AGEC 440 Exam Questions and Answers
Graded A+
S-C-P approach traditionally employed to _______ attainment of ________ market
conditions - Correct answer-Facilitate;Competitive
aimed to develop competitive markets - Correct answer-Anti-trust
Turns S-C-P framework "upside down"
- It seeks ways to describes attributes of industry that make it less than competitive
- To help firms find ways to make above normal economic profits - Correct
answer-Business Approach to SCP: Strategy Approach
The essence of strategy relates to seeking _______ normal economic returns. -
Correct answer-Above
What is porters 5 forces? - Correct answer-Based on S-C-P framework to assess
environmental threats or competitive market conditions.
any organization external to a firm that reduces the level of that firm's performance
- Correct answer-Environmental Threats
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,Purpose of 5 forces? - Correct answer-Assist firm manager's a framework to
analyze environmental threats
To develop strategies to neutralize threats so as to seek competitive advantage
Competitive advantage yields ______ normal economic returns - Correct answer-
above
Environmental Threats: Porter's 5 Forces: - Correct answer-Threat of Entry
Threat of Rivalry
Threat of Substitutes
Threat of Suppliers
Threat of Buyers
List of remote environment trends: - Correct answer-SOCIOCULTURAL
TRENDS
TECHNOLOGICAL TRENDS
GOVERNMENT/REGULATORY TRENDS
ECONOMIC TRENDS
INDUSTRY ANALYSIS BASED ON INDUSTRIAL ORGANIZATION
ECONOMICS - Correct answer-Task environment
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,New entrants motivated to enter and compete due to above normal economic
profits earned by existing firms
- Increases industry competition
- Reduced performance of incumbent firms
• With free entrance, performance tends to competitive levels - Correct answer-
Threat of Entry
cost of entry by new firms
- High cost detours entry
- Determines sustainability of above normal economic profits
- Protects incumbent firm's profits - Correct answer-Barriers To Entry
Factors affecting threat of entry: - Correct answer-economies of scale
capital requirements
access to distribution
Product differentiation / brand identity
natural cost advantages
learning curve
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, access to necessary inputs
government policy
- High cost of fixed investment
- Fixed demand and high market share of incumbents forces entrance at sub-
optimal scale
Higher cost to new entrant - Correct answer-Economies of Scale
- Incumbents have brand identity and customer loyalty
• New entrants face higher advertising costs to change consumer behavior
• e.g. U.S. Brewing Industry (Budweiser) - Correct answer-Product Differentiation
• Rivalry is the intensity of competition among a firm's direct competitors
- e.g. Flour milling: ADM, ConAgra, Cereal Foods
• Rivalry threatens firms by reducing economic profits
- e.g. Price cutting in airline industry, advertising, retaliatory actions - Correct
answer-Threat of Rivalry
• Large numbers of competing firms
- Approximates conditions of perfect competition
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Graded A+
S-C-P approach traditionally employed to _______ attainment of ________ market
conditions - Correct answer-Facilitate;Competitive
aimed to develop competitive markets - Correct answer-Anti-trust
Turns S-C-P framework "upside down"
- It seeks ways to describes attributes of industry that make it less than competitive
- To help firms find ways to make above normal economic profits - Correct
answer-Business Approach to SCP: Strategy Approach
The essence of strategy relates to seeking _______ normal economic returns. -
Correct answer-Above
What is porters 5 forces? - Correct answer-Based on S-C-P framework to assess
environmental threats or competitive market conditions.
any organization external to a firm that reduces the level of that firm's performance
- Correct answer-Environmental Threats
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Purpose of 5 forces? - Correct answer-Assist firm manager's a framework to
analyze environmental threats
To develop strategies to neutralize threats so as to seek competitive advantage
Competitive advantage yields ______ normal economic returns - Correct answer-
above
Environmental Threats: Porter's 5 Forces: - Correct answer-Threat of Entry
Threat of Rivalry
Threat of Substitutes
Threat of Suppliers
Threat of Buyers
List of remote environment trends: - Correct answer-SOCIOCULTURAL
TRENDS
TECHNOLOGICAL TRENDS
GOVERNMENT/REGULATORY TRENDS
ECONOMIC TRENDS
INDUSTRY ANALYSIS BASED ON INDUSTRIAL ORGANIZATION
ECONOMICS - Correct answer-Task environment
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,New entrants motivated to enter and compete due to above normal economic
profits earned by existing firms
- Increases industry competition
- Reduced performance of incumbent firms
• With free entrance, performance tends to competitive levels - Correct answer-
Threat of Entry
cost of entry by new firms
- High cost detours entry
- Determines sustainability of above normal economic profits
- Protects incumbent firm's profits - Correct answer-Barriers To Entry
Factors affecting threat of entry: - Correct answer-economies of scale
capital requirements
access to distribution
Product differentiation / brand identity
natural cost advantages
learning curve
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, access to necessary inputs
government policy
- High cost of fixed investment
- Fixed demand and high market share of incumbents forces entrance at sub-
optimal scale
Higher cost to new entrant - Correct answer-Economies of Scale
- Incumbents have brand identity and customer loyalty
• New entrants face higher advertising costs to change consumer behavior
• e.g. U.S. Brewing Industry (Budweiser) - Correct answer-Product Differentiation
• Rivalry is the intensity of competition among a firm's direct competitors
- e.g. Flour milling: ADM, ConAgra, Cereal Foods
• Rivalry threatens firms by reducing economic profits
- e.g. Price cutting in airline industry, advertising, retaliatory actions - Correct
answer-Threat of Rivalry
• Large numbers of competing firms
- Approximates conditions of perfect competition
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
