66) Overall, the average level of performance in an industry is likely to be highest when
A) the threat level of all five forces is high.
B) the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and
new entrants is high.
C) the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers
and supplies is low.
D) the threat level of all five forces is low.
67) If your customers value your products more when they have your product and another firm’s
product rather than when they have your product alone, the other firm is considered to be a
A) competitor.
B) complementor.
C) rival.
D) substitute.
68) An industry in which a large number of small or medium-sized firms operate and no small
set of firms has dominant market share or creates dominant technologies is known as a(n)
________ industry.
A) fragmented
B) consolidated
C) mature
D) emerging
69) The major opportunity facing firms in fragmented industries is
A) refining their current products and emphasizing an increase in service quality.
B) developing new products and technologies.
C) creating a first-mover advantage through technological leadership.
D) the implementation of strategies that began to consolidate the industry into a smaller number
of firms.
70) ________ industries are newly created, or newly recreated industries formed by
technological innovations, changes in demand, or the emergence of new customer needs.
A) Mature
B) Emerging
C) Fragmented
D) Declining
71) The advantages that come to firms that make important strategic and technological decisions
early in the development of an industry are known as ________ advantages.
A) first-mover
B) competitive
C) early-entrant
D) first-comer
72) In general, first-mover advantages can arise from any of these sources except
A) technological leadership.
B) preemption of strategically valuable assets.
C) the creation of customer switching costs.
D) using an imitative strategy to introduce improved versions of competitors’ new products.
73) Mature industries are characterized by
A) an increase in total industry demand.
B) faster increases in production capacity.
C) a slowdown in the introduction of new products or services.
D) a decrease in the amount of international competition.
74) The most promising opportunity for a firm in a declining industry is to
A) establish itself as a first mover in the post-shakeout industry.
B) become a market leader in the pre-shakeout industry.
C) become a fast follower in the pre-shakeout industry.
D) merge with another firm.
75) Firms that engage in a long, systematic phased withdrawal from an industry, extracting as
much value as possible during the withdrawal period, are following a(n) ________ strategy.
A) niche
B) expansion
C) divestment
D) harvest
76) Industries in which a large number of small or medium-sized firms operate and no small set
of firms has dominant market share or creates dominant technologies are called ________
industries.
A) fragmented
B) mature
C) emerging
D) declining
77) ________ are advantages that come to firms that make important strategic and technological
decisions early in the development of an industry.
A) Visionary advantages
B) First-mover advantages
C) Comparative advantages
D) Missionary advantages
78) Consolidation strategy is a good option in what type of industry?
A) Mature
B) Emerging
C) Fragmented
D) Declining
79) ________ valuable assets are resources required to successfully compete in an industry.
A) Strategically
B) Pedestrian
C) Globally
D) Domestically
80) ________ costs exist when customers make investments in order to use a firm’s particular
products or services.
A) Strategic-switching
B) Competitive-switching
C) Customer-switching
D) Resource-switching
81) Based on the above description, the hardwood furniture industry can best be described as
a(n) ________ industry.
A) emerging
B) fragmented
C) consolidated
D) declining
82) The threat of rivalry in the hardwood furniture industry can best be described as
A) low because of the numerous firms in the industry and the slowing growth rate.
B) low because of the slowing growth rate and the competition from composite wood furniture.
C) high because of the numerous firms in the industry and the slowing growth rate
D) moderate because the slowing growth rate offsets the numerous firms in the industry.
83) The threat of suppliers in the hardwood furniture can best be described as
A) low because there are a large number of suppliers selling an undifferentiated product.
B) high because there are a large number of suppliers selling an undifferentiated product.
C) moderate because the large number of suppliers is offset by the undifferentiated products they
are selling.
D) moderate because of the slowing growth rate in the industry and the commodity nature of the
products produced by suppliers.
84) If Hickory Divine were to open its own chain of furniture stores, this would be an example of
A) complementors.
B) backward vertical integration.
C) consolidation.
D) forward vertical integration.
85) In this example, composite wood furniture would be an example of
A) substitutes.
B) rivals.
C) new entrants.
D) complementors.
86) The threat of buyers in this industry is best described as
A) high because there are many suppliers, none of which represents a significant portion of the
hardwood furniture industry’s sales.
B) low because of the slow industry growth and the commodity nature of the suppliers.
C) low because there are many suppliers, none of which represents a significant portion of the
hardwood furniture industry’s sales.
D) high because of the slow industry growth and the commodity nature of the suppliers.
87) Which of the following best describes the competition in the U.S. online auction industry?
A) Perfect competition
B) Monopolistic competition
C) Oligopoly
D) Monopoly
88) For BidBuy, services such as those offered by DollarDog that make BidBuy’s services more
valuable for customers who use the services of both companies are best described as
A) complementors.
B) substitutes.
C) rivals.
D) suppliers.
89) Factors such as BidBuy’s feedback rating system that are valuable to the company’s
customers but which are not useful on other online auction sites are examples of
A) first-mover advantages.
B) complementors.
C) substitutes.
D) customer-switching costs.
90) BidBuy has a ________ advantage.
A) visionary
B) global
C) first-mover
D) comparative
91) Identify the six interrelated elements that comprise a firm’s general environment.
92) Identify and define the three elements of the S-C-P model.
93) Identify the five most common threats facing firms from their local competitive environment
that are represented in the five forces framework, and discuss under what conditions firms in a
specific industry are most likely to earn an above average profit and when they are to likely to
earn a below average profit.
94) Identify the four types of competition, the attributes of each type and the expected
performance under each.
95) Discuss the difference between a company’s rivals and its substitutes and discuss the role
substitutes play in an industry.
96) Describe the difference between a competitor and a complementor and identify the role
complementors play in an industry.
97) Identify the four generic industry structures and the specific strategic opportunities in each of
these industries.
98) Identify and clearly distinguish between the four strategic options available to firms in a
declining industry.
99) What are customer-switching costs?
100) What is a harvest strategy?