CHAPTER 3 External Environmental Analysis

What does the acronym PEST stand for in the context of the general environment?

• Political, Economic, Social, Technological

• Political, Economic, Social, Taxation

• Political, Environmental, Social, Technological

• Political, Economic, Social, Trade

Which of the following is NOT a factor in the general environment?

• Economic factors

• Technological factors

• Socio-cultural factors

• Market share

What is the primary purpose of conducting an external environmental analysis?

• To evaluate employee performance

• To identify internal strengths

• To understand opportunities and threats

• To assess financial stability

Which of the following factors is included in the socio-cultural environment?

• Demographic factors

• Inflation rate

• Corporate tax policies

• Trade deficits

What is a key characteristic of the industry environment?

• It includes macroeconomic factors

• It is static and unchanging

• It affects all firms equally

• It directly affects competitive responses

Which of the following is a barrier to entry in an industry?

• High consumer demand

• High customer loyalty

• Low production costs

• Government regulations

What does the term 'economies of scale' refer to?

• Increased production costs with volume

• Decreased per-unit costs with increased production

• Higher prices due to competition

• Lower demand for products

Which of the following is a threat to existing firms in an industry?

• New entrants

• High customer loyalty

• Low production costs

• Stable market conditions

What is the effect of high bargaining power of buyers on a firm?

• Higher market share

• Lower prices for products

• Reduced competition

• Increased profitability

Which of the following factors can create a competitive advantage for a firm?

• High employee turnover

• Low product differentiation

• Weak supplier relationships

• Strong brand loyalty