Analyzing the External Environment of the Firm

Analyzing the External Environment of the Firm

1. Developing forecasts, as discussed in the text, include two key inputs, which are A. environmental scanning and stakeholder identification.
B. environmental scanning and competitor intelligence.
C. assessing internal strengths and environmental scanning.
D. environmental scanning and a SWOT analysis.

2. A risk of forecasting discussed in the text is that A. in most cases, the expense of collecting the necessary data exceeds the benefit.
B. forecasting's retrospective nature provides little information about the future.
C. managers may view uncertainty as "black and white" while ignoring important "gray areas."
D. it can create legal problems for the firm if regulators discover the company is making forecasts.

3. Which of the following would be thought of as part of a firm's general environment? A. increased trade deficit
B. decreased entry barriers
C. increased bargaining power of the firm's suppliers
D. increased competitive intensity

4. Interest rate increases have a ________ impact on the residential home construction industry and a ___ effect on industries that produce consumer necessities, such as prescription drugs or basic grocery items. A. positive; negligible
B. positive; negative
C. negative; positive
D. negative; negligible

5. An independent group of suppliers, such as farmers, gather to form a cooperative in order to sell their products to buyers directly, replacing their previous distributor. This is an example of A. forward integration.
B. backward integration.
C. threat of substitute products.
D. threat of entry.

6. The bargaining power of the supplier is less than that of the buyer when A. volume of purchase is low.
B. the buyer's profit margin is low.
C. cost savings from the supplier's product are minimal.
D. threat of backward integration by buyers is low.

7. As seen in Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except A. lack of importance of the buyer to the supplier group.
B. high differentiation by the supplier.
C. readily available substitute products.
D. dominance by a few suppliers.

8. The most extreme rivalry results from A. a high level of differentiation.
B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers.
D. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.

9. Which of the following is an example of the interrelationship between the competitive and general environments? A. A decline in a nation's educational standards results in a decline in the nation's productivity.
B. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic beverages industry.
C. A country's technological inferiority results in its enactment of strong trade barriers against importation.
D. Greater awareness of the environment results in environmental legislation.

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