External Analysis
If you examine various barriers facing firms that might wish to enter the airline industry, this would be most helpful in assessing which of the five forces in that industry?
threat of new entrants
Value chain analysis consists of systematically analyzing a firm’s key activities that for analysis purposes are categorized into what two groups?
primary activities & support activities
_____ is the benefit that is missed or given up when an investor, individual, or business chooses one alternative over another.
opportunity cost
Pete E’ Gee sell’s Big Dog Choppers, a special type of motorcycle. His business generates roughly 80 percent of his revenues from selling these motorcycles and about 20 percent on motorcycle repair and service. Pete E’ Gee would be classified as a ________ firm.
Dominant business
Jennifer is the CEO of JustFixIt Inc., a firm that merges technology with commercial hardware. She has been struggling with the decision to allocate her resources for the development of a new system or go to the market and search for an already established system. The Board of Directors for JustFixIt Inc. suggested that enter a contractual agreement with a partner. This scenario best illustrates the concept of what framework?
build-borrow-buy
In a firm's external environment, ______ trends primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.
demographic
_____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
isolating mechanisms
The difference between the price charged for a product and the cost to manufacture it is referred to as the
producer surplus
________ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.
strategic alliances
A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a
strategic alliance
The internet service provider industry in the country of Wakanda is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the internet service provider industry, the __(power)___ is most likely __(low/high)__
threat of new entrants
most likely low
Leading guitar string producer Highly Strung Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Highly Strung’s competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Highly Strung for similar-quality strings. Highly Strung’s competitive advantage is in danger due to
imitation and substitution
SonronMedia sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called
Agency
Billy is the CEO of Billy’s Kicks, a soccer ball retailer. He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores. In order to do this, Billy will need to engage in ________, which is a corporate level strategy.
backward vertical integration
Companies must evaluate the relevancy of their internal resources. This happens in two ways: they test whether resources are (1) similar to those the firm needs to develop and (2) superior to those of competitors in the targeted area. Which tool can be applied to assess #2?
VRIO framework
We Ensure Inc., an insurance firm, replaced its existing project management software with new software from another supplier. Since the new software has different features and abilities, We Ensure has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents We Ensure’s ______ cost.
switching
The owners of Always Baked bakery want to open a second retail outlet. Which of the following scenarios is most likely to yield a competitive advantage?
- Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.
- Purchase an existing bakery from a business that closed due to declining sales and try to revive it.
- Build a shop in a sparsely populated rural area where the land is inexpensive and few other bakeries exist.
- Open a shop in a crowded downtown location where several other bakeries have been successful over the years.
Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.
A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?
$180
Massive Dynamic Computers sources the components for its laptops from various suppliers on the market. The firm pays $100 for processors, $35 for disk drives, $50 for screens, $10 for memory, and $40 for graphics and wireless internet cards. Massive Dynamic has determined that it would cost $200 per unit to produce all of the necessary components in its in-house manufacturing facility. In this scenario, Massive Dynamic should pursue what?
vertical integration
InGen Pharmaceuticals Inc., Desktop Pharma Inc., and WEN Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with one another. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as?
co-opetition
Nye Studios is a large production company that controls a major portion of the television industry’s market share along with two other firms. Despite its competitiveness with the two other firms, it is influenced by their actions and often has to consider their strategic actions before acting on its own. In this scenario, Nye Studios is most likely functioning in a(n) ________ industry structure.
oligopolistic
Cartzy Inc., Cartific Inc., and Clustercart Inc., are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Judging from the market conditions described in this scenario, which of the following statements is true?
- Resource immobility of the firms will be low.
- The industry structure will be far from perfect competition.
- Barriers to entry within the industry will be high.
- Any advantage that one firm has will be short-lived.
Any advantage that one firm has will be short-lived.
The management team for Forever Power came up with the following vision statement: “Forever Power will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment.” This vision statement is most likely based on which measurement approach?
triple-bottom-line
Finjob Inc. is following a related-linked diversification strategy, and Rangreen Inc. is following a related-constrained diversification strategy. How do the two firms differ from each other?
Finjob Inc. will share fewer common competencies and resources between its various businesses when compared to Rangreen Inc.
Konmatfix Inc. recently acquired Finhigh Pharmaceuticals Inc. It now sells its own products along with the products originally sold by Finhigh Pharmaceuticals. As a result, Konmatfix’s sales force will also be marketing the acquired company’s products. How will this horizontal integration most likely affect Konmatfix?
It will lower its costs through economies of scale.