BPS CHAPTER 2 TEST QUESTIONS
AND CORRECT ANSWERS
The risk of entry by potential competitors is the first step in Porter's competitive forces
model. This risk of entry is a function of the factors that make it costly for companies to
enter an industry. Which of the following statements is true of the risks of entry? -
Answer-Economies of scale arise as a firm expands its output.
Which of the following statements is true regarding rivalries among established
companies? - Answer-Dell and Hewlett-Packard are considered an intense rivalry.
Which of the following has a major impact on the intensity of rivalry among established
companies within an industry? - Answer-Height of exit barriers in the industry
Companies that do not currently compete in an industry but have the capability to do so
are: - Answer-potential competitors.
Estrada Corporation is not currently competing in the athletic shoe industry but has the
capability to do so. Which of the following terms describes Estrada Corporation? -
Answer-Potential competitor
_____ exists when consumers prefer the products of established companies. - Answer-
Brand loyalty
Kelson received a Keurig coffee brewer as a gift. Now Kelson must buy K-cups for
brewing a cup of coffee rather than buying the cans of coffee used with his old Cuisinart
automatic drip coffee maker. The higher costs related to this shift to Keurig from
Cuisinart are known as: - Answer-switching costs
Suppliers are most powerful in which of the following circumstances? - Answer-
Companies in the industry cannot threaten to enter their suppliers' industry
A company that makes software applications is a _____ to the personal computer
industry. - Answer-complementor
Which of the following is the most immediate threat to a company's profitability? -
Answer-Competitors within its own strategic group
Retail chain organizations can be distinguished on many different levels. For example,
Gucci, Chanel, and Neiman Marcus strive for exclusivity and high quality and operate in
AND CORRECT ANSWERS
The risk of entry by potential competitors is the first step in Porter's competitive forces
model. This risk of entry is a function of the factors that make it costly for companies to
enter an industry. Which of the following statements is true of the risks of entry? -
Answer-Economies of scale arise as a firm expands its output.
Which of the following statements is true regarding rivalries among established
companies? - Answer-Dell and Hewlett-Packard are considered an intense rivalry.
Which of the following has a major impact on the intensity of rivalry among established
companies within an industry? - Answer-Height of exit barriers in the industry
Companies that do not currently compete in an industry but have the capability to do so
are: - Answer-potential competitors.
Estrada Corporation is not currently competing in the athletic shoe industry but has the
capability to do so. Which of the following terms describes Estrada Corporation? -
Answer-Potential competitor
_____ exists when consumers prefer the products of established companies. - Answer-
Brand loyalty
Kelson received a Keurig coffee brewer as a gift. Now Kelson must buy K-cups for
brewing a cup of coffee rather than buying the cans of coffee used with his old Cuisinart
automatic drip coffee maker. The higher costs related to this shift to Keurig from
Cuisinart are known as: - Answer-switching costs
Suppliers are most powerful in which of the following circumstances? - Answer-
Companies in the industry cannot threaten to enter their suppliers' industry
A company that makes software applications is a _____ to the personal computer
industry. - Answer-complementor
Which of the following is the most immediate threat to a company's profitability? -
Answer-Competitors within its own strategic group
Retail chain organizations can be distinguished on many different levels. For example,
Gucci, Chanel, and Neiman Marcus strive for exclusivity and high quality and operate in
