Crafting and Executing Strategy, 22e (Thompson)
1) The strategically relevant factors outside a company’s industry boundaries—economic
conditions, political factors, sociocultural forces, technological factors, environmental factors,
and legal/regulatory conditions—are known as
A) the industry and the competitive arena in which the company operates.
B) general economic conditions plus the factors driving change in the markets where a company
operates.
C) a company’s macro-environment.
D) the competitive market environment that exists between a company and its competitors.
E) the dominant economic features of a company’s industry.
2) Managers must chart a company’s strategic course by
A) focusing on the local environment in which they are operating.
B) ensuring excess production capacity and/or inventory.
C) competing fiercely for a share in the market.
D) building a bigger dealer network.
E) developing a thorough understanding of the company’s external and internal environment.
3) The homebuilding industry is not affected by such macro-influences as
A) changes in mortgage interest rates, rules, and regulations that make it easier/harder for
homebuyers to obtain mortgages.
B) trends in household incomes and buying power.
C) the distinctive competences of incumbent firms.
D) disasters and other unanticipated events in the natural environment.
E) shifting preferences of families for renting versus owning a home, and/or homes of various
sizes, styles, and price ranges.
4) Which of the following is not one of the principal components of strategic significance in the
PESTEL analysis?
A) political factors including the extent to which government intervenes in the economy
B) economic conditions that include the general economic climate and specific factors such as
interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond
markets that can affect consumer confidence
C) sociocultural forces that include societal values, attitudes, cultural factors, and lifestyles that
impact business
D) technological factors that include the pace of change and technical developments that have
the potential for impacting society
E) environmental forces that include the competitive structure, the degree of industry
fragmentation, and the mobility barriers that inhibit business
5) The biggest strategy-shaping impact on on-demand transportation providers such as Uber and
Lyft is most likely to be
A) Yellow Cab companies launching mobile app campaigns for community-connect and
awareness.
B) Amazon launching a mobile delivery service via drones.
C) Apple launching a global network of driverless cars, buses, and trucks on demand via a
mobile app.
D) Tesla and ZipCar announcing a joint venture for electric automobile sharing services.
E) Greyhound developing and marketing a mobile app for customers to purchase intercity bus
tickets.
6) A strategically relevant political factor in the macro-environment that will influence the
performance of all firms across the board is most likely to be
A) the strength of the federal banking system.
B) the exogenous forces related to the general environmental demand.
C) social factors that could fuel a political agenda and create greater transparency.
D) bailouts and energy policies that are industry specific.
E) tax policy, fiscal policy, and tariffs providing impetus for antitrust matters.
7) Avon Products at one point secured information about its biggest rival, Mary Kay Cosmetics,
by having its personnel search through the garbage bins outside MKC’s headquarters. This is an
example of
A) how companies in an industry can sustain good track records for revenue growth and
profitability.
B) strategic moves rivals are likely to make next.
C) industry key factors for future competitive success.
D) lawful gathering of competitive intelligence.
E) lawful but probably unethical gathering of competitive intelligence.
8) The impact of the macro-environment on a company’s strategic opportunities is not
exemplified by the following situation?
A) Sales of Stolichnaya Vodka in the United States dwindle on account of a boycott of Russian
products.
B) Consumer confidence in Volkswagen drops precipitously because of falsified emissions data.
C) Netflix squares off with Amazon Prime as its most potent rival in the streaming television and
film industry.
D) Traffic increases at the outlets of Whole Foods following its introduction of stores comprised
solely of generic products.
E) Sales of FitBit surge on account of a new feature that monitors users’ blood pressure.
9) The most powerful and widely used conceptual tool for diagnosing the principal competitive
pressures in a market is
A) the five forces framework.
B) PESTEL.
C) the driving forces model.
D) strategic group mapping.
E) SWOT analysis.
10) The competitive pressures on companies within an industry come from all of the following
except
A) those associated with the market maneuvering and jockeying for buyer patronage that goes on
among rival firms in the industry.
B) those companies in other industries attempting to win buyers over to their substitute products.
C) those associated with the threat of new entrants into the marketplace.
D) those associated with the bargaining power of suppliers and customers.
E) those associated with environmental factors such as water shortages.
11) The five forces of competitive pressures do not include
A) the power and influence of social/demographic trends.
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.
12) Market maneuvering and jockeying for buyer patronage that goes on among rival sellers in
the industry
A) is less strong than the competitive pressures that stem from the ready availability of
attractively priced substitute products.
B) is the strongest force among the five forces that drive profitability in an industry.
C) emerges from close collaboration with suppliers and the competitive pressures that such
collaboration creates.
D) is less important than competitive pressure associated with the potential entry of new
competitors.
E) has about the same impact as bargaining power and leverage that large customers are able to
exercise.
13) 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)
determine 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) determine which rival has the biggest
competitive advantage and (2) assess 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) assess 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.
14) What makes the marketplace a competitive battlefield?
A) the race of industry members to build strong defenses against the industry’s driving forces
B) the constant rivalry of firms to strengthen their standing with buyers and win a competitive
edge over rivals
C) the ongoing race among rival sellers to have the highest-quality product
D) the ongoing efforts of industry members to introduce new and improved products/services at
a faster rate than their rivals
E) the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits
15) Market maneuvering among industry rivals
A) determines whether the industry’s strategic group map will be static or dynamic.
B) centers around collaborative efforts to overcome the bargaining power of powerful suppliers
and powerful buyers.
C) is usually an industry’s strongest driving force.
D) is usually one of the two or three weakest competitive forces because of the close familiarity
that rivals have for one another’s likely next moves.
E) is ongoing and dynamic, with moves and countermoves of rivals producing a continually
evolving competitive landscape that delivers winners and losers.
16) Rivalry among competing sellers decreases
A) when buyer demand is growing rapidly.
B) as it becomes less costly for buyers to switch brands.
C) as the products of rival sellers become commoditized.
D) when there is excess production relative to demand.
E) as the number of competitors increases.
17) External forces in the natural environment include
A) the trend toward healthier lifestyles, which can shift spending toward exercise equipment and
health clubs and away from alcohol and snack foods.
B) air and/or water pollution, the depletion of irreplaceable natural resources, or inefficient
energy/resource usage.
C) interest rates, exchange rates, the inflation rate, the unemployment rate, the rate of economic
growth, trade deficits or surpluses, savings rates, and per-capita domestic product.
D) tax policy, fiscal policy, tariffs, the political climate, and the strength of institutions such as
the federal banking system.
E) slow growth in buyer demand.
18) Legal and regulatory factors in the external environment typically do not include
A) minimum wage legislation in low-wage industries (such as nursing homes and fast food
restaurants) that employ substantial numbers of relatively unskilled workers.
B) consumer protection statutes
C) genetic engineering, nanotechnology, and solar energy technology.
D) antitrust laws.
E) occupational health and safety regulations specific to certain industries, such as meatpacking
and coalmining, where jobs are hazardous or carry high risk of injury
19) Rivalry among competing sellers is generally less intense when
A) there are relatively more industry key success factors.
B) the industry’s driving forces are weak and rivals have mostly commodity products.
C) barriers to entry are moderately low and the pool of likely entry candidates is large.
D) rivals are wary of making fresh moves to lower prices, introduce new products, increase
promotional efforts and advertising, and otherwise gain sales and market share.
E) buyers have many alternative products or services from which to choose.
20) The competitive battles among rival sellers striving for better market positions, higher sales
and market shares, and competitive advantage, suggest the rivalry force
A) is stronger when firms strive to be low-cost producers than when they use differentiation and
focus strategies.
B) is often weak when rivals have emotional stakes in business or face high exit barriers.
C) is largely unaffected by whether industry conditions tempt rivals to use price cuts or other
competitive weapons to boost unit sales.
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.
E) is weaker when more firms have weakly differentiated products, buyer demand is growing
slowly, and buyers have moderate switching costs.
21) In analyzing the strength of competition among rival firms, an important consideration is
A) the potential for buyers to exercise strong bargaining power.
B) the diversity of competitors in terms of long-term direction, objectives, strategies, and
countries of origin.
C) the number of firms pursuing differentiation strategies versus the number pursuing low-cost
leadership strategies and focus strategies.
D) the extent to which some rivals have more than two competitively valuable competencies or
capabilities.
E) whether the industry is characterized by a strong learning/experience curve and whether the
industry is composed of many or few strategic groups.
22) 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.
23) In which of the following instances is rivalry among competing sellers not more intense?
A) when certain competitors are dissatisfied with their market position and make moves to
bolster their standing
B) when strong companies outside the industry acquire weak firms in the industry and launch
aggressive moves to transform their newly acquired competitors into stronger market contenders
C) when competitors are fairly equal in size and capability
D) when the products of rivals are weakly differentiated, buyer switching costs are low, and
market demand is growing slowly
E) when there are vast numbers of small rivals so the impact of any one company’s actions is
spread thinly across all industry members
24) Competing companies deploy whatever means necessary to strengthen market position,
including all of the following except
A) marketing tactics that include 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) reducing distribution capabilities and market presence.
25) Which of the following is generally not considered a barrier to entry?
A) restrictive regulatory policies
B) high capital requirements
C) strong brand preferences
D) many industry patents in place
E) weak network effects in customer demand
26) 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.
B) incumbent firms are complacent.
C) buyers are not particularly price-sensitive and the industry already contains a dozen or more
rivals.
D) the relative cost positions of incumbent firms are about the same, such that no one incumbent
has a meaningful cost advantage.
E) buyer switching costs are moderately low because of strong product differentiation among
incumbent firms.
27) Competitive pressures associated with the threat of entry are greater in all of the following
situations except when
A) incumbent firms are willing to strongly contest the entry of newcomers with moves designed
to make entry unprofitable.
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) customers have low brand preferences and low degrees of loyalty to seller.
28) The best test of whether potential entry is a strong or weak competitive force is
A) the strength of buyer loyalty to existing brands.
B) whether the industry’s driving forces make it harder or easier for new entrants to be
successful.
C) whether the strategies of industry members are well-matched to the industry’s key success
factors.
D) whether there are any vacant spaces on the industry’s strategic group map.
E) to ask if the industry’s growth and profit prospects are strongly attractive to potential entry
candidates.
29) The competitive threat that outsiders will enter a market is weaker when
A) financially strong industry members send strong signals that they will launch strategic
initiatives to combat the entry of newcomers.
B) the industry’s market growth is rapid.
C) the pool of entry candidates is large and some have resources that would make them
formidable market contenders.
D) newcomers can be expected to earn attractive profits.
E) buyers have little loyalty to the brands and product offerings of existing industry members.