CH 3 Flashcards
1
Q
Industry analysis is also referred to as external strategic management audit.
A
True
2
Q
An external audit focuses on identifying and evaluating trends and events within the control of management.
A
False
3
Q
The aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.
A
F
4
Q
4) External audits attempt to identify key variables that offer actionable responses.
A
T
5
Q
Five major categories of external variables are: 1) economic forces; 2) social and cultural
forces; 3) political, governmental and legal forces; 4) technological forces; and 5) demographic forces.
A
F
6
Q
As many managers and employees as possible should be involved in the process of performing an external audit.
A
T
7
Q
To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental and technological trends.
A
T
8
Q
8) Freund argues that key external factors must not be hierarchical.
A
F
9
Q
Research findings suggest that a greater percentage of a firm’s profitability can be explained
by the industry than can be explained by the firm’s internal factors.
A
F
10
Q
An economic trend in the Arab world is an increasing number of two-income households.
A
T
11
Q
11) Economic factors do not have much impact on the attractiveness of strategies.
A
F
12
Q
An increase in interest rates is directly related to an increase in both discretionary income and the demand for discretionary goods.
A
F
13
Q
13) In Arab countries that are oil producers, government expenditures increase and jobs become more readily available when oil revenues increase.
A
T
14
Q
In some Arab countries, companies that depend heavily on imports benefit greatly when the dollar falls against the yen and euro.
A
F
15
Q
Decreasing demands for oil will significantly impact the economies of many countries in the
Middle East region, as these countries are either oil producers or labor exporters for the oil- producing countries.
A
T
16
Q
The Arab region is experiencing little change in terms of social priorities and population changes.
A
F
17
Q
The Arab world, in general, has a high rate of birth; and the youth demographic group is one of the largest in the population.
A
T
18
Q
With about 60 percent of its population under 25 years of age, the Arab world is one of the most youthful regions in the world.
A
T
19
Q
19) All Arab countries share a similar culture and have the same ethnic and religious beliefs.
A
F
20
Q
Social and demographic trends are not shaping the way the Arabs live, work, produce, and consume
A
F
21
Q
Although the Arab world has one of the highest rates of expansion of the youth demographic in the world, the growing percentage of the older segment is apparent in some countries.
A
T
22
Q
In 2050, approximately a quarter of the populations are expected to be aged 60 years and older in five Arab countries.
A
T
23
Q
Political, governmental, and legal factors are considered key threats for most small and large organizations.
A
F
24
Q
Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.
A
T
25
In addition to liberalization, Arab executives have shown an interest in asking their respective governments to join the World Trade Organization and in protecting the environment.
T
26
Mass communication and high technology are creating similar patterns of consumption in
diverse cultures worldwide, which means that many companies may find it difficult to survive by relying solely on domestic markets.
T
27
Within the European Union (EU), tax rates have been standardized to end competitive tax breaks among member countries.
F
28
The Internet is changing the very nature of many industries by altering product life cycles and changing the historical trade-off between production standardization and flexibility.
T
29
In practice, critical technology decisions are too often delegated to lower organizational levels or are made without an understanding of their strategic implications.
T
30
Competition in virtually all industries can be described as intense, and sometimes as cutthroat in the Arab world.
T
31
"Innovate or evaporate; particularly in technology-driven businesses, nothing quite recedes like success" is a characteristic of the most competitive companies.
T
32
Corporate intelligence can be defined as a systematic and ethical process for gathering and analyzing information about the activities and general business trends of the competition, to
further a business's own goals.
F
33
33) Internal opportunities can be represented by major competitors' weaknesses.
F
34
An effective CI program allows all areas of a firm to access consistent and verifiable information in making decisions.
T
35
Competitive intelligence is not considered corporate espionage because 95 percent of the
information a company needs to make strategic decisions is available and accessible to the public.
T
36
Because companies are fearful of corporate espionage, cooperative agreements between competitors are becoming less popular.
F
37
Market commonality is the extent to which the type and amount of a firm's internal resources are comparable to a rival
F
38
According to Michael Porter, five competitive forces create vital opportunities and threats to
organizations: 1) new entrants; 2) substitute products or services; 3) bargaining power of
suppliers; 4) bargaining power of buyers; and 5) rivalry among existing firms.
T
39
The first step for using Porter's Five-Forces Model is to evaluate the relative strength of each competitive force.
F
40
The most powerful of Porter's five competitive forces is usually the bargaining power of consumers.
F
41
Significant barriers to entry are not always sufficient to keep some new firms from entering
industries with higher-quality products, lower prices and substantial marketing resources
T
42
Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses.
T
43
43) Forward integration is used by firms to gain control or ownership of suppliers.
F
44
The bargaining power of consumers can be the most important force impacting competitive advantage.
T
45
45) Forecasts are educated assumptions about future trends and events.
True
46
) Qualitative forecasts are most appropriate when historical data are available, and when the relationships among key variables are expected to remain the same in the future.
F
47
47) Quantitative forecasts become less accurate as historical relationships become less stable.
T
48
48) Linear regression is based on the assumption that the future will be different from the past.
F
49
49) Linear regression is a popular technique for qualitative forecasts.
F
50
Without reasonable assumptions, the strategy-formulation process could not proceed effectively.
T
51
Globalization is a process of worldwide integration of strategy formulation, implementation
and evaluation activities.
T
52
A global strategy seeks to meet the needs of customers worldwide with the lowest cost at the highest value.
T
53
A global strategy includes designing, producing, and marketing products with global needs in mind, instead of considering individual countries alone.
T
54
54) It is clear that different industries become domestic for different reasons.
F
55
An EFE Matrix does not alow strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.
F
56
In an External Factor Evaluation Matrix, opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening.
T
57
Regardless of the number of key opportunities and threats included in an External Factor Evaluation Matrix, the highest possible total weighted score for an organization is 4.0, and
the lowest possible total weighted score is 0.0.
F
58
A Competitive Profile Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.
F
59
Both a Competitive Profile Matrix and an EFE Matrix have the same meaning in the weights, ratings and total weighted scores.
T
60
The critical success factors in a Competitive Profile Matrix are often the same as those in an EFE Matrix.
F
61
________ is not part of an external audit.
A) Studying the political environment
B) Analyzing social, cultural, demographic and geographic forces
C) Analyzing financial ratios
D) Analyzing available technologies
E) Analyzing competitors
C
62
Identifying and evaluating key social, political, economic, technological and competitive
trends and events are the main components of
A) performing an external audit.
B) formulating strategy.
C) developing an effective mission statement.
D) conducting an internal audit.
E) implementing strategy.
A
63
The process of performing an external audit needs to include
A) as many managers and employees as possible.
B) between 15 to 20 managers for it to be valid
C) stockholders and external government agencies
D) primarily front-line supervisors
E) only top level managers, as it's a planning function.
A
64
To perform an external audit, a company first must
A) get an approval from the Securities and Exchange Commission.
B) perform an internal audit.
C) hire a consultant to develop a comprehensive strategic plan.
D) gather competitive intelligence and information about external trends.
E) all of these
D
65
Freund emphasizes that key external factors should be all of these except
A) measurable.
B) hierarchical in the sense that some will pertain to the overall company while others will be
more narrowly focused.
C) important for achieving long-term and annual objectives.
D) applicable to all competing firms.
E) relatively few in number.
E
66
The I/O approach to competitive advantage argues that external factors are ________ internal
factors in a firm achieving competitive advantage.
A) more important than
B) less important than
C) less common than
D) more common than
E) as important as
A
67
According to I/O theorists, which of the following contributes least to firm performance?
A) Economies of scale
B) Product differentiation
C) Internal resources
D) Barriers to market entry
E) Level of competitiveness
C
68
What happens to the demand for discretionary goods when interest rates rise?
A) It declines.
B) It stays the same.
C) There is no way to tell.
D) It first rises then declines.
E) It rises.
D
69
The effect of trends in the dollar's value on companies in different industries and in different
locations are
A) significant and equal.
B) neglibible.
C) significant and unequal.
D) insignificant and unequal.
E) marginal and equal.
C
70
Generally, at the present time, a high worldwide demand for ________ generates more
revenue for Arab countries and allows these countries to invest in various economic sectors.
A) gold
B) food
C) steel
D) diamond
E) oil
E
71
Who are the world's longest-living people?
A) Americans
B) Japanese
C) Filipinos
D) Indians
E) Egyptians
B
72
72) Older population segments are especially interested in
A) crime prevention.
B) financial servoces.
C) travel and leisure.
D) health care.
E) All the above.
E
73
When an industry relies heavily on government contracts, which forecasts can be the most
important part of an external audit?
A) Competitive
B) Political
C) Multinational
D) Economic
E) Technological
B
74
Which of these does not significantly affect firms?
A) Lobbying activities
B) Constitutional laws
C) Antitrust legislation
D) Tax rates
E) Patent laws
B
75
The term that refers to the EU's effort to end competitive tax breaks among member
countries is
A) tax harmonization.
B) double taxation.
C) equity taxation.
D) taxation bias.
E) tax reconciliation.
A
76
Technological advancements can create new ________ advantages that are more powerful
than existing advantages.
A) competitive
B) social
C) environmental
D) economic
E) comparative
A
77
Which is an important sector of the economy for a number of Arab countries highly
vulnerable to climate change?
A) Food production
B) Metals
C) Textiles
D) Paper
E) Tourism
E
78
Collecting and evaluating information on competitors is essential for successful
A) strategy formulation.
B) strategy management.
C) strategy implementation.
D) strategy evaluation.
E) internal analysis.
A
79
The term used to describe the systematic and ethical process for gathering and analyzing
information about the competition's activities and general trends to further a business' own
goals is
A) unethical business practice.
B) information sharing.
C) artificial intelligence.
D) competitive intelligence.
E) competitive advantage.
D
80
________ is not a basic mission of a competitive intelligence program.
A) To provide a general understanding of an industry
B) To identify industry executives who could be hired by the firm
C) To provide a general understanding of a company's competitors
D) To identify areas where competitors are vulnerable and to assess the impact strategic
actions would have on competitors
E) To identify potential moves a competitor might make that would endanger a firm's
position in the market
B
81
Keeping strategies secret from employees and stakeholders can do all of the following except
A) provide competitive advantage to competitors.
B) inhibit employee and stakeholder understanding.
C) forego valuable employee or stakeholder input.
D) inhibit employee and stakeholder communication.
E) inhibit employee and stakeholder commitment.
A
81
Which statement about business intelligence is least accurate?
A) Running an intelligence program requires many people.
B) Intelligence gathering is an unethical business practice.
C) Business intelligence is equal to espionage.
D) Collecting intelligence about competitors violates antitrust laws.
E) Running an intelligence program requires many computers and other resources.
D
82
Intensity of competition ________ in lower-return industries.
A) fluctuates
B) is lowest
C) is non-existent
D) is highest
E) is not important
D
83
What is not one of Michael Porter's five competitive forces?
A) Bargaining power of suppliers
B) Bargaining power of buyers
C) Rivalry among existing firms
D) Bargaining power of unions
E) New entrants
D
84
According to Porter, what is usually the most powerful of the five competitive forces?
A) Rivalry among competing firms
B) Potential entry of new competitors
C) Bargaining power of consumers
D) Bargaining power of suppliers
E) Potential development of substitute products
A
85
Whenever new firms can easily enter a particular industry, the intensity of competitiveness
among firms
A) stays the same.
B) neutralizes.
C) increases.
D) decreases.
E) fluctuates.
C
86
If suppliers are unreliable or too costly, which of these strategies may be appropriate?
A) Backward integration
B) Forward integration
C) Market penetration
D) Horizontal integration
E) Concentric diversification
A
87
What level of bargaining power do consumers have when the products being purchased are
standard or undifferentiated?
A) Marginal
B) Not necessary
C) High
D) Negative
E) Low
C
88
Because of the Internet, barriers to personal and business success are
A) being eliminated.
B) significantly enhanced.
C) acting like glass walls.
D) lower.
E) being built.
A
89
90) What are educated assumptions about future trends and events?
A) Statistics
B) Facts
C) Predictions
D) Forecasts
E) Guesses
D
90
The international challenge faced by Arab corporations is twofold:
A) how to enhance imported goods in domestic markets and minimize exports to other
nations.
B) how to defend domestic markets against imported goods while minimizing exports.
C) how to gain exports to other nations and enhance market share for imported goods in
domestic markets.
D) how to gain and maintain exports to other nations and how to defend domestic markets
against imported goods.
E) how to increase exports to other countries and how to increase imports from other
countries.
D
91
Which of the following is a process of worldwide integration of strategy formulation,
implementation and evaluation activities?
A) Industry analysis
B) Brainstorming
C) Industrialization
D) Mission development
E) Globalization
E
92
Globalization of industries is occurring for all of these reasons except
A) the emergence of global buyers.
B) e-commerce and the instant transmission of money and information across continents.
C) a worldwide trend toward different consumption patterns.
D) a worldwide trend toward similar consumption patterns.
E) the emergence of global sellers.
C
93
What is the first step in designing an EFE Matrix?
A) Identifying key external factors in the industry
B) Summing the weighted score for each competitor
C) Calculating the sales of each competitor
D) Determining four competitors
E) Drawing the horizontal and vertical lines for the matrix
A
94
What is the range for a firm's total weighted score in an External Factor Evaluation Matrix?
A) 0 to 5
B) 1 to 5
C) 0 to 10
D) 0 to 4
E) 1 to 4
E
95
One difference between CPM and EFE is that
A) CPM includes both internal and external issues.
B) CPM is only used in small firms.
C) the weight and total weighted score mean opposite.
D) CPM is performed only for the company, whereas EFE is performed for both the company
and the competitors.
E) CPM ratings range from 1 to 10
A
