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Due to economic regression in United Filipia,the profitability of the large conglomerate Blue Wing Products Inc.(BWP) was poor.An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner.From which of the following businesses would BWP find it most easy to exit?


A) the automobile business where the company has contractual obligations with suppliers
B) the airline business where the company's strategic commitments are long-term
C) the e-commerce retail business where investments on assets are low
D) the pharmaceutical business where the company has a large number of fixed costs

E) A) and B)
F) A) and C)

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Home Savings,Good Deals,Hank's Store,and King Bargains are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases.All four stores cater to the needs of highly price-sensitive customers.Thus,together Home Savings,Good Deals,Hank's Store,and King Bargains form a


A) focus group.
B) command group.
C) strategic group.
D) cross-functional group.

E) B) and D)
F) C) and D)

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First Ledger Inc.,an auditing company,replaced its existing accounting software with new accounting software from another supplier.Since the new software has different features and abilities,First Ledger Inc.has had to spend $10,000 on training its employees to use it.In this scenario,$10,000 represents First Ledger Inc.'s


A) opportunity cost.
B) switching cost.
C) octroi charge.
D) excise duty.

E) B) and C)
F) A) and D)

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SooGood Inc.produces a dip that goes extremely well with Crunchy Potato Chips Inc.SooGood Inc.,therefore,is a _____ of Crunchy.


A) direct competitor
B) complementor
C) indirect competitor
D) shareholder

E) None of the above
F) A) and B)

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A new company named Far Reach Inc.entered the radio retail business.In response,two incumbent radio retailers,Smooth Waves and Clear Signal,lowered the cost of their travel alarm radios and long-distance radios.Also,they spent more money to improve these radios.By doing this,Smooth Waves and Clear Signal


A) decreased industry exit barriers.
B) increased industry exit barriers.
C) decreased industry profit potential.
D) increased industry profit potential.

E) All of the above
F) None of the above

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A strategic group will typically include


A) firms within the same industry.
B) customers belonging to a particular socioeconomic class.
C) firms employing similar number of employees, irrespective of their industries.
D) employees within a firm earning the same amount of salaries.

E) B) and D)
F) All of the above

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In the luxury cruise industry,the small cruise lines Tropics Inc.and Sunset Inc.merged to form TropicalSunset Inc.After the merge,the competition between TropicalSunset Inc.and the two mega cruise lines,Pacifico and West Winds,has increased significantly.Which of the following statements best explains why this happened?


A) Competitive rivalry is strongest between firms that are within the same strategic group.
B) Competition always increases when two small firms merge into a mega firm.
C) Competition always increases if there are only two or three mega firms competing.
D) Competitive rivalry is strongest between firms that service the same region.

E) B) and C)
F) A) and C)

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Which of the following is a drawback of Porter's five forces model?


A) The model describes competition narrowly as a firm's closest competitors.
B) Managers cannot determine the changing speed of an industry or the rate of innovation.
C) It fails to provide a basis for deriving implications for a firm's strategic position within an industry.
D) The model fails to consider that threat of substitutes can come from outside a given industry.

E) B) and C)
F) None of the above

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A fragmented industry is made into a consolidated industry through


A) governmental deregulation.
B) globalization.
C) technological innovation and new legislation.
D) horizontal mergers and acquisitions.

E) C) and D)
F) None of the above

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The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year.This has ensured that all firms in the country pay their employees at least $8,000 per year,which has brought about a higher standard of living for the people of Filvia.Which of the following factors in a firm's general environment does this mandate best indicate?


A) ecological factors
B) sociocultural factors
C) technological factors
D) legal factors

E) A) and C)
F) A) and B)

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Competitive rivalry based solely on _____ is destructive to firms as it transfers most of the value created in the industry to the customers.


A) price-cutting
B) new product releases
C) promotional campaigns
D) product differentiation

E) All of the above
F) A) and B)

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Corner Market Inc.is a supermarket chain.Due to strong competition from other stores in the industry,Corner Market has aggressively used branding,pricing,and superior customer service to uniquely position itself in the market.As a result,the supermarket chain has been able to differentiate itself from its competitors and sell its products at higher prices.Which of the following industry competitive structures does this scenario best illustrate?


A) perfect competition
B) monopolistic competition
C) monopoly
D) oligopoly

E) A) and C)
F) B) and C)

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How do low interest rates affect a business?


A) Firms tend to defer investments.
B) Firms can easily borrow money to finance future growth.
C) Consumer demand slows down.
D) Business credit is harder to obtain.

E) A) and B)
F) A) and C)

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The relative bargaining power of suppliers is high when


A) suppliers provide products that are differentiated.
B) incumbent firms face low supplier switching costs.
C) incumbent firms can credibly threaten to backward integrate into the industry.
D) suppliers depend heavily on the industry for a large portion of their revenues.

E) All of the above
F) B) and C)

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A company is best described as a _____ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service.


A) competitor
B) shareholder
C) complementor
D) strategic equivalent

E) C) and D)
F) B) and D)

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In the smartphone industry,Google is a complementor to Samsung.Which of the following statements best explains why this is true?


A) Samsung apps are tailored exclusively for Google smartphones and tablets.
B) Google's smartphones increase in value because they face strong buying power from Samsung.
C) Samsung's smartphones increase in value when they are preinstalled with Google's Android system.
D) Google accounts for a large quantity of Samsung's overall sales.

E) None of the above
F) A) and C)

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In a firm's external environment,_____ primarily capture population characteristics related to age,gender,family size,ethnicity,sexual orientation,religion,and socioeconomic class.


A) political trends
B) demographic trends
C) ecological trends
D) economic trends

E) A) and B)
F) A) and C)

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Which of the following is an implication of low interest rates?


A) Cost of capital for firms will be high.
B) Firms will invest less in future growth.
C) Economic growth rate will fall.
D) Consumer demand will increase.

E) A) and D)
F) All of the above

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While Burger Cult Inc.operates in a monopolistically competitive industry,Citizen Telecom Inc.operates in a monopoly.Keeping this information in mind,which of the following statements is most likely true?


A) The threat of new entrants will be higher for Burger Cult Inc. than Citizen Telecom Inc.
B) Burger Cult Inc. will have more pricing power than Citizen Telecom Inc.
C) Burger Cult Inc. will have more profit potential than Citizen Telecom Inc.
D) The number of buyers will be limited for both Burger Cult Inc. and Citizen Telecom Inc.

E) B) and C)
F) A) and D)

Correct Answer

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Shield Autos Inc.has newly launched a luxury car into the European market.Which of the following would most likely not be a complement to the car?


A) a premium car manufactured and sold by Mova Autos Inc., a rival company
B) a bank that insures cars against theft and accidents
C) a car service station managed and run by Shield Autos Inc.
D) a stereo system that can be used as a GPS system in cars

E) B) and C)
F) A) and C)

Correct Answer

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