Contemporary Strategy Analysis Text and Cases 8th Edition Test Bank

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Chapter 4

Further Topics in Industry and Competitive Analysis

True or False questions

1.    Porter’s five forces model offers a rigorous, empirically validated approach to explaining the variation in profitability across industries

@ Pages and References: pp88-89

1.    T

*b. F

2.    Industries are the central arenas in which competition takes place. To understand competition there is little need to disaggregate industries into segments and groups of firms.

@ Pages and References: p89

1.    T

*b. F

3.    Industry accounts for a major proportion of the differences in profitability between firms

@ Pages and References: p89

*a. T

1.    F

4.    A key factor determining the profitability of making inkjet printers is the complementary relationship between printers and ink cartridges.

@ Pages and References: p91

*a. T

1.    F

5.    A key factor determining the profitability of making automobiles is the complementary relationship between automobiles and gasoline.

@ Pages and References: p91

1.    T

*b. F

6.    When two products complement each another, profit accrues to the supplier that builds the stronger market position and reduces the value contributed by the other

@ Pages and References: p91

*a. T

1.    F

7.    The Schumpeterian view of competition in industries (the Austrian school of economics) emphasizes the role of innovation and entrepreneurship

@ Pages and References: p91

*a. T

1.    F

8.    In common with the Porter five forces framework, the Schumpeterian approach views competitive behavior as the outcome of industry structure

@ Pages and References: p91

1.    T

*b. F

9.    Hypercompetition is an intense and dynamic mode of competition in which sustaining established competitive advantage becomes the key goal for strategy.

@ Pages and References: p91

*a. T

1.    F

10.  Empirical studies on hypercompetition show unanimously that industries are becoming increasingly turbulent and competitive advantage increasingly short-lived

@ Pages and References: pp91-92

1.    T

*b.  F

11.  By modeling the process of interactive decision making by rival firms, game theory can predict the outcome of a range of competitive situations.

@ Pages and References: p92

*a. T

1.    F

12.  In the world of business, competition and cooperation are exclusive

@ Pages and References: p93

1.    T

*b. F

13.  The propensity for similar businesses to cluster in the same locality is evidence of the intensity of the competitive instincts that drive business owners.

@ Pages and References: p93

1.    T

*b. F

14.  “Deterrence” can be defined as imposing costs on the other players for actions that we deem to be desirable

@ Pages and References: p93

1.    T

*b. F