MGT-420 Exam I questions and answers
A+ rated
Industry - correct answer ✔✔is a grouping of businesses that interact in a common
environment as part of a value chain or
distribution channel that delivers a particular good.
Market - correct answer ✔✔is defined by customers, those who pay for the benefits of the
product or service.
Primary Market - correct answer ✔✔Those customers or markets that have the most need for
what you're offering are called the primary market.
There are two important reasons to study the industry in which your business will operate. -
correct answer ✔✔1. It represents the business's external environment, and no business
operates independent of its external environment.
2. You need to understand whether you can make a profit in the industry and if that profit will
be significant enough to make the effort to start the business worthwhile.
The data collected should answer the following key questions - correct answer ✔✔What does
the industry look like? Is the industry growing? Where are the opportunities? How quickly does
the industry adopt new technology? How much do industry companies spend on research and
development? Who are the opinion leaders in the industry? Are there young, successful firms in
the industry? What does the future look like? Are there any threats to the industry? What are
the typical margins in the industry?
Secondary sources - correct answer ✔✔information to gather background data. Today, Google
search engine or any other as well as Wikipedia.com are great places to get an introduction to
an industry and pick up on some trends by noting what is being talked about. Journals, trade
, magazines, industry analysts, government publications, and annual reports of public
corporations—normally available online in a university or community library—are also excellent
starting points;
Primary field data on the industry PG 49 (Textbook) Lists types for reference - correct answer
✔✔Put more simply, you need to talk with people in the industry to validate what they have
gathered with their secondary research. Some sources to tap are
The value chain - correct answer ✔✔consists of all of the companies that contribute to the
development and distribution of products and services coming out of that industry.
economies of scale - correct answer ✔✔This means that their costs to produce have declined
relative to the price of their goods and services. Typically, economies of scale are found in more
mature industries.
Brand Loyalty PG 54 - correct answer ✔✔New entrants to an industry face existing products and
services with loyal customers who are not likely to switch easily to something new.
Capital Requirements PG 54 - correct answer ✔✔The cost of entering many industries may
include up-front advertising, research and development (R&D), and expenditures for plant and
equipment.
Switching costs for the buyer - correct answer ✔✔A manufacturing business that has spent a lot
of time and money finding the best supplier for the raw materials it needs to produce its
product will not easily change suppliers because that would mean going through the whole
process again.
Access to distribution channels - correct answer ✔✔The new venture must persuade
established distribution channel members to accept its new product or service and must prove
that it will be beneficial to distributors to do so and this costs money
A+ rated
Industry - correct answer ✔✔is a grouping of businesses that interact in a common
environment as part of a value chain or
distribution channel that delivers a particular good.
Market - correct answer ✔✔is defined by customers, those who pay for the benefits of the
product or service.
Primary Market - correct answer ✔✔Those customers or markets that have the most need for
what you're offering are called the primary market.
There are two important reasons to study the industry in which your business will operate. -
correct answer ✔✔1. It represents the business's external environment, and no business
operates independent of its external environment.
2. You need to understand whether you can make a profit in the industry and if that profit will
be significant enough to make the effort to start the business worthwhile.
The data collected should answer the following key questions - correct answer ✔✔What does
the industry look like? Is the industry growing? Where are the opportunities? How quickly does
the industry adopt new technology? How much do industry companies spend on research and
development? Who are the opinion leaders in the industry? Are there young, successful firms in
the industry? What does the future look like? Are there any threats to the industry? What are
the typical margins in the industry?
Secondary sources - correct answer ✔✔information to gather background data. Today, Google
search engine or any other as well as Wikipedia.com are great places to get an introduction to
an industry and pick up on some trends by noting what is being talked about. Journals, trade
, magazines, industry analysts, government publications, and annual reports of public
corporations—normally available online in a university or community library—are also excellent
starting points;
Primary field data on the industry PG 49 (Textbook) Lists types for reference - correct answer
✔✔Put more simply, you need to talk with people in the industry to validate what they have
gathered with their secondary research. Some sources to tap are
The value chain - correct answer ✔✔consists of all of the companies that contribute to the
development and distribution of products and services coming out of that industry.
economies of scale - correct answer ✔✔This means that their costs to produce have declined
relative to the price of their goods and services. Typically, economies of scale are found in more
mature industries.
Brand Loyalty PG 54 - correct answer ✔✔New entrants to an industry face existing products and
services with loyal customers who are not likely to switch easily to something new.
Capital Requirements PG 54 - correct answer ✔✔The cost of entering many industries may
include up-front advertising, research and development (R&D), and expenditures for plant and
equipment.
Switching costs for the buyer - correct answer ✔✔A manufacturing business that has spent a lot
of time and money finding the best supplier for the raw materials it needs to produce its
product will not easily change suppliers because that would mean going through the whole
process again.
Access to distribution channels - correct answer ✔✔The new venture must persuade
established distribution channel members to accept its new product or service and must prove
that it will be beneficial to distributors to do so and this costs money
