Question 1

How did Virgin America enter the airline industry despite the industry's notoriously low profitability?

Accepted Answer

Indeed, despite notoriously low industry...

Question 2

Discuss the political and legal environments in the PESTEL model.

Accepted Answer

The political environment describes the ...

Question 3

Which of the following best illustrates a firm operating in a monopolistically competitive industry?

Accepted Answer

A)   A foreign exchange company sells currencies of different countries at market prices as it cannot differentiate its products from its competitors'.
B)   A chain of multiplex theaters, along with its competitor, owns 80 percent of the multiplex market share.
C)   An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers.
D)   A railway company owned by the government of New Darvland, owns 100 percent of the railway transport in the country.E) None of the above
F) B) and C)

Question 4

In the _____ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Accepted Answer

A)   PESTEL framework
B)   VRIO framework
C)   five forces model
D)   value chain analysisE) A) and B)
F) A) and D)

Question 5

How do economies of scale and high switching costs act as entry barriers in an industry?

Accepted Answer

Economies of scale are cost advantages t...

Question 6

In which of the following industry competitive structures do selling firms have the lowest pricing power?

Accepted Answer

A)   Monopolistic competition
B)   Monopoly
C)   Oligopoly
D)   Perfect competitionE) B) and D)
F) B) and C)

Question 7

Which of the following is a primary feature of the five forces model?

Accepted Answer

A)   It is concerned exclusively about the intensity of rivalry among direct competitors.
B)   It takes into account a firm's internal resources, capabilities, and core competencies.
C)   It helps managers determine the changing speed of an industry or the rate of innovation.
D)   It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.E) None of the above
F) A) and D) D

Question 8

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Accepted Answer

A)   Threat of new entrants will be low
B)   Bargaining power of suppliers will be high
C)   Availability of complements will be low
D)   Threat of substitute products and services will be highE) A) and B)
F) A) and C)

Question 9

In the 1950s, in response to extreme forms of nationalism and the resulting world wars that had devastated Europe, the first steps were taken to create a supra-national EU.In 1992, after almost 40 years of continued economic integration, peace, and prosperity, the European leaders initiated further steps toward political economic integration.Which of the following represents one of the steps the European leaders initiated?

Accepted Answer

A)   Creating a country called the United States of Europe
B)   Introducing a common currency
C)   Providing budgetary authority to all states of the EU
D)   Separating heavy industries such as coal and steelE) A) and B)
F) A) and C)

Question 10

Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?

Accepted Answer

A)   The competition in the industry is insignificant.
B)   The number of buyers in the industry is small.
C)   The firms can differentiate their product offerings.
D)   The entry barriers in the industry are extremely high.E) None of the above
F) All of the above

Question 11

Home Cart, Home Essentials, Good Store, and Price King are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases.All the four stores cater to the needs of highly price-sensitive customers.Thus, together Home Cart, Home Essentials, Good Store, and Price King form a _____.

Accepted Answer

A)   focus group
B)   command group
C)   strategic group
D)   cross-functional groupE) A) and B)
F) A) and C) C

Question 12

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE) in 2008?

Accepted Answer

A)   A strong threat of substitutes decreases the rivalry among existing competitors.
B)   All the five forces must work together to have a meaningful impact.
C)   Any of the five forces on its own, if sufficiently strong, can extract industry profitability.
D)   Competition must be defined more narrowly to remain confined to the industry's closest competitors.E) None of the above
F) All of the above

Question 13

How do interest rates affect a business?

Accepted Answer

A key macroeconomic variable for manager...

Question 14

Industry convergence is a process whereby:

Accepted Answer

A)   firms within the same industry start to satisfy different customer needs.
B)   formerly unrelated industries begin to satisfy the same customer need.
C)   excess capacity within an industry is reduced through horizontal mergers.
D)   firms within an industry start to target a narrow market segment.E) A) and D)
F) A) and B)

Question 15

Which of the following is a feature of a monopolistically competitive industry?

Accepted Answer

A)   Differentiated products
B)   High entry barriers
C)   No pricing power
D)   A single firmE) A) and B)
F) None of the above

Question 16

In an industry, the rivalry among existing competitors is high when:

Accepted Answer

A)   fixed costs are low and marginal costs are high.
B)   exit barriers are low.
C)   incumbent firms are highly committed to the business.
D)   industry growth is high.E) B) and C)
F) C) and D) C

Question 17

Economies of scale are cost advantages that accrue for firms with:

Accepted Answer

A)   high fixed costs.
B)   low employee turnover.
C)   larger output.
D)   high capital risks.E) All of the above
F) B) and D)

Question 18

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

Accepted Answer

A)   New auto companies create electric cars powered by simpler motors and gearboxes.
B)   New entrants in the automotive industry expect that incumbents will not or cannot retaliate.
C)   Car manufacturers require large-scale production in order to be cost-competitive.
D)   Few industrial products are as easy to build as cars powered by internal combustion engines.E) None of the above
F) All of the above

Question 19

In Porter's five forces model, competition is not defined as a firm's closest competitors.Elaborate on this statement.

Accepted Answer

In Porter's five forces model, competiti...

Question 20

While implementing strategic group mapping for the U.S.domestic airline industry, two strategic groups become apparent: low-cost, point-to-point airlines (Virgin Atlantic, Alaska Airlines, JetBlue, and Southwest Airlines) versus differentiated airlines using a hub-and-spoke system (American, Delta, and United) .Which of the following statements is true about these two strategic groups?

Accepted Answer

A)   Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that between American and Southwest airlines.
B)   American, United, and Delta airlines will be affected differently by Porter's five competitive forces.
C)   Alaska Airlines and Delta airlines will be affected by the external environment in very similar ways.
D)   Competitive rivalry between Virgin Atlantic and Delta airlines is likely to be higher than that between American, Delta, and United.E) B) and C)
F) All of the above

Exam 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

How did Virgin America enter the airline industry despite the industry's notoriously low profitability?

Correct Answer
verified
Indeed, despite notoriously low industry...
View Answer

Discuss the political and legal environments in the PESTEL model.

Correct Answer
verified
The political environment describes the ...
View Answer

Which of the following best illustrates a firm operating in a monopolistically competitive industry?

Correct Answer
verified

In the _____ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Correct Answer
verified

How do economies of scale and high switching costs act as entry barriers in an industry?

Correct Answer
verified
Economies of scale are cost advantages t...
View Answer

In which of the following industry competitive structures do selling firms have the lowest pricing power?

Correct Answer
verified

Which of the following is a primary feature of the five forces model?

Correct Answer
verified
D

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Correct Answer
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Correct Answer
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Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?

Correct Answer
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Correct Answer
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C

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE) in 2008?

Correct Answer
verified

How do interest rates affect a business?

Correct Answer
verified
A key macroeconomic variable for manager...
View Answer

Industry convergence is a process whereby:

Correct Answer
verified

Which of the following is a feature of a monopolistically competitive industry?

Correct Answer
verified

In an industry, the rivalry among existing competitors is high when:

Correct Answer
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C

Economies of scale are cost advantages that accrue for firms with:

Correct Answer
verified

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

Correct Answer
verified

In Porter's five forces model, competition is not defined as a firm's closest competitors.Elaborate on this statement.

Correct Answer
verified
In Porter's five forces model, competiti...
View Answer

Correct Answer
verified

Exam 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

How did Virgin America enter the airline industry despite the industry's notoriously low profitability?

Correct AnswerverifiedIndeed, despite notoriously low industry...View AnswerShow Answer

Discuss the political and legal environments in the PESTEL model.

Correct AnswerverifiedThe political environment describes the ...View AnswerShow Answer

Which of the following best illustrates a firm operating in a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

In the _____ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Correct AnswerverifiedShow Answer

How do economies of scale and high switching costs act as entry barriers in an industry?

Correct AnswerverifiedEconomies of scale are cost advantages t...View AnswerShow Answer

In which of the following industry competitive structures do selling firms have the lowest pricing power?

Correct AnswerverifiedShow Answer

Which of the following is a primary feature of the five forces model?

Correct AnswerverifiedD

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE) in 2008?

Correct AnswerverifiedShow Answer

How do interest rates affect a business?

Correct AnswerverifiedA key macroeconomic variable for manager...View AnswerShow Answer

Industry convergence is a process whereby:

Correct AnswerverifiedShow Answer

Which of the following is a feature of a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

In an industry, the rivalry among existing competitors is high when:

Correct AnswerverifiedC

Economies of scale are cost advantages that accrue for firms with:

Correct AnswerverifiedShow Answer

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

Correct AnswerverifiedShow Answer

In Porter's five forces model, competition is not defined as a firm's closest competitors.Elaborate on this statement.

Correct AnswerverifiedIn Porter's five forces model, competiti...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
Indeed, despite notoriously low industry...
View Answer

Correct Answer
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The political environment describes the ...
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Correct Answer
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Correct Answer
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Correct Answer
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Economies of scale are cost advantages t...
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Correct Answer
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Correct Answer
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D

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Correct Answer
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C

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A key macroeconomic variable for manager...
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Correct Answer
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Correct Answer
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Correct Answer
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C

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Correct Answer
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Correct Answer
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In Porter's five forces model, competiti...
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Correct Answer
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