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MGT 187 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

According to the Chapter 2 Opening Case on BP, in response to the Deepwater Horozon oil spill, the company should expect increased scrutiny coming from which of the following segments of the general environment?

A

political/legal

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2
Q

As noted in the Chapter 2 Opening Case, gas drilling and fracturing have dramatically increased gas reserves and may provide a substitute for other carbon dioxide producing products such as coal. This change illustrates the effect of the _____________segment of the general environment.

A

technological

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3
Q

The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ___________ segment of the general environment that BP and other integrated oil firms have to deal when contending with scarce resources (Chapter 2 Opening Case).

A

global

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4
Q

Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its traditional strategy and product characteristics over this time period. But, Acme has experienced declines in sales and profits over the last four quarters. The CEO of Acme should

A

conduct an analysis of the external environment.

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5
Q

The three parts of the external environment which affect a firms strategic actions are

A

general, industry, and competitor

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6
Q

The ____ environment is composed of dimensions in the broader society that can influence an industry and the firms within it.

A

general

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7
Q

The environmental segments that comprise the general environment typically will NOT include

A

substitute products or services

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8
Q

Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark’s third product makes up one third of sales. With profitability far above the industry average, this product is responsible for one half of Aardvark’s profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?

A

The company should monitor the general environment for changes that might effect the revenue and profitability of all products.

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9
Q

Which of the following is NOT an activity used in the external environmental analysis process?

A

decrypting

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10
Q

Environmental scanning would be most important for which of the following organizations?

A

a web design company catering to small businesses

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11
Q

The use of the Internet by Netflix to collect data on customer preferences is an example of

A

scanning

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12
Q

When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are engaged in

A

forecasting

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13
Q

A general environmental analysis can be expected to produce all of the following EXCEPT

A

objective answers

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14
Q

In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT

A

cultural values

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15
Q

Which of the following identified in an analysis of the general environment is an opportunity for an entrepreneur who wishes to open a business doing “Fitness for Life” physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people?

A

the average age of the population in his community is high

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16
Q

Analyzing income distribution would include all of the following EXCEPT

A

wage differentials between male and female employees working for a large manufacturer.

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17
Q

Demographic changes include variations in income distribution. Which of the following statements is true?

A

The general loss in real income has been somewhat offset by the increase in dual-career couples.

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18
Q

In the chapter discussion of the political legal segment of the general environment, it was noted that President Obama’s administration has sought to pursue policies that would

A

reduce the amount of work U.S. companies outsource to firms in other nations.

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19
Q

An analysis of the economic segment of the external environment would include all of the following EXCEPT

A

the move toward a contingent workforce.

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20
Q

Characteristics of the current economic segment include all of the following EXCEPT

A

a clear understanding of future economic opportunities and threats.

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21
Q

The economic environment refers to

A

the nature and direction of the economy in which a firm competes or may compete.

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22
Q

Which of the following would NOT be identified in an analysis of the economic portion of the general environment?

A

The ability of Ford to issue new debt due to their recent financial performance.

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23
Q

All of the following are aspects of the political/legal segment of the general environment EXCEPT

A

attitudes and values

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24
Q

An analysis of society’s attitudes and values would be conducted when studying the ____ segment of the general environment.

A

sociocultural

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25
Q

In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store’s showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owner fail to take into account when she began selling the lingerie?

A

sociocultural segment

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26
Q

The technological segment of environmental analysis includes

A

institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.

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27
Q

Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ____ segment of the general environment.

A

technological

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28
Q

The next critical technological opportunity for organizations is predicted to be

A

wireless communications

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29
Q

Which of the following would be an example of the application of next major technological opportunity for organizations?

A

Amazon Kindle

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30
Q

The observation that in China, even though car sales surged 37% in 2010, it is expected that by 2015 they will reach production overcapacity and have a glut of extra cars is an aspect of the ____ segment of the general environment.

A

global

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31
Q

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by

A

focusing on global niche markets

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32
Q

The concepts of Guanxi, Wa, and Inhwa all convey the general idea of

A

interpersonal relationships

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33
Q

Global warming and energy consumption trends are aspects of the _____________ segment of the general environment that firms should monitor.

A

physical

34
Q

Green restaurant design, sustainable packaging, waste management, and energy efficiency are aspects of the ______________ segment of the general environment that McDonald’s has sought to address (Chapter 2 Strategic Focus).

A

physical

35
Q

All of the following are examples of efforts by firms to address the physical segment of the general environment in the Chapter 2 Strategic Focus case EXCEPT

A

Hiring more women and minorities at Microsoft.

36
Q

An industry is defined as

A

a group of firms producing products that are close substitutes.

37
Q

The likelihood of entry of new competitors is affected by ____ and ____.

A

barriers to entry, expected retaliation of current industry organizations

38
Q

Which of the following is NOT an entry barrier to an industry?

A

bargaining power of suppliers

39
Q

New entrants to an industry are more likely when

A

product differentiation in the industry is low.

40
Q

Economies of scale refer to the fact that as the

A

quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases.

41
Q

The large expenditures on advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry?

A

product differentiation

42
Q

Product differentiation refers to the

A

belief by customers that a product is unique.

43
Q

Switching costs refer to the

A

one-time costs customers incur when buying from a different supplier.

44
Q

Customer loyalty programs such as airline frequent flyer miles are an attempt to

A

increase customers’ switching costs.

45
Q

As customers come to believe that a firm’s product is unique, this allows the firm to

A

obtain loyal customers

46
Q

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale, the products must be sold in retail outlets. The main barrier to entry DWK is likely to encounter here is

A

access to distribution channels.

47
Q

In the case of a retail business dependent on drive-in customers, the major cost disadvantage independent of scale would be

A

favorable locations are not available.

48
Q

A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true?

A

The cost of the marble will be expensive because of the bargaining power of the supplier.

49
Q

suppliers are powerful when

A

they offer a credible threat of forward integration.

50
Q

In the airline industry, consolidation among fuel providers serving airport facilities would be considered as ____ factor in the five forces model of competition.

A

an increase in the bargaining power of suppliers of a critical input

51
Q

Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement of donors is accurate?

A

Blood donors are suppliers and are powerful due to the critical nature of what they provide to the blood bank.

52
Q

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?

A

It will make the airline industry more attractive because of decreased supplier power.

53
Q

Golden Lotus, an exercise club targeting healthy individuals over 50, is located in a fast-growing city in the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is the most directly controllable by the company?

A

the power of the customers/buyers

54
Q

Buyers are powerful when

A

switching costs are low

55
Q

The highest amount a firm can charge for its products is most directly affected by

A

cost of substitute products

56
Q

The threat from substitutes is high when

A

the substitute product’s price is lower than the industry product’s price.

57
Q

The Chapter 2 Strategic Focus discussed the movement of media content from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here?

A

substitutes

58
Q

All of the following are forces that create high rivalry within an industry EXCEPT

A

fast industry growth.

59
Q

The existence of high exit barriers such as ownership of specialized assets (e.g., large aircraft) in the airline industry indicates that

A

the competitive rivalry in the industry is severe.

60
Q

A manufacturer of washing machines has expanded its plant and has created excess capacity, just as the general economy has taken a downturn. The company is likely to

A

offer rebates and incentives for customers who purchase washing machines.

61
Q

When rival firms compete aggressively by trying to attract competitors’ customers, this might be an indication of

A

slow industry growth

62
Q

Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green

A

is likely to raise the level of competitive rivalry in the industry.

63
Q

Rivalry between Dell, Hewlett-Packard, and other computer manufacturers is intense in part because

A

these companies are trying to find ways to differentiate their products.

64
Q

Circuit Corp. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component which is an essential differentiating feature for most of their consumer products. The costs to manufacture this component have risen sharply in recent months. Internal cost accounting estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely?

A

Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes.

65
Q

Exit barriers to a firm include all of the following EXCEPT`

A

generic assets

66
Q

An owner of a stable of racehorses has been earning below-average returns for over 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because “racing is in my blood.” This individual is probably still racing horses because of

A

high barriers to exit

67
Q

According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT

A

low barriers to entry.

68
Q

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT

A

low supplier power due to commodity inputs.

69
Q

The competition within each strategic group is

A

more intense than is the competition between strategic groups.

70
Q

Firms within strategic groups

A

follow similar strategies across certain dimensions.

71
Q

All of the following are implications of strategic groups EXCEPT

A

the strength of the five forces is the same across strategic groups.

72
Q

Competitor analysis focuses on

A

firms with which the company competes directly.

73
Q

Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis?

A

IBM Microsoft

74
Q

Competitor intelligence is

A

the data that the firm gathers to understand competitors’ objectives, strategies, assumptions, and capabilities.

75
Q

Once a firm has determined its competitor’s future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop

A

a response profile

76
Q

A competitor analysis includes all of the following about competitors EXCEPT

A

traditions.

77
Q

Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa’s firm’s understanding of the competitor’s business strategy, and would allow Clarissa’s employer to gain many of the competitor’s clients.

A

The ethical dilemma here is the right of competitors not to reveal certain information.

78
Q

All the following are ethical sources of data for external analysis EXCEPT

A

a competitor’s confidential memos.

79
Q

Competitor intelligence could ethically come from all the following EXCEPT

A

eavesdropping

80
Q

Which of the following represents a competitive intelligence practice that is both legal and ethical?

A

An executive attends a trade show solely to obtain a competitor’s brochures, listen to sales pitches, and ask questions about the competitor’s products.

81
Q

Which of the following intelligence gathering techniques is most likely to be legal and ethical?

A

attending trade show presentations given by a competitor’s employees

MGT 187 (6 decks)

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