Chapter 2—The External Environment: Opportunities, Threats, Competition, and Competitor Analysis

| September 29, 2018

1. According to the Chapter 2 Opening Case on
BP, in response to the Deepwater Horozon oil spill, the company should expect
increased scrutiny coming from which of the following segments of the general
environment?

a.

Political/legal.

b.

Global.

c.

Technological.

d.

Sociocultural.

2. As noted in the Chapter 2 Opening Case, gas
drilling and fracturing have dramatically increased gas reserves and may
provide a substitute for other carbon dioxide producing products such as
coal. This change illustrates the effect
of the _____________segment of the general environment.

a.

economic

b.

political/legal

c.

technological

d.

industry

3. The recent joint ventures formed by BP with
Russian and Indian partners show the importance of the ___________ segment of the general environment that BP
and other integrated oil firms have to deal when contending with scarce
resources (Chapter 2 Opening Case).

a.

political/legal

b.

physical

c.

demographic

d.

global

4. Acme Valves, Inc., has been a successful
player in the oil field supply industry in the last 15 years. Acme maintained
its traditional strategy and product characteristics over this time period.
But, Acme has experienced declines in sales and profits over the last four
quarters. The CEO of Acme should

a.

continue with the
proven strategy because its returns over the long run are important.

b.

focus on improving
efficiency of production and cost control.

c.

conduct an analysis
of the external environment.

d.

immediately begin
making incremental adjustments to the traditional business strategy in an
effort to improve sales.

5. The three parts of the external environment
which affect a firms strategic actions are

a.

economic,
political, and legal

b.

general, industry,
and competitor

c.

industry, business,
and product

d.

local, national,
and global

6. The ____ environment is composed of
dimensions in the broader society that can influence an industry and the firms
within it.

a.

general

b.

competitor

c.

sociocultural

d.

industry

7. The environmental segments that comprise the
general environment typically will NOT include

a.

demographic
factors.

b.

sociocultural
factors.

c.

substitute products
or services.

d.

technological
factors.

8. Aardvark Corp. has three products. Two
products together make up two-thirds of revenues and constitute 50 percent of
company profits. Aardvark’s third product makes up one third of sales. With
profitability far above the industry average, this product is responsible for
one half of Aardvark’s profits. Which of the following statements regarding
assessment of the general environment is accurate for Aardvark?

a.

The company should
monitor the general environment for changes that might effect the revenue of
all products.

b.

The company should
monitor the general environment for changes that might effect the
profitability of the most profitable products.

c.

The company should
monitor the general environment for changes that might effect the
profitability of all products.

d.

The company should
monitor the general environment for changes that might effect the revenue and
profitability of all products.

9. Which of the following is NOT an activity
used in the external environmental analysis process?

a.

Scanning

b.

Decrypting

c.

Monitoring

d.

Assessing

10. Environmental scanning would be most important for which of the
following organizations?

a.

a provider of
hospice services for the terminally ill

b.

a web design
company catering to small businesses

c.

a neighborhood
sewer and water utility

d.

a manufacturer of
household linens

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