Entrepreneurship Successfully Launching New Ventures 5th Edition by Bruce R. Barringer - Test Bank

Entrepreneurship Successfully Launching New Ventures 5th Edition by Bruce R. Barringer – Test Bank

 

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Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)

Chapter 5   Industry and Competitor Analysis

 

1) Greenvelope, the company profiled in the opening feature of Chapter 5, believes it has created sufficient barriers to entry to enable it to maintain a leadership position in the invitation industry. Its barriers to entry include ________.

1. A) the price-point of its products, the amount of its funding, the strength of its management team, and its partnership with a major player in the invitations industry
2. B) its intellectual property, the strength of its brand, its international presence, and its access to distribution channels
3. C) the strength of its brand, its network of freelance designers, its social mission, and the functionality of its Web site.
4. D) the innovative nature of its products, its network of freelance designers, the strength of its management team, and economies of scale
5. E) its international presence, the price-point of its products, its social mission, and the innovative nature of its products

Answer:  E

Diff: 2      Page Ref: 149

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Analytical Thinking

 

2) 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.

1. A) industry
2. B) sector
3. C) commercial
4. D) business
5. E) target market

Answer:  A

Diff: 1      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

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

1. A) cluster
2. B) division
3. C) sector
4. D) industry
5. E) network

Answer:  D

Diff: 1      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

4) 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.

1. A) business
2. B) industry
3. C) competitor
4. D) strategic
5. E) market

Answer:  C

Diff: 1      Page Ref: 151

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

5) 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.

1. A) competitor
2. B) challenger
3. C) strategic
4. D) participant
5. E) industry

Answer:  A

Diff: 2      Page Ref: 151

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

6) In various studies, researchers have found that from ________ percent of the variation in firm profitability is directly attributable to the industry in which a firm competes.

1. A) 4 to 12
2. B) 8 to 30
3. C) 18 to 42
4. D) 22 to 56
5. E) 34 to 70

Answer:  B

Diff: 3      Page Ref: 151

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Analytical Thinking

 

 

7) 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.

1. A) environmental
2. B) business
3. C) commerce
4. D) statutory
5. E) competitive

Answer:  A

Diff: 2      Page Ref: 152

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

8) 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.

1. A) business
2. B) environmental
3. C) commerce
4. D) statutory
5. E) economic

Answer:  A

Diff: 2      Page Ref: 152

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Analytical Thinking

 

9) The Partnering for Success feature in Chapter 5 focuses on three things that are important for startups to become active in to learn the ins and outs of their industries. The three items focused on in the feature are ________.

1. A) local Chambers of Commerce, trade journals, and networking events
2. B) Facebook, industry-related e-mail listservs, and trade shows
3. C) trade associations, trade shows, and trade journals
4. D) networking events, blogs, and Facebook
5. E) local Chambers of Commerce, city or university-sponsored incubators, and trade associations

Answer:  C

Diff: 2      Page Ref: 153

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

10) Industry analysis is business research that focuses on the potential of an industry.

Answer:  TRUE

Diff: 1      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

 

11) A comparison analysis is a detailed evaluation of a firm’s competitors.

Answer:  FALSE

Diff: 1      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

12) An industry is a group of firms producing a similar product or service, such as tires, life insurance, or smartphone apps.

Answer:  TRUE

Diff: 2      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

13) The two trends that are most important to focus on in an industry analysis are business trends and environmental trends.

Answer:  TRUE

Diff: 2      Page Ref: 152

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

14) Business trends include economic trends, social trends, technological advances, and political and regulatory changes.

Answer:  FALSE

Diff: 2      Page Ref: 152

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

15) What is industry analysis? Why is it important for a new venture to complete a thorough analysis of the industry it is entering?

Answer:  Industry analysis is business research that focuses on the potential of an industry. An industry is a group of firms producing a similar product, such as tires, fitness drinks, or electronic games. Once it is determined that a new venture is feasible in regard to the industry and market in which it will compete, a more in-depth analysis is needed to learn the ins and outs of the industry the firm plans to enter. This analysis helps a firm determine if the target market(s) it identified during its feasibility analysis are accessible and which ones represent the best point of entry for a new firm.

Diff: 1      Page Ref: 150

LO:  5.1: Explain the purpose of an industry analysis.

AACSB:  Reflective Thinking

 

 

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

1. A) rate of new business starts in an industry
2. B) growth rate for the firms in an industry
3. C) rate of return for the firms in an industry
4. D) sales for the firms in an industry
5. E) failure rate for the firms in an industry

Answer:  C

Diff: 3      Page Ref: 154

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

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

1. A) They switch industries if the forces are too compelling.
2. B) They focus on one force intently and excel by overcoming that force.
3. C) They overcome each of the forces.
4. D) They ignore the forces.
5. E) They try to position their firms in a way that avoids or diminishes the forces.

Answer:  E

Diff: 3      Page Ref: 154

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Analytical Thinking

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

1. A) majority of the threats are high
2. B) majority of the threats are low
3. C) threat of each of the forces is neutral-neither low nor high
4. D) threat of each of the five forces is high
5. E) threat of each of the five forces is low

Answer:  E

Diff: 2      Page Ref: 154

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

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

1. A) high
2. B) low
3. C) neutral (neither high or low)
4. D) high for manufacturing firms and low for service firms
5. E) high for service firms and low for manufacturing firms

Answer:  B

Diff: 2      Page Ref: 155

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Analytical Thinking

 

 

20) The price of prescription medicine is high, partly because when someone is sick there is no real alternative to buying medicine if they want to get better. Which of Porter’s five forces explains how this aspect of the prescription medicine industry helps keep profitability high?

1. A) Rivalry among existing firms
2. B) Threat of new entrants
3. C) Threat of substitutes
4. D) Bargaining power of buyers
5. E) Bargaining power of suppliers

Answer:  C

Diff: 2      Page Ref: 155

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

21) Which of Porter’s five forces is most closely associated with the concept “barrier to entry”?

1. A) Bargaining power of suppliers
2. B) Rivalry among existing firms
3. C) Threat of new entrants
4. D) Bargaining power of buyers
5. E) Threat of substitutes

Answer:  C

Diff: 2      Page Ref: 156

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

22) Which of the following is not one of the major sources of barriers to entry?

1. A) Product differentiation
2. B) Capital requirements
3. C) Buyer group concentration
4. D) Access to distribution channels
5. E) Government and legal barriers

Answer:  C

Diff: 2      Page Ref: 157

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

 

23) Shelly Brunner owns a sports-themed restaurant which is located in an upscale business district in Chicago. One advantage that Shelly has is that she bought the lot she built her restaurant on 25 years ago when lots in the area were selling for $50,000. Shelly knows that several potential competitors have looked at bare lots near his business but haven’t been willing to pay the asking prices, which are as high as $500,000. Which of the six major sources of barriers to entry is causing a disincentive for new firms to enter Shelly’s industry?

1. A) Capital requirements
2. B) Economies of scale
3. C) Product differentiation
4. D) Government and legal barriers
5. E) Cost advantage independent of size

Answer:  E

Diff: 2      Page Ref: 157

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Analytical Thinking

 

24) Some industries, like the athletic shoe industry, are dominated by a small number of firms with strong brands. These industries are difficult to break into without spending heavily on advertising. The barrier to entry that the firms in these types of industries have erected is referred to as ________.

1. A) government and legal barriers
2. B) capital requirements
3. C) product differentiation
4. D) cost advantages independent of size
5. E) access to distribution channels

Answer:  C

Diff: 2      Page Ref: 157

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

25) Which of Porter’s five forces is most directly influenced by the number and balance of competitors, degree of difference between products, growth rate of an industry, and level of fixed costs?

1. A) Threat of new entrants
2. B) Rivalry among existing firms
3. C) Threat of substitutes
4. D) Bargaining power of buyers
5. E) Bargaining power of suppliers

Answer:  B

Diff: 3      Page Ref: 157

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

 

26) If a startup pioneers an industry or a new concept within an industry, the name recognition the startup establishes may create a formidable nontraditional barrier to entry referred to as a(n) ________.

1. A) unique business model
2. B) aggressive supremacy
3. C) competitive superiority
4. D) first-mover advantage
5. E) aggressive tactical advantage

Answer:  D

Diff: 2      Page Ref: 158

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

27) According to the example provided in Chapter 5, www.1800contacts.com possesses a nontraditional barrier to entry referred to as ________.

1. A) unique business model
2. B) strength of management team
3. C) access to distribution channels
4. D) Internet domain name
5. E) first-mover advantage

Answer:  D

Diff: 2      Page Ref: 158

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

28) Which of the following was not identified in the textbook as a nontraditional barrier to entry?

1. A) Strength of management team
2. B) First-mover advantage
3. C) Unique business model
4. D) Product differentiation
5. E) Internet domain name

Answer:  D

Diff: 2      Page Ref: 158

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

29) Supplier concentration, switching costs, attractiveness of substitutes, and threat of forward integration are factors that have a direct impact on ________.

1. A) threat of new entrants
2. B) bargaining power of buyers
3. C) rivalry among existing firms
4. D) threat of substitutes
5. E) bargaining power of suppliers

Answer:  E

Diff: 3      Page Ref: 158

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

30) Tim Rutherford is thinking about starting a firm in the medical equipment industry. In the industry analysis Tim has been conducting, one thing he has noticed is that the medical equipment industry is characterized by buyer group concentration. This factor concerns Tim because it tells him that the profitability of the medical equipment industry is potentially suppressed by the ________.

1. A) threat of substitutes
2. B) bargaining power of buyers
3. C) rivalry among existing firms
4. D) bargaining power of suppliers
5. E) threat of new entrants

Answer:  B

Diff: 2      Page Ref: 159

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Analytical Thinking

 

31) The five competitive forces model is a framework for understanding the structure of an industry.

Answer:  TRUE

Diff: 2      Page Ref: 152

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

32) The best industry to enter is an industry where the threat of each of Porter’s five forces is high.

Answer:  FALSE

Diff: 2      Page Ref: 154

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

33) There are four factors that determine the threat of new entrants: number and balance of competitors, degree of difference between products, growth rate of an industry, and level of fixed costs.

Answer:  FALSE

Diff: 2      Page Ref: 156

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

34) In most industries, the major determinant of industry profitability is the level of competition among the firms already competing in the industry.

Answer:  TRUE

Diff: 2      Page Ref: 157

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

 

35) If the buyers are concentrated and they buy from a large number of suppliers, then the bargaining power of buyers is increased.

Answer:  TRUE

Diff: 2      Page Ref: 159

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

36) Identify the five competitive forces that determine industry profitably. Explain the purpose of analyzing these forces?

Answer:  The five competitive forces that determine industry profitability are the threat of substitutes, the threat of new entrants, rivalry among existing firms, bargaining power of suppliers, and bargaining power of buyers. The five competitive forces model is a framework for understanding the structure of an industry and was developed by Harvard professor Michael Porter. Each of Porter’s five forces impacts the average rate of return for the firms in an industry by applying pressure on industry profitability. Companies analyze the five forces to try to position their firms in a way that avoids or diminishes the negative impacts of these forces.

Diff: 2      Page Ref: 154

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

37) Discuss the nontraditional barriers to entry identified in the chapter. Why is it important that entrepreneurial firms utilize one or more of these forms of barriers to entry?

Answer:  The nontraditional barriers to entry, which are particularly suitable for entrepreneurial firms, are strength of management team, first-mover advantage, passion of management team and employees, unique business model, a unique Internet domain name, and inventing a new approach to an industry and executing the idea in an exemplary fashion. It is important that startups utilize one or more of these forms of barriers to entry because many of the traditional barriers to entry, like economies of scale, are expensive. It is difficult for startups to erect expensive barriers to entry because money is usually tight.

Diff: 3      Page Ref: 158

LO:  5.2: Identify and discuss the five competitive forces that determine industry profitability.

AACSB:  Reflective Thinking

 

38) According to the textbook, the Five Forces model can be used in the following two ways: ________.

1. A) first, to help a firm determine whether it should enter an industry in an aggressive or a conservative manner, and second, to help a firm determine whether to compete in international markets in that industry.
2. B) first, to help a firm determine if it should enter a single or multiple niches in an industry, and second, to help a firm determine whether it can be competitive in that industry
3. C) first, to help a firm determine what industry it is best equipped to compete in, and second, to help a firm determine whether to compete in international markets in that industry
4. D) first, to help a firm determine what niche to enter within an industry, and second, to help a firm determine whether it can be competitive in that industry
5. E) first, to help a firm determine whether it should enter a particular industry, and second, to help a firm discern whether it can carve out an attractive position in that industry

Answer:  E

Diff: 3      Page Ref: 160

LO:  5.3: Explain the value that entrepreneurial firms create by successfully using the five forces model.

AACSB:  Analytical Thinking

 

39) Brain Sentry is starting a firm in the small industry that helps football teams discern whether a player has suffered a concussion. This industry is still so new that no standard operating procedures have been developed. The industry Brain Sentry is entering is an example of a(n) ________ industry.

1. A) mature
2. B) declining
3. C) emerging
4. D) global
5. E) fragmented

Answer:  C

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

40) The primary opportunity existing for startups in emerging industries is to ________.

1. A) consolidate the industry and establish industry leadership as a result of doing so
2. B) win customers by placing an emphasis on service and process innovation
3. C) pursue a niche strategy, which focuses on a narrow segment of the industry that might be encouraged to grow through product or process innovation
4. D) capture a first-mover advantage
5. E) pursue a cost reduction strategy, which is accomplished through achieving lower costs than industry incumbents through process innovation

Answer:  D

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

41) A(n) ________ industry is one that is characterized by a large number of firms of approximately equal size.

1. A) fragmented
2. B) mature
3. C) declining
4. D) emerging
5. E) global

Answer:  A

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

42) The primary opportunity existing for startups in fragmented industries is to ________.

1. A) pursue a niche strategy, which focuses on a narrow segment of the industry that might be encouraged to grow through product or process innovation
2. B) win customers by placing an emphasis on service and process innovation
3. C) capture a first-mover advantage
4. D) pursue a cost reduction strategy, which is accomplished through achieving lower costs than industry incumbents through process innovation
5. E) consolidate the industry and establish industry leadership as a result of doing so

Answer:  E

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

43) A(n) ________ industry is an industry that is experiencing slow or no increase in demand.

1. A) declining
2. B) global
3. C) mature
4. D) emerging
5. E) fragmented

Answer:  C

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

 

44) According to the textbook, Justin’s in peanut butter, Pure Fix Cycles in bicycles, and Flings Bins in trash bags are examples of entrepreneurial firms who are exploiting opportunities in ________ industries.

1. A) emerging
2. B) fragmented
3. C) declining
4. D) mature
5. E) consolidated

Answer:  D

Diff: 3      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

45) According to the textbook, Chipotle Mexican Grill in fast-casual restaurants and 1-800-GOT_JUNK? in junk removal are examples of entrepreneurial firms who are exploiting opportunities in ________ industries.

1. A) global
2. B) declining
3. C) mature
4. D) emerging
5. E) fragmented

Answer:  E

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

46) According to the textbook, Nucor in steel, JetBlue in airlines, and Cirque du Soleil in circuses are examples of entrepreneurial firms who are exploiting opportunities in ________ industries.

1. A) fragmented
2. B) emerging
3. C) declining
4. D) global
5. E) mature

Answer:  C

Diff: 3      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

 

47) Opportunities for leadership, niche, harvest and divestment are associated with ________ industries.

1. A) mature
2. B) emerging
3. C) declining
4. D) fragmented
5. E) global

Answer:  C

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

48) A(n) ________ industry is an industry that is experiencing significant international sales.

1. A) global
2. B) mature
3. C) fragmented
4. D) declining
5. E) emerging

Answer:  A

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

49) The two most common strategies pursued by firms in global industries are the ________ strategy and the ________ strategy.

1. A) inclusive, multidomestic
2. B) multidomestic, global
3. C) multidomestic, worldwide
4. D) inclusive, global
5. E) home, worldwide

Answer:  B

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

50) Firms that pursue a(n) ________ strategy compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market.

1. A) inclusive
2. B) universal
3. C) multidomestic
4. D) contemporary
5. E) worldwide

Answer:  C

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

51) Kellen West recently launched a firm in the fruit drink industry, and has already exported his fruit drinks to 11 different countries. One thing that Kellen’s firm is doing is that it is varying the tastes of the fruit drinks it sells on a country-by-country basis to meet the demands of the local markets. Kellen’s firm is pursuing a ________ strategy.

1. A) global
2. B) home
3. C) universal
4. D) contemporary
5. E) multidomestic

Answer:  E

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

52) Katherine Chapman recently launched a firm in the clothing industry, targeting 13-17 year olds. One thing Katherine thinks she has accomplished is producing products that have universal appeal, so she will not vary her approach from country to country. Katherine is pursuing a ________ strategy.

1. A) universal
2. B) multidomestic
3. C) contemporary
4. D) global
5. E) home

Answer:  D

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

53) A fragmented industry is a new industry in which standard operating procedures have yet to be developed.

Answer:  FALSE

Diff: 1      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

54) An emerging industry is one that is characterized by a large number of firms of approximately equal size.

Answer:  FALSE

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

 

55) The primary opportunity available to firms in fragmented industries is consolidation. The most common way to do this is through a geographic roll-up strategy, in which one firm starts acquiring similar firms that are located in different geographic areas.

Answer:  TRUE

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

56) A fragmented industry is an industry that is experiencing slow increases in demand, numerous repeat customers, and limited product innovation.

Answer:  FALSE

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

57) Firms that pursue a multidomestic strategy use the same basic approach in all foreign markets.

Answer:  FALSE

Diff: 2      Page Ref: 165

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

 

58) What is an emerging industry? What is the primary opportunity available to entrepreneurial firms in emerging industries? Name three examples of firms in emerging industries.

Answer:  An emerging industry is a new industry in which standard operating procedures have yet to be developed. The firm that pioneers or takes the leadership of an emerging industry often captures a first-mover advantage, which is a sometimes insurmountable advantage gained by the firm initiating the first significant move into a new market. Examples of firms in emerging industries include Apple with its iTunes music store, Brain Sentry in devices that detect concussions, and Buzzy in procedures that help relieve pain when shots are administered.

Diff: 2      Page Ref: 163

LO:  5.4: Identify the five primary industry types and the opportunities they offer.

AACSB:  Reflective Thinking

59) According to the textbook, the first step in a competitor analysis is to ________.

1. A) develop a marketing plan
2. B) develop the strategic plan
3. C) study the strength of the industry
4. D) study the external environment
5. E) determine who the competition is

Answer:  E

Diff: 1      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

 

60) According to the textbook, the three different types of competitors a business will face are ________.

1. A) potential, direct, and upcoming
2. B) indirect, fleeting, and future
3. C) serious, cautious, and future
4. D) direct, indirect, and future
5. E) potential, fleeting, and indirect

Answer:  D

Diff: 2      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

61) In the context of competitor analysis, businesses that offer identical or similar products are referred to as ________ competitors.

1. A) immediate
2. B) direct
3. C) indirect
4. D) straight
5. E) urgent

Answer:  B

Diff: 2      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

62) Aquafina operates in the bottled water industry. The companies that offer identical or similar products and go after the same customers that Aquafina does are Dasani and Zephyrhills. Dasani and Zephyrhills are Aquafina’s ________ competitors.

1. A) direct
2. B) indirect
3. C) future
4. D) impending
5. E) potential

Answer:  A

Diff: 2      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Analytical Thinking

 

63) In the context of competitor analysis, ________ competitors offer close substitutes to the product sold by the firm completing the analysis.

1. A) potential
2. B) direct
3. C) indirect
4. D) impending
5. E) future

Answer:  C

Diff: 2      Page Ref: 166

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

64) In the beverage industry, soda, fruit juice, and sports drinks are ________ competitors of bottled water.

1. A) occasional
2. B) infrequent
3. C) indirect
4. D) direct
5. E) future

Answer:  C

Diff: 2      Page Ref: 166

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

65) In the context of competitor analysis, ________ competitors are companies that are not yet direct or indirect competitors but could move into one of these roles at any time.

1. A) stable
2. B) roundabout
3. C) impending
4. D) approximate
5. E) future

Answer:  E

Diff: 2      Page Ref: 166

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

66) The information that is gathered by a firm to learn about its competitors is referred to as ________.

1. A) a feasibility appraisal
2. B) a workable appraisal
3. C) a practical assessment
4. D) a viable assessment
5. E) competitive intelligence

Answer:  E

Diff: 2      Page Ref: 166

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

67) The Savvy Entrepreneurial Firm feature in Chapter 5 focuses on three firms that are doing well in crowded industries as ________.

1. A) they have effectively differentiated themselves from their competitors and have captured a first-mover advantage
2. B) they have passionate leaders and run savvy promotional campaigns
3. C) they have captured a first-mover advantage and have unique business models
4. D) they create meaningful value for customers at a fair price and have differentiated themselves from their competitors
5. E) they are low-cost leaders and run savvy promotional campaigns

Answer:  D

Diff: 3      Page Ref: 167

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Analytical Thinking

 

68) Amy has just launched a firm in the sports drink industry. She has decided to complete a grid to see how she stacks up against her competitors. Along the horizontal axis of the grid she lists her firm along with her major competitors. Along the vertical axis of the grid she lists the main competitive factors in her industry. Amy is completing a ________.

1. A) strategic analysis spreadsheet
2. B) tactical analysis framework
3. C) competitive analysis grid
4. D) strategic analysis grid
5. E) behavioral analysis spreadsheet

Answer:  C

Diff: 2      Page Ref: 168

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

69) The What Went Wrong? feature in Chapter 5 focused on Digg, a Web site that was once one of the hottest sites on the Internet but eventually failed. According to the feature, through a series of missteps Digg ________.

1. A) failed to conduct sufficient competitor analysis
2. B) succumb to the bargaining power of suppliers
3. C) lost its way and its place in its industry
4. D) was unable to erect sufficient barriers to entry
5. E) succumb to the bargaining power of buyers

Answer:  C

Diff: 2      Page Ref: 170

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Analytical Thinking

 

70) The first step in a competitor analysis is to determine who the competition is.

Answer:  TRUE

Diff: 1      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

71) A firm’s future competitors are its most important ones.

Answer:  FALSE

Diff: 2      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

72) The three types of competitors a business will face are direct competitors, indirect competitors, and future competitors.

Answer:  TRUE

Diff: 2      Page Ref: 165

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

73) The information that is gathered by a firm to learn about its competitors is referred to as tactical intelligence.

Answer:  FALSE

Diff: 2      Page Ref: 168

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

74) A competitive analysis grid is a tool for organizing the information a firm collects about its competitors.

Answer:  TRUE

Diff: 1      Page Ref: 168

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking

 

75) What is competitive intelligence? What are some of the ways that a firm can ethically obtain information about its competitors?

Answer:  The information that is gathered by a firm to learn about its competitors is referred to as competitive intelligence. There are a number of ways that a firm can ethically obtain information about its competitors. These ways include: attend conferences and trade shows, read industry-related books, magazines, and Web sites, along with general business magazines, talk to potential customers about what motivated them to buy your product as opposed to your competitor, purchase competitors’ products to understand their features, benefits, and shortcomings, study competitors’ Web sites, and study Web sites that provide information about competitors.

Diff: 2      Page Ref: 166

LO:  5.5 Explain the purpose of a competitor analysis and a competitive analysis grid.

AACSB:  Reflective Thinking