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CHAPTER 4 - The organisational ecosystem: External environmental

Total questions: 32

Worksheet time: 32mins

Name
Class
Date
1.

ABC Furnishings is a mid-sized company that manufactures low-cost wooden furniture. The industry has many small manufacturers offering very similar products. Buyers can easily switch between brands as the products are mostly standardised. ABC purchases wood from a small number of large timber suppliers that dominate the market.

Which ONE of Porter’s Five Forces is likely to be the apply for ABC?

a)

Low threat of new entrants

b)

High buyer bargaining power

c)

Low supplier bargaining power

d)

Low threat of substitutes

2.

FreshBrew Co. is a company that supplies ground coffee to supermarkets. Several new coffee brands have recently entered the market through online channels, offering cheaper products with free delivery. FreshBrew is concerned that customers may switch due to these competitive online alternatives. Coffee beans are sourced from many farms around the world, giving FreshBrew multiple supplier options.

Which ONE of the following best describes FreshBrew's industry environment?

a)

High threat of substitutes

b)

High supplier power

c)

High barriers to entry

d)

Low buyer power

3.

TechFix Solutions provides IT repair and maintenance services in a region where only a handful of similar service companies exist. Customers typically sign 2-year service agreements, and switching providers incurs a penalty fee. However, qualified technicians are scarce, and most skilled workers demand higher wages, giving them strong negotiating power.

Which ONE of Porter’s Five Forces is strongest in this industry

a)

High buyer bargaining power

b)

High supplier bargaining power

c)

High threat of new entrants

d)

High threat of substitutes

4.

Under Porter’s five forces model, which ONE of the following would be evidence of HIGH supplier power?

a)

Customers are relatively small compared to the supplier

b)

Low probability of forward integration by suppliers

c)

Large numbers of suppliers

d)

Supplier’s product is not differentiated

5.

SkyDrip, a premium bottled water company, notices that customers are increasingly buying reusable metal bottles instead of single-use plastic bottled water. The metal bottle trend is driven by sustainability concerns.

Which type of competitor does the reusable metal bottle represent for SkyDrip?

a)

Brand competitor

b)

Industry competitor

c)

Form competitor

d)

Generic competitor

6.

TechLens, a mid-size camera manufacturer, discovers that its rival PixelPro is investing heavily in low-cost compact cameras for students. PixelPro’s financial reports show strong demand from the education sector, and the company’s new mission statement emphasises “affordable digital photography for all”.

Which competitor response profile about PixelPro is MOST accurate?

a)

Laid back

b)

Selective

c)

Tiger

d)

Stochastic

7.

GreenRide, an electric-scooter startup, observes that competitor EcoMove has launched products in three new cities and is offering subscription models rather than one-off purchases.

Which competitor analysis element is being examined her

a)

Objectives

b)

Strategy

c)

Assumptions

d)

Resources & competencies

8.

BookNook, an online bookstore, notes that its competitor ReadFast ignores the rise of audiobook platforms and continues investing only in printed books. ReadFast believes digital products are a passing trend.

What assumption does ReadFast most likely hold?

a)

The firm has strong digital competencies

b)

The market will continue valuing physical books

c)

The firm's objectives are expanding

d)

Competitors have aggressive response profiles

9.

FreshBite, a new organic snack brand, launches a marketing campaign. Their main competitor NutriMax reacts immediately with price cuts, new promotions, and expanded social media activity.

Which response profile best describes NutriMax?

a)

Laid back

b)

Selective

c)

Tiger

d)

Stochastic

10.

AutoVision, a manufacturer of driver-assist camera systems, discovers that its competitor SafeDrive has invested heavily in AI engineers, advanced sensor technology, and machine-learning capabilities.

Based on competitor analysis, which area of SafeDrive is being examined?

a)

Competitor objectives

b)

Competitor assumptions

c)

Resources and competencies

d)

Competitor strategy

11.

FreshGlow Cosmetics, a skincare company, operates in a country where the domestic market has reached full saturation. Sales growth has stalled, and shareholders are pressuring management to improve return on capital employed. Meanwhile, rising middle-class income in several Asian countries presents strong demand for premium skincare.

Which is the MOST likely strategic reason for FreshGlow to enter these foreign markets?

a)

Economies of scale

b)

challenge to the traditional home cultural

c)

Market development

d)

Risk reduction

e)

Management opportunity

12.

BuildPro Construction Tools plans to expand into a developing country. The management team discovers that skilled labour is limited, local competitors operate at very low cost, and exchange rates fluctuate unpredictably. The political environment is relatively unstable, with frequent policy changes.

Which risks are BuildPro MOST likely to face?

a)

Marketing mix adaptations

b)

Varying cost structures

c)

Political involvement

d)

Entry requirements?

e)

Different competitive levels

13.

TasteWorld Foods, a UK snack manufacturer, plans to launch its products in South America. Market research reveals distinct flavour preferences, strong cultural attachment to local snacks, and differing advertising norms.

Which of the following adaptations will TasteWorld MOST likely need to make

a)

Uniform global marketing mix to reduce cost

b)

No changes because consumer needs are similar globally

c)

Modifications to product flavour, packaging, and promotion

d)

A reduction in cultural research to minimise expenses

14.

BioPharm UK, a biotechnology company, is deciding whether to expand into Country A. Country A offers low-cost unskilled labour, inexpensive land, and basic manufacturing infrastructure. However, it lacks scientific universities, advanced research facilities, and experienced lab technicians.

BioPharm operates in an industry requiring advanced genetic engineering, high-level scientific knowledge, and strong R&D talent.

According to Porter’s Diamond, how should BioPharm evaluate Country A?

a)

Country A provides advanced factor conditions suitable for innovation

b)

Country A’s basic factor conditions are strong, but lack of advanced factors limits suitability

c)

Country A’s strong domestic rivalry compensates for its weak scientific base

d)

Country A’s supportive government policies override factor condition shortages

15.

TechVision Japan, a producer of home robotics, competes in a domestic market where customers expect extremely high product quality, speed, and precision. Japanese consumers frequently demand upgrades and advanced features, forcing TechVision to innovate continuously.

As TechVision considers entry into less sophisticated markets in Africa and Eastern Europe, which advantage from Porter’s Diamond is MOST relevant?

a)

High domestic demand conditions prepare the firm to outperform competitors abroad

b)

Strong government subsidies directly determine international success

c)

Weak supplier industries encourage global expansion

d)

Basic labour factors will give TechVision a cost advantage abroad

16.

StyleLux Italy, a luxury leather handbag manufacturer, is evaluating whether to expand production into Country B. Italy currently provides StyleLux with access to world-class leather suppliers, design schools, fashion houses, and specialised machinery manufacturers that contribute to high product quality.

Country B, however, has no strong supplier network, limited leather expertise, and minimal fashion industry infrastructure.

Which statement best reflects Porter’s Diamond?

a)

StyleLux should move because supplier networks are not important in global competition

b)

Italy’s strong related and supporting industries give StyleLux an advantage that Country B cannot easily replicate

c)

Country B’s lack of supplier networks will create a cost advantage

d)

Country B’s weak infrastructure can be compensated by basic factor conditions

17.

AutoTech Germany, a vehicle manufacturer, operates in a domestic market with intense competition among firms such as BMW, Mercedes, and Audi. This rivalry has historically pushed the company to innovate, increase efficiency, and enhance product quality.

If AutoTech expands internationally, which aspect of Porter’s Diamond MOST likely explains its global competitiveness?

a)

Domestic rivalry created strong capabilities that enhance international performance

b)

Low competition in Germany reduces the need for innovation

c)

Germany’s basic labour factors are the main drivers of competitiveness

d)

Limited domestic competitors created a protected environment for growth

18.

MedTech Solutions, a medical equipment company, is selecting a country for manufacturing expansion. Country X offers:

  • Strong universities producing biomedical engineers

  • High demand for advanced medical devices

  • A cluster of related industries (electronics, plastics, precision tools)

  • Strong regulatory frameworks and intense domestic rivalry

  • Government grants for medical technology investment

Based on Porter’s Diamond, which statement is MOST accurate?

a)

Country X is highly attractive due to strength in all four Diamond elements plus government support

b)

Weak domestic rivalry makes Country X unsuitable

c)

Country X’s demand conditions are irrelevant in global competitiveness

d)

Lack of skilled labour makes Country X high-risk for expansion

19.

L Ltd is a small company which offers accountancy services to a range of clients. L is relatively new to the market and is considering undertaking formal environmental analysis.

Which of the following are purposes of L undertaking external environmental analysis? Select ALL that apply.

a)

Allows L to assess its competition

b)

Enables L to identify its resources

c)

Allows L to gain a deeper understanding of its market

d)

Enables L to understand its industry

e)

Helps L to meet its stakeholder needs

20.

Select criticism for PESTEL analysis? Select all that apply

a)

PESTEL analysis may quickly become irrelevant. This is particularly a problem in fast-moving industries, such as computing or mobile phones.

b)

The PESTEL analysis process is prone to bias.

c)

Managers to correctly identify and understand every environmental issue that might affect the organisation in the future. This problem is sometimes referred to as ‘bounded rationality’

d)

Failure to identify all environmental issues for the organisation.

21.

Q is an electrical appliance manufacturer and currently specialises in the manufacture of domestic vacuum cleaners. Q Operates in this market with four other companies. Each manufacturer similar products and sell similar volumes of vacuum cleaners each year. Q and its rivals own a large number of patents relating to the manufacture of vacuum cleaners. Q buys its raw materials through a number of small suppliers, as do its rivals.

From the information above, which ONE of the following forces from Porter’s Five Forces model would be classified as ‘high’?

a)

Threat of new entrants

b)

Power of suppliers

c)

Competitive rivalry

d)

Threat of substitutes

22.

Z plc is using Porter’s Five Forces model to examine the key aspects of the organisation’s industry that may impact upon strategy. It has identified the following issues:

  1. 1. One of Z’s customers is considering backwards integration of their supply chain.

  2. 2. Z plc and its rivals have secured exclusive agreements with all major distribution channels for their products.

  3. 3. Z has managed to achieve significant economies of scale in its manufacturing processes.

Select the correct porter's five forces factor/s. Select all that apply.

a)

Power of customers is high due to upstream integration by Z's customers.

b)

Z plc and its rivals has downstream integration. Hence, the bargaining power of customer is low.

c)

Due to Z's economies of scales, threat of new entries will be low.

d)

Due to z's economies of scales in its manufacturing process, bargaining power of suppliers is low.

e)

Power of customers is low due to upstream integration by Z's customers.

23.

X is a company offering its customers broadband internet access. It sells to both residential customers as well as businesses. X is considering a major investment in its IT systems, which it hopes will deliver a competitive advantage. The new systems will improve customer service levels, and reduce the cost of routine processes.

Although the investment will cost several million dollars, X expects payback to be very fast. In the short term, X expects that excellent customer service will be a core competence. However, X accepts that its competitors will ‘catch up’ within five years, making excellent customer service a threshold competence.

Advise X which THREE of the competitive forces in its industry will be affected by this investment.

a)

Threat of new entrants

b)

Competitive rivalry

c)

Threat of substitutes

d)

Power of buyers

e)

Power of suppliers

24.

H is a company that manufactures toys. Its core business has stayed constant for many years, allowing H to make reasonable profits. H’s managers have an excellent knowledge of the market and wider industry, having worked in H for many years, though the company has not undertaken formal external analysis for many years. One of H’s managers has been asked to undertake a PESTEL analysis for the business. Before he started, he has stated that he feels that the only possible threat to the organisation is changes to the national and international economy.

Which ONE of the following problems with PESTEL analysis is most likely to arise for H?

a)

Issues becoming outdated before the analysis can used

b)

Bounded rationality

c)

Bias in the issues chosen to be included in the analysis

d)

Failure to identify all environmental issues for the organisation

25.

WWW Ltd is a large company that sells paint and wallpaper through homeware retailers in Country X. WWW has several major competitors, each of whom is a similar size to WWW and offers a similar range of products. Due to the generic nature of the products they produce, WWW is unable to secure patents on any of their products. WWW sells its goods via several retailers, including BBB, which has a 52% share of the paint and wallpaper retail market in Country X. WWW has a one-year rolling contract with BBB to stock their products, though BBB is considering launching its own brand range of paint and wallpaper in the near future. WWW is uncertain of how this will affect their sales agreement with BBB.

Which ONE of the following statements relating to Porter's Five Forces model is correct in relation to WWW’s industry?

a)

It has high barriers to entry

b)

It has high supplier bargaining power

c)

It has high buyer bargaining power

d)

It has a high threat of substitutes

26.

Under Porter’s five forces model, which ONE of the following would be evidence of HIGH supplier power?

a)

Customers are relatively small compared to the supplier

b)

Low probability of forward integration by suppliers

c)

Large numbers of suppliers

d)

Supplier’s product is not differentiated

27.

Which of the following criticisms are raised against Porter’s Five Forces model? Select all may apply.

a)

It may encourage managers to view customers as opponents rather than partners.

b)

It focuses too heavily on sustainable competitive advantage and not enough on customer needs.

c)

It assumes that all five forces always increase industry profitability.

d)

It may distract managers from recognising the importance of collaboration with customers.

28.

Which of the following are characteristics or strategic considerations of the Introduction stage of the product life cycle? Select all may apply.

a)

High launch and marketing costs are likely.

b)

Competition is intense due to many established rivals.

c)

Price skimming may be used when demand is price‑inelastic.

d)

Penetration pricing may be used when gaining market share is more important than rapid cost recovery.

e)

Products are mainly purchased by innovators.

29.

Which of the following are characteristics of the Growth stage of the product life cycle? Select all may apply

a)

Sales for the market as a whole increase.

b)

Competition levels decrease as weaker firms exit the market.

c)

New competitors enter the market to challenge the pioneer.

d)

Prices often fall due to economies of scale and competitive pressure.

e)

Demand becomes more sophisticated

30.

Which of the following are characteristics of the Maturity stage of the product life cycle? Select all may apply

a)

Market growth slows or stops.

b)

Price sensitivity increases

c)

Demand reaches saturation, making market share gains difficult.

d)

Competition levels fall as weaker firms exit the market.

e)

Firms focus on defensive strategies to protect their position.

31.

Which of the following are characteristics of the Decline stage of the product life cycle? Select all may apply

a)

Competition reduces as firms exit the market.

b)

Prices fall as customers expect cheaper options.

c)

Investment is increased to stimulate new demand.

d)

Firms may adopt harvesting or divestment strategies

e)

There may still be profitable niches even after overall industry decline.

32.

ABC is a manufacturer of portable communications equipment. The equipment is designed to be used in toxic environments. ABC has identified four main competitors and wishes to classify them.

A. A firm which makes a similar product, but for a different market segment (for the nuclear industry).

B. A firm which creates a similar product to ABC and tries to sell it to ABC’s customers

C. A firm which competes for the same income as ABC (e.g. safety equipment).

D. A firm which attempts to meet the same needs as ABC, but with a different product (e.g. flare guns)

a)

A. Industry.

B. Brand

C. Generic

D. Form

b)

A. Brand.

B. Industry

C. Generic

D. Form

c)

A. Industry.

B. Generic

C. A. Brand.

D. Form

d)

A. Form.

B. Brand

C. Generic

D. Industry