Strategic Management and Business Policy Conceptual Part 3

60. The economic environment refers to a. the nature and direction of the economy in which a firm competes or may compete. b. the economic outlook of the world provided by the World Bank. c. an analysis of how the environmental movement and world economy interact. d. an analysis of how new environmental regulations will affect the U.S. economy. ANSWER: a 61. Which of the following would NOT be identified in an analysis of the economic portion of the general environment? a. the willingness of Chrysler's buyers to purchase large vehicles in light of an increase in oil prices b. the ability of Ford to issue new debt in light of its recent financial performance c. the ability of BMW's buyers to finance car purchases in light of a change in interest rates d. the willingness of GM buyers to purchase new vehicles in light of the threat of recession ANSWER: b 62. The political/legal segment of an environment represents a. the political preferences of different ethnic groups in the society. b. the technological values of different political entities in society. c. how organizations and governments mutually try to influence each other. d. the system of regulations governments at all levels place on businesses. ANSWER: c 63. All of the following are aspects of the political/legal segment of the general environment EXCEPT a. lobby groups. b. attitudes and values. c. taxation laws. d. industries chosen for deregulation. ANSWER: b 64. An analysis of society's attitudes and values would be conducted when studying the general environment. a. sociocultural b. global segment of the c. demographic d. economic ANSWER: a 65. In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owners fail to take into account when they began selling the lingerie? a. the sociocultural segment b. the economic segment c. the demographic segment d. the political/legal segment ANSWER: a 66. The technological segment of environmental analysis includes a. institutions and activities involved with creating new knowledge and translating that knowledge into new outputs. b. the determination of when machinery will need to be replaced in a given firm. c. the need for new technology in order for a firm to gain a competitive advantage. d. places where a firm's technology will allow that firm to dominate a given market. ANSWER: a 67. Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the segment of the general environment. a. economic b. political/legal c. technological d. global ANSWER: c 68. The next critical technological opportunity for organizations is predicted to be a. the Internet. b. multiphasic interventions. c. biological engineering. d. wireless communications. ANSWER: d 69. Which of the following would be an example of the application of the next major technological opportunity for organizations? a. Boeing's Dreamliner b. Toyota's hybrid vehicles c. Philip Morris International's smokeless tobacco d. Amazon's Kindle ANSWER: d 70. The observation that China, despite a 37 percent surge in car sales in 2010, is expected to reach production overcapacity by 2015 and have a glut of extra cars, is an aspect of the segment of the general environment. a. demographic b. global c. physical d. technological ANSWER: b 71. Because of threats and risks in the global environment, some firms choose to take a more cautious approach by a. avoiding global markets altogether. b. expanding only to developed countries. c. focusing on global niche markets. d. acquiring already established firms in foreign markets. ANSWER: c 72. The concepts of Guanxi, Wa, and Inhwa all convey the general idea of a. entrepreneurial risk-taking. b. interpersonal relationships. c. the value of hard work. d. personal achievement. ANSWER: b 73. Global warming and energy consumption trends are aspects of the that firms should monitor. a. technological segment of the general environment b. physical c. sociocultural d. economic ANSWER: b 74. Green restaurant design, sustainable packaging, waste management, and energy efficiency are aspects of the segment of the general environment that McDonald's has sought to address (Chapter 2 Strategic Focus). a. technological b. political/legal c. global d. physical ANSWER: d 75. All of the following are examples of efforts by firms to address the physical segment of the general a. development of sustainable packaging by McDonald's. b. reduction in carbon dioxide emissions by Procter & Gamble. c. reduction in water usage in plants by Unilever. d. increase in hiring of women and minorities at Microsoft. ANSWER: d 76. One popular approach to taking care of the physical environment is a. producing and selling additional green products. b. lobbying the government to reduce environmental regulations. c. making donations to the Sierra Club and other environmental organizations. d. increasing health benefits for employees. ANSWER: a 77. An industry is defined as a. a group of firms producing the same products or services. b. firms producing items that sell through the same distribution channels. c. firms that sell the same products or services to the same customer base. d. a group of firms producing products that are close substitutes. ANSWER: d 78. The likelihood of entry of new competitors is affected by and a. barriers to entry; expected retaliation of current industry organizations. b. the power of existing suppliers; buyers. c. the profitability of the industry; the market share of its leading firm. d. the demand for the product; the profitability of the competitors. ANSWER: a 79. Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of suppliers ANSWER: d 80. New entrants to an industry are more likely when a. it is difficult to gain access to distribution channels. b. economies of scale in the industry are high. c. product differentiation in the industry is low. d. capital requirements in the industry are high. ANSWER: c 81. Economies of scale refers to the fact that as the a. quantity of product produced in a given time period increases, the cost of manufacturing each unit increases. b. quantity of product produced in a given time period increases, the cost of manufacturing each unit remains constant. c. quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases. d. quantity of product produced in a given time period decreases, the cost of manufacturing each unit decreases. ANSWER: c 82. The large amount of advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry? a. access to distribution channels b. capital requirements c. economies of scale d. product differentiation ANSWER: d 83. Product differentiation refers to the a. ability of the buyer of a product to negotiate a lower price. b. response of incumbent firms to new entrants. c. belief by customers that a product is unique. d. fact that as more of a product is produced the cheaper it becomes per unit. ANSWER: c 84. When consumers change phone service providers they are frequently required to maintain service with the provider for a specified time period. This is an example of a a. cost to a producer to exchange equipment in a facility when new technologies emerge. b. cost of changing the firm's strategic group. c. one-time cost suppliers incur when selling to a different customer. d. one-time cost customers incur when buying from a different supplier. ANSWER: d 85. Customer loyalty programs such as airline frequent-flyer miles are an attempt to a. decrease competitors' access to distribution channels. b. develop a cost advantage independent of scale. c. increase customers' switching costs. d. overcome the perishability of the hotel "product." ANSWER: c 86. As customers come to believe that a firm's product is unique, this allows the firm to a. decrease its advertising expenditures. b. customize its product. c. force other companies out of the market by lowering prices. d. obtain loyal customers. ANSWER: d 87. DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets. The main barrier to entry DWK is likely to encounter here is a. government licensing and permits. b. access to distribution channels. c. consumers' switching costs. d. cost disadvantages independent of scale. ANSWER: b 88. For a retail business dependent on drive-in customers, the major cost disadvantage independent of scale would be if a. favorable locations are not available. b. other competitors have proprietary product technology. c. access to raw materials is difficult. d. other competitors have government subsidies. ANSWER: a 89. A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true? a. The cost of the marble will be expensive because of the bargaining power of the supplier. b. The cost of the marble will be moderate because of the bargaining power of the buyer. c. The cost of the marble will be moderate because of economies of scale. d. The cost of the marble will be expensive because of the high strategic stakes involved. ANSWER: a