Concepts in Strategic Management and Business Policy Globalization Innovation and Sustainability 15th Edition Wheelen Test Bank 1

Strategic Management and Business Policy, 15e (Wheelen et al.
)
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Chapter 4 Environmental Scanning and Industry Analysis
1) The combination of the degree of complexity and the degree of change existing in an
organization's external environment is/are called
A) strategic factors.
B) strategic issues.
C) environmental uncertainty.
D) strategic fit.
E) scenarios.
Answer: C
Difficulty: Easy
Learning Obj.: 4.1: List the aspects of an organization's environment that can influence its long-
term decisions
AACSB: Application of knowledge
2) According to the text, one reason environmental uncertainty is a threat to strategic managers is
because
A) it is a costly and time-consuming process.
B) it creates a new playing field in which creativity and innovation can play a major part in
strategic decisions.
C) it forces the strategic manager to be more stable.
D) it hampers their ability to develop long-range plans and make strategic decisions.
E) there are too many uncontrollable variables.
Answer: D
Difficulty: Moderate
term decisions
1
Copyright © 2018 Pearson Education, Inc.
AACSB: Analytical thinking
3) Which of the following is not descriptive of external environmental scanning?

A) used as a tool to ensure a corporation's long-term health
B) used to monitor, evaluate, and disseminate information relevant to the organizational
development of strategy
C) used to identify major stockholders
D) used as a tool for corporations to avoid strategic surprise
E) used to determine a firm's competitive advantage
Answer: C
term decisions
2
4) The corporation's task environment
A) encompasses the physical working areas of the organization.
B) includes those elements or groups within an organization's industry.
C) is an advisory committee to top management.
D) is an accounting of the many jobs within an organization.
E) is the job requirement specification listing necessary skills and abilities.
Answer: B
Difficulty: Easy
term decisions
5) Which of the following is not an element of the organization's task environment?

A) local communities
B) trade associations
C) governments
D) technological developments
E) special interest groups
Answer: D
Difficulty: Easy
term decisions
6) Which environment was generally perceived by business people to be something to exploit,

not conserve, until the twentieth century?
A) the task environment
B) the natural environment
C) the internal environment
D) the societal environment
E) the external environment
Answer: B
term decisions
3
7) Which of the following is not a major force in the societal environment?
A) political-legal forces
B) labor forces
C) economic forces
D) technological forces
E) sociocultural forces
Answer: B
Difficulty: Easy
term decisions
8) Industry analysis was popularized by Michael Porter.

Answer: TRUE
term decisions
9) In dynamic environments, the CEO's focus is on forces in the societal environment.

Answer: FALSE
Difficulty: Easy
term decisions
AACSB: Reflective thinking
10) Environmental scanning is an overarching term encompassing the monitoring, evaluation,

and dissemination of information relevant to the organizational development of strategy.
Answer: TRUE
Difficulty: Easy
term decisions
11) A corporation uses environmental scanning to avoid strategic surprises and ensure long-term
health.
Answer: TRUE
term decisions
12) Political-legal forces regulate the values, mores, and customs of society.
Answer: FALSE
Difficulty: Easy
term decisions
4
13) The societal environment includes the economic, technological, political-legal, and
sociocultural forces.
Answer: TRUE
term decisions
14) A corporation's task environment is typically focused on the industry within which the firm
operates.
Answer: TRUE
term decisions
15) Externalities have been identified by governments but firms have not been forced to deal
with the side effects of their activities.
Answer: FALSE
Difficulty: Easy
term decisions
16) Today's organizations must scan the natural environment for factors that might previously
have been taken for granted.
Answer: TRUE
Difficulty: Easy
term decisions
17) Describe the four general forces in the societal environment.

Answer: The four general forces in the societal environment are economic, technological,
political-legal, and sociocultural. Economic forces regulate the exchange of materials, money,
energy, and information. Technological forces generate problem-solving inventions. Political-
legal forces allocate power and provide constraining and protecting laws and regulations.
Sociocultural forces regulate the values, mores, and customs of society.
Difficulty: Easy
term decisions
5
18) All of the following are technological breakthroughs already having a significant impact on
many industries EXCEPT
A) growing health consciousness.
B) alternative energy sources.
C) genetically altered organisms.
D) smart, mobile robots.
E) virtual personal assistants.
Answer: A
Difficulty: Easy
Learning Obj.: 4.2: Identify the aspects of an organization's environment that are most
strategically important
19) Which societal force includes demographic trends?

A) political-legal forces
B) labor forces
C) economic forces
D) technological forces
E) sociocultural forces
Answer: E
20) Which of the following is not one of the eight current sociocultural trends mentioned in the
text?
A) increasing environmental awareness
B) growth of the seniors market
C) decline of the mass market
D) wage/price controls
E) impact of Generation Y boomlet
Answer: D
6
21) Which is the largest age group of the current generations in all developed countries?
A) Baby Boomers
B) Woofies
C) Silent Generation
D) Gen X
E) Gen Y
Answer: A
Difficulty: Easy
22) A company with significant assets and activities in multiple countries is known as a(n)
A) multi-national corporation.
B) repatriated corporation.
C) transferable corporation.
D) duplicate corporation.
E) emancipated corporation.
Answer: A
Difficulty: Easy
23) When strategic managers have a willingness to reject unfamiliar as well as negative
information it is referred to as
A) strategic paralysis.
B) corporate inertia.
C) management indifference.
D) strategic myopia.
E) corporate apathy.
Answer: D
7
24) The origin of competitive advantage lies in the ability to
A) gain major stockholders.
B) identify and respond to environmental change well in advance of competition.
C) launch products quickly.
D) serve customers faster.
E) create surprise for others.
Answer: B
Difficulty: Difficult
25) The transferring of profits from a foreign subsidiary to a corporation's headquarters is known
as repatriation of profits.
Answer: TRUE
Difficulty: Easy
26) An example of an economic variable in the societal environment is interest rates.

Answer: TRUE
27) The growing health consciousness is an example of a political-legal force.

Answer: FALSE
28) One of the sociocultural variables in the societal environment is the changing household
composition.
Answer: TRUE
8
29) One of the breakthrough developments in technology is the portable information device and
electronic networking.
Answer: TRUE
Difficulty: Easy
30) A multi-national corporation is a company with significant assets and activities in multiple
countries.
Answer: TRUE
Difficulty: Easy
31) The origin of competitive advantage lies in the ability to identify and respond to
environmental change well in advance of competition.
Answer: TRUE
32) Strategic myopia is the willingness to reject unfamiliar as well as negative information.
Answer: TRUE
33) Booz & Company found that companies that are most successful at avoiding surprises had a
well-defined system that integrated planning, budgeting, and business reviews.
Answer: TRUE
9
34) List eight current sociocultural trends in the United States that are transforming North
America and the world.
Answer: Eight current sociocultural trends in the United States that are transforming North
America and the world are as follows:
1. Increasing environmental awareness
2. Growing health consciousness
3. Expanding seniors market
4. Impact of Millennials
5. Decline of the mass market
6. Changing pace and location of life
7. Changing household composition
8. Increasing diversity of workforce and markets
35) According to Porter, seeing clothing firms such as Under Armour enter the athletic shoe
industry would reflect a
A) medium bargaining power of suppliers.
B) low threat of substitutes.
C) medium bargaining power of buyers.
D) high threat of potential entrants.
E) low competitive intensity.
Answer: C
Learning Obj.: 4.3: Conduct an industry analysis to explain the competitive forces that influence
the intensity of rivalry within an industry
36) Industry analysis is primarily concerned with a corporation's

A) societal environment.
B) task environment.
C) sociocultural environment.
D) economic environment.
E) internal environment.
Answer: B
10
37) According to Porter, the corporation is most concerned with
A) the intensity of competition within its industry.
B) the aggregate level of demand for a product line.
C) a market's position on its life cycle.
D) the amount of pressure from the societal environment.
E) the level of government action in an industry.
Answer: A
38) In addition to Porter's Five Forces, another force added in the text is
A) bargaining power of unions.
B) other stakeholders.
C) threat of prospects.
D) threat of shareholders.
E) bargaining strength of employees.
Answer: B
39) According to Porter, the collective strength of the interaction of potential entrants, buyers,
substitutes, suppliers, firm rivalry, and other stakeholders determine
A) the level of government action in an industry.
B) the probable industry attractiveness and business strength position.
C) the ultimate profit potential in the industry measured in terms of long-run return on invested
capital.
D) the aggregate level of demand for a product line.
E) the amount of pressure from the societal environment.
Answer: C
11
40) According to Porter's model, a strong or high force is likely to reduce profits and can be
regarded as a(n)
A) benefit.
B) opportunity.
C) advantage.
D) threat.
E) risk.
Answer: D
41) According to Porter's model, a low force can enable the company to earn greater profits and
can be regarded as a(n)
A) benefit.
B) opportunity.
C) advantage.
D) threat.
E) risk.
Answer: B
42) Porter describes the threat of new entrants. Which of the following is not descriptive of the
"threat of new entrants"?
A) depends on the presence of entry barriers
B) has a desire to gain market share
C) depends on the reaction of existing competitors
D) does not impact industry attractiveness
E) brings new capacity and substantial resources
Answer: D
12
43) Which barrier to entry do corporations such as P&G use to force new entrants to spend
heavily to overcome existing customer loyalty?
A) rivalry among existing firms
B) switching costs
C) capital requirements
D) product differentiation
E) access to distribution channels
Answer: D
44) Which barrier to entry uses cost advantages associated with large size?
A) rivalry among existing firms
B) switching costs
C) cost disadvantages independent of size
D) capital requirements
E) economies of scale
Answer: E
45) Which barrier to entry was demonstrated by Microsoft's development of the first widely
adopted operating system (MS-DOS) for the IBM-type personal computer that gave it a
significant competitive advantage over potential competitors?
A) government policy
B) access to distribution channels
C) cost disadvantages independent of size
D) capital requirements
E) economies of scale
Answer: C
13
46) Intel was able to gain a significant cost advantage over its competitors in the production and
sale of microprocessors because of
A) capital requirements.
B) product differentiation.
C) switching costs.
D) economies of scale.
E) access to distribution.
Answer: D
47) Which of the following is not descriptive of intense rivalry among firms?
A) slow industry growth
B) high fixed costs
C) high exit barriers
D) few competitors or competitors that are roughly equal in size and power
E) product offerings that are highly differentiated
Answer: E
48) Which of the following is not descriptive of the threat of substitute products or services?
A) Substitute products appear to be different, but satisfy the same need as another product.
B) If the cost of switching is low, substitutes may have a strong effect on an industry.
C) Identifying substitutes is relatively easy since they look similar.
D) Possible substitute products or services may not appear to be easily substitutable.
E) Substitutes limit the potential returns of an industry.
Answer: C
14
49) A sugar company that is worried that consumers may buy artificial sweetener instead of
sugar is concerned about the
A) threat of new entrants.
B) rivalry among existing firms.
C) threat of substitute products.
D) bargaining power of suppliers.
E) bargaining power of buyers.
Answer: C
50) Which of the following is not descriptive of a high level of bargaining powers of buyers?
A) Changing suppliers costs very little.
B) Alternative suppliers are plentiful because of standardization of the product.
C) The purchased product represents a high percentage of buyer's costs.
D) The buyer buys a large proportion of the seller's product or service.
E) A buyer earns high profits and is very insensitive to costs and service differences.
Answer: E
51) When General Motors considers making its own automotive parts, Delphi Automotive
Supply Company would be concerned with the
A) bargaining power of suppliers.
B) bargaining power of buyers.
C) rivalry among existing competitors.
D) threat of substitutes.
E) threat of new entrants.
Answer: B
15
52) Which of the following is not descriptive of a high level of bargaining power of suppliers?
A) Substitutes are readily available.
B) The product or service is unique.
C) The supplier industry is dominated by a few companies, but sells too many.
D) The purchasing industry buys only a small portion of the supplier group's goods and services.
E) Suppliers are able to integrate forward and compete directly with their present customers.
Answer: A
53) Other software companies would not compete with Microsoft based on the perceived
hesitation of consumers to try new software. Which of Porter's forces does this reflect?
A) exit barriers
B) bargaining power of buyers
C) threat of substitutes
D) bargaining power of suppliers
E) rivalry among existing firms
Answer: D
54) A company or an industry whose product works well with a firm's product and without
which the product would lose much of its value is considered to be a(n)
A) complementor.
B) oligopoly.
C) strategic group.
D) industry leader.
E) staggered company.
Answer: A
Difficulty: Easy
16
55) A relationship that illustrates the term "complementor" is
A) Microsoft and Intel.
B) General Motors and Ford.
C) Hewlett Packard and Compaq.
D) Gateway and Dell.
E) America Online and CompuServe.
Answer: A
Difficulty: Easy
56) An industry is a group of firms producing a similar product or service.

Answer: TRUE
Difficulty: Easy
57) According to Michael Porter, the weaker each of the competitive forces, the more limited
companies are in their ability to raise prices and earn greater profits.
Answer: FALSE
58) According to Michael Porter, a high force can be regarded as a threat because it is likely to
reduce profits.
Answer: TRUE
59) An entry barrier is an obstruction that makes it difficult for a company to enter an industry.
Answer: TRUE
Difficulty: Easy
17
60) One of the possible barriers to entry is product differentiation.
Answer: TRUE
61) The need to invest huge financial resources in manufacturing facilities in order to produce
large commercial airplanes creates a significant barrier to entry to any competitor for Boeing and
Airbus.
Answer: TRUE
62) Governments can do little to erect barriers to entry in an industry.

Answer: FALSE
63) NutraSweet can serve as a product substitute for sugar satisfying the same need.
Answer: TRUE
64) A buyer may be powerful when changing suppliers costs a great deal.
Answer: FALSE
18
65) Describe Porter's approach to industry analysis.
Answer: Michael Porter contends that a corporation is most concerned with the intensity of
competition within its industry. Basic competitive forces determine the level of this intensity.
These are the threat of new entrants, rivalry among existing firms, threat of substitute products or
services, bargaining power of buyers, bargaining power of suppliers, and relative power of other
stakeholders (added later by the authors).
New entrants to an industry typically bring to it new capacity, a desire to gain market share, and
substantial resources. The threat of entry depends on the presence of entry barriers and the
reaction that can be expected from existing competitors.
A competitive move by one firm can be expected to have noticeable effect on its competitors and
thus may cause retaliation or counter efforts. Intense rivalry is related to the presence of the
number of competitors, rate of industry growth, product or service characteristics, the amount of
fixed costs, capacity, the height of exit barriers, and the diversity of rivals.
Substitute products are those products that appear to be different but can satisfy the same need as
another product.
Buyers affect an industry through their ability to force down prices, bargain for higher quality or
more services, and play competitors against each other.
Suppliers can affect an industry through their ability to raise prices or reduce the quality of
purchased goods and services.
The sixth force includes a variety of stakeholder groups from the task environment. The
importance of these stakeholder groups varies by industry. Some of these groups are
governments, local communities, creditors, trade associations, special interest groups, unions,
shareholders, and complementors.
66) The strength of each of the six driving forces of industry competition varies according to the
A) effectiveness of the strategic planning.
B) stage of industry evolution.
C) capital requirements.
D) changes in the political environment.
E) amount of government regulation.
Answer: B
Learning Obj.: 4.4: Discuss how industry maturity affects industry competitive forces
19
67) In a fragmented industry
A) no firm has large market share.
B) prices increase as new competitors enter the market.
C) economies of scale are rarely used to reduce costs.
D) companies avoid integration to further reduce costs.
E) the experience curve is ineffective in reducing costs.
Answer: A
68) The U.S. major home appliance industry is an example of an industry

A) that has evolved from an oligopoly to a monopoly.
B) in which each company maintained a distinct product line.
C) that was once fragmented, but now is consolidated.
D) that has experienced consistent, increasing sales.
E) experiencing a successful strategy of product specialization because of product differentiation.
Answer: C
69) An industry dominated by a few large firms, all of which struggle with product
differentiation, is known as
A) multi-domestic.
B) consolidated.
C) global.
D) indigenous.
E) worldwide.
Answer: B
70) A fragmented industry is dominated by a few large firms, each of which struggles to
differentiate its products from the competition.
Answer: FALSE
Difficulty: Easy
20
71) Distinguish between a fragmented and consolidated industry.
Answer: A fragmented industry has no firm with a large market share and each firm serves only
a small piece of the total market in competition with others. As new competitors enter the
industry, prices drop as a result of competition.
A consolidated industry is dominated by a few large firms, each of which struggles to
differentiate its products from the competition. The automobile, petroleum, and major home
appliance industries are examples of mature, consolidated industries each controlled by a few
large competitors.
72) In which type of international industry do corporations tailor products to the specific needs
of consumers in a particular country?
A) consortium industry
B) global industry
C) indigenous industry
D) multi-domestic industry
E) worldwide industry
Answer: D
Learning Obj.: 4.5: Categorize international industries based on their pressures for coordination
and local responsiveness
73) Which type of international industry manufactures and sells the same products with only
minor adjustments made for individual countries around the world?
A) consortium industry
B) global industry
C) indigenous industry
D) multi-domestic industry
E) worldwide industry
Answer: B
21
74) Which of the following is an example of an industry in which companies manufacture and
sell the same products, with only minor adjustments made for individual countries around the
world?
A) retailing
B) banking
C) tires
D) insurance
E) health care
Answer: C
75) Two factors tend to determine whether an industry will be primarily multi-domestic or
primarily global. One of the factors is pressure for coordination within the MNCs operating in
that industry. The other factor is
A) the pressure for local responsiveness on the part of individual country markets.
B) the power of the local country governments to restrict MNC actions.
C) the need for brand management in the various MNCs operating within that industry.
D) the importance of differentiating with integrating mechanisms in regional cooperatives.
E) the likelihood of terrorist activity impacting that industry.
Answer: A
76) When the pressure for coordination is strong and the pressure for local responsiveness is
weak for multi-national corporations within a particular industry, the industry will tend to
become
A) global.
B) consolidated.
C) multi-domestic.
D) risky.
E) indigenous.
Answer: A
22
77) When the pressure for local responsiveness is strong and the pressure for coordination is
weak for multi-national corporations in an industry, the industry will tend to become
A) global.
B) consolidated.
C) multi-domestic.
D) risky.
E) indigenous.
Answer: C
78) What is a set of business units or firms that "pursue similar strategies with similar
resources"?
A) strategic group
B) collective collaboration
C) cooperative
D) integral association
E) strategic assembly
Answer: A
Difficulty: Easy
79) Which of the following is not one of the general strategic types according to Miles and
Snow?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
Answer: A
Difficulty: Easy
23
80) According to Miles and Snow, which strategic orientation is demonstrated by companies that
have a limited product line and focuses on improving the efficiency of their existing operations?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
Answer: E
81) According to Miles and Snow, a company that operates in at least two different product-
market areas in which one product is stable and the other one is variable, reflects which strategic
orientation?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
Answer: C
82) According to Miles and Snow, companies with fairly broad product lines that focus on
product innovations and market opportunities, such as Frito-Lay, reflect which strategic
orientation?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
Answer: D
24
83) According to Miles and Snow, most major U.S. airlines have reflected which strategic
orientation?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
Answer: B
84) To succeed in a hypercompetitive industry, companies must be willing to

A) cut prices below marginal costs.
B) pursue market share instead of profits.
C) operate in the ethical gray zone.
D) cannibalize their successful product lines.
E) reduce spending on research and development.
Answer: D
85) Multi-domestic industries are specific to each country or group of countries.

Answer: TRUE
Difficulty: Easy
86) The only factor used to determine whether an industry will be primarily multi-domestic or
primarily global is the pressure for local responsiveness.
Answer: FALSE
87) McDonald's and Olive Garden are in the same strategic group.
Answer: FALSE
25
88) According to Miles and Snow, reactors are companies with a limited product line that focus
on improving the efficiency of their existing operations.
Answer: FALSE
89) In hypercompetitive industries, competitive advantage comes from an up-to-date knowledge

of environmental trends and competitive activity coupled with a willingness to risk a current
advantage for a possible new advantage.
Answer: TRUE
Difficulty: Easy
90) What are the two factors that tend to determine whether an industry will be primarily multi-
domestic or primarily global?
Answer: The factors that tend to determine whether an industry will be primarily multi-domestic
or primarily global are pressure for coordination within the multi-national operations operating in
that industry and pressure for local responsiveness on the part of individual country markets. A
multi-domestic industry is one in which companies tailor their products to the specific needs of
consumers in a particular country. A global industry is one in which companies manufacture and
sell the same products, with only minor adjustments made for individual countries around the
world.
91) Describe the four strategic types of the Miles and Snow typology.
Answer: According to Miles and Snow, there are four general types of firms based on their
general strategic orientation. Defenders are companies with a limited product line that focus on
improving the efficiency of their existing operations. Prospectors are companies with fairly
broad product lines that focus on product innovation and market opportunities. Analyzers are
corporations that operate in at least two different product-market areas, one stable and one
variable. Reactors are corporations that lack a consistent strategy-structure-culture relationship.
26
92) A table which summarizes the key success factors within a particular industry is called a(n)
A) EFAS Table.
B) IFAS Table.
C) SFAS Table.
D) TOWS Matrix.
E) industry matrix.
Answer: E
Difficulty: Easy
Learning Obj.: 4.6: Identify key success factors and develop an industry matrix
93) Those variables that can affect significantly the overall competitive positions of companies
within any particular industry are known as
A) external strategic factors.
B) internal strategic factors.
C) matrix factors.
D) key success factors.
E) industry scenario.
Answer: D
Difficulty: Easy
94) Key success factors seldom vary from industry to industry.

Answer: FALSE
95) An industry matrix summarizes the key success factors within a particular industry.
Answer: TRUE
96) A formal program of gathering information on a company's competitors is referred to as

A) statistical modeling.
B) competitive intelligence.
C) competitive strategy.
D) quantitative forecasting.
E) qualitative matrix.
Answer: B
Difficulty: Easy
Learning Obj.: 4.7: Construct strategic group maps to assess the competitive positions of firms
in an industry
27
97) Which of the following is true in regards to competitive intelligence?
A) The Economic Espionage Act makes it illegal to steal any material that a business has taken
"reasonable efforts" to keep secret.
B) The Society of Competitive Intelligence Professionals urges strategists to stay within the law
and to act ethically when searching for information.
C) The Society of Competitive Intelligence Professionals states that illegal activities are foolish
because the vast majority of worthwhile competitive intelligence is available publicly via annual
reports, websites, and libraries.
D) A number of firms hire consultants with questionable reputations who do what is necessary to
get information when the selected methods do not meet SPIC ethical standards or are illegal.
E) The competitive intelligence function is always housed in its own unit within organizations.
Answer: E
in an industry
98) The primary activity of a competitive intelligence unit is to

A) monitor competitors.
B) engage in corporate espionage.
C) survey stakeholders.
D) determine industry R&D statistics.
E) reverse engineer competitors' products.
Answer: A
Difficulty: Easy
in an industry
99) Competitive intelligence is a formal program of gathering information on a company's

competitors.
Answer: TRUE
Difficulty: Easy
in an industry
100) Business intelligence is one of the fastest growing fields within strategic management.
Answer: TRUE
Difficulty: Easy
in an industry
28
101) A.C. Nielsen is an example of an outside organization providing a firm with competitive
intelligence.
Answer: TRUE
in an industry
102) To combat the increasing theft of company secrets, the U.S. government passed the
Economic Espionage Act in 1996.
Answer: TRUE
in an industry
103) Define competitive intelligence.

Answer: Competitive intelligence is a formal program of gathering information on a company's
competitors. Often called business intelligence, it is one of the fastest growing fields within
strategic management. Most companies use outside organizations (such as A.C. Nielsen Co.) to
provide them with environmental data. The Internet provides the quickest means to obtain data.
Some companies choose to use industrial espionage or other intelligence-gathering techniques to
get their information straight from their competitors.
in an industry
104) Over ________ of large companies use trend extrapolation for forecasting.
A) 20%
B) 30%
C) 40%
D) 50%
E) 70%
Answer: E
Difficulty: Easy
Learning Obj.: 4.8: Develop an industry scenario as a forecasting technique
29
105) A study of nearly 500 of the world's largest corporations indicated which of the following
to be the most widely practiced form of forecasting?
A) statistical modeling
B) scenario-writing
C) Delphi technique
D) brainstorming
E) trend extrapolation
Answer: E
Difficulty: Easy
106) ________ rests on the assumption that the world is reasonably consistent and changes
slowly in the short run.
A) Statistical modeling
B) Scenario-writing
C) The Delphi technique
D) Brainstorming
E) Extrapolation
Answer: E
Difficulty: Easy
107) Trend extrapolation is

A) the process of converting intuition and hunches into reality.
B) the extension of present trends into the future.
C) the process of asking some authorities in the area to make an "informed guess" about the
future.
D) given a large amount of historical data on certain interrelated factors, one attempts to
conceptualize alternative futures.
E) detecting faulty underlying assumptions before forecasting errors can occur.
Answer: B
30
108) A non-quantitative approach to forecasting that requires simply the presence of people with
some knowledge of the situation to be predicted to propose ideas without first mentally screening
them is called
A) simulations.
B) the Delphi technique.
C) brainstorming.
D) signal monitoring.
E) scenarios.
Answer: C
109) One ground rule necessary for effective brainstorming is

A) scrutinize each idea generated.
B) propose ideas without mentally screening them.
C) calculating future earnings of each idea.
D) critique each idea for rationality.
E) forecast the success of each idea.
Answer: B
110) Regression analysis is an example of which quantitative forecasting technique?

A) the Delphi technique
B) statistical modeling
C) brainstorming
D) trend-impact analysis
E) morphological analysis
Answer: B
Difficulty: Easy
111) The most widely used forecasting technique used after trend extrapolation is
A) statistical modeling.
B) simulations.
C) scenario-writing.
D) expert opinion.
E) brainstorming.
Answer: C
Difficulty: Easy
31
112) Which one of the following is not part of the process of developing industry scenarios?
A) Examine possible shifts in societal variables.
B) Identify uncertainties in each of the six forces in the task environment.
C) Generate at least 15 scenarios.
D) Make a range of plausible assumptions about future trends.
E) Analyze the industry situation that would prevail under each scenario.
Answer: C
Difficulty: Easy
113) Faulty underlying assumptions are the most frequent cause of forecasting errors.
Answer: TRUE
114) Extrapolation rests on the assumption that the world is relatively dynamic and changes
quickly in the short run.
Answer: FALSE
115) Statistical modeling is a quantitative forecasting technique that attempts to discover causal
or at least explanatory factors that link two or more time series together.
Answer: TRUE
116) An industry scenario is a forecasted description of a particular industry's likely future. It is

developed by analyzing the probable impact of future societal forces on key groups in a
particular industry.
Answer: TRUE
32
117) Discuss the most commonly practiced form of forecasting.
Answer: Trend extrapolation is the most widely practiced form of forecasting with over 70% of
the world's largest firms using this technique either occasionally or frequently. Extrapolation is
the extension of present trends into the future. It rests on the assumption that the world is
reasonably consistent and changes slowly in the short run. Time-series methods are approaches
of this type: they attempt to carry a series of historical events forward into the future. The basic
problem with extrapolation is that a historical trend is based on a series of patterns or
relationships among so many different variables that a change in any one can drastically alter the
future direction of the trend. As a rule of thumb, the further back into the past you can find
relevant data supporting the trend, the more confidence you can have in the prediction.
118) The technique recommended by the text to organize an analysis of external strategic factors
is called
A) IFAS.
B) EFAS.
C) SFAS.
D) SWOT.
E) the issues priority matrix.
Answer: B
Difficulty: Easy
Learning Obj.: 4.10: Construct an EFAS Table that summarizes external environmental factors
119) In the EFAS Table, the indicator of how well a particular company is responding to current
and expected factors in its external environment is characterized by the
A) IFAS score.
B) industry matrix.
C) total weighted score.
D) SWOT score.
E) SFAS score.
Answer: C
Learning Obj.: 4.10: Construct an EFAS Table that summarizes external environmental factors
33

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Concepts in Strategic Management and Business Policy Globalization Innovation and Sustainability 15th Edition Wheelen Test Bank 1

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Strategic Management and Business Policy, 15e (Wheelen et al.

Chapter 4 Environmental Scanning and Industry Analysis

3) Which of the following is not descriptive of external environmental scanning?

5) Which of the following is not an element of the organization's task environment?

6) Which environment was generally perceived by business people to be something to exploit,

8) Industry analysis was popularized by Michael Porter.

9) In dynamic environments, the CEO's focus is on forces in the societal environment.

10) Environmental scanning is an overarching term encompassing the monitoring, evaluation,

17) Describe the four general forces in the societal environment.

19) Which societal force includes demographic trends?

26) An example of an economic variable in the societal environment is interest rates.

27) The growing health consciousness is an example of a political-legal force.

36) Industry analysis is primarily concerned with a corporation's

56) An industry is a group of firms producing a similar product or service.

62) Governments can do little to erect barriers to entry in an industry.

68) The U.S. major home appliance industry is an example of an industry

84) To succeed in a hypercompetitive industry, companies must be willing to

85) Multi-domestic industries are specific to each country or group of countries.

89) In hypercompetitive industries, competitive advantage comes from an up-to-date knowledge

94) Key success factors seldom vary from industry to industry.

96) A formal program of gathering information on a company's competitors is referred to as

98) The primary activity of a competitive intelligence unit is to

99) Competitive intelligence is a formal program of gathering information on a company's

103) Define competitive intelligence.

107) Trend extrapolation is

109) One ground rule necessary for effective brainstorming is

110) Regression analysis is an example of which quantitative forecasting technique?

116) An industry scenario is a forecasted description of a particular industry's likely future. It is

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