Test Bank – Essentials of Strategic Management: The Quest for
Competitive Advantage |
Chapter 3
1.A company’s broad “macro-environment” refers to
the industry and competitive arena in which the company operates.
general economic conditions plus the factors driving change in the markets being served.
all the strategically significant forces and factors outside a company’s boundaries—general economic
conditions, population demographics, societal values and lifestyles, technological factors, and
governmental legislation and regulation.
the competitive market environment that exists between a company and its competitors.
the dominant economic features of a company’s industry.
Strictly speaking, the macro-environment excludes a company’s competitively valuable resources and
capabilities and instead encompasses all of the relevant factors—political factors, economic conditions in
the firm’s general environment, sociocultural forces, technological factors, environmental forces, and
legal/regulatory factors—making up the broad environmental context in which a company operates. See
Figure 3.1, The Components of a Company’s External Environment.
References
,2. Award: 10.00 po ints
Multiple Choice Difficulty: 1 Easy Learning Objective: 03-01
Identify factors in a company's broad macro-
environment that may have strategic
significance.
The homebuilding industry is not affected by such macro-influences as
changes in mortgage interest rates, rules, and regulations that make it easier/harder for
homebuyers to obtain mortgages.
trends in household incomes and buying power.
the distinctive competences of incumbent firms.
disasters and other unanticipated events in the natural environment.
shifting preferences of families for renting versus owning a home, and/or homes of various sizes,
styles, and price ranges.
See Figure 3.1. Six principal components—(1) political factors; (2) economic conditions in the firm’s general
environment (local, country, regional, worldwide); (3) sociocultural forces; (4) technological factors; (5)
environmental factors (concerning the natural environment); and (6) legal/regulatory conditions—
constitute a company’s “macro-environment.” The homebuilding industry, in this example, is affected by
such macro-influences as trends in household incomes and buying power, rules and regulations that make
it easier/harder for homebuyers to obtain mortgages, changes in mortgage interest rates, shifting
preferences of families for renting versus owning a home, and shifts in buyer preferences for homes of
various sizes, styles, and price ranges. The distinctive competences of incumbent firms may be an internal
factor, but it is not part of the macroenvironment.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
,3. Award: 10.00 po ints
Which of the following is not a major question to ask in thinking strategically about industry and
competitive conditions in a given industry?
How many companies in the industry have good track records for revenue growth and
profitability?
What strategic moves are rivals likely to make next?
What are the key factors for future competitive success?
Does the outlook for the industry offer good prospects for profitability?
What forces are driving changes in the industry, and what impact will these changes have on
competitive intensity and industry profitability?
The correct answer refers to actions in a company’s economic environment, whereas all of the other
responses refer to characteristics of a company’s industry and competitive environment, as shown in
Figure 3.1.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
Which of the following is not one of the principal components of strategic significance in the PESTEL
analysis?
technological factors that include the pace of change and technical developments possessing the
potential to impact society.
, 4. Award: 10.00 po ints
changes in laws and regulations that give rise to the birth of new industries, new knowledge, and
disruptive technologies.
economic conditions that include the general economic climate and specific factors such as interest
rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets
that can affect consumer confidence.
sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact
business.
environmental forces that include the competitive structure, the degree of industry fragmentation,
and the mobility barriers that inhibit business
PESTEL analysis is an acronym that serves as a reminder of the six principal components of the macro-
environment: (1) political; (2) economic; (3) sociocultural; (4) technological; (5) environmental (concerning
the natural environment, not the business environment); and (6) legal/regulatory. The correct answer
refers to actions in a company’s industry and competitive environment, whereas all of the other responses
refer to characteristics of a company’s economic environment, as shown in Figure 3.1. The factors and
forces in a company’s external environment that have the biggest strategy-shaping impact typically pertain
to the company’s immediate inner ring industry and competitive environment—competitive pressures, the
actions of rival firms, buyer behavior, supplierrelated considerations, and so on.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
Which of the following is not a factor to consider in identifying an industry’s dominant economic features?
market size, growth rate, and prospects
Competitive Advantage |
Chapter 3
1.A company’s broad “macro-environment” refers to
the industry and competitive arena in which the company operates.
general economic conditions plus the factors driving change in the markets being served.
all the strategically significant forces and factors outside a company’s boundaries—general economic
conditions, population demographics, societal values and lifestyles, technological factors, and
governmental legislation and regulation.
the competitive market environment that exists between a company and its competitors.
the dominant economic features of a company’s industry.
Strictly speaking, the macro-environment excludes a company’s competitively valuable resources and
capabilities and instead encompasses all of the relevant factors—political factors, economic conditions in
the firm’s general environment, sociocultural forces, technological factors, environmental forces, and
legal/regulatory factors—making up the broad environmental context in which a company operates. See
Figure 3.1, The Components of a Company’s External Environment.
References
,2. Award: 10.00 po ints
Multiple Choice Difficulty: 1 Easy Learning Objective: 03-01
Identify factors in a company's broad macro-
environment that may have strategic
significance.
The homebuilding industry is not affected by such macro-influences as
changes in mortgage interest rates, rules, and regulations that make it easier/harder for
homebuyers to obtain mortgages.
trends in household incomes and buying power.
the distinctive competences of incumbent firms.
disasters and other unanticipated events in the natural environment.
shifting preferences of families for renting versus owning a home, and/or homes of various sizes,
styles, and price ranges.
See Figure 3.1. Six principal components—(1) political factors; (2) economic conditions in the firm’s general
environment (local, country, regional, worldwide); (3) sociocultural forces; (4) technological factors; (5)
environmental factors (concerning the natural environment); and (6) legal/regulatory conditions—
constitute a company’s “macro-environment.” The homebuilding industry, in this example, is affected by
such macro-influences as trends in household incomes and buying power, rules and regulations that make
it easier/harder for homebuyers to obtain mortgages, changes in mortgage interest rates, shifting
preferences of families for renting versus owning a home, and shifts in buyer preferences for homes of
various sizes, styles, and price ranges. The distinctive competences of incumbent firms may be an internal
factor, but it is not part of the macroenvironment.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
,3. Award: 10.00 po ints
Which of the following is not a major question to ask in thinking strategically about industry and
competitive conditions in a given industry?
How many companies in the industry have good track records for revenue growth and
profitability?
What strategic moves are rivals likely to make next?
What are the key factors for future competitive success?
Does the outlook for the industry offer good prospects for profitability?
What forces are driving changes in the industry, and what impact will these changes have on
competitive intensity and industry profitability?
The correct answer refers to actions in a company’s economic environment, whereas all of the other
responses refer to characteristics of a company’s industry and competitive environment, as shown in
Figure 3.1.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
Which of the following is not one of the principal components of strategic significance in the PESTEL
analysis?
technological factors that include the pace of change and technical developments possessing the
potential to impact society.
, 4. Award: 10.00 po ints
changes in laws and regulations that give rise to the birth of new industries, new knowledge, and
disruptive technologies.
economic conditions that include the general economic climate and specific factors such as interest
rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets
that can affect consumer confidence.
sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact
business.
environmental forces that include the competitive structure, the degree of industry fragmentation,
and the mobility barriers that inhibit business
PESTEL analysis is an acronym that serves as a reminder of the six principal components of the macro-
environment: (1) political; (2) economic; (3) sociocultural; (4) technological; (5) environmental (concerning
the natural environment, not the business environment); and (6) legal/regulatory. The correct answer
refers to actions in a company’s industry and competitive environment, whereas all of the other responses
refer to characteristics of a company’s economic environment, as shown in Figure 3.1. The factors and
forces in a company’s external environment that have the biggest strategy-shaping impact typically pertain
to the company’s immediate inner ring industry and competitive environment—competitive pressures, the
actions of rival firms, buyer behavior, supplierrelated considerations, and so on.
References
Multiple Choice Difficulty: 2 Medium Learning
Objective: 03-01 Identify factors in a
company's broad macro-environment that
may have strategic significance.
Which of the following is not a factor to consider in identifying an industry’s dominant economic features?
market size, growth rate, and prospects
