30) Which of the following is not a good example of a substitute product that triggers stronger
competitive pressures?
A) a salad as a substitute for French fries
B) wireless phones as a substitute for wired telephones
C) Coca-Cola as a substitute for Pepsi
D) snowboards as a substitute for snow skis
E) video-on-demand services from a cable TV company as a substitute for going to the movies
31) The competitive pressures from substitute products tend to be stronger when
A) good substitutes are readily available.
B) there are fewer number of substitute products.
C) substitutes have lower performance features.
D) buyers incur high costs in switching to substitutes.
E) substitutes are priced above the market.
32) In which of the following instances are industry members not subject to stronger competitive
pressures from substitute products?
A) The costs to buyers of switching over to the substitutes are low.
B) Buyers are dubious about using substitutes.
C) The quality and performance of the substitutes are well-matched to what buyers need to meet
their requirements.
D) Buyer brand loyalty is weak.
E) Substitutes are readily available at competitive prices.
33) Determining 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.
B) identifying the attractiveness of other industries.
C) measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling
techniques.
D) adopting a substitute product concentration factor to the buyer volume.
E) judging whether industry members are capable of self-manufacturing their products.
34) The lower the user’s switching costs, the
A) harder it is for the sellers of attractive substitutes to lure buyers to their offering.
B) more intense the competitive pressures posed by substitute products.
C) less intense the competitive pressures posed by substitute products.
D) greater the bargaining power from both suppliers and influential customers.
E) lesser the bargaining power from both suppliers and influential customers.
35) Whether supplier-seller relationships in an industry represent a strong or weak source of
competitive pressure is a function of
A) whether the profits of suppliers are relatively high or low.
B) the average number of suppliers that each seller/industry member purchases from.
C) how aggressively rival industry members are trying to differentiate their products.
D) whether demand for supplier products is high and they are in short supply.
E) whether the prices of the items being furnished by the suppliers are rising or falling.
36) 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.
B) whether suppliers self-manufacture what they supply or source their items from other
manufacturers.
C) whether the industry’s position in the growth cycle is favorable.
D) whether technological change in the businesses of suppliers is rapid or slow.
E) whether the needs and expectations of supplier-seller relationships are changing slowly or
rapidly.
37) The bargaining leverage of suppliers is greater when
A) the suppliers’ products/services account for a small percentage of industry members’ costs.
B) industry members incur low costs in switching their purchases from one supplier to another.
C) industry members account for a big fraction of supplier’s sales.
D) there is extensive seller-supplier collaboration.
E) the supplier industry is composed of a large number of relatively small suppliers.
38) In which one of the following instances is supplier bargaining power and leverage 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 items purchased from suppliers are in short supply
D) when the buying firms purchase in large quantities and thus are important customers of the
suppliers
E) when the item being supplied is a commodity
39) When an industry member is a major customer of the supplier, and the relationship
(partnership) is unusually effective and mutually advantageous
A) it is rare for such partnerships to have much competitive impact on those industry members
not having such partnerships.
B) one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining
power in their dealings with these industry members.
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.
D) there is a high likelihood of such partnerships reducing competitive pressures on all industry
members, provided technological change in the suppliers’ business is rapid and the item being
supplied is a commodity.
E) the usual result is to reduce competitive pressures on all industry members, provided the costs
of the items furnished by supply chain partners amount to 50 percent or more of total cost.
40) The higher the switching costs for industry members, the more it can
A) limit supplier bargaining power.
B) enhance supplier bargaining power.
C) enhance the quality of parts and components being supplied, and in effect reduce defect rates.
D) provide important cost savings for the collaborative supplier-seller relationship.
E) limit the supply of products and/or services.
41) Whether buyer-seller relationships in an industry represent a strong or weak source of
competitive pressure is a function of
A) the speed with which general economic conditions and interest rates are changing.
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.
C) how many buyers purchase all of their requirements from a single seller versus how many
purchase from several sellers.
D) the number of buyers versus the number of sellers.
E) whether industry members are spending more or less on advertising.
42) Whether buyer bargaining power poses a strong or weak source of competitive pressure on
industry members depends in part on
A) the degree to which buyers have any bargaining preferences and the extent to which buyers
are price sensitive.
B) how many buyers are engaged in collaborative partnerships with sellers.
C) whether entry barriers are high or low and the size of the pool of likely entry candidates.
D) whether the overall quality of the items being furnished by industry members is rising or
falling.
E) whether demand-supply conditions represent a buyer’s market or a seller’s market.
43) 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.
44) Buyer bargaining power is stronger when
A) winning the business of certain high-profile customers offers a seller important market
exposure or prestige.
B) the extent and importance of collaborative partnerships and alliances between particular
sellers and buyers are credible.
C) buyers cannot integrate backward into the product market of sellers.
D) sellers’ products are differentiated, making it easy and inexpensive for buyers to switch to
competing brands.
E) the industry’s products are standardized or undifferentiated.
45) Which of the following factors is not a relevant consideration in determining the strength of
buyer bargaining power?
A) the relationship between the buyer market and seller market
B) the degree to which the seller is a manufacturer of goods and services in substantial quantities
C) the degree to which buyers pose a credible threat to integrate backward into the product
market of sellers
D) the degree to which buyers are well-informed about a seller’s products, prices, and costs
E) the degree to which industry goods are standardized and undifferentiated
46) Collaborative relationships between particular sellers and buyers in an industry can represent
a source of strong competitive pressure when
A) virtually all buyers have strong brand attachments and are highly brand loyal.
B) demand for the product is growing rapidly.
C) sales are made to buyer groups with either strong bargaining power or high sensitivity.
D) sellers are racing to add the latest and greatest performance features so as to attract the
patronage of important or prestigious buyers.
E) buyers are very quality conscious.
47) In which of the following circumstances are competitive pressures associated with the
bargaining power of buyers relatively moderate-to-weak?
A) The supply of soccer balls increases during the World Cup season.
B) Consumers can easily compare different smartphones’ features over the Internet before buying
them.
C) Apple designs and manufactures its chip processors rather than buying them from Intel.
D) Dairy products are usually standardized and therefore differentiated only by price.
E) Buyers tend to delay purchases of luxury goods, such as home entertainment systems, until
they are on sale.
48) Competitive pressures stemming from buyer bargaining power tend to be weakest in which
of the following circumstances?
A) Most consumers vary the brands they choose for their cookware and kitchen gadgets.
B) There is a global decline in the demand for cable television services.
C) The commercial jet aviation manufacturing industry offers highly differentiated products.
D) The Internet offers a huge amount of information on a variety of products.
E) Heinz owns a metal-can manufacturing subsidiary to cut back on supplier costs.
49) Which of the following conditions acts to weaken buyer bargaining power?
A) when buyers are unlikely to integrate backward into the business of sellers
B) when buyers purchase the item frequently and are well-informed about sellers’ products,
prices, and costs
C) when the costs incurred by buyers in switching to competing brands or to substitute products
are relatively low
D) when the products of rival sellers are weakly differentiated and buyers have considerable
discretion over whether and when they purchase the product
E) when buyers are few in number and/or often purchase in large quantities
50) Buyers are in position to exert strong bargaining power in dealing with sellers when
A) their costs to switch to competing brands or to substitute products are relatively high.
B) a particular seller’s product delivers quality or performance that is very important to the buyer
and is not matched by other brands.
C) they buy the product infrequently or in small quantities and are not particularly well-informed
about sellers’ products, prices, and costs.
D) buyer demand is growing rapidly.
E) buyers are price sensitive because the product represents a significant portion of their
purchasing budget.
51) 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 buyers pose a major threat to integrate backward into the product market of sellers
52) Not all buyers of an industry’s product have equal degrees of bargaining power with sellers
because
A) sellers in an industry provide similar products and generally their cost structures are different
because of competitive advantages in their operation.
B) some sellers may be less sensitive than others to price, quality, or service differences.
C) along the various stages of the value chain sellers are conducive to earning attractive profits.
D) the industry is a highly cohesive structure with limited fragmentation and few industry
members.
E) sellers are large and few in number relative to the number of buyers.
53) 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
A) lacks powerful driving forces.
B) gives each industry competitor the best potential for building sustainable competitive
advantage over rival firms.
C) makes it challenging for industry members to compete successfully unless they can strongly
differentiate their products.
D) is conducive to industry members earning attractive profits.
E) requires that industry members have low costs in order to be competitively successful.
54) 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.
B) offers little ability to build a sustainable competitive advantage.
C) is highly conducive to achieving strong product differentiation and high customer loyalty to
the company’s brand.
D) offers moderate to good prospects for making a reasonable profit and building a sustainable
competitive advantage.
E) requires that industry members have a strongly differentiated product offering in order to be
profitable.
55) The stronger the collective impact of competitive pressures associated with the five
competitive forces,
A) the stronger are the industry’s driving forces.
B) the greater number of companies that can achieve a competitive advantage via differentiation.
C) the larger the number of competitive advantage opportunities for industry members.
D) the greater the number of industry key success factors.
E) the fewer companies that can achieve a competitive advantage via anything other than being
the industry’s low-cost leader.
56) Based on an analysis of the five competitive forces, in which of the following industries is
profitability likely to be lowest?
A) pharmaceuticals
B) wireless lighting systems
C) wearable fitness and health monitors
D) pizza restaurants
E) delivery services using drones
57) Based on an analysis of the five competitive forces, in which of the following industries is
profitability likely to be highest?
A) apparel
B) tire manufacturing
C) electric and gas utilities
D) commercial airlines
E) video streaming services
58) As a rule, the collective impact of competitive pressures associated with the five competitive
forces
A) determines the strength of the industry’s driving forces.
B) determines the extent of the competitive pressure on industry profitability.
C) means that fewer companies can achieve a competitive advantage via anything other than
being the industry’s low-cost leader.
D) means there will be a larger number of competitive advantage opportunities for industry
members.
E) means there will be a greater number of industry key success factors.
59) A company’s strategy is increasingly effective the more it can match the company strategy to
competitive conditions, so the firm can
A) pursue avenues that expose the firm to as many of the different competitive pressures as
possible.
B) shift the competitive battle in favor of the firm by altering the underlying factors driving the
five forces.
C) pursue ways to identify and complement the five forces’ contradictions and inferences to
attract competitive growth opportunities.
D) pursue avenues that promote strategic thinking about how to contest competitor strengths and
weaknesses and to create a checklist of potential profitability preferences.
E) shift societal concerns, attitudes, and lifestyles by altering the pattern of competition.
60) The value net framework includes an analysis of
A) the firm, substitutes, suppliers, customers, and competitors.
B) the firm, suppliers, customers, competitors, and driving forces.
C) substitutes, suppliers, customers, competitors, and driving forces.
D) the firm, suppliers, customers, competitors, and complementors.
E) substitutes, suppliers, customers, competitors, and potential entrants.
61) Which of the following is not an example of a complementor?
A) microprocessors and laptops
B) automobiles and gasoline stations
C) theme parks and hotels
D) gyms and fitness equipment
E) newspapers and Internet news providers
62) The “driving forces” in an industry
A) are usually triggered by changing technology or stronger learning/experience curve effects.
B) usually are spawned by growing demand for the product, the outbreak of price-cutting, and
big reductions in entry barriers.
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.
D) appear when an industry begins to mature but are seldom present during early stages of the
industry life cycle.
E) are usually triggered by shifting buyer needs and expectations or by the appearance of new
substitute products.
63) Industry conditions change because of
A) such powerful driving forces as swings in buyer demand, changing interest rates, ups and
downs in the economy, and higher/lower entry barriers.
B) newly emerging industry threats and industry opportunities that alter the composition of the
industry’s strategic groups.
C) newly emerging industry key success factors.
D) important forces enticing or pressuring certain industry participants (competitors, customers,
suppliers) to alter their actions in important ways.
E) changes in the barriers to entry and the degree of competition from substitute products.
64) You have been asked to analyze the Value Net of the major regions of the California wine
industry and have observed close relationships between wineries and local hospitality businesses
(such as restaurants and lodging facilities) in the regions under study. Those local hospitality
businesses can be said to be
A) cohabitors.
B) competitors.
C) cooperators.
D) complementors.
E) customers.
65) One of the steps of driving-forces analysis is to identify which
A) strategy changes a company may need to make to prepare for the impacts of the driving
forces.
B) strategic group is the most powerful.
C) industry member is likely to become (or remain) the industry leader and why.
D) key success factors are most likely to help their company gain a competitive advantage.
E) of the five competitive forces will be the strongest driver of industry change.