The nature and strength of the competitive forces that prevail in an industry are generally a joint product of

B) the threat that firms outside the industry will decide to enter the market.

C) the attempts of companies in other industries to win buyers over to their own substitute products.

D) competitive pressures stemming from the bargaining power of both suppliers and buyers.

Which of the following is not one of the five typical sources of competitive pressures?

A) The power and influence of industry driving forces

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

The most powerful of the five competitive forces is usually

A) the competitive pressures that stem from the ready availability of attractively-priced substitute products.

C) the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates.

D) the competitive pressures associated with the potential entry of new competitors.

E) the bargaining power and leverage that large customers are able to exercise.

Typically, the weakest of the five competitive forces in an industry is/are:

E) None of the above is typically weakest.

A) the threat posed by potential new entrants.

B) the bargaining power and leverage that suppliers are able to exercise.

C) the competitive pressures that stem from the ready availability of attractively-priced substitute products.

D) the bargaining power and leverage that buyers are able to exercise.

Using the five-forces model of competition to determine what competition is like in a given industry involves

A) building the picture of competition in three steps: (1) identifying the specific competitive pressures associated with each of the five competitive forces; (2) evaluating how strong the pressures comprising each competitive force are; and (3) determining whether the collective impact of all five competitive forces is conducive to earning attractive profits.

C) evaluating whether competition is being intensified or weakened by the industry’s driving forces and key success factors.

D) assessing 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.

B) building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits.

What makes the marketplace a competitive battlefield is

B) the constant jockeying of industry members to strengthen their standing with buyers and win a competitive edge over rivals.

A) the race of industry members to build strong defenses against the industry’s driving forces.

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.

Competitive jockeying and market maneuvering among industry rivals

E) is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.

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.

Factors that cause the rivalry among competing sellers to be weak include

B) rapid growth in buyer demand and high buyer switching costs.

A) low buyer switching costs and rival sellers that are relatively equal is size and capability.

C) few industry rivals that any one company’s actions can easily be anticipated and countered by its rivals.

D) low barriers to entry and weakly differentiated products among rival sellers.

E) slow growth in buyer demand and strongly differentiated products.

Which one of the following does not cause the rivalry among competing sellers to be weak?

B) Rapid growth in buyer demand

C) Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales

E) Strongly differentiated products among rival sellers

Factors that tend to result in weak rivalry among competing sellers include

B) rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company’s actions have little impact on rivals’ businesses.

A) low buyer switching costs and low barriers to entry.

C) weakly differentiated products among rival sellers.

D) rivals that are quite diverse in terms of their strategies, objectives, and countries of origin.

E) conditions where outsiders have recently acquired weak competitors and are trying to turn them into major contenders.

The rivalry among competing sellers tends to be less intense when

C) industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance.

A) industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales.

B) buyer demand is weak and many sellers have excess capacity and/or inventory.

D) rivals have diverse strategies and objectives and are located in different countries.

E) rival sellers have weakly differentiated products.

Rivalry among competing sellers is generally more intense when

D) rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising, and otherwise gain sales and market share.

A) there are relatively few industry key success factors and rivals have highly differentiated products.

B) the industry’s driving forces are strong and rivals have strongly differentiated products.

C) barriers to entry are moderately high and the pool of likely entry candidates is small.

E) barriers to entry are high and buyer switching costs are high.

Rivalry among competing sellers grows in intensity when

E) buyer demand is growing slowly and the industry is composed of 6 to 10 competitors that are fairly equal in size and competitive capability.

A) rivals’ products/services are sold at widely varying prices and there are only 2-4 rivals.

B) rivals have highly differentiated products and buyer demand is growing rapidly.

C) there are so many industry rivals that the impact of any one company’s actions is spread thinly across all industry members.

D) the products/services of rivals are strongly differentiated and buyers have high switching costs.

The rivalry among competing firms tends to be more intense

A) when demand for the product is growing slowly, buyers have low switching costs, and the actions of any one company to attract more customers and boost market share have strong direct impact on their rivals.

B) when the products/services of rival sellers are strongly differentiated and buyer demand is strong.

C) when rivals are relatively content with their market position.

D) when there are so many industry rivals that the impact of any one company’s actions is spread thinly across all industry members.

E) the smaller the number of firms in the industry and the more unequal their market shares.

Which of the following is not among the factors that affect whether competitive rivalry among participating firms is strong, moderate, or weak?

D) Whether industry driving forces are strong or weak

A) Whether the products of rival sellers are strongly or weakly differentiated

B) Whether demand for the industry’s product is growing rapidly or slowly

C) The degree to which rivals are satisfied with their current market position

E) Whether industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales and whether one or two rivals have particularly powerful strategies

Rivalry among competing sellers tends to be more intense when

C) several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position.

A) competitors are very unequal in size and capability, such that small competitors must really scramble to even survive.

B) buyer switching costs are high and market demand is growing rapidly.

D) the products of rival sellers are strongly differentiated.

E) there are fewer than 5 competitors and their products are strongly differentiated.

The competitive force of rival firms’ jockeying for better market positions, higher sales and market shares, and competitive advantage

D) tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders.

A) is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies.

B) is typically a weaker competitive force than is the threat of entry of new rivals.

C) is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales.

E) is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.

In analyzing the strength of competition among rival firms, an important consideration is

B) the diversity of competitors in terms of visions, strategic intents, objectives, strategies, resources and countries of origin.

A) the potential for buyers to exercise strong bargaining power.

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.

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 2 strategic groups.

B) competitors are diverse in terms of visions, strategic intents, objectives, strategies, resources 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.

E) industry conditions tempt industry members to use price cuts or other competitive weapons to boost unit sales.

In which one of the following instances is rivalry among competing sellers not more intense?

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

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

Which of the following is generally not considered as a barrier to entry?

B) Sizable capital requirements and an array of regulatory requirements

C) Strong buyer loyalty to existing brands

D) Sizable economies of scale in production

E) Difficulties in gaining access to technological know-how

Potential entrants are more likely to be deterred from actually entering an industry when

A) incumbent firms have previously been 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.

Competitive pressures associated with the threat of entry are greater when

E) All of these conditions heighten the competitive pressures associated with fresh entry into the industry.

A) incumbent firms are unable or unwilling to strongly contest the entry of newcomers.

B) newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist.

C) entry barriers are relatively low and buyer demand for the product is growing fairly rapidly.

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.

Which one of the following does not intensify the competitive pressures associated with the threat of entry?

B) When industry members are struggling to earn good profits

A) When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers

C) When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly

D) When 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) When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

Which one of the following increases the competitive pressures associated with the threat of entry?

E) When newcomers can expect to earn attractive profits

A) When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers

B) When buyers have a high degree of loyalty to the brands and product offerings of existing industry members

C) When buyer demand for the product is growing fairly slowly

D) When few outsiders have the expertise and resources to hurdle whatever entry barriers exist

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 is characterized by the lack of sizable scale economies and learning/experience curve effects.

C) the industry’s market growth is rapid.

D) there are more than 2 entry barriers.

E) buyers have little loyalty to the brands and product offerings of existing industry members.

Competitive pressures stemming from the threat of entry are weaker when

C) the industry outlook is risky or uncertain.

A) there are fewer than 20 potential entry candidates and more than 10 firms already in the industry.

B) there are more than 3 entry barriers.

D) incumbent firms have little ability to leverage distributors, dealers, and/or retailers to retain their business.

E) the nature of the industry entails few scale economies.

The best test of whether potential entry is a strong or weak competitive force is

E) to ask if the industry’s growth and profit prospects are strongly attractive to potential entry candidates.

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.

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?

C) Coca-Cola as a substitute for Pepsi

A) A salad as a substitute for French fries

B) Wireless phones as a substitute for wired telephones

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

The competitive pressures from substitute products tend to be stronger when

A) buyers are relatively comfortable with using substitutes and the costs to buyers of switching over to the substitutes are low.

B) there are more than 10 sellers of substitute products.

C) the quality and performance of the substitutes is well above what buyers need to meet their requirements.

D) buyers have high psychic costs in severing existing brand relationships and establishing new ones.

E) demand for the industry’s product is not very price sensitive.

In which of the following instances are industry members not subject to stronger competitive pressures from substitute products?

B) Buyers are dubious about using substitutes.

A) The costs to buyers of switching over to the substitutes are low.

C) The quality and performance of the substitutes is well matched to what buyers need to meet their requirements.

D) Buyer brand loyalty is weak.

E) Substitutes are readily available at competitive prices.

Industry rivals tend to experience weak competitive pressures from substitute products when

D) buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the performance they deliver.

A) the available substitute products are weakly differentiated from one another.

B) the buyers of the industry’s products are few in number and they have substantial amounts of leverage with sellers.

C) rival sellers experience strong bargaining power from both suppliers and influential customers.

E) the producers of substitute products are all pursuing strategies to strongly differentiate their products on the basis of quality and product performance.

Just how strong the competitive pressures are from substitute products depends on

B) whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.

A) whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently.

C) whether the available substitutes are products or services.

D) whether the producers of substitutes have ample budgets for new product R&D.

E) the speed with which buyer needs and expectations are changing.

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of

D) whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.

A) whether the profits of suppliers are relatively high or low.

B) the number of suppliers that each seller/industry member purchases from on average.

C) how aggressively rival industry members are trying to differentiate their products.

E) whether the prices of the items being furnished by the suppliers are rising or falling.

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 or whether ample supplies are readily available from several different suppliers.

B) whether suppliers self-manufacture what they supply or source their items from other manufacturers.

C) the industry’s position in the growth cycle.

D) whether technological change in the businesses of suppliers is rapid or slow.

E) whether the needs and expectations of buyers of the industry product are changing slowly or rapidly.

The bargaining leverage of suppliers is greater when

A) there are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small.

B) industry members incur low costs in switching their purchases from one supplier to another.

C) industry members purchase in large quantities and thus are important customers of the suppliers.

D) there is extensive seller-supplier collaboration.

E) the supplier industry is composed of a large number of relatively small suppliers.

In which one of the following instances are the competitive pressures that industry members experience in their dealings with suppliers not weakened?

E) When the items purchased from suppliers are in short supply

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 buying firms purchase in large quantities and thus are important customers of the suppliers

D) When the item being supplied is a commodity

Supplier bargaining power is weaker when

A) good substitute inputs exist or new ones emerge.

B) the cost of switching from one supplier to another is high.

C) suppliers furnish a critical part or component.

D) buying firms are looking for suppliers with good just-in-time supply capabilities.

E) a few large suppliers are the primary sources of a particular item.

Which one of the following is not a factor that affects the strength of supplier bargaining power?

C) Whether industry members are struggling to make good profits because of slow-growing market demand

A) Whether needed inputs are in ample supply and are readily available from several different suppliers

B) Whether industry members are a strong threat to integrate backward into the business of suppliers and self-manufacture their own requirements

D) Whether the costs of industry members to switch their purchases to alternative suppliers are high or low

E) Whether the item being supplied is a commodity or is highly differentiated from supplier to supplier

Which one of the following is not a factor in causing supplier bargaining power to be relatively strong?

C) The input being supplied is a commodity.

A) The inputs needed from suppliers are in short supply.

B) Suppliers are a strong threat to integrate forward into the business of industry members.

D) The input being supplied significantly enhances the quality or performance of the products of industry members.

E) There are only a few suppliers of the input.

When one or more industry members have unusually effective and mutually advantageous partnerships with their suppliers,

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.

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.

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% or more of total cost.

Which one of the following is not a reason why industry members are often motivated to enter into collaborative partnerships with key suppliers?

A) To reduce the costs of switching suppliers

B) To speed the availability of next-generation components

C) To enhance the quality of parts and components being supplied and reduce defect rates

D) To squeeze out important cost savings for both themselves and their suppliers

E) To reduce inventory and logistics costs

Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of

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

A) the speed with which general economic conditions and interest rates are changing.

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.

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on

E) whether demand-supply conditions represent a buyer’s market or a seller’s market.

A) whether most buyers possess roughly equal or varying degrees of bargaining power and leverage.

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.

STR CH3

Quiz

•

Business

•

Practice Problem

•

Hard

Naif Alharbi

Used 3+ times

FREE Resource

Student preview

98 questions

Show all answers

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

A company’s “macroenvironment” refers to

A) the industry and competitive arena in which the company operates.

B) general economic conditions plus the factors driving change in the markets where a company operates.

C) all the relevant forces and factors outside a company’s boundaries–general economic conditions, population demographics, societal values and lifestyles, technological factors, governmental legislation and regulation, and closer to home, the industry and competitive arena in which it operates.

D) the competitive market environment that exists between a company and its competitors.

E) the dominant economic features of a company’s industry.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which one of the following is not part of a company’s macroenvironment?

A) Conditions in the economy at large

B) Population demographics and societal values and lifestyles

C) Technological factors and governmental regulations and legislation

D) The industry and competitive environment arena in which the company operates

E) The company’s resource strengths, resource weaknesses, and competitive capabilities

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry?

A) How many companies in the industry have good track records for revenue growth and profitability?

B) What strategic moves are rivals likely to make next?

C) What are the key factors for future competitive success?

D) Does the outlook for the industry present the company with sufficiently attractive prospects for profitability?

E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Thinking strategically about industry and competitive conditions in a given industry involves evaluating such considerations as

A) the forces driving change in the industry.

B) the dominant economic features of the industry in which the company operates.

C) the kinds of competitive forces industry members are facing and the strength of each competitive force.

D) the key factors influencing future competitive success in the industry.

E) All of the above.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is not a factor to consider in identifying an industry’s dominant economic features?

A) Market size and growth rate

B) The extent of backward and forward integration and buyer needs and requirements

C) Whether the products or services of rival fi rms are becoming more or less differentiated

D) Strength of driving forces and competitive forces

E) The pace of technological change, scale economies and experience curve effects, and product innovation

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is not a relevant consideration in identifying an industry’s dominant economic features?

A) Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply conditions

B) The extent to which economies of scale and learning/experience curve effects are present

C) How many strategic groups the industry has and which ones are most profitable and least profitable

D) The number and sizes of buyers, the number of rivals, and the pace of product innovation

E) The prevalence of vertical integration and the pace of technological change

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The state of competition in an industry is a function of

A) the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry.

B) competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products.

C) competitive pressures associated with the threat of new entrants into the marketplace.

D) competitive pressures associated with the bargaining power of suppliers and customers.

E) All of these.

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