and the demand for discretionary goods decreases
D) The demand for discretionary goods decreases
77
What effect do trends in the dollar's value have on companies in different industries and in
different locations?
Significant and unequal
78
In general, what happens to American goods in overseas markets when there is a strong
dollar?
They are more expensive.
79
It is predicted that the United States will have how many racial or ethnic majorities by the
year 2075?
None
80
Which of the states below has the youngest average population?
Utah
81
Which of the states below has the oldest average population?
A) Idaho
B) Texas
C) Alaska
D) Maine
E) California
D) Maine
82
Hawaii, California, and ________ already have no majority race or ethnic group.
A) New York
B) New Jersey
C) New Hampshire
D) New Mexico
E) all of the above
D) New Mexico
83
Who are the world's longest-living people?
A) Americans
B) Mexicans
C) Indians
D) Filipinos
E) Japanese
E) Japanese
84
Americans were on the move in a population shift to _______, but the recession and housing
bust nationwide has slowed migration throughout the United States.
A) the Frostbelt
B) the South and West
C) the Northeast and Midwest
D) the Midwest and South
E) Canada
B) the South and West
85
Japan's elderly population ratio is _______ percent.
A) 13
B) 17
C) 19
D) 22
E) 65
B) 17
86
When an industry relies heavily on government contracts, which forecasts can be the most
important part of an external audit?
Political
87
Changes in which of the following can significantly affect firms?
A) Patent laws
B) Antitrust legislation
C) Tax rates
D) Lobbying activities
E) All of the above
E) All of the above
88
Many economists say the current rash of trade constraints will make it ________ for global
economic growth to recover from the global recession.
harder
89
________ perhaps has instituted the most protectionist measures in recent months by raising
tariffs on most imports and subsidizing its own exports.
Russia
90
Who is Japan's largest trading partner?
A) Mexico
B) China
C) U.S.
D) U.K.
E) Germany
B) China
91
All of the following are political, governmental, and legal variables that can represent key
opportunities or threats to organizations except:
A) special tariffs.
B) environmental protection laws.
C) world oil, currency, and labor markets.
D) legislation on equal employment.
E) population changes by race, age, sex, and level of affluence.
E) population changes by race, age, sex, and level of affluence.
92
Technological advancements can create new ________ advantages that are more powerful
than existing advantages.
competitive
93
Which of the following sectors of the economy would be most impacted by technological
developments?
A) Forestry
B) Pharmaceuticals
C) Textiles
D) Metals
E) Paper
B) Pharmaceuticals
94
Collecting and evaluating information on competitors is essential for successful
strategy formulation.
95
In 2008, which company had the dominant market share in the beverages industry?
A) Schweppes
B) Coca-Cola
C) Anheuser-Busch
D) Pepsi Bottling
E) Molson Coors Brewing
B) Coca-Cola
96
Which of the following is not a characteristic that describes the most competitive companies
in America?
A) Divestiture is essential to growth.
B) People make a difference.
C) Innovate or evaporate.
D) There is no substitute for quality and no greater threat than failing to be cost-competitive on a
global basis.
E) Whether it's broke or not, fix it.
A) Divestiture is essential to growth.
97
A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business's own goals is called
competitive intelligence.
98
________ is not a basic mission of a competitive intelligence program.
A) To provide a general understanding of an industry
B) To provide a general understanding of a company's competitors
C) To identify industry executives who could be hired by the firm
D) To identify areas where competitors are vulnerable and to assess the impact strategic actions
would have on competitors
C) To identify industry executives who could be hired by the firm
99
Which statement about business intelligence is least accurate?
A) Intelligence gathering is an unethical business practice.
B) Running an intelligence program requires many people.
C) Running an intelligence program requires many computers and other resources.
D) Collecting intelligence about competitors violates antitrust laws.
E) Business intelligence is not equal to espionage.
E) Business intelligence is not equal to espionage.
100
The responsibilities of a director of competitive analysis include all of the following except:
A) researching special issues.
B) disseminating information on a timely basis.
C) recognizing what information is important and who needs to know.
D) corporate espionage.
E) analyzing data.
D) corporate espionage.
101
Market commonality can be defined as
A) the number and significance of markets that a firm competes in with rivals.
B) the number and significance of points in common a firm has with its rivals.
C) the extent to which the type of a firm's internal resources are comparable to a rival.
D) the extent to which the amount of a firm's internal resources are comparable to a rival.
E) none of the above
A) the number and significance of markets that a firm competes in with rivals.
102
Intensity of competition ________ in lower-return industries.
is highest
103
What is not one of Michael Porter's five competitive forces?
A) New entrants
B) Rivalry among existing firms
C) Bargaining power of unions
D) Bargaining power of suppliers
E) Bargaining power of buyers
C) Bargaining power of unions
104
According to Porter, what is usually the most powerful of the five competitive forces?
A) Potential development of substitute products
B) Bargaining power of suppliers
C) Bargaining power of consumers
D) Rivalry among competing firms
E) Potential entry of new competitors
D) Rivalry among competing firms
105
Whenever new firms can easily enter a particular industry, the intensity of competitiveness
among firms tends to
increase.
106
If suppliers are unreliable or too costly, which of these strategies may be appropriate?
Backward integration
107
What level of bargaining power do consumers have when the products being purchased are
standard or undifferentiated?
High
108
The Internet has made it _______ for firms to gather, assimilate, and evaluate information.
easier
109
What are educated assumptions about future trends and events called?
Forecasts
110
Without assumptions, planning would be
impossible.
111
Unpublished sources of external strategic information include all of the following except:
A) abstracts.
B) customer surveys.
C) market research.
D) speeches at professional and shareholders' meetings.
E) conversations with stakeholders.
A) abstracts.
112
Which of the following is not a published source of external strategic information?
A) periodicals
B) television programs
C) journals
D) reports
E) directories
B) television programs
113
Standard and Poor's Industry Surveys include all of the following sections except:
A) Historic Environment.
B) Industry Trends.
C) How to Analyze a Company.
D) Glossary of Industry Information.
E) Comparative Company Financial Analysis.
A) Historic Environment.
114
A total weighted score of _______ in an EFE Matrix indicates that the firm's strategies are
not capitalizing on opportunities or avoiding external threats.
1.0
115
What is the first step in designing an EFE Matrix?
A) Identifying key external factors in the industry
B) Summing the weighted score for each competitor
C) Calculating the sales of each competitor
D) Drawing the horizontal and vertical lines for the matrix
E) Determining four competitors
A) Identifying key external factors in the industry
116
What is the range for a firm's total weighted score in an External Factor Evaluation Matrix?
1 to 4
117
One difference between CPM and EFE is that
A) CPM includes both internal and external issues.
B) the weights and total weighted scores have different meanings.
C) CPM ratings range from 1 to 10.
D) CPM is performed only for the company, whereas EFE is performed for both the company
and its competitors.
E) CPM is only used in small firms.
A) CPM includes both internal and external issues.
