Chapter 2

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True/False Questions

1.Environmental scanning and competitor intelligence provide important inputs for forecasting activities.

Answer: True

2.Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process.

Answer: True

3.Competitor Intelligence (CI) is a tool that can provide management with “early warnings” about both threats and opportunities.

Answer: True

4.Competitor Intelligence gathering is no different from spying.

Answer: False

5.Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain.

Answer: False

6.Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions.

Answer: False

7.Scenario planning is usually concerned with short-term forecasts.

Answer: False

8.The same environmental trend can often have very different effects on firms within the same industry.

Answer: True

9.Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry.

Answer: False

10.Growth in the United States' population has been rather evenly distributed among major geographic regions.

Answer: False

11.A major sociocultural trend in the United States is the rapid decline in the number of retirees.

Answer: False

12.Technological innovations can create entirely new industries and alter the boundaries of industries.

Answer: True

13.There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators.

Answer: False

14.Porter's five forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses.

Answer: False

15.Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential.

Answer: True

16.In some industries, high switching costs can act as an important barrier to entry.

Answer: True

17.Industries characterized by high economies of scale typically attract fewer new entrants.

Answer: True

18.The power of a buyer group is increased if the buyer group has less concentration than the supplier group.

Answer: False

19.Buyer power tends to be higher if suppliers provide undifferentiated or standard products.

Answer: True

20.Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers.

Answer: False

21.The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration.

Answer: True

22.The more attractive the price/performance ratio of substitute products, the more tightly it constrains an industry's ability to charge high prices.

Answer: True

23.Rivalry is most intense when there are high exit barriers and high industry growth.

Answer: False

24.Five forces analysis implicitly assumes a zero sum game; a perspective that can be shortsighted.

Answer: True

25.Michael Porter's Five Forces Analysis is a dynamic tool for analyzing industry attractiveness.

Answer: False

26.Complementary products are products that typically have a negative impact on the value of a firm's own products or services.

Answer: False

27.Competition tends to be more intense among firms within a strategic group than between strategic groups.

Answer: True

28.The use of the strategic groups concept is generally not helpful in charting the future directions of firms' strategies.

Answer: False...
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