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Coulter Smia6 TB 03
Coulter Smia6 TB 03
Coulter Smia6 TB 03
2) Threats are positive external environmental trends or changes that will help the organization
improve its performance.
Answer: FALSE
Diff: 2 Page Ref: 57
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
3) Opportunities are positive external environmental trends or changes that may help the
organization improve its performance.
Answer: TRUE
Diff: 2 Page Ref: 56
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
5) An open system is one that interacts with and responds to its external environment.
Answer: TRUE
Diff: 1 Page Ref: 57
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
1
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
6) As an open system, an organization is affected by the environment and can also impact that
environment.
Answer: TRUE
Diff: 2 Page Ref: 57
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
10) Buyers have bargaining power if the industry's product is not important to the quality of the
buyers' products or services.
Answer: TRUE
Diff: 2 Page Ref: 65
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
2
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
11) Substitute products can be found in the same industry.
Answer: FALSE
Diff: 3 Page Ref: 68
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
12) Industry sales forecasts and trends are part of the general economic sector.
Answer: FALSE
Diff: 2 Page Ref: 70
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
13) If an organization does business globally, its economic analysis changes significantly.
Answer: FALSE
Diff: 3 Page Ref: 71
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
14) An external information system is an information system that provides managers with needed
internal information on an annual basis.
Answer: FALSE
Diff: 2 Page Ref: 77
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Use of Information Technology
Objective: Explain how to evaluate a firm's external environment
15) Front-line employees or operational level employees are viewed as being on the "firing line"
and are often the last to hear comments from people outside the organization.
Answer: FALSE
Diff: 2 Page Ref: 78
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
3
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
16) An external analysis enables the organization to examine
A) opportunities and threats.
B) strengths and weaknesses.
C) product substitution and durability.
D) manufacturing and operations.
E) None of the answer choices is correct.
Answer: A
Diff: 1 Page Ref: 56
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
18) As an open system, an organization ________ and ________ its external environment.
A) reacts to; controls
B) interacts with; responds to
C) interacts with; controls
D) reacts to; responds to
E) None of the answer choices is correct.
Answer: B
Diff: 3 Page Ref: 57
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
4
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
19) The various studies of organizational environments can be summarized from the following
perspective(s):
A) environment as a source of information.
B) environment as a source of resources.
C) environment as a source of power.
D) environment as a source of information and of resources.
E) None of the answer choices is correct.
Answer: D
Diff: 2 Page Ref: 57
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
21) Which of the following would be examples of sectors that could be found in the specific
environment?
A) Demographics
B) Competitors
C) Economics
D) Political/legal
E) All of the answer choices are correct.
Answer: B
Diff: 2 Page Ref: 60
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
5
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
22) Which of the following is not one of the five competitive forces?
A) Competition forms substitute products
B) The threat of potential entry
C) The strength of industry forces
D) The bargaining power of buyers
E) None of the answer choices is correct.
Answer: C
Diff: 2 Page Ref: 62
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
23) The Porter five forces model includes all of the following factors except
A) bargaining power of suppliers.
B) threat of new entrants.
C) threat of a decrease in research and development.
D) threat of substitute products.
E) bargaining power of buyers.
Answer: C
Diff: 2 Page Ref: 62
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
6
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
25) One of the factors that shapes the definition of exit barriers as factor(s) that keep companies
competing in businesses, even when those businesses are failing, is
A) economic factors.
B) strategic factors.
C) emotional factors.
D) All of the answer choices are correct.
E) None of the answer choices is correct.
Answer: C
Diff: 2 Page Ref: 63
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
27) Which of the following does not usually function as an entry barrier?
A) Economies of scale
B) High strategic stakes
C) Product differentiation
D) Switching costs
E) Access to distribution channels
Answer: B
Diff: 2 Page Ref: 64
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
7
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
28) ________ refers to cost savings that you get as volume increases.
A) Switching costs
B) Economic costs
C) Economies of scale
D) All of the answer choices are correct.
E) None of the answer choices is correct.
Answer: C
Diff: 2 Page Ref: 64
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
30) The one-time costs facing the buyer who switches from one supplier's product to another's is
A) product differentiation.
B) capital requirements.
C) switching costs.
D) access to distribution channels.
E) government policy.
Answer: C
Diff: 1 Page Ref: 65
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
8
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
31) Government policy is a potential barrier to entry because of
A) licensing requirements.
B) controlling access to raw materials.
C) product safety standards.
D) water pollution standards.
E) All of the above are issues of government policy.
Answer: E
Diff: 2 Page Ref: 65
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
32) When consumers consider whether they have the ability and resources themselves to
manufacture the products they are purchasing from the industry, this issue refers to the ________
of the Porter five forces model.
A) bargaining power of buyers
B) threat of potential entrants
C) threat of substitute products
D) bargaining power of suppliers
E) None of the answer choices are correct.
Answer: A
Diff: 3 Page Ref: 66
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
33) A buyer will have less bargaining power if all of the following factors apply except
A) buyers have limited information.
B) buyers face few switching costs.
C) the products purchased are highly differentiated and unique.
D) buyers do not have the ability to manufacture the products.
E) buyers purchase small volumes of the products.
Answer: B
Diff: 2 Page Ref: 66
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
9
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
34) When organizations consider whether there are upcoming price increases in the products
purchased by the industry, this issue refers to the ________ of the Porter five forces model.
A) bargaining power of buyers
B) threat of potential entrants
C) threat of substitute products
D) bargaining power of suppliers
E) None of the answer choices is correct.
Answer: D
Diff: 3 Page Ref: 66
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
10
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
37) Recent census data showed that for the first time in the history of the United States there
were more Americans over age ________ than under.
A) 25
B) 30
C) 21
D) 19
E) 35
Answer: B
Diff: 2 Page Ref: 72
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
38) The generation of the postwar group was born between the years
A) 1912-1921.
B) 1922-1927.
C) 1928-1945.
D) 1965-1977
E) 1978-1994.
Answer: C
Diff: 1 Page Ref: 72
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
39) Which of the general environmental sectors is affected when minimum wage laws are
changed?
A) Economics
B) Demographics
C) Sociocultural
D) Political/legal
E) Technological
Answer: D
Diff: 2 Page Ref: 74
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
11
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
40) One of the significant legislative acts affecting organizations is
A) Equal Employment Opportunity Act of 1972.
B) Family and Medical Leave Act of 1993.
C) North American Free Trade Agreement of 1993.
D) Consumer Product Safety Act of 1972.
E) All of the answer choices are correct.
Answer: E
Diff: 1 Page Ref: 75
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
42) One of the biggest technological advancements to affect the organization in recent years is
A) the assembly line.
B) the ability of consumers to buy online.
C) the introduction of hand-held personal computers.
D) continuing computerization of an organization's activities.
E) the ability of managers to control employees electronically.
Answer: D
Diff: 2 Page Ref: 76
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Use of Information Technology
Objective: Explain how to evaluate a firm's external environment
12
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
43) Demographic information can be obtained from all of the following sources except
A) the Economic Statistics Briefing Room.
B) the U.S. Bureau of the Census.
C) the Statistical Abstract of the World.
D) the Statistical Yearbook.
E) the Current Population Survey.
Answer: A
Diff: 2 Page Ref: 73
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
45) A manager who anticipates changes and plans for those changes can be referred to as a(n)
A) reactive manager.
B) negligent manager.
C) ethical manager.
D) proactive manager.
E) socially responsible manager.
Answer: D
Diff: 3 Page Ref: 79
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
13
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
46) The major problem with forecasts and trend analyses is
A) the information is difficult to compile with the latest technology.
B) the information constitutes predictions of the future, not actual facts.
C) the information is built using historical trends.
D) consumers do not benefit from technological trends predicted.
E) None of the answer choices is correct.
Answer: B
Diff: 2 Page Ref: 81
Topic: Discuss the Benefits and Challenges of Doing an External Analysis
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
14
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
50) The key is to make the external analysis process as ________ and ________ as possible.
A) efficient; effective
B) efficient; competitive
C) turbulent; stable
D) All of the answer choices are correct.
E) None of the answer choices is correct.
Answer: A
Diff: 2 Page Ref: 78
Topic: Discuss the Benefits and Challenges of Doing an External Analysis
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
TimberKing is a new Midwest company in the portable saw mill industry. You have been asked
to give Edward Perry, TimberKing's new CEO, advice to assist him in doing an external analysis
of the portable saw mill industry.
51) Which of the following best describes the organizational environment perspective that
summarizes the various studies of organizational environments?
A) Environment as a source of information
B) Environment as a source of resources
C) Environment as a source of power
D) Environment as a source of information and resources
E) None of the answer choices is correct.
Answer: D
Diff: 2 Page Ref: 58
Topic: Describe What an External Analysis Is
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
52) Mr. Perry thinks perhaps the $30,000 price tag of each portable saw mill might discourage
buyers from going to another brand portable saw mill. This is an example of
A) product differentiation.
B) capital requirements.
C) switching costs.
D) access to distribution channels.
E) government policy.
Answer: C
Diff: 2 Page Ref: 65
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
15
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
53) In thinking about the various laws that affect organizations, Mr. Perry should be most
concerned about which of the following laws?
A) The Equal Employment Opportunity Act of 1972
B) The Americans with Disabilities Act of 1990
C) The Occupational Safety and Health Act of 1970
D) The Civil Rights Act of 1991
E) The U.S. Economic Espionage Act of 1996
Answer: C
Diff: 2 Page Ref: 75
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
54) As the consultant, you propose to Mr. Perry that one challenge of conducting an external
analysis is
A) market conditions are stable.
B) brand loyalty is low.
C) markets may be concentrated.
D) markets may be fragmented.
E) forecasts and trend analyses are not facts.
Answer: E
Diff: 2 Page Ref: 81
Topic: Discuss the Benefits and Challenges of Doing an External Analysis
AACSB: Analytical Skills
Objective: Explain how to evaluate a firm's external environment
The perspective that views the environment as a source of resources is characterized by:
∙ Organizations depend on the environment for these resources.
∙ Resources are sought by competing organizations.
∙ Dependency is determined by difficulty of obtaining and controlling resources.
∙ Reducing dependency means controlling environmental resources.
∙ Controlling environmental resources, meaning knowing about the environment and attempting
to change or influence it.
Diff: 2 Page Ref: 57-59
Topic: Describe What an External Analysis Is
AACSB: Reflective Thinking
Objective: Explain how to evaluate a firm's external environment
16
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
56) Discuss the major barriers to entry.
Answer:
∙ Economies of scale are defined as any cost savings received as volume of the product
increases.
∙ Cost disadvantages from other than scale - There are certain factors in production that yield
cost advantages such as favorable access to raw materials, exclusive or protected product
technology, favorable locations, and government subsidies.
∙ Product differentiation is the identification of the product to the customer. Any aspect of the
product that can set it apart for the customer is the key to brand loyalty and, ultimately, product
differentiation.
∙ Capital requirements are the investment cost required to compete financially.
∙ Switching costs are the costs associated with the buyer that switches from one supplier to
another.
∙ Access to distribution channels - A new competitor in the industry must work with distribution
outlets to provide a space through which its products can be sold.
∙ Government policy can involve the implementation of laws and regulations to which all
competitors in an industry must adhere.
Diff: 3 Page Ref: 64-65
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Reflective Thinking
Objective: Explain how to evaluate a firm's external environment
17
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
58) Explain the primary responsibility of managers in conducting external analysis across
managerial levels.
Answer:
∙ Lower level managers should encourage workers to listen to what customers are saying or to
what suppliers' sales representatives are saying.
∙ Middle managers act as an information gatherer and disseminator. They also monitor changes
in general environmental sectors.
∙ Upper managers must be responsible for the overall health of the organization. Information
gathered should be used to make strategic decisions about the organization.
Diff: 2 Page Ref: 78
Topic: Explain How to Do an External Analysis of an Organization's Specific and General
Environments
AACSB: Reflective Thinking
Objective: Explain how to evaluate a firm's external environment
18
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall