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Exam 2: Analyzing the External Environment of the Firm: Creating Competitive Advantages

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Question 61

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Which of the following firms would likely pose the least competitive threat?

A) a firm in the same industry and in the same strategic group
B) a competitor to your product where a high switching cost exists
C) a firm that produces substitute goods to your product line
D) a firm in the same industry and in the nearest strategic group looking to join your group

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

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Question 62

Multiple Choice

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Which is considered a force in the five-forces model?

A) increased deregulation in an industry
B) the threat of government intervention
C) recent technological innovation
D) rivalry among competing firms

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

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Question 63

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A Motel 6 executive indicates that he regularly reviews the number of rooms in the budget segment of the industry in the United States and the difference between the average daily room rate and the consumer price index (CPI). This is an example of Competitive Intelligence.

In the SWOT framework, ______________ are internal factors that are specific to the company.

If companies miscalculate the market, opportunities will be lost.

The Apple iPod was enormously successful due in large part to the company strategy of using

Another value of strategic grouping is that it helps a firm identify groups whose competitive position may be marginal or tenuous.

Perceptual acuity can be improved by sitting alone and not consulting others.

Code of Ethics guidelines can assist companies in avoiding aggressive competitive intelligence gathering that results from illegal behaviors.

Rivalry is not always cutthroat; sometimes, it can be gentlemanly.

Technological innovations can create entirely new industries and alter the boundaries of industries.

A sharp increase in interest rates, for example, tends to have more impact on providers of higher-priced goods (e.g., Porsches) than on providers of lower-priced goods (e.g., Chevrolet Cobalt), whose customer base is much more price-sensitive.

It is not important to consider the potential impact of government regulation when developing new innovations.

Using the Cuusoo System, Lego develops ideas that are generated by the many children and adults who create a model, take photos, write project descriptions, and submit their idea on the Lego website. This is an example of using __________ to develop new products.

When the management frame of reference gets out of touch with the realities of the actual business situation, what can happen to the firm?

A danger of forecasting discussed in the text is that

SWOT analysis is useful in part because it obliges the firm to act proactively by putting an emphasis on identifying opportunities and threats that constrain the action choices a firm might make as a result of its internal and external environmental scan.

Ted Turner saw the potential of 24-hour news before anyone else. This is an example of perceptual acuity.

To understand the business environment of a particular firm, you need to analyze both the general environment and the firm industry and competitive environment.

Executives must be careful to avoid spending so much time and effort tracking the actions of ___________ that they ignore ____________.