Exam 3: Evaluating a Companys External Environment

A) Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals
B) Successful introduction of innovative new products or new ways to market products
C) An increase in the prices of substitute products
D) Decisions on the part of 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

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A) consists of those industry members that are growing at about the same rate and have similar product line breadth.
B) includes all rival firms having comparable profitability.
C) is a cluster of industry members with similar competitive approaches and market positions in the market.
D) consists of those firms whose market shares are about the same size.
E) is made up of those firms having comparable profit margins.

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A) incumbent firms are willing and able to be 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.

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A) determining the industry outlook for future profitability.
B) determining which firms in the industry have a competitive advantage and how they got their advantage.
C) determining the overall strength of the five competitive forces.
D) constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group to determine the overall attractiveness of all the strategic groups.
E) using value chain analysis to determine the relative cost positions of rival firms and to learn who the industry's low-cost producer is.

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A) where on the map is the best place to be and why.
B) which companies/strategic groups are destined to prosper because of their positions.
C) which companies/strategic groups seem destined to struggle.
D) what accounts for why some parts of the map are better than others.
E) where on the map is the easiest position to shift from to a more favorably situated position.

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Competitive pressures from buyers decrea...

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A) limit supplier bargaining power.
B) enhance supplier bargaining power.
C) enhance the quality of parts and components being supplied, and in effect reduce defect rates.
D) provide important cost savings for the collaborative supplier-seller relationship.
E) limit the supply of products and/or services.

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A) the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups.
B) competitors are diverse in terms of long-term directions, objectives, strategies, and countries of origin.
C) strong companies outside the industry have acquired weak firms in the industry and are launching aggressive moves to transform the acquired companies into strong market contenders.
D) one or two rivals have particularly powerful and successful strategies to grow the business, attract and retain buyers, and develop a sustained competitive advantage.
E) industry conditions attract industry members to use price cuts or other competitive weapons to boost total sales volume and market share.

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A) whether the profits of suppliers are relatively high or low.
B) the average number of suppliers that each seller/industry member purchases from.
C) how aggressively rival industry members are trying to differentiate their products.
D) whether demand for supplier products is high and they are in short supply.
E) whether the prices of the items being furnished by the suppliers are rising or falling.

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A) The industry's growth potential and whether competitive pressures will likely grow stronger or weaker, and whether strong competitive forces are squeezing industry profitability to subpar levels
B) Whether the company occupies a stronger market position than rivals
C) Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces
D) The severity of the macro-environment problems confronting the industry
E) Whether the industry's product is strongly or weakly differentiated

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A) The costs to buyers of switching over to the substitutes are low.
B) Buyers are dubious about using substitutes.
C) The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements.
D) Buyer brand loyalty is weak.
E) Substitutes are readily available at competitive prices.

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A) those associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry.
B) those companies in other industries attempting to win buyers over to their substitute products.
C) those associated with the threat of new entrants into the marketplace.
D) those associated with the bargaining power of suppliers and customers.
E) those associated with environmental factors such as water shortages.

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A) The power and influence of industry driving forces
B) The bargaining power of suppliers and seller-supplier collaboration
C) The threat of new entrants into the market
D) The attempts of companies in other industries to win customers over to their own substitute products
E) The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry

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A) Some buyers are a threat to integrate backward into the business of sellers and become an important competitor.
B) Buyers are small and numerous relative to sellers.
C) Buyers have considerable discretion over whether and when they purchase the product.
D) Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs.
E) The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.

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A) try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly.
B) consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage.
C) consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak.
D) consider what it will take to overtake the company with the industry's overall best strategy.
E) focus their attention on what it will take to capitalize on the impacts of the industry's driving forces.

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Threat of entry is a stronger force when...

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A) are subject to the same driving forces.
B) place about the same emphasis on various distribution channels.
C) use the same key success factors to differentiate their products.
D) pursue essentially identical strategies and have similar market positions.
E) pursue varying distribution channels and product attributes, and have customer service attributes that differentiate them in the marketplace.

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Rivalry among competing sellers increase...

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