BUS 345 Ch 3 External Analysis Quiz 2
-Practice Questions and Answers
Graded A+
(True or False)
A technological change, such as the rise of the Internet, can represent either an
opportunity or a threat. - ANSWER-True
(True or False)
Access to cheaper capital is an example of an economy of scale. - ANSWER-False
(True or False)
Age structure, geographic distribution, income distribution, interest rates, and process
innovations are some of the elements of concern when studying the demographic
segment of the general environment. - ANSWER-False
(True or False)
Because the health of a nation's economy affects the performance of individual firms
and industries, companies study the economic environment to identify changes, trends,
and their strategic implications. - ANSWER-True
(True or False)
Changes in the characteristics of a population, such as age or race, are irrelevant to the
analysis of an industry's macroenvironment. - ANSWER-False
(True or False)
Companies facing greater exit barriers find it harder to reduce capacity, and face a
greater threat of severe price
competition. - ANSWER-True
(True or False)
Companies operating in high-technology industries are dependent on complementary
products for their mutual success. - ANSWER-True
(True or False)
Cost reductions gained through mass-producing a standardized output are a source of
scale economies. - ANSWER-True
(True or False)
Demographic, economic, political/legal, sociocultural, technological, global, and physical
are the seven elements comprising the industry environment. - ANSWER-False
(True or False)
, Deregulation of the mortgage industry is an example of how political and legal forces
impact and industry. - ANSWER-True
(True or False)
Even when entry barriers are very high, new firms may still enter an industry if they
perceive that the benefits outweigh the costs of entry. - ANSWER-True
(True or False)
Government deregulation of telephone service lowered the barriers to entry and lowered
industry profit margins. - ANSWER-True
(True or False)
Growing demand tends to reduce rivalry because all companies can sell more without
taking market share away from each other. - ANSWER-True
(True or False)
High exit barriers are most serious as a competitive threat when industry demand is
declining. - ANSWER-True
(True or False)
High tech industries are often dependent on complementor industries for their mutual
success. - ANSWER-True
(True or False)
In Porter's five forces framework, the stronger the five forces, the more limited the ability
of established companies to raise prices and earn greater profits. - ANSWER-True
(True or False)
Intense rivalry lowers prices and raises costs. - ANSWER-True
(True or False)
Interest rates have an impact on the sale of automobiles, appliances, and capital
equipment, and thus represent a macroeconomic force. - ANSWER-True
(True or False)
Opportunities arise when a company can take advantage of conditions in its
environment to formulate and implement strategies that allow it to become more
profitable. - ANSWER-True
(True or False)
Rapid growth in industry demand enables companies to expand their revenues and
profits without taking market share away from competitors. - ANSWER-True
(True or False)
Starbucks and an independent local café are different in terms of their business
techniques. They both sell coffee, and
-Practice Questions and Answers
Graded A+
(True or False)
A technological change, such as the rise of the Internet, can represent either an
opportunity or a threat. - ANSWER-True
(True or False)
Access to cheaper capital is an example of an economy of scale. - ANSWER-False
(True or False)
Age structure, geographic distribution, income distribution, interest rates, and process
innovations are some of the elements of concern when studying the demographic
segment of the general environment. - ANSWER-False
(True or False)
Because the health of a nation's economy affects the performance of individual firms
and industries, companies study the economic environment to identify changes, trends,
and their strategic implications. - ANSWER-True
(True or False)
Changes in the characteristics of a population, such as age or race, are irrelevant to the
analysis of an industry's macroenvironment. - ANSWER-False
(True or False)
Companies facing greater exit barriers find it harder to reduce capacity, and face a
greater threat of severe price
competition. - ANSWER-True
(True or False)
Companies operating in high-technology industries are dependent on complementary
products for their mutual success. - ANSWER-True
(True or False)
Cost reductions gained through mass-producing a standardized output are a source of
scale economies. - ANSWER-True
(True or False)
Demographic, economic, political/legal, sociocultural, technological, global, and physical
are the seven elements comprising the industry environment. - ANSWER-False
(True or False)
, Deregulation of the mortgage industry is an example of how political and legal forces
impact and industry. - ANSWER-True
(True or False)
Even when entry barriers are very high, new firms may still enter an industry if they
perceive that the benefits outweigh the costs of entry. - ANSWER-True
(True or False)
Government deregulation of telephone service lowered the barriers to entry and lowered
industry profit margins. - ANSWER-True
(True or False)
Growing demand tends to reduce rivalry because all companies can sell more without
taking market share away from each other. - ANSWER-True
(True or False)
High exit barriers are most serious as a competitive threat when industry demand is
declining. - ANSWER-True
(True or False)
High tech industries are often dependent on complementor industries for their mutual
success. - ANSWER-True
(True or False)
In Porter's five forces framework, the stronger the five forces, the more limited the ability
of established companies to raise prices and earn greater profits. - ANSWER-True
(True or False)
Intense rivalry lowers prices and raises costs. - ANSWER-True
(True or False)
Interest rates have an impact on the sale of automobiles, appliances, and capital
equipment, and thus represent a macroeconomic force. - ANSWER-True
(True or False)
Opportunities arise when a company can take advantage of conditions in its
environment to formulate and implement strategies that allow it to become more
profitable. - ANSWER-True
(True or False)
Rapid growth in industry demand enables companies to expand their revenues and
profits without taking market share away from competitors. - ANSWER-True
(True or False)
Starbucks and an independent local café are different in terms of their business
techniques. They both sell coffee, and
