Chapter 2 External Analysis The Identification ofOpportunities and ThreatsTRUEFALSE1.To determine its opportunities and threats, a firm should focus on internal processes andcapabilities.(A) True(B) FalseAnswer : (B)2.Opportunities arise when a company can take advantage of conditions in its environment toformulate and implement strategies that allow it to become more profitable.3.Threats arise when conditions in the external environment endanger the integrity and profitabilityof a company's business.4.The bottled water industry created new competitors for Coca-Cola, but it did not change the basicindustry boundaries.5.In Porter's competitive forces framework, the stronger the five forces, the ability of establishedcompanies to raise prices and earn greater profits becomes more limited.(A) True(B) False
Answer : (A)6.Substitute products are not a threat if a company is the market leader.7.Suppliers are most powerful when the products that they sell have many substitutes.8.Cost reductions gained through mass-producing a standardized output are a source of scaleeconomies.9.The risk of entry by potential competitors is a function of the height of the barriers to entry.(A) True(B) FalseAnswer : (A)10.The more commodity-like that an industry's product is, the lower the intensity of any price warthat may develop.11.A group of firms all make tools for baking-pots, pans, measuring cups, and utensils. This groupshould be referred to as a market segment.
12.Strong brand loyalty and high customer switching costs are low barriers to entering an industry.13.Growing demand tends to reduce rivalry because all companies can sell more without takingmarket share away from each other. (A) True(B) FalseAnswer : (A)14.Government deregulation of telephone service lowered the barriers to entry and loweredindustry profit rates.15.When buyers are in a weak bargaining position, companies in the industry must lower theirprices to increase profits.16.Market segments are distinct groups of customers within a market that can be distinguishedfrom each other based on their individual attributes and specific demands.
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- Fall '17