Contemporary Strategy Analysis Text and Cases Edition 9th Edition Test Bank



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TESTBANK: CHAPTER 04

Further Topics in Industry and Competitive Analysis


True/False Questions

1.     Porter’s five forces model offers a rigorous, empirically validated approach to explaining the variation in profitability across industries
[See pp.90-91]
1.     T
*b. F

2.     Industries are the central arenas in which competition takes place. Disaggregating industries into segments and groups of firms add little to our understanding of competition.
[See p.90]
1.     T
*b. F

3.     Industry membership is the single most important source of profitability differences between firms.
[See p.91]
1.     T
*b. F

4.     The profitability of making inkjet cartridges depends critically upon their complementary relationship with between inkjet printers.
[See p.92]
*a. T
1.     F

5.     The value of a product to its consumers tends to be reduced by availability of close substitutes. Similarly, the value if a product to its consumers is reduced by the availability of complements.
[See p.92]
1.     T
*b. F

6.     While the profitability of supplying a product tends to be reduced by availability of close substitutes, the effect of complements on profitability is less clear: it depends upon how value is shared among the suppliers of the different complements.
[See p.92]
*a. T
1.     F

7.     When products A and B are complements, the division of profit between the supplier of A and the supplier of B will depend upon which builds the stronger market position and is better able to reduce the value contributed by the other.
[See p.92]
*a. T
1.     F

8.     In supplying video game systems, the suppliers of consoles are no longer in such a strong position to appropriate the major profits because of increasingly intense competition among the three of them (Sony, Microsoft and Nintendo), and the growing size and power of the suppliers of video games.
[See pp.92-93]
*a. T
1.     F

9.     The Schumpeterian view of competition emphasizes the role of innovation and entrepreneurship
[See p.93]
*a. T
1.     F

10.   In common with the Porter five forces framework, the Schumpeterian approach views competitive behavior as the outcome of industry structure.
[See p.93]
1.     T
*b. F

11.   In hypercompetitive markets, the quest for sustainable competitive advantage is the overwhelmingly important priority for firm strategy.
[See p.95]
1.     T
*b. F

12.   Empirical studies on hypercompetition show unanimously that industries are becoming increasingly turbulent and competitive advantage increasingly short-lived
[See p.95]
1.     T
*b. F

13.   Game theory seeks to predict the outcome of competitive situations by modeling the interactive decisions by firms,
[See p.95]
*a. T
1.     F

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