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Which of the following is a macroeconomic factor that can affect a firm's strategy?


A) power of buyers
B) power of suppliers
C) levels of employment
D) threat of substitutes

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

Correct Answer

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Which of the following is a feature of a monopolistically competitive industry?


A) differentiated products
B) high entry barriers
C) no pricing power
D) a single firm

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

Correct Answer

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Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?


A) Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized.
B) In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four.
C) Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices.
D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

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

Correct Answer

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Which of the following best illustrates a firm operating in a monopolistically competitive industry?


A) A foreign exchange company sells currencies of different countries at market prices as it cannot differentiate its products from its competitors.
B) A chain of multiplex theaters, along with its competitor, owns 80 percent of the multiplex market share.
C) An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers.
D) A railway company owned by the government of New Darvland owns 100 percent of the railway transport in the country.

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

Correct Answer

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Which of the following is a feature of an oligopolistic industry structure?


A) many small sellers
B) standardized or undifferentiated products
C) limited pricing power
D) high entry barriers

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

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An industry has many firms that compete in it.While products between competitors tend to be similar,they are by no means identical.As a consequence,managers selling a product with unique features tend to have some ability to raise prices.This type of industry is an example of


A) oligopoly.
B) monopoly.
C) perfect competition.
D) monopolistic competition.

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

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Which of the following represents an economic factor in a firm's external general environment?


A) the government regulations and laws in the country in which the firm exists
B) the stage of the business cycle that the country is in
C) the values and norms prevalent in the society in which the firm operates
D) the bargaining power of the firm's suppliers and buyers

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

Correct Answer

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Which of the following would most likely not indicate that sellers are a strong competitive force in an industry?


A) when the buyers' cost of switching to substitutes is low
B) when the products and services they provide can be differentiated
C) when the buyers of their products are customers who buy in small quantities
D) when the components they supply affect buyers' product quality

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

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While industry forces have been favorable for a long time in the U.S.automotive industry,recent dynamics have lowered the profit potential of competing in this industry and thus reduced its attractiveness.The continued success of Tesla Motors in the industry will depend on other firm and industry factors.Which of the following represents one such factor that directly affects Tesla Motors?


A) Since suppliers of its key sources are few, the bargaining power of suppliers is high.
B) Since individual buyers do not have many choices, their bargaining power is low.
C) There is a lack of balance in demand and supply, demand far exceeds capacity within the industry.
D) There is a noticeable absence of complementary products and services for the industry.

E) All of the above
F) None of the above

Correct Answer

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Rhino Pictures Inc.is a large production company that controls a major portion of the movie industry's market share along with two other firms.Despite its competitiveness with the two other firms,it is influenced by their actions and often has to consider their strategic actions before acting on its own.In this scenario,Rhino Pictures Inc.is most likely functioning in a(n) _____ industry.


A) oligopolistic
B) monopolistic
C) perfectly competitive
D) monopolistically competitive

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

Correct Answer

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Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine.It has some pricing power because it provides differentiated products and therefore,has some entry barriers in place.In this scenario,Curry Rush is most likely operating in a(n)


A) oligopoly.
B) monopoly.
C) perfectly competitive industry.
D) monopolistically competitive industry.

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

Correct Answer

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D

Earlier,the travel industry was controlled by a few large travel companies that booked holidays,air tickets,bus tickets,and hotels for their customers.However,with the emergence of the Internet,smaller travel agencies started mushrooming in the industry and customers started making their own reservations.Which of the following can be inferred from this information?


A) The travel industry changed from a consolidated structure to a fragmented one.
B) The pricing power of the incumbent firms in the travel industry has increased.
C) The bargaining power of buyers in the travel industry has decreased.
D) The structure of the travel industry changed from monopolistic competition to an oligopolistic one.

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

Correct Answer

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A

Which of the following external forces is a part of a firm's task environment?


A) the composition of the strategic group to which the firm belongs
B) the interest rates prevalent in the economy in which the firm operates
C) the inflation level in the economy in which the firm operates
D) the recent innovations in process technology, including lean manufacturing

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

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A

Peerless Inc.,a large conglomerate,wants to liquidate its business in certain industries to improve its overall profitability.Which of the following industries would Peerless Inc.find it most difficult to exit?


A) the management consultancy industry in which the company's fixed costs are low
B) the steel industry in which the company has obligations like severance pay toward employees
C) the corporate training industry in which the company's commitments are mostly short-term
D) the e-commerce industry where the company has no long-term contractual agreements with suppliers

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

Correct Answer

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Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?


A) The competition in the industry is insignificant.
B) The number of buyers in the industry is small.
C) The firms can differentiate their product offerings.
D) The entry barriers in the industry are extremely high.

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

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Industry convergence is a process whereby


A) firms within the same industry start to satisfy different customer needs.
B) formerly unrelated industries begin to satisfy the same customer need.
C) excess capacity within an industry is reduced through horizontal mergers.
D) firms within an industry start to target a narrow market segment.

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

Correct Answer

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Competitive industry structure refers to elements and features common to


A) all industries.
B) successful industries.
C) new industries.
D) incumbent industries.

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

Correct Answer

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Demand for traditional fast-food providers such as McDonald's,Burger King,and Wendy's has been on a decline in recent years.Consumers have become more health conscious and demand has shifted to alternative restaurants like Subway,Chick-fil-A,and Chipotle.Attempts by McDonald's and Wendy's to steal customers from one another include frequent discounting tactics such as dollar menus.Such competitive actions are indicative of


A) profitability increases.
B) perfect competition.
C) natural monopolies.
D) cutthroat competition.

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

Correct Answer

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Which of the following firms will most likely not be a complementor to a firm that manufactures computers?


A) a company that develops operating software
B) a company that develops application software
C) a company that manufactures its own brand of desktops and laptops
D) a company that manufactures portable external disks

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

Correct Answer

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The primary objective of Porter's five forces model is to


A) replace a firm's competitive advantage with competitive parity.
B) understand the profit potential of different industries.
C) reduce the gap between the value of a firm's product and its cost of production.
D) break down a firm's value chain activities into primary and support.

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

Correct Answer

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