Chapter 03 Industry Analysis Answer Key
Multiple Choice Questions
1.
(p. 63)
In which of these three sectors of the economy – manufacturing, services, transportation – is
the effect of business strategy on performance the smallest?
88)
2.
(p. 65,
Which of the following industry forces is not one of Porter’s five forces?
3.
(p. 74)
Which of the following conditions is not necessary for perfect competition?
4.
(p. 66–
70)
How would a firm reduce the power of one of its buyers?
5.
(p. 77)
Which of the following best describes the determinants of industry concentration?
6.
(p. 88–
Which of the following represents a good example of complementary products?
7.
(p. 77)
Which of the following helps to explain why stronger industry concentration is often associated
with a higher level of profitability?
8.
(p. 83–
84)
According to Ghemawat, which of the following are key conditions for tacit collusion?
9.
(p. 86)
Which of the following is a common condition for the failure of a cartel?
10.
(p. 81)
Price competition within an oligopoly of firms with identical products drives profits to:
True / False Questions
11.
Building barriers to entry is usually costless.
12.
The baseline condition for buyer power is the availability of comparable, competing products.
13.
Suppliers set the baseline for a firm’s costs.
14.
(p. 69)
The bargaining power of a supplier increases as it sells a higher percentage of its goods to a
firm.
(p. 71)
15.
Strong substitutes can set a limit on the prices firms may charge for their products or services.
(p. 82)
16.
Technological similarity is necessary to distinguish an industry from substitutes.
(p. 91)
17.
Powerful substitutes lower the value required to compete.
(p. 91)
18.
Reducing prices is one way to increase the barriers to entry.
19.
(p. 91)
Cooperation between the firm and its suppliers can lower supplier costs with a comparable
drop in value.
20.
(p. 91)
Cooperation between a firm and its buyers can lower firm costs and also, lower buyer value.
Short Answer Questions
21.
(p. 62–
63)
What is the difference between a market segment and an industry?
22.
(p. 66–
73,
summary
table:
How do industry forces affect Value minus Cost? What does an analysis that only considers
the competition ignore?
23.
(p. 88–
89)
How can complementary products or services increase the profitability in an industry?
24.
(p. 88–
89)
Draw the value net for the Tablet industry.