Strategic Management, Chapter 3 And
4 Frank T. Rothaermel Test Bank And
Answers 2026.
PESTLE Model - Answer a framework that categorizes and analyzes an important set of
external factors that might impinge upon a firm.
Political Factors - Answer processes and actions of government bodies that can influence the
decisions and behavior of firms
Economic Factors - Answer in a firm's external environment are largely macroeconomic,
affecting economy-wide phenomena.
growth rate - Answer a measure of the change in the amount of goods and services
produced by a nation's economy
levels of employment - Answer Growth rates directly affect this
interest rate - Answer the amount that creditors are paid for use of their money and the
amount the debtors pay for that use
price stability - Answer the lack of change in price levels of goods and services (rare)
Inflation - Answer when there is too much money in an economy, we tend to see rising
prices
Deflation - Answer a decrease in the general level of prices
currency exchange rate - Answer determines how many dollars one must pay for a unit of
foreign currency
sociocultural factors - Answer a society's cultures, norms, and values
Technological Factors - Answer application of knowledge to create new processes and
products
, ecological factors - Answer broad environmental issues such as the natural environment,
global warming, and sustainable economic growth
Legal Factors - Answer official outcomes of political processes as manifested in laws,
mandates, regulations, and court decisions
Industry Effects - Answer firm performance attributed to the structure of the industry in
which the firm competes
Firm Effects - Answer firm performance attributed to the actions managers take
industry - Answer a group of incumbent companies that face more or less the same set of
suppliers and buyers
Industry Analysis - Answer A method to (1) identify an industry's profit potential and (2)
derive implications for a firm's strategic position within an industry.
strategic position - Answer a firm's strategic profile based on the difference between value
creation and cost (V-C)
Five Forces Model - Answer A framework that identifies five forces that determine the profit
potential of an industry and shape a firm's competitive strategy.
Threat of Entry - Answer the risk that potential competitors will enter an industry
Entry barriers - Answer obstacles that determine how easily a firm can enter an industry and
often significantly predict industry profit potential
economies of scale - Answer cost advantages to manufacturers that accrue from high-
volume production, since the average cost of production falls with increasing output
network effects - Answer the value of a product or service for an individual user increases
with the number of total users
switching costs - Answer incurred by moving from one supplier to another
capital requirements - Answer describe the "price of the entry ticket" into a new industry
4 Frank T. Rothaermel Test Bank And
Answers 2026.
PESTLE Model - Answer a framework that categorizes and analyzes an important set of
external factors that might impinge upon a firm.
Political Factors - Answer processes and actions of government bodies that can influence the
decisions and behavior of firms
Economic Factors - Answer in a firm's external environment are largely macroeconomic,
affecting economy-wide phenomena.
growth rate - Answer a measure of the change in the amount of goods and services
produced by a nation's economy
levels of employment - Answer Growth rates directly affect this
interest rate - Answer the amount that creditors are paid for use of their money and the
amount the debtors pay for that use
price stability - Answer the lack of change in price levels of goods and services (rare)
Inflation - Answer when there is too much money in an economy, we tend to see rising
prices
Deflation - Answer a decrease in the general level of prices
currency exchange rate - Answer determines how many dollars one must pay for a unit of
foreign currency
sociocultural factors - Answer a society's cultures, norms, and values
Technological Factors - Answer application of knowledge to create new processes and
products
, ecological factors - Answer broad environmental issues such as the natural environment,
global warming, and sustainable economic growth
Legal Factors - Answer official outcomes of political processes as manifested in laws,
mandates, regulations, and court decisions
Industry Effects - Answer firm performance attributed to the structure of the industry in
which the firm competes
Firm Effects - Answer firm performance attributed to the actions managers take
industry - Answer a group of incumbent companies that face more or less the same set of
suppliers and buyers
Industry Analysis - Answer A method to (1) identify an industry's profit potential and (2)
derive implications for a firm's strategic position within an industry.
strategic position - Answer a firm's strategic profile based on the difference between value
creation and cost (V-C)
Five Forces Model - Answer A framework that identifies five forces that determine the profit
potential of an industry and shape a firm's competitive strategy.
Threat of Entry - Answer the risk that potential competitors will enter an industry
Entry barriers - Answer obstacles that determine how easily a firm can enter an industry and
often significantly predict industry profit potential
economies of scale - Answer cost advantages to manufacturers that accrue from high-
volume production, since the average cost of production falls with increasing output
network effects - Answer the value of a product or service for an individual user increases
with the number of total users
switching costs - Answer incurred by moving from one supplier to another
capital requirements - Answer describe the "price of the entry ticket" into a new industry
