Chapter 5: Industry and Competitor Analysis(L6)

1) Terry Washington recently started a new firm in the financial services industry. Prior to starting his firm, he spent considerable time doing research on the potential of the industry. The research that Terry was doing is called ________ analysis.

• A) industry

• B) sector

• C) commercial

• D) business

• E) target market

2) A(n) ________ is a group of firms producing a similar product or service, such as soft drinks, airlines, or smartphone apps.

• A) cluster

• B) division

• C) sector

• D) industry

• E) network

3) Once a firm decides to enter an industry and chooses a market in which to compete, it must gain an understanding of its competitive environment. This challenge can be undertaken by completing a(n) ________ analysis.

• A) business

• B) industry

• C) competitor

• D) strategic

• E) market

4) Each quarter, Craig Anderson, who owns a chain of auto repair shops, does a detailed analysis of his firm's competitors. This analysis is called ________ analysis.

• A) competitor

• B) challenger

• C) strategic

• D) participant

• E) industry

5) Industries that sell products to seniors, such as the eyeglass industry and the hearing aid industry, are benefiting from the aging of the population, which is an important ________ trend.

• A) environmental

• B) business

• C) commerce

• D) statutory

• E) competitive

6) Many firms benefit from an increasing ability to outsource manufacturing or service functions to lower-cost foreign countries. This trend is referred to in the textbook as a(n) ________ trend.

• A) business

• B) environmental

• C) commerce

• D) statutory

• E) economic

7) According to the textbook, the five competitive forces included in the Five Forces model determine the average ________.

• A) rate of new business starts in an industry

• B) growth rate for the firms in an industry

• C) rate of return for the firms in an industry

• D) sales for the firms in an industry

• E) failure rate for the firms in an industry

8) According to the textbook, how do well-managed firms respond to the five forces that determine industry profitability?

• A) They switch industries if the forces are too compelling.

• B) They focus on one force intently and excel by overcoming that force.

• C) They overcome each of the forces.

• D) They ignore the forces.

• E) They try to position their firms in a way that avoids or diminishes the forces.

9) In general, industries are more attractive when the ________.

• A) majority of the threats are high

• B) majority of the threats are low

• C) threat of each of the forces is neutral-neither low nor high

• D) threat of each of the five forces is high

• E) threat of each of the five forces is low

10) Generally, industries are more attractive when the threat of substitutes is ________.

• A) high

• B) low

• C) neutral (neither high or low)

• D) high for manufacturing firms and low for service firms

• E) high for service firms and low for manufacturing firms