1. D 2. D 3.A 4.B 5. C 6. D 7. C 8. A 9. A 10.

C
11. D 12. D 13. A 14. C 15. D 16. A 17.B 18. D 19. D 20. C
21. A 22. C 23. C 24.C 25. D 26. A 27. A 28. B 29. C 30.B

STRATEGIC MANAGEMENT CHAP 2 QUIZ

1. The executive leadership team of a large corporation is analyzing a report. The report's
contents have information that can be used to better understand and anticipate a competitor's
objectives, strategies, assumptions, and capabilities. Which of the following is the term for the
report being analyzed?
A. External environmental analysis
B. Internal analysis
C. SWOT analysis
D. Competitor intelligence

2. In the toy industry, Mattel is one of the world leaders, especially with its line of Barbie dolls.
However, it has faced competition from MGA Entertainment, who has produced Bratz dolls
since the 1990s. Which of the following statements is true about the strategic group in which
these companies compete?
A. The two companies occupy different strategic groups and will likely have very different
competitive forces and different strategies.
B. The companies are dealing with the same competitive forces as all of the other companies in
the toy industry.
C. Since they are both toy companies, they both have the ability to quickly pursue the toy truck
market with minimal investment.
D. By competing in the same strategic group, the two companies are dealing with customers who
view their products as direct substitutes for each other.

3. Strategic groups exist because:

A. companies within the same industry may position themselves differently regarding
distribution channels, market segments, and other differentiators, which affects their
strategies.
B. government regulators have different rules for companies based on the size of the company,
geographic headquarters, and number of employees
C. customers want variety in the products and services they select, and different brands can
serve customers' needs differently.
D. industries are one-dimensional, and all businesses within an industry utilize the same
resources and same strategies to achieve their goals.

4. You are starting a new business. Which of the following is the best source of information
regarding gathering competitive intelligence in an ethical manner?
A. State laws
B. A professional association
C. Employees
D. Suppliers

5. Understanding how income is distributed within and across populations informs firms of
different groups':
A. social class.
B. disposable income.
C. purchasing power.
D. family structure.

6. A product substitute would pose a threat to a company in all of the following situations
EXCEPT:
A. when customers face few, if any, switching costs.
B. the substitute product's price is lower than the competing product's price.
C. the substitute product's performance capabilities are lower than the competing product's
performance capabilities.
D. the substitute product's quality is equal to the competing product's quality.

7. You are hired as a strategic analyst for a Fortune 500 company. Your first task is to develop a
competitive intelligence report to find key insights on the rivals' latest actions, current
capabilities, and potential future actions. Being new to this type of report and the ethical
protocols, what should be your first action?
A. Call the competitors' CEO for an interview.
B. Infiltrate the competitors' headquarters and plant devices to receive information.
C. Contact the Strategy and Competitive Intelligence Professionals association.
D. Analyze the publicly released financial records from six months ago.

8. What is the most likely outcome for a company if the executives never analyze competitors'
possible reactions to competitive actions the firm takes?
A. The company will most likely not be able to compete successfully within the industry because
competitors might neutralize its competitive advantage.
B. The company will most likely not be able to compete successfully within the industry due to
unlawful actions that it was unaware of.
C. The company will still be able to compete successfully within the industry as long as it has an
efficient corporate structure.
D. The company will still be able to compete successfully within the industry if it has effective
marketing.

9. A company has just invented a piece of equipment that uses a camera to ensure that drivers
do not leave a child or pet unattended in the vehicle. This new product falls under which of the
following segments of the general environment?
A. Technological
B. Political/legal
C. Global
D. Sociocultural

10. Through research and development (R&D), a cable company has found a way to use its
existing network lines to serve customers with a new product offering—home security systems.
The company is offering the service with a lower monthly fee than most other security
companies. However, the sales force didn't see a lot of interest among its customers who had
an existing security system from a competitor until the firm ran a promotion for reduced prices
on equipment and free installation. Which of the competitive forces is at play?
A. Cost conditions
B. Bargaining power of suppliers
C. Customer switching costs
D. Complementors

11. An industrial tool manufacturer relies on a particular distributor network. This distributor
network has the largest online outlet and store network, and its product lines are aimed at
construction workers. The distributor network is seeking a manufacturer to provide it with
private-label products, as it has decided to offer only its own product line in this category of
industrial tools. Now, the industrial tool company must decide whether to agree to this
proposition or lose this network as a customer. This is an example of which of the competitive
forces at play in this industry?
A. Industry competitive structure
B. Rivalry among competing firms
C. Bargaining power of suppliers
D. Bargaining power of buyers

12. In an external environmental analysis, what are two important elements that need to be
identified?
A. Strengths and weaknesses
B. Threats and strengths
C. Opportunities and weaknesses
D. Opportunities and threats

13. A company is debating whether to enter a new industry. The first order of business is to
conduct an analysis of the five forces. Why is this a crucial first step in the decision-making
process of entering a new industry?
A. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the
venture will most likely fail.
B. If the barrier for entry is high, and suppliers and buyers have little bargaining power, the
venture will most likely fail.
C. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the
venture will most likely succeed.
D. If the barrier for entry is high, and suppliers and buyers have strong bargaining positions, the
venture will most likely succeed.
14. The five competitive forces include all of the following forces that shape competition within
an industry EXCEPT:
A. threat of new entrants.
B. bargaining power of suppliers.
C. rate of innovation and change.
D. threat of substitute products.

15. Which of the following would be deemed unethical when developing competitor
intelligence?
A. Analyzing competitors' financial reports
B. Attending trade shows solely to obtain knowledge of competitors' new products
C. Obtaining court records in an attempt to find statements that may not be found anywhere
else
D. All of these actions are ethical

16. Which of the following describes the relationship between Intel, which makes computer
processors, and Microsoft, a leading desktop software company?
A. Intel and Microsoft are complementors.
B. Intel and Microsoft are competitors.
C. Intel is a supplier to Microsoft.
D. Intel is a customer of Microsoft.

17. Suppliers are most powerful when a company:

A. buys from a supplier in large quantities, making up 50 percent or more of the supplier's total
sales.
B. would have switching costs if it went to a different supplier because the current supplier's
products are unique.
C. has the capability of producing the end product without the supplier.
D. has multiple suppliers to choose from that produce similar components at similar quality.

18. During a meeting, your client told you that a new firm had approached her and presented
its products to her. The new firm has the potential to become a rival. Which of the following
should you research to discover the potential rival's capabilities?
A. Its future objectives
B. Its assumptions
C. Its current strategy
D. Its strengths and weaknesses

19. Cisco is a technology company looking to diversify its portfolio and compete in a new
market. After conducting a scan and forecast, the consultants hired by Cisco provide several
options. In which of the following economic segments should Cisco seek to compete?
A. A very stable economy with low growth potential
B. An unstable, new economy that has an attractively high growth potential.
C. A stable economy with a declining growth potential.
D. A relatively stable economy with strong growth potential

20. Why have PepsiCo and The Coca-Cola Company spent so much money on product
differentiation?
A. To ruin the reputation of the other company
B. To increase flexibility
C. To foster customer loyalty
D. To allow economies of scale

21. Procter & Gamble (P&G) is a consumer products company that is consistently implementing
scanning systems of the environment. The company wants to identify early signals of
environmental changes and trends. P&G's competitors also frequently utilize scanning systems
but are not as competitive as P&G. Which of the following could be the reason for P&G's
competitiveness?
A. P&G takes quick action on ambiguous, incomplete, or unconnected data.
B. The competitors are less concerned with competitive advantages.
C. P&G's reports are more robust and contain insider information.
D. The competitors are not as educated as P&G's executives.

22. The _____ environment is the set of factors that directly influences a firm and its
competitive actions and responses.
A. internal
B. industry
C. economic
D. competitor

23. Which of the following is an element of the economic segment?

A. Income distribution
B. Interest rates
C. Age structure
D. Ethnic mix

24. A telecommunications company is impacted by government regulations of the wireless

spectrum, cell tower locations, and Internet accessibility. The company decides to hire a
lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and
Congress. This is an example of a company dealing with the _____ segment of the general
environment.
A. social
B. political/legal
C. sociocultural
D. economic
25. Car manufacturers have a large lead time on new products. If an idea for a feature on a
vehicle is developed, it will likely be two years before consumers know about it and can decide
if they want to buy it. Consumer trends are sometimes short lived as they are always evolving.
Which external environmental analysis element is a primary focus of car manufacturers?
A. Scanning
B. Monitoring
C. Forecasting
D. Assessing

26. General Electric (GE), the multinational conglomerate, is researching rivals in the appliance
industry by analyzing the financials, current product offerings, and strategies of competitors in
order to gain insight as to how to gain a competitive advantage. Which of the following is GE
performing?
A. Competitor analysis
B. Industry analysis
C. External environmental analysis
D. General analysis

27. What is a competitor analysis?

A. An analysis of companies with which a firm competes directly
B. A robust analysis of one specific competitor
C. An internal report of what a competitor may discover if the competitor analyzed the
company
D. A SWOT analysis of a competitor

28. The country's largest landscape company is the result of a merger between two multistate
firms, Brickman Group and ValleyCrest. Now called BrightView, the $2 billion firm was created
in 2015. The company is operating in a fragmented industry dominated by small, local
businesses. Which of the following identifies a relevant competitive force and a way the
company might leverage it?
A. Bargaining Power of Buyers: BrightView can expect customers to purchase from it because of
brand loyalty.
B. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-
barrier industry through economies of scale, specifically discounts on bulk purchases of raw
material inputs.
C. Bargaining Power of Suppliers: BrightView will have difficulty leaving the landscape industry
because of its investment in this merger and the cost of all of the landscape equipment
included among both companies' assets.
D. Complementors: BrightView will need to collaborate with other companies to develop
outdoor products because there are not enough complementary products in the marketplace
to make homeowners value their landscaping.

29. What is a set of firms emphasizing similar strategic dimensions and using a similar strategy?
A. Collusion group
B. Business partners
C. Strategic group
D. Complementors

30. Which of the following is NOT a concern of a competitor analysis?

A. Information about what drives the competitor, as shown by its future objectives
B. Data on what the competitor's available funds are for innovation, as shown by its balance
sheet
C. Information about what the competitor is doing and can do, as revealed by its current
strategy
D. Intelligence about what the competitor believes about the industry, as shown by its
assumptions