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40 Cards in this Set
- Front
- Back
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What term is used for a plausible alternative views of how the business environment might develop in the future?
Pestelate Scenario Strategic option Value driver |
Scenario
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What is represented by the E in the PEST framework? Choose all that apply.
Economic Experience Efficiency Effectiveness |
Economic
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PEST and Porter's 5 forces analysis are not connected with each other. True or false?
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False
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Which of the following is not one of the five forces used in Porter's model to analyse industries?
Bargaining power of customers Threat of new entrants Threat from substitutes Bargaining power of complementors Supplier bargaining power |
Bargaining power of complementors
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Porter's 5 forces analyses the macroenvironment. True or false?
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False
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Why is it important to undertake macroenvironmental analysis when the micro-environment has more impact on day-to-day operations?
Because changes in the macroenvironment are barriers to the daily operations of the organisation. That is why they are called PESTEL factors. Because managers ought to be aware of the current affairs issues represented by PESTEL factors. Because understanding trends in PESTEL factors enables an organisation to anticipate changes, threats and opportunities arising in the operating environment. |
Because understanding trends in PESTEL factors enables an organisation to anticipate changes, threats and opportunities arising in the operating environment.
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The bargaining power of suppliers depends on which of the following?
The uniqueness and scarcity of the resource that suppliers provide Value for money Capital costs The profitability of the industry Low switching costs |
The uniqueness and scarcity of the resource that suppliers provide
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Which three of the following are the key drivers of consolidation in the brewing industry?
The existence of over-capacity within the industry. The need to contain costs. The benefits of leveraging strong brands. A desire on the part of executives to run the biggest firm in the industry |
The existence of over-capacity within the industry.
The need to contain costs. The benefits of leveraging strong brands. |
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Which three of the following would be most likely to create a major barrier to entry?
Incumbents benefit from significant economies of scale. The industry is highly regulated and there is patent protection. Incumbents are likely to react to a new entry with a price war. There is easy access to suppliers and distribution channels. |
Incumbents benefit from significant economies of scale.
The industry is highly regulated and there is patent protection. Incumbents are likely to react to a new entry with a price war. |
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Which of the following is studied as part of an organisation's macro-environmental analysis?
Competitors Market trends PESTEL issues Internal sales data Industry structure |
PESTEL issues
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Which approach would you use if you wanted to identify the attractiveness of an industry or sector in terms of competitive forces?
PESTEL SWOT Porter's diamond Porter's 5 forces |
Porter's 5 forces
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Which of the following statements best defines a barrier to entry?
A barrier to entry is anything that stops an organisation from moving from one strategic group to another. A barrier to entry is anything that stops a firm in the industry developing a new product for a market segment not currently served. A barrier to entry is anything that stops a firm not currently operating in an industry from joining that industry. A barrier to entry is anything that makes an identified market segment unattractive to firms. |
A barrier to entry is anything that stops a firm not currently operating in an industry from joining that industry.
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The macro-environment (or 'far' external environment) comprises those influences from within the organisation's industry environment. True or false?
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False
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Which of the following is an example of a social issue from the PESTEL analysis?
Development of 3G phones Rising demand for pre-school nursery places China joins the WTO Rise in interest rates |
Rising demand for pre-school nursery places
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A strategic group is a sub-set of consumers with shared characteristics. True or false?
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False
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Which of the following affects the bargaining power of customers?
The number of customers and the volume of their purchases The growth rate of the market Rates of technological innovation Supplier switching costs for firms in the industry The number of customers and the volume of their purchases |
The number of customers and the volume of their purchases
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How often should an organisation carry out macroenvironmental and industry analysis?
Every 1 to 3 years Every five years, to coincide with a five-year planning cycle Continuously Annually, as part of its operational review process |
Continuously
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Porter's 5 forces analysis helps us to understand the process of competition over time. True or false?
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False
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The differential impact of environmental drivers means: (Select one answer only)
The same environmental changes will be an opportunity for some strategies and a threat to other strategies. Some organisations are more competent than others. The same environmental changes will be an opportunity for some organisations and a threat to others. Competitors in an industry need to pursue different strategies. |
The same environmental changes will be an opportunity for some strategies and a threat to other strategies.
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Which one of the following do you think is not a reason why it is important for businesses to study technology trends as part of the PEST analysis?
Technological innovation leads to discontinuous change in industries. New technologies create new market opportunities. New technology can reduce costs. Technological innovation can provide new ways of distributing products. Technological innovation has to be effectively managed in an organisation. |
Technological innovation has to be effectively managed in an organisation.
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Barriers to entry are factors that must be overcome by existing competitors if they are to continue to compete successfully. True or false?
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False
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A scenario is a guess about the future. True or false?
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False
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PEST and Porter's 5 forces analysis should be applied to one organisation. True or false?
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False
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Which of the following issues is not likely to increase the competitive intensity in an industry?
The company has powerful suppliers. There is a low threat of new entrants. The company has powerful buyers. There is a high threat of new entrants. |
There is a low threat of new entrants.
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Which of the following should you consider in segmenting the market?
Customer needs Supplier needs Competitor needs Organisational core competences Organisational resources |
Customer needs
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Which of the following are examples of environmental issues from a PESTEL analysis of the airline industry?
Noise pollution controls Energy consumption controls Restrictions on mergers between airlines Rise in interest rates |
Noise pollution controls
Energy consumption controls |
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Which of the following are identified as a result of external analysis?
Strengths and weaknesses Threats and opportunities Competitive advantages Core competencies |
Threats and opportunities
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What are 'critical success factors'?
They are the organisations major strengths, deriving from the way it deploys its resources. They are those product features that are particularly valued by customers and where the organisation must excel to outperform competition. They represent the secrets of success that an organisation tries to hide from rivals. They are the competencies that enable an organisation to outperform others in the same environment. |
They are those product features that are particularly valued by customers and where the organisation must excel to outperform competition.
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Which of the following is not part of the analysis of the macroenvironment?
Competitors Technology Politics Sociocultural factors Economic factors |
Competitors
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Which of the following is not a key focus of industry analysis?
Monetary policy Market segmentation Competitors Industry structure analysis |
Monetary policy
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Why does external analysis usually start with the macro-environment and proceed to industry analysis?
Because knowledge of the wider environment facilitates a more grounded interpretation of the operating environment as the wider context shaping the industry is understood better. Because managers know about the operating environment already but need to study those issues they do not interact with on a daily basis such as PEST factors. This is just a convention that has developed over time. It does not matter what order the analysis is done in. Because it is important that the data on the operating environment data is very up-to-date so this should be collected last. |
Because knowledge of the wider environment facilitates a more grounded interpretation of the operating environment as the wider context shaping the industry is understood better.
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Which of the following may identify organisations that form a strategic group? Choose all that apply.
They have similar characteristics. They follow similar strategies. They compete on similar bases. They are strategic business units within a single organisation. |
They have similar characteristics
They follow similar strategies. They compete on similar bases. |
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Which of the following are correct descriptions of Porter's 5 forces? Choose all that apply.
The threat of suppliers The threat of substitutes The power of rivalry The power of suppliers |
The threat of substitutes
The power of suppliers |
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Which of the following is NOT an insight derived from using the five forces model?
Understanding of the link between competitive rivalry and the potential profitability of competitors in the industry. It explains and predicts the industry structure. Industry structure refers to the number of players in an industry and the concentration of supply. It clearly identifies the opportunities and threats from the business's industry environment. It provides understanding of the relative cost positions of rivals, suppliers and customers. |
It provides understanding of the relative cost positions of rivals, suppliers and customers.
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Which of the following is NOT a common criticism of the five forces model?
The model is essentially designed to evaluate private sector competitive environments and is not really appropriate for the not-for-profit sector. The model doesn't provide an insight into macro-environmental factors that shape the industry context. It is more appropriate for analysing manufacturing rather than service sectors, where suppliers are less of an issue. The model assumes business environments are characterised by competitive rather than co-operative relations between firms and between firms and their suppliers and customers. The model is often criticised for providing only a snapshot of the industry at a point in time, i.e. it is too static. |
The model doesn't provide an insight into macro-environmental factors that shape the industry context.
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Which of the following is NOT a key element in analysing an organisation's industry environment?
Porter's 'five forces' model Value chain analysis Competitor profiling/benchmarking Demographic trends Market analysis/segmentation |
Porter's 'five forces' model
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Which two of the following are important issues that result from the concept of market segments?
Each market segment must be approached in a similar way to maintain product image. No organisations should attempt to operate in more than six market segments. Many market segments may exist since customer needs may vary for many reasons. Relative market share within a market segment is an important consideration. |
Relative market share within a market segment is an important consideration.
Many market segments may exist since customer needs may vary for many reasons. |
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Which of the following is a correct description of the SWOT analysis?
A SWOT analysis summarises the opportunities and threats for an organisation. A SWOT analysis summarises the key issues from the business environment and the strategic capability of a organisation. A SWOT analysis summarises the strengths and weaknesses of an organisation. A SWOT analysis is a substitute for environmental and industry analysis. A SWOT analysis avoids the need for evaluating strategic capability. |
A SWOT analysis summarises the key issues from the business environment and the strategic capability of a organisation.
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Which of the following five forces is/are most important during the decline stage of an industry life cycle?
Rivalry Power of suppliers Power of customers Threat of entry |
Rivalry
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Which of the following is not an example of a barrier to entry?
Capital costs Access to distribution Intellectual property rights Low switching costs High switching costs |
Low switching costs
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