Student name:__________

TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Environmental scanning and competitor intelligence provide important inputs for
forecasting activities.

⊚ true

2) Perceptual acuity, according to Ram Charan, is the ability to know for certain what will
happen in the future

⊚ false

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

⊚ true

4) Environmental monitoring deals with tracking changes in environmental trends that are
often uncovered during the environmental scanning process.

⊚ true

5) Competitive Intelligence (CI) is a tool that can provide management with early warnings
about both threats and opportunities.

⊚ true

6) Competitive intelligence generally does not benefit very much from gathering
information on competitors from sources in the public domain

⊚ false

7) Even with all the advances in recent years, forecasting is typically considered more of an
art than a science and it is of little use in generating accurate predictions

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 ⊚ false

8) Scenario analysis is a superficial approach to forecasting that seeks to explore possible

⊚ false

9) 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 because of its internal and external environmental scan.

⊚ true

10) In the SWOT framework, the Strengths and Weaknesses are external environmental
factors to consider

⊚ false

11) In the SWOT framework, Opportunities and Threats are environmental conditions
internal to the firm

⊚ false

12) Although changes in the general environment may often adversely or favorably impact a
firm, they seldom alter an entire industry

⊚ false

13) A major sociocultural trend in the United States is the increased number of women in the
workforce that has increased the need for business clothing but decreased the demand for baking
product staples.

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 ⊚ true

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

⊚ true

15) The Porter five-forces model is designed to help us understand how social attitudes and
cultural values impact U.S. businesses

⊚ false

16) The five-forces model helps to determine both the nature of competition in an industry
and the profit potential for the industry.

⊚ true

17) In some industries, low switching costs can act as an important barrier to entry

⊚ false

18) In most industries, new entrants will not be a threat because the Internet lowers entry
barriers

⊚ false

19) The Internet and digital technologies suppress the bargaining power of buyers by
providing them with more information to make buying decisions

⊚ false

20) Reintermediation is responsible for an overall reduction in business opportunities.

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 ⊚ false

21) Michael Porter, the originator of the five-forces model suggests that for most industries, a
one-year time horizon is appropriate for rigorously evaluating the structural underpinnings of
profitability of an industry

⊚ false

22) Michael Porter, the originator of the five-forces model suggests that, as much as possible,
analysts should look at industry structure quantitatively, rather than be satisfied with lists of
qualitative factors.

⊚ true

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
23) Two of the key inputs to developing forecasts discussed in the text are

C) environmental scanning and competitive intelligence.

24) Airbus launched the A380 in 2007 and after more than 17 billion USD invested in the
project, it announced in 2019 that it would discontinue the A380 production by 2021 because it
had sold fewer than half the A380s it expected to deliver. This is an example of poor

C) environmental scanning.

25) Environmental analysis requires continual questioning of all these assumptions except

B) continual updating of environmental knowledge.

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26) Firms that were successful in the past can fail today because

B) the company strategy is outdated.

27) Which one of the following statements is an example of how to improve perceptual
acuity?

C) A CEO meets with direct competitors to analyze current industry trends. The CEOs
share their conclusions with their respective companies.

28) Perceptual acuity requires all the following except

C) a refusal to consult with others.

29) Two non-competing global firms meet quarterly to discuss multiple perspectives on
world trends. This is an example of how to improve

B) perceptual acuity.

30) Which of the following is not an input process to develop forecasts?

C) stakeholder management

31) Boards of directors use outsiders to critique their strategy. This is necessary mostly to
improve

C) perceptual acuity.

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

C) The company business strategy no longer works.

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33) Corporate retreats do not

B) guarantee positive consumer response to new products.

34) Why must successful managers recognize opportunities and threats in their company
external environment?

A) If they miscalculate the market, opportunities will be lost.

35) The failure of the A380 to reach its sales goals is due to

B) the miscalculation of market demands.

36) ________ tracks the evolution of environmental trends, sequences of events, or streams
of activities.

B) Environmental monitoring

37) Companies that are able to spot key trends in the environment know their business and
most importantly know their

C) customers.

38) Scanning the general environment would identify information on

C) the aging population and ethnic shifts.

39) Which of the following is not an example of corporate competitive intelligence?

C) consumers comparing product offers online

40) Gathering competitive intelligence

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 B) is good business practice.

41) Environmental forecasting does not involve plausible projections about the ________ of
environmental change.

D) lack of intensity

42) When investors examine the performance of beauty products like Olay moisturizers and
CoverGirl cosmetics, they are looking for

A) indicators of emerging trends.

43) Which of the following websites is not an example of one used routinely for corporate
competitive intelligence gathering?

C) Duolingo

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

C) traditional competitors; new competitors

45) Banks and airlines are examples of two industries that track competitor offers
continually. This is called the process of gathering

B) competitive intelligence.

46) Which of the following would not lead a manager to believe that an ethical concern
exists?

C) Is the contemplated technique for gathering information relevant?

47) In 1977, Kenneth H. Olsen, then president of Digital Equipment Corp., announced that
there was no reason for individuals to have a computer in their home. Long since disproven, this
is an example of

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 A) poor forecasting of future consumer demand.

48) It is important to question the reliability of forecasts because

A) if predictions are too low, a company like Motel 6 might build too many units and
thus have a surplus of capacity.

49) A danger of forecasting discussed in the text is that

D) managers may view uncertainty as black and white while ignoring important gray
areas.

50) PPG Industries, the Pittsburgh-based manufacturer of paints, coatings, optical products,
specialty materials, chemicals, glass, and fiber glass has paid dividends each year since 1899. It
uses a technique to help it identify possible future strategies. What is it?

C) scenario analysis

51) SWOT analysis is a framework for analyzing the internal and external environment of a
company. It consists of strengths, weaknesses, opportunities, and threats. According to a SWOT
analysis, which of the following is not an aspect that the strategy of the firm must follow?

A) build on its weaknesses

52) Scenario planning is a useful technique for firms competing in industries characterized by
________ and ________.

C) unpredictability; change

53) Scenario analysis draws on a range of disciplines and interests. It is a more ________
approach to forecasting.

C) in-depth

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54) In the SWOT framework, ________ are the same for all firms in the same competitive
environment.

D) opportunities and threats

55) In the SWOT framework, ________ are internal factors that are specific to the company.

D) strengths and weaknesses

56) Heightened concern with fitness might be a threat to some companies and an opportunity
to others. In the SWOT framework, these are ________ environmental factors.

B) external

57) By emphasizing the importance of identifying opportunities and threats, the SWOT
framework makes firms act ________ rather than ________.

C) proactively; reactively

58) SWOT analysis raises awareness about the role of strategy in creating a match between
the environmental conditions and ________ of the firm.

B) internal strengths and weaknesses

59) Steve Jobs, former chairman of Apple, demonstrated that ________ also are important in
forecasting.

B) intuition and judgment

60) Which of the following is not a correct usage of the SWOT framework?

D) protect the firm from environmental weaknesses

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61) The aging of the population, changes in ethnic composition, and effects of the millennial
generation are ________ changes.

D) demographic

62) Larger numbers of women entering the work force since the early 1970s is an example of

C) sociocultural changes.

63) Emerging sociocultural changes in the environment include

B) the increasing educational attainment of women in the past decade.

64) All of the following are important elements of the political and legal segment of the
general environment except

B) the increased use of Internet technology.

65) Which of the following would be considered part of the general environment of a firm?

B) higher unemployment rates

66) Interest rate increases have a ________ impact on the residential home construction
industry and a ________ effect on industries that produce consumer necessities such as
prescription drugs or basic grocery items.

C) negative; negligible

67) In the general environment, many relationships exist among the various elements.
General environmental trends can have positive and negative impacts on various industries. For
example, the aging population might have a ________ impact on the health care industry and a
________ impact on the baby product industry. These are called ________ impacts.

D) positive; negative; demographic

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68) In the general environment, which of the following is not a demographic trend?

D) more women in the workforce

69) Research published in Personnel Psychology shows that older workers are slightly more
willing to implement organizational changes than younger workers. This is an example of which
segment of the general environment?

C) sociocultural

70) Most companies today use a three-stage career model of education, work, and retirement,
but longer lives means changes will be inherent in multistage career models that will need to be
addressed by human resource practices. This is an example of which segments of the general
environment?

C) sociocultural

71) The U.S. Congress passed the Sarbanes-Oxley Act in 2002, which greatly increases the
accountability of auditors, executives, and corporate lawyers. Sarbanes-Oxley has also created a
tremendous demand for professional accounting services. This is an example of which segment
of the general environment?

C) political and legal

72) A bill passed by the U.S. Congress in October 2000 allowed 195,000 H-1B visas for each
of the following three years—up from a cap of 115,000. However, beginning in 2006 and
continuing through 2019, the annual cap on H-1B visas has shrunk to only 65,000—with an
additional 20,000 visas available for foreigners with a masters or higher degree from a U.S.
institution. This is an example of which segment of the general environment?

D) political and legal

73) Data Analytics are being used by corporations to understand their customer purchasing
patterns. This is an example of which segment of the general environment?

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 C) technological

74) Genetic engineering has had a positive impact on the pharmaceutical industry. This is an
example of which type of general environmental trend?

C) technological

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

D) rivalry among competing firms

76) Airbnb, a room-sharing site, offers more rooms than Marriott. Goldman Sachs suggests
that the supply of new rooms over the next two years will outpace the previous five even though
the growth of American occupancy rates has begun to slow. Which competitive force is involved
in this situation?

C) the threat of new entrants

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

B) a competitor to your product where a high switching cost exists

78) The threat of new entrants is high when there are

B) low economies of scale.

79) Product differentiation by incumbents act as an entry barrier because

D) new entrants will have to spend heavily to overcome existing customer loyalties.

80) Which of the following would be an entry barrier?

C) large economies of scale

81) An automobile manufacturer acquires a rental car company. This is an example of

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 B) forward integration.

82) The bargaining power of the buyer is greater than that of the supplier when

B) the buyer profit margin is low.

83) Buyer power will be greater when

B) it is concentrated or when a buyer group purchases large volumes relative to seller sales.

84) The bargaining power of suppliers increases as

A) threat of forward integration by suppliers increases.

85) New communication technology can impact seemingly unrelated industries such as the
airline industry. This would be an example of a

C) threat of substitute products.

86) The bargaining power of suppliers is enhanced under which following market condition?

D) dominance by a few suppliers

87) In the five-forces model, conditions under which a supplier group can be powerful
include all of the following except

C) readily available substitute products.

88) Because the Internet lowers barriers to entry in most industries, it

D) increases the threat of new entrants.

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89) Pittsburgh-based FreeMarkets has developed software enabling large industrial buyers to
organize online auctions for qualified suppliers of semistandard parts such as fabricated
components, and services. By aggregating buyers, FreeMarkets ________ the ________
bargaining power.

B) increases; buyer

90) End users are not

B) the first customers in a distribution channel.

91) Incumbent firms may enjoy increased bargaining power because the Internet

D) diminishes the power of many distribution channel intermediaries.

92) Supplier power has increased because of the Internet for all the following reasons except

D) some suppliers have created web-based purchasing systems that encourage

93) In general, the threat of substitutes is heightened because the Internet

C) introduces new ways to accomplish the same task.

94) How do infomediaries and consumer information websites increase the intensity of
competitive rivalry?

B) by consolidating the marketing message that consumers use to make a purchase

95) The value net is a game-theoretic approach that

D) is a way to analyze how the interactions of all the players in a game affect the firm.

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96) In the value net analysis, complementors are

B) firms that produce products that have a positive impact on company product value.

97) Complements are products or services that have a potential impact on the ________ of
the products or services of that company.

C) value

98) Nintendo built a security chip into its game console hardware and then licensed the right
to develop games to outside firms. These firms paid a royalty to Nintendo for each copy of the
game sold. This is an example of Nintendo using ________ products.

B) complement

99) Elements of the five forces can be quantified. This is important for analyzing industry
structure. Which of the following is not an example of an element that can be quantified?

D) the governmental regulatory policy

100) Strategic groups consist of a group of

D) firms within an industry that follows similar strategies.

101) Which of the following statements about strategic groups is false?

B) Strategic groupings are of little help to a firm in assessing mobility barriers that
protect a group from attacks by other groups.

102) Strategic groups consist of firms that are more ________ to each other than firms that are
not.

B) similar

103) Strategic groups are clusters of firms that share ________ strategies.

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 C) similar

104) Classifying an industry into strategic groups involves judgment. If it is useful as an

D) management team.

105) Referring to the textbook Exhibit 2.7 The World Automobile Industry: Strategic Groups,
which strategic group is the largest in terms of breadth of product line?

B) Toyota, Ford, General Motors, Chrysler, Honda, Nissan

106) Referring to the textbook Exhibit 2.7 The World Automobile Industry: Strategic Groups,
which strategic group is the smallest in terms of breadth of product line?

C) Chery, Geely, Tata Motors

107) Referring to the textbook Exhibit 2.7 The World Automobile Industry: Strategic Groups,
which strategic group consists of firms high in product pricing/quality and average in their
product-line breadth?

D) Mercedes, BMW, Audi

108) In 2014, Audi introduced the Q3 SUV at a base price of only $32,500. And BMW, with
its 1-series, is another well-known example. Such cars, priced in the low $30,000s, compete
more directly with products from broad-line manufacturers like Ford, General Motors, and
Toyota. This suggests that members of a strategic group can overcome ________ barriers and
migrate to other groups that they find attractive if they are willing to commit time and resources.

D) cost

109) The strategic groups concept is valuable for identifying groups with ________
competitive positions.

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 A) marginal

110) The strategic groups concept is valuable for charting the ________ directions of firm
strategies.

D) future

111) The strategic groups concept is valuable for assessing the implications of industry
________ for the strategic group as a whole.

A) trends

112) Michael Porter, the originator of the five-forces model suggests that an improved
understanding of the root causes of profitability depends upon two critical issues when
conducting an industry analysis. One of these is

B) the selection of an appropriate time frame.

113) Delta Pride Catfish, a supplier group of catfish farmers in Mississippi, formed a
cooperative to process their own fish, thus bypassing ConAgra and Farm Fresh, their previous
processing contractors. By 2014, Delta Pride Catfish controlled over 40 percent of the U.S.
catfish market. This is an example of the

B) bargaining power of suppliers.

114) Which one of the following is not an effect of the digital economy according to the
textbook?

B) decrease in collaboration

115) Medical monitoring through wearable devices has been approved by the U.S. Food and
Drug Administration for offers from Apple. This is an important development of which factor of
the general environment?

B) sociocultural

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116) Grocery stores in California charge money for their plastic bags. This is a response to
environmental sustainability concerns and is part of the considerations under which general
environment factor?

B) sociocultural

117) Changes in the U.S. national debt can have a big impact on the ability of the country to
compete in world markets. This is an example of which factor in the general environment?

D) economic

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