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Which of the following statements is true about strategic groups?


A) It is not possible to have two different strategic groups within the same industry.
B) Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups.
C) Profitability varies between different strategic groups.
D) Companies within the same strategic group are complementors to each other.

E) A) and B)
F) C) and D)

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Lu runs a company that manufactures satellites for commercial and government use. It has few rivals. At the moment, the power of buyers, the power of suppliers, and the threat of substitutes are all low. Based on this information, what can Lu conclude?


A) The manufacturer is likely to see little profit until the power of buyers improves.
B) In this scenario, suppliers are likely to create and sell effective substitutes.
C) This firm is an example of near-perfect competition.
D) The company is likely to be very profitable as long as the threat to entry is low.

E) All of the above
F) B) and C)

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Which of the following statements with regard to industry structures is true?


A) They are stable over time, not dynamic.
B) Having a large number of competitors generally equates to higher industry profitability.
C) A consolidated industry tends to be more profitable than a fragmented one.
D) Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power.

E) B) and C)
F) A) and D)

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Mara is a management consultant for a soda manufacturer that wants to expand into health drinks such as green tea and after-workout drinks. Based on what you have read, which of these is sensible advice for Mara to offer her client?


A) "Pinpoint the best time to enter this new market, and then make a yes-or-no decision quickly."
B) "Carefully consider the entry choices over time before making a decision."
C) "Your best bet is to undercut competitors' prices and lure them into a price war."
D) "Focus on what your company does well rather than trying to expand into untried areas."

E) C) and D)
F) All of the above

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Why are entry barriers in the U.S. airline industry relatively low?

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Entry barriers in the U.S. airline indus...

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Which of the following is a drawback of Porter's five forces model?


A) The model describes competition narrowly as a firm's closest competitors.
B) Managers cannot determine the changing speed of an industry or the rate of innovation.
C) It fails to provide a basis for deriving implications for a firm's strategic position within an industry.
D) The model fails to consider that threat of substitutes can come from outside a given industry.

E) All of the above
F) A) and C)

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Kimba Inc. is a manufacturer of smart watches that track the wearer's heart rate and sleep patterns. Which of the following is most likely an implication of new firms entering this industry?


A) The bargaining power of buyers will reduce.
B) The industry's overall profit potential and sales will increase.
C) The rivalry among existing competitors will reduce.
D) The incumbent firms will spend more to satisfy their existing customers.

E) All of the above
F) A) and B)

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Clear Calls Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all Clear Calls users are free. When a person switches to a Clear Calls network, his or her entire network of family and friends is likely to switch to the same network to receive the benefit of free calls and messages. In addition, an existing user who gets a new user to register with Clear Calls Inc. is given a free wireless connection. This has helped to keep competition away from Clear Calls. In this scenario, which of the following factors is acting as an entry barrier for Clear Calls Inc.?


A) economies of scale
B) high capital requirement
C) network effects
D) high fixed costs

E) C) and D)
F) A) and D)

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Luz manages a chain of bars and restaurants in a tri-county area that has recently experienced an economic boom because of fracking and high oil prices. What is most likely to happen when there is too much money in the tri-county economy?


A) too many goods and services
B) a drop in interest rates
C) high economic growth
D) an increase in prices

E) B) and C)
F) A) and D)

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How do scholars explain differences in firm performance within the same industry?

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To explain differences in firm performan...

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In 2008, BlackBerry's market cap peaked at $75 billion. By 2017 this valuation had fallen more than 90 percent, to $3.9 billion. BlackBerry fell victim to two important PESTEL factors in its external environment: sociocultural and technological. How did technology contribute to BlackBerry's decline?


A) BlackBerry failed to offer strong security features for its device.
B) BlackBerry failed to change its device into one that could perform multiple tasks effectively.
C) BlackBerry failed to adapt to a groundswell that involved workers bringing mobile devices to work.
D) BlackBerry failed to produce an efficient emailing system using a keyboard.

E) B) and C)
F) None of the above

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How do low interest rates affect a business?


A) Firms tend to defer investments until rates rise.
B) Firms can easily borrow money to finance future growth.
C) Consumer demand slows down.
D) Business credit is harder to obtain.

E) A) and D)
F) A) and C)

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Fran owns Consolidated Auto Parts, a company that got its start making auto parts related for hybrid vehicles, but her firm has had difficulty establishing itself as a maker of parts for the more-profitable internal combustion engine. What is most likely contributing to Consolidated's problem in this area?


A) Newcomers cannot use existing assets or reconfigure their value chains.
B) New competitors usually ignore stakeholders who are not stockholders.
C) It is difficult for outsiders to gauge which stage of the "life cycle" that industry is in.
D) Entry barriers usually protect the incumbent players in a profitable industry.

E) A) and D)
F) None of the above

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When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger?


A) the emergence of entry barriers
B) the bargaining power of suppliers
C) the availability of complements
D) the threat of substitutes

E) All of the above
F) C) and D)

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Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of


A) co-opetition.
B) perfect competition.
C) monopolization.
D) conglomeration.

E) A) and B)
F) None of the above

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How do interest rates affect a business?

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A key macroeconomic variable for manager...

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Federal and regional laws prevent incumbent firms from dramatically lowering prices or otherwise retaliating when a new entrant joins an industry.

A) True
B) False

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Addams Coaches Inc. is a bus line with service to several major cities. It has several competitors that each offer service to one or two cities, and based on its current outlays, it cannot match or beat those competitors on price. Because of long-term contracts and an increase in the cost of gasoline, it is not possible to reduce expenditures at this time. Which of these strategies should Addams pursue instead?


A) Create a strategic group through mergers.
B) Compete based on inter-group rivalry, not intra-group rivalry.
C) Pursue a differentiated strategy.
D) Close the business until the cost of gas decreases.

E) A) and B)
F) A) and C)

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Describe the relationship between the state of an economy and its level of employment.

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The state of the economy directly affect...

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How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?


A) Threat of new entrants will be low.
B) Bargaining power of suppliers will be high.
C) Availability of complements will be low.
D) Threat of substitute products and services will be high.

E) All of the above
F) B) and D)

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