Chapter 3 The External Environment

1. The need to invest large financial resources in order to compete creates

A) increased supplier power

B) increased buyer power

C) increased jockeying for position

D) a barrier to entry

2. Which one of the following is NOT a tactic used by competitors when they jockey for position?

A) Price competition

B) Reduced advertising

C) Advertising slugfests

D) Product introduction

3. Which of the following is NOT a major barrier to entry?

A) Economies of scale

B) Product differentiation

C) Market breadth

D) Cost disadvantages independent of size

4. Which of the following is a factor that does NOT foster brand identification?

A) Advertising

B) Customer service

C) Product differences

D) Price

5. The learning curve effect is an example of which barrier to entry?

A) Cost disadvantages independent of size

B) Product differentiation

C) Economies of scale

D) Government policy

6. The definition of an industry's boundaries is important because

A) It has to be included in the mission statement

B) It helps executives determine the arena in which their firm is competing

C) It has to be reported to stockholders

D) It helps set the prices for the firm's products.

7. Defining industry boundaries is a very difficult task because

A) industry evolution creates industries within industries.

B) industries are becoming very narrow in scope.

C) industries do not evolve over time.

D) industries remain static over time.

8. A firm's external environment includes a remote sector and an immediate task sector. The remote sector includes which of the following categories?

A) Political, technological, economic and social

B) Political, union activity, economic and technological

C) State government, production, social and economic

D) Mission, company profile and competition

E) Ecological and economic only

9. Three factors are mentioned which affect a firm's access to needed personnel. One of these factors is:

A) geographic location

B) employee benefits

C) national employment rates

D) availability of skills

E) employee demographics

10. A valuable result of task environment analysis with respect to geographic, demographic, psychographic and buyer-behavior factors is called:

A) market share analysis

B) customer profile

C) competitive edge

D) consumer/surveys

E) marketing consultation

11. When we consider the level of disposable income, we are normally considering:

A) technological factors

B) economic factors

C) political factors

D) social factors

E) modernity factors

12. The considerations involving the beliefs, values, attitudes and opinions of those in a firm's environment

A) social factors

B) personal factors

C) economic factors

D) political factors

E) modernity factors

13. Defining the industry's boundaries is important to management because it:

A) focuses on the firm's competitors

B) determines company profits

C) helps determine if goals are ecological

D) determines company's costs

E) expresses firm's culture

14. Access to distribution channels is a major source of which competitive force?

A) Bargaining power of buyers

B) Threat of entry

C) Threat of substitute products

D) Bargaining power of suppliers

E) Rivalry among existing firms

15. Economies of scale in an industry refers to:

A) savings that companies within the industry achieve due to increased volume

B) declining average short run costs per unit

C) improved contractual agreements with suppliers in the near term

D) decreased barriers to entry to new firms attempting to enter the industry

E) as production increases so do costs per unit

16. Awareness of technological changes in its industry helps the firm to:

A) interpret new regulations

B) act slowly and carefully

C) exploit new markets

D) forecast social changes

E) avoid acting environmentally safe.

17. In considering the competition's profile, a firm would NOT be concerned with which of the following?

A) Market share and breadth of product line

B) Facility location and production capacity

C) Financial position and caliber of personnel

D) Salary of the chief executive and board of directors

E) Research and development advantages

18. A firm can more accurately forecast both its long- and short-term growth and profit potential by developing its:

A) competitor profile

B) financial position

C) technological innovation

D) vendor profile

E) computer facilities

19. Which of the following can limit or even foreclose entry to industries with such controls as license requirements?

A) Equal opportunity employer

B) Federal trade commission

C) Government policy

D) Securities and exchange commission

E) Drug enforcement administration

20. Collectively, competitive forces determine the ultimate:

A) growth of a firm

B) survival of a firm

C) profitability of a firm

D) viability of a firm

E) visibility of a firm