Meeting 4 - 12 Sept 2016

Business Strategy

Read the questions and then choosing the correct answer from available options below
(a, b, c, d, or e)

1. Which of the following is not among the factors that determine whether competitive
rivalry among industry members is strong, moderate, or weak?

a) Whether buyer demand for the product is growing rapidly or slowly

b) Whether customers' costs to switch brands is low or high

c) How active industry rivals are in initiating fresh competitive moves and in using the
various weapons of competition to improve their market standing and business
performance

d) Whether there are few or many rival sellers and whether there are big dierences in
their sizes and competitive capabilities

e) Whether industry members are vertically integrated and whether the industry is
characterized by significant scale economies and rapid technological change

2. The rivalry among competing sellers in an industry intensifies

a) when buyer demand for the product is growing rapidly.

b) when customers are brand loyal and their costs to switch to competing brands or
substitute products are relatively high.

c) when buyer demand is strong and sellers have little or no excess capacity and only
minimal inventories.

d) as the number of rivals increases and as they become more equal in size and
competitive capability.

e) when the products of rival sellers are highly dierentiated products and the industry
consists of so many rivals that any one company's actions have little direct impact on
rivals' business.

3. Competitive pressures associated with the threat of new entrants grow stronger when

a) buyer demand is growing slowly and the pool of entry candidates is small.

b) the number of customers for the industry's product is large and the product oerings
of rival sellers are strongly dierentiated.

c) industry members are looking to expand their market reach by entering product
segments or geographic areas where they currently do not have a presence, when
current industry members are unable or unwilling to strongly contest the entry of
newcomers, and when a newcomer can reasonably expect to earn attractive profits.

d) there are not many competitors already in the industry, their products are highly
dierentiated, and buyers are brand loyal.

e) a small percentage of companies in the industry are currently earning above-average

profits, entry barriers are high, and buyers are not brand loyal.

4. Which of the following conditions generally raise the barriers to entering an industry?

a) Low levels of brand loyalty on the part of customers and the presence of more than 20
rivals in the industry

b) Rapid market growth, low buyer switching costs, and weak brand preferences and
customer loyalty

c) Product oerings that are pretty much standardized from rival to rival

kristina@telkomuniversity.ac.id

Page 1 of 3

Meeting 4 - 12 Sept 2016

Business Strategy

d) High capital requirements, diculties in building a network of distributors-retailers and

securing adequate space on retailers' shelves, and the likelihood that industry
incumbents will strongly contest the eorts of new entrants to gain a market foothold

e) The industry is not characterized by scale economies and/or sizable learning/

experience curve eects and few firms in the industry hold key patents and/or
possess significant proprietary technology not readily available to a newcomer

5. Competitive pressures stemming from substitute products are weaker when

a) substitutes are higher-priced, buyers don't believe substitute products have equal or
better features, and buyers' costs of switching to substitutes are relatively high.

b) the industry consists of a relatively large number of rival sellers that are fairly equal in
size and competitive capability.

c) entry barriers are moderately high but by no means prohibitive and there is a fairly
small pool of entry candidates.

d) a number of customers buy in large volumes and are in a strong bargaining position to
win concessions from sellers.

e) buyer loyalty to the products they are currently purchasing is relatively low.

6. Which of the following is not a factor in determining whether the suppliers to an

industry are a source of strong, moderate, or weak competitive pressures?

a) Whether certain needed inputs are in short supply and whether the item being
supplied is a standard commodity that is readily available from many suppliers at the
going market price

b) Whether it is dicult or costly for industry members to switch their purchases from
one supplier to another or to switch to attractive substitute inputs

c) Whether industry members are major customers of suppliers and whether suppliers'
sales to members of this one industry constitute a big percentage of their total sales

d) Whether the industry supply chain is global or mostly national, whether suppliers have
a wide or narrow product line, and whether industry members place orders frequently
or infrequently with suppliers

e) Whether certain suppliers provide a dierentiated input that enhances the

performance or quality of the industry's product

7. Whether the buyers of an industry's product have strong or weak bargaining leverage
over the terms and conditions of sale depends on

a) how often that sellers alter their prices, how sensitive buyers are to price dierences
among sellers, whether the item being purchased is a good or a service, and whether
buyers buy frequently or infrequently.

b) the frequency with which rival firms change strategies and the amount of advertising
that sellers utilize.

c) whether all buyers have the same degree of negotiating power, whether the item
carries a high or low price tag, and whether there are many or few collaborative
partnerships between sellers and buyers.

d) whether buyers purchase in relatively large or small quantities, whether the costs of
switching to competing brands or to substitute products are high or low, and how well
informed buyers are about sellers' prices, products, and costs.

e) whether buyer demand is seasonal or year-round, whether entry barriers are high or
low, and whether competitive pressures from substitutes are strong or weak.

kristina@telkomuniversity.ac.id

Page 2 of 3

Meeting 4 - 12 Sept 2016

Business Strategy

8. The task of driving forces analysis is to

a) identify all the underlying factors that can cause industry profitability to rise or fall in
the years ahead.

b) predict what new forces of competitive and market change will emerge next.

c) determine which of the five competitive forces is the biggest driver of industry change.

d) identify which companies are being driven to move from one strategic group to
another strategic group.

e) identify what the driving forces are, assess whether the drivers of change are, on the
whole, acting to make the industry more or less attractive, and determine what
strategy changes are needed to prepare for the impacts of the driving forces.

9. Strategic group mapping is a helpful analytical tool for

a) assessing why competitive pressures and driving forces usually impact the biggest
strategic groups more so than the smaller groups.

b) determining which companies have how big a competitive advantage and how good
their prospects are for increasing their market shares.

c) determining which company is the most profitable in the industry and why it is doing
so well.

d) determining who competes most closely with whom; evaluating whether industry
driving forces and competitive pressures favor some strategic groups and hurt others;
and ascertaining whether the profit potential of dierent strategic groups varies due to
the strengths and weaknesses in each group's respective market positions.

e) pinpointing which of the five competitive forces is the strongest and which is the
weakest.

10. An industry's key success factors

a) can best be determined by studying the strategies of those companies in the

industry's best strategic group and those in the worst strategic group.

b) concern the particular strategy elements, product attributes, resources, competencies,

competitive capabilities, and market achievements that spell the dierence between
being a strong competitor and a weak competitorand sometimes between profit and
loss.

c) are mainly a function of an industry's macro-environment and dominant economic

features.

d) can best be determined by identifying the similarities in the strategies of rival

companiesthose strategy elements that are most commonly found in the strategies of
rivals can be considered key success factors.

e) usually relate to technology and manufacturing-related capabilities and rarely to

distribution or marketing capabilities.

kristina@telkomuniversity.ac.id

Page 3 of 3