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

| September 29, 2018

51. Suppliers are powerful when

a.

satisfactory
substitutes are available.

b.

they sell a
commodity product.

c.

they offer a
credible threat of forward integration.

d.

they are in a
highly fragmented industry.

52. In the airline industry, consolidation among fuel providers
serving airport facilities would be considered as ____ factor in the five
forces model of competition.

a.

a reduction of the
airlines’ abilities to enjoy economies of scale

b.

an increase in
switching costs because the airlines have no choice but to use jet fuel and
other oil products

c.

an increase in the
bargaining power of suppliers of a critical input

d.

an increase in the
intensity of rivalry among airlines for scarce resources

53. Blood banks are highly dependent on donors. In the terminology of
industry analysis, which statement of donors is accurate?

a.

Blood donors are
suppliers and are powerful due to the critical nature of what they provide to
the blood bank.

b.

Blood donors are
suppliers and are powerful due to their concentration relative to the blood
bank.

c.

Blood donors are
buyers and are not due to low switching costs needed to change to alternative
inputs.

d.

Blood donors are
buyers and are powerful due to the volume of blood needed.

54. The aircraft industry has long been dominated by two large
aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is
low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the
domestic airline industry?

a.

It will make the
airline industry more attractive because of decreased supplier power.

b.

It will make the
airline industry less attractive because of decreased supplier power.

c.

It will make the
airline industry more attractive because of increased supplier power.

d.

It will make the
airline industry more attractive because of a new entrant.

55. Golden Lotus, an exercise club targeting healthy individuals over
50, is located in a fast-growing city in the Southwest. Which of the following
factors that may have an effect on the success of Golden Lotus is the most
directly controllable by the company?

a.

the socio-cultural
environment

b.

the demographics of
the environment

c.

the economy of the
local area

d.

the power of the
customers/buyers

56. Buyers are powerful when

a.

there is a threat
of forward integration.

b.

they purchase a
small proportion of the supplier’s output.

c.

switching costs are
low.

d.

the buyers’
industry is fragmented.

57. The highest amount a firm can charge for its products is most
directly affected by

a.

expected
retaliation from competitors.

b.

the cost of
substitute products.

c.

variable costs of
production.

d.

customers’ high
switching costs.

58. The threat from substitutes is high when

a.

switching costs are
high.

b.

the substitute
product’s price is lower than the industry product’s price.

c.

the quality of the
substitute product is lower than the quality of the industry’s product.

d.

the substitute
product stimulates new process innovations within the industry.

59. The Chapter 2 Strategic Focus discussed the movement of media
content from paper, tape, and film to a digital world based on Internet
technology. From the perspective of the
five forces model, which force is most relevant here?

a.

buyers

b.

substitutes

c.

entry barriers

d.

suppliers

60. All of the following are forces that create high rivalry within an
industry EXCEPT

a.

numerous or equally
balanced competitors.

b.

high fixed costs.

c.

fast industry
growth.

d.

high storage costs.

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