Chapter 2
The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis:
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1. According to your text, a firm's external environment is divided into three major areas:
a. the general, industry, and competitor environments.
b. the general, industry, and internal environments.
c. the general, governmental, and global environments.
d. the political, economic, and competitor environments.
e. the internal, outer circle, and global environments.

2. Which of these is not a dimension of general environment?
a. Demographic
b. Economic
c. Sociocultural
d. Industry
e. Technological

3. Which of these elements is a component of sociocultural segment?
a. Income distribution
b. Population shift
c. Workforce diversity
d. Age structure
e. Labor training laws

4. Educational philosophies and policies are considered a component of which of these segments?
a. Economic
b. Demographic
c. Technological
d. Political/Legal
e. Sociocultural

5. Industry environment includes all of these factors except
a. the threat of new entrants.
b. the power of suppliers.
c. the intensity of rivalry among competitors.
d. the power of buyers.
e. the threat of government regulations.

6. Which of these is not an activity of external environmental analysis?
a. Scanning
b. Distribution
c. Forecasting
d. Monitoring
e. Assessing

7. Determining the timing and importance of environmental changes and trends for firms' strategies and their management refers to
a. assessing
b. forecasting
c. scanning
d. distributing
e. monitoring

8. A(n) _______ is a condition in the general environment that if exploited, helps a company achieve strategic competitiveness.
a. strength
b. threat
c. weakness
d. opportunity
e. scanning

9. _______ suggest competitive possibilities, while _______ are potential constraints.
a. Threats; strengths
b. Opportunities; threats
c. Weaknesses; threats
d. Weaknesses; strengths
e. Threats; opportunities

10. Identifying early signals of environmental changes and trends refers to
a. assessing
b. monitoring
c. distributing
d. forecasting
e. scanning

11. When _______, analysts observe environmental changes to see if an important trend is emerging from among those spotted by scanning.
a. assessing
b. forecasting
c. monitoring
d. distributing
e. condensing

12. Developing projections of anticipated outcomes based on monitored changes and trends refers to
a. assessing
b. monitoring
c. distributing
d. forecasting
e. scanning

13. Which segment of the general environment is concerned with a population's size, age structure, and ethnic mix?
a. Sociocultural
b. Economic
c. Demographic
d. Global
e. Political/Legal

14. Combined, China and India account for _______ of the world's population.
a. half
b. one-third
c. 6 billion
d. 4 billion
e. 550 million

15. For decades, the U.S. population has been shifting from the _______ to the _______.
a. west and south; north and east
b. west and north; east and south
c. east and south; north and west
d. midwest; offshore
e. north and east; west and south

16. In the U.S., projections are that the Hispanic and Asian population shares will increase from 14 percent in 1995 to _____ percent in 2020.
a. 41
b. 37
c. 29
d. 19
e. 6

17. Which segment represents how organizations try to influence government and how government influences them?
a. Economic
b. Political/Legal
c. Technological
d. Demographic
e. Sociocultural

18. Which OECD country spends the highest percent of the nation's GDP on healthcare?
a. The United States
b. Mexico
c. France
d. Germany
e. Japan

19. The fastest growing group of contingency workers is in the
a. technical and professional area.
b. blue-collar work area.
c. assembly-line work area.
d. elementary and high school staff area.
e. maintenance work area.

20. The _______ segment includes the institutions and activities involved in creating new knowledge and translating the knowledge into new outputs, products, processes, and materials.
a. demographic
b. technological
c. global
d. sociocultural
e. economic

21. Korea's approach focuses on ______, whereas China stresses _______,
a. Inhwa; Wa
b. Wa; Gaunxi
c. Gaunxi; Wa
d. Inhaw; Gaunxi
e. Gaunxi; Inhwa

22. Gaunxi refers to
a. personal relationship or good connections.
b. group harmony.
c. social cohesion.
d. obedience to authority.
e. respect of hierarchical relationships.

23. A(n) _______ is a group of firms producing products that are close substitutes.
a. economy
b. demography
c. environment
d. Inhwa
e. Industry

24. Marginal improvements in efficiency that a firm experiences as it incrementally increases its size refers to
a. threat of new entrants.
b. economies of scale.
c. product differentiation.
d. expected retaliation.
e. threat of substitute products.

25. Economies of scale, product differentiations, and capital requirements are types of
a. customer's buying power.
b. bargaining power of suppliers.
c. barriers to entry.
d. rivalry among competitors.
e. government mandates in an industry.

26. All of these are kinds of entry barriers in an industry except
a. access to distribution channels.
b. product similarities.
c. economies of scale.
d. government policy.
e. capital requirements.

27. A supplier group is powerful under all of these conditions except
a. satisfactory substitute products are available to industry firms.
b. industry firms are not a significant customer for the supplier group.
c. suppliers' goods are critical to buyers' marketplace success.
d. the effectiveness of suppliers' products has created high switching costs for industry firms.
e. it is dominated by a few large companies and is more concentrated than the industry to which it sells.

28. Customers are powerful when
a. they purchase a large portion of an industry's total output.
b. the sales of the product being purchased account for a significant portion of the seller's annual revenues.
c. they could switch to another product at little, if any, cost.
d. the industry's products are undifferentiated or standardized, and the buyers pose a credible threat if they were to integrate backward into the sellers' industry.
e. All of the above are true.

29. _______ products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces.
a. Barriers to entry
b. Substitute
c. Differentiated
d. External environment
e. Global

30. Which of these factors does not affect the intensity of firms' rivalries?
a. Numerous or equally balanced competitors
b. High fixed costs
c. High industry growth
d. Lack of differentiation
e. Low switching costs



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