MGT 4150 EXAM 1 QUESTIONS AND
ANSWERS ALL CORRECT
What factors increase supplier bargaining power? - Answer- When products are in short
supply, differentiated, and when switching costs for industry members are high.
What conditions weaken supplier bargaining power? - Answer- When there are good
substitutes for their products and when industry members account for a large fraction of
suppliers' sales.
What increases buyer bargaining power? - Answer- When demand is weak, products
are standardized, switching costs are low, and buyers are few and large.
What factors decrease buyer bargaining power? - Answer- When buyers have low
income, the product represents a small fraction of their purchases, or when they cannot
postpone purchases.
What should a competitor do if it finds an industry attractive? - Answer- It should invest
aggressively to capture opportunities and improve its long-term competitive position.
What are the three best indicators of a company's strategy effectiveness? - Answer-
Achieving stated objectives, financial performance above industry average, and gaining
customers and market share.
What is a resource in the context of competitive advantage? - Answer- A competitive
asset owned or controlled by a firm that contributes to its strategy.
What is the difference between a resource and a capability? - Answer- A resource is an
asset, while a capability is the firm's capacity to perform activities competently using its
resources.
What are tangible resources? - Answer- Physical assets, financial resources,
technological assets, and organizational resources.
What are intangible resources? - Answer- Human assets, brand reputation,
relationships, and company culture.
What are the four tests of a resource's competitive power? - Answer- value, rarity,
inimitability, and non-substitutability.
ANSWERS ALL CORRECT
What factors increase supplier bargaining power? - Answer- When products are in short
supply, differentiated, and when switching costs for industry members are high.
What conditions weaken supplier bargaining power? - Answer- When there are good
substitutes for their products and when industry members account for a large fraction of
suppliers' sales.
What increases buyer bargaining power? - Answer- When demand is weak, products
are standardized, switching costs are low, and buyers are few and large.
What factors decrease buyer bargaining power? - Answer- When buyers have low
income, the product represents a small fraction of their purchases, or when they cannot
postpone purchases.
What should a competitor do if it finds an industry attractive? - Answer- It should invest
aggressively to capture opportunities and improve its long-term competitive position.
What are the three best indicators of a company's strategy effectiveness? - Answer-
Achieving stated objectives, financial performance above industry average, and gaining
customers and market share.
What is a resource in the context of competitive advantage? - Answer- A competitive
asset owned or controlled by a firm that contributes to its strategy.
What is the difference between a resource and a capability? - Answer- A resource is an
asset, while a capability is the firm's capacity to perform activities competently using its
resources.
What are tangible resources? - Answer- Physical assets, financial resources,
technological assets, and organizational resources.
What are intangible resources? - Answer- Human assets, brand reputation,
relationships, and company culture.
What are the four tests of a resource's competitive power? - Answer- value, rarity,
inimitability, and non-substitutability.
