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Strategic Mgmt Exam 1 A+ Pass Questions
and Correct Answers
How should firms in an industry defend against substitutions?
Ans: Increase incumbent product buyer surplus
Increase customer switching costs
What are the 3 ways firms can slow imitation? Ans: Property rights
over key resources
establishing causal ambiguity regarding executing capabilities
sunk costs in developing a brand or capability
What are the underlying causes of the concentration-profitability
relationship? Ans: More efficient
Interact strategically without cooperating
Collude to increase profits
Cartels fail at a remarkably high rate, why? Ans: An inability to
prevent entry into the business
Uncontrolled cheating or defection
Fluctuations in demand
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Bargaining problems among the cartel members
Firms that repeatedly receive benefits from cooperation are said to
have developed a Ans: relational capability
Five forces that drive down profitability are: Ans: rivalry
buyer power
supplier power
potential entry
substitutes
The basic conditions for collusion in a concentrated industry are:
Ans: mutual familiarity
repeated interaction
consistent roles
strategic complementarity
Which of the following is threatened by industry evolution?
a. firms pursuing value advantage only
b. firms pursuing cost advantage only
c. all types of competitive advantage
d. firms in niche markets only Ans: C
© 2025 All rights reserved
Strategic Mgmt Exam 1 A+ Pass Questions
and Correct Answers
How should firms in an industry defend against substitutions?
Ans: Increase incumbent product buyer surplus
Increase customer switching costs
What are the 3 ways firms can slow imitation? Ans: Property rights
over key resources
establishing causal ambiguity regarding executing capabilities
sunk costs in developing a brand or capability
What are the underlying causes of the concentration-profitability
relationship? Ans: More efficient
Interact strategically without cooperating
Collude to increase profits
Cartels fail at a remarkably high rate, why? Ans: An inability to
prevent entry into the business
Uncontrolled cheating or defection
Fluctuations in demand
© 2025 All rights reserved
, 2 | Page
Bargaining problems among the cartel members
Firms that repeatedly receive benefits from cooperation are said to
have developed a Ans: relational capability
Five forces that drive down profitability are: Ans: rivalry
buyer power
supplier power
potential entry
substitutes
The basic conditions for collusion in a concentrated industry are:
Ans: mutual familiarity
repeated interaction
consistent roles
strategic complementarity
Which of the following is threatened by industry evolution?
a. firms pursuing value advantage only
b. firms pursuing cost advantage only
c. all types of competitive advantage
d. firms in niche markets only Ans: C
© 2025 All rights reserved
