Questions on Business Competitive Landscape

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1. A
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. Points Earned: 1.0/1.0

2. B
Driving forces analysis
A) involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces. B) identifies which strategic group is the most powerful. C) helps managers identify which industry member is likely to become (or remain) the industry leader and why. D) helps managers identify which key success factors are most likely to help their company gain a competitive advantage. E) helps managers identify which of the five competitive forces will be the strongest driver of industry change. Points Earned: 0.0/1.0

3. E
The best test of whether potential entry is a strong or weak competitive force is 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. E) to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates. Points Earned: 1.0/1.0

4. A
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. Points Earned: 1.0/1.0

5. B
Which of the following is most likely to qualify as a driving force? A) Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals B) Wildly successful introduction of innovative new products by one or more industry rivals that force other rivals to respond quickly or lose a major share of their customers to the innovating rival(s) C) An increase in the prices of substitute products

D) Decisions on the part the industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader E) Decisions by one or more outsiders not to attempt to enter the industry Points Earned: 1.0/1.0

6. C
Competitive pressures stemming from the threat of entry are weaker when 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.

C) the industry outlook is risky or uncertain.
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. Points Earned: 1.0/1.0

7. A
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...
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