108. According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT
a. low barriers to entry.
b. suppliers and buyers with little bargaining power.
c. a moderate degree of rivalry among competitors.
d. few good product substitutes.
109. According to the five forces model, an unattractive industry would include all of the following characteristics
EXCEPT
a. low economies of scale needed for new firms to enter.
b. low supplier power due to commodity inputs.
c. high threat of substitute products due to a large number of low-cost alternatives.
d. high bargaining power of buyers due to low switching costs.
110. The competition within each strategic group is
a. more intense than is the competition between strategic groups.
b. less intense than is the competition between strategic groups.
c. typically very low.
d. an unknown factor in the analysis of competitive practices within a firm’s strategic group.
111. Firms within strategic groups
a. follow dissimilar strategies.
b. follow similar strategies across certain dimensions.
c. typically engage in greater intergroup rivalry than intragroup rivalry.
d. exist almost exclusively in the manufacturing sector.
112. All of the following are implications of strategic groups EXCEPT
a. the strength of the five forces differs across strategic groups.
b. the strength of the five forces is the same across strategic groups.
c. competitive rivalry within strategic groups is greater than between strategic groups.
d. the closer the strategic groups are in terms of strategies, the greater is the likelihood of rivalry.
113. Competitor analysis focuses on
a. firms with which the company competes directly.
b. firms that produce products that are substitutes.
c. all firms in the industry.
d. companies that might enter the industry.
114. Which of the following pairs of companies would be least likely to be examined together as part of competitive
analysis?
a. Wendy‘s and Taco Bell
b. Sony and Apple
c. Dell and Microsoft
d. Coca-Cola and PepsiCo
115. Competitor intelligence is
a. legally or illegally gained data about competitors‘ internal strategic processes and competitive decisions.
b. strategic information gained from industrial espionage targeting international competitors.
c. the data that the firm gathers to understand competitors’ objectives, strategies, assumptions, and capabilities.
d. illegal to gather under the Sarbanes-Oxley Act.
116. Once a firm has determined its competitors’ future objectives, current strategy, assumptions, and strengths and
weaknesses, its next step is to develop
a. an environmental assessment.
b. a marketing plan.
c. a response profile.
d. a task force to implement the plan.
117. A competitor analysis includes all of the following about competitors EXCEPT
a. future objectives.
b. current strategy.
c. assumptions.
d. traditions.
118. 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. What
ethical implications may result from this situation?
a. There is no ethical or legal concern here for Clarissa.
b. The ethical dilemma is not Clarissa‘s but her client’s, since he passed on confidential information to her
voluntarily.
c. The ethical dilemma here is the right of competitors not to reveal certain information.
d. This is an example of ethical competitor intelligence obtained as eavesdropping.
119. All of the following are ethical sources of data for external analysis EXCEPT
a. trade shows.
b. a competitor’s annual reports.
c. a competitor’s help-wanted advertisements.
d. a competitor’s confidential memos.
120. Competitor intelligence could ethically come from all of the following EXCEPT
a. court records.
b. financial reports.
c. trade show discussions.
d. eavesdropping.
121. Which of the following represents a competitive intelligence practice that is both legal and ethical?
a. A firm hires a competitor’s employees and asks them to share the names and addresses of business contacts
from their previous company.
b. 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.
c. A city council member shares information about the decision process for selecting a contractor to build a
new library wing with his wife, an executive with a construction firm bidding on the contract.
d. A marketing manager at Smith-Phillips, Inc., sells confidential plans for the company’s expansion into the Far
East to a firm that is not a direct competitor.
122. Which of the following intelligence-gathering techniques is most likely to be legal and ethical?
a. hiring investigators to examine the competitor’s trash
b. entering a competitor’s production plant without authorization
c. redirecting a competitor’s emails to one’s own company
d. attending trade show presentations given by a competitor’s employees
123. The U.S. Hispanic market is the third-largest “Latin American” economy behind Brazil and Mexico. This impacts
the aspect of demographic segment analysis.
a. age structure
b. geographic distribution
c. income distribution
d. ethnic mix
124. New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people
moving out compared to people moving into the state. This impacts the aspect of demographic analysis.
a. age structure
b. geographic distribution
c. income distribution
d. ethnic mix
125. The communications industry is broadly defined as encompassing all of the following EXCEPT
a. media companies.
b. smartphone producers.
c. book retailers.
d. entertainment companies.
126. The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example
of a barrier to entry.
a. cost disadvantage independent of scale
b. government policy
c. capital requirements
d. product differentiation
127. After Amazon lowered the price on Kindle e-readers, Sony eventually lowered the price on its Reader. Sony
needed to do this because
a. it is in the same strategic group.
b. it is outside the strategic group.
c. of inter–strategic group competition.
d. of strategic distinctiveness.
128. Applications developed for iPhones make the phone more valuable to iPhone users. App developers are to
Apple.
a. suppliers
b. customers
c. competitors
d. complementors
129. Counterfeiting goods and exporting them from China is
a. ethical and legal.
b. unethical but legal.
c. ethical but illegal.
d. unethical and illegal.
Subjective Short Answer
Case Scenario 1: The Boys and Girls Clubs.
The Boys and Girls Clubs (BGC) is a national non–profit organization geared toward providing America‘s youth with
the tools and skills they need to become healthy adults, responsible citizens, and effective leaders. By bringing
parents, neighbors, educators, and civic leaders together with our youth, BGC believes it can instill these crucial life
lessons at an age when they‘re most needed. The national organization is headquartered in Atlanta, GA, and serves
as a service hub for over 3,700 club locations around the United States. Each local club is directed by a volunteer
board of directors and staffed by professional youth development workers (usually including an executive director, a
program director, and an arts director) and many volunteers who just enjoy working with young people and want to
make a difference in their lives. While affiliated with the national center, each local BGC is locally funded.
130. (Refer to Case Scenario 1). How are the various facets of the general environment (Table 2.1 in Strategic
Management) likely to be important for BGC?
131. (Refer to Case Scenario 1). Why would attention focused on victims of natural disasters be a threat to BGC?
132. (Refer to Case Scenario 1). How might BGC respond to threats to its donations at both local and national levels?
133. (Refer to Case Scenario 1). The purpose of the Boys and Girls Clubs (BGC) is to instill in youth the tools and skills
needed to become healthy adults, responsible citizens, and effective leaders. If BGC were to initiate programs
about women‘s issues, women in the workforce, workforce diversity, and changes in work and career preferences,
it would be contributing to an understanding of which segment of the general environment?
A. demographic
B. sociocultural
C. economic
D. technological
Case Scenario 2: B.B. Mangler.
B.B. Mangler is a top U.S. business–to-business distributor of maintenance, repair, and service equipment,
components, and supplies such as compressors, motors, signs, lighting and welding equipment, and hand and power
tools. Its industry is typically referred to as MRO, an acronym for maintenance, repair, and supplies. MRO products
are typically small and fairly inexpensive (such as light bulbs and washers), but often needed on short notice.
Mangler states its strategy as having the “capacity to offer an unmatched breadth of lowest-total-cost MRO
solutions to business.” Mangler’s GoMRO sourcing center for indirect spot buys locates products through its
database of 8,000 suppliers and 5 million products. Mangler has 388 physical branches in the United States,
including Puerto Rico (90 percent of sales), 184 in Canada, and 5 in Mexico. Customers include contractors, service
and maintenance shops, manufacturers, hotels, governments, and health care and educational facilities. Mangler
also provides materials-management consulting services.
134. (Refer to Case Scenario 2). Historically, Mangler appears to have relied on its physical locations for market
presence in the United States and northern South America. What threats does the Internet pose to its location-
based strategy?
135. (Refer to Case Scenario 2). What opportunities does the Internet provide to Mangler, both domestically and
internationally?
136. (Refer to Case Scenario 2). How should Mangler respond to the threat of new Internet-based entrants?
Case Scenario 3: Barracuda Inc.
Barracuda Inc. is a lamp-fixture manufacturer that is considering an entry strategy into the U.S. home-furnishings
manufacturing industry. The existing landscape consists of many players but none with a controlling share. There
are currently 2,500 home furnishings firms, and only 600 of those have more than 15 employees. Average net profit
after tax is between 4 and 5 percent. While the industry still primarily comprises single-business, family–run firms
that manufacture furniture domestically, imports are increasing at a fairly rapid rate. Some of the European imports
are leaders in contemporary design. Relatively large established firms are also diversifying into the home–
furnishings industry via acquisition. Supplier firms to the home-furnishings industry are in relatively concentrated
industries (such as lumber, steel, and textiles). Retailers, the intermediate customer of the home-furnishings
industry, have been traditionally very fragmented. Customers have many products to choose from, at many
different price points, and few home-furnishing products have strong brands. Also, customers can switch easily
among high- and low-priced furniture and other discretionary expenditures (spanning big-screen TVs to the choice
of postponing any furniture purchase entirely).
137. (Refer to Case Scenario 3). Using the five-forces framework, summarize the opportunities and threats facing
Barracuda as it considers entry into the home-furnishings manufacturing industry. Which threats are greatest to
current incumbents?
138. (Refer to Case Scenario 3). How intense is competitive rivalry likely to be among incumbents of the home-
furnishings manufacturing industry?
139. (Refer to Case Scenario 3). Is the furniture industry described above attractive?
Essay
140. Explain why it is important for organizations to analyze and understand the external environment.
141. Identify and describe the three major parts of the external environment. What is the purpose for a firm to collect
information about these aspects of its environment?
142. Describe and discuss the four activities of the external environmental analysis process.
143. Describe the seven segments of the general environment.
144. Identify the five forces that underlie the five forces model of competition. Explain briefly how they affect industry
profit potential.
145. Describe the factors that raise the competitive nature of an industry’s rivalry.
146. What are high exit barriers and how do they affect the competition within an industry?
147. What is a firm’s strategic group? What effect does the strategic group have on the firm?
148. What do firms need to know about their competitors? What legal and ethical intelligence-gathering techniques can
be used to obtain this information?
149. What are barriers to entry and how do they affect competition in the industry?