Environmental scanning and competitor intelligence provide important inputs for forecasting activities.

1.	Environmental scanning and competitor intelligence provide important inputs for forecasting activities.    TRUE Three important processes (scanning, monitoring, and gathering competitive intelligence) are used to develop forecasts.

AACSB: Analytic Blooms: Understand Learning Objective: 02-01 The importance of developing forecasts of the business environment. Level of Difficulty: 2 Medium Topic: Creating the Environmentally Aware Organization

2.	A hard trend is something that might happen and for which the probability that it might happen can be estimated.    FALSE A soft trend is something that might happen and for which the probability that it might happen can be estimated.

AACSB: Analytic Blooms: Understand Learning Objective: 02-01 The importance of developing forecasts of the business environment. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

3.	A soft trend is a projection based on measureable facts, events, or objects. It is something that will happen.    FALSE A hard trend is a projection based on measureable facts, events, or objects. It is something that will happen.

AACSB: Analytic Blooms: Understand Learning Objective: 02-01 The importance of developing forecasts of the business environment. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

4.	The aging of the population is a hard trend.    TRUE A hard trend is a projection based on measureable facts, events, or objects. It is something that will happen.

AACSB: Analytic Blooms: Understand Learning Objective: 02-01 The importance of developing forecasts of the business environment. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

5.	A number of choices government officials make are based on projections about future interest rates. The projections are soft trends.    TRUE A soft trend is something that might happen and for which the probability that it might happen can be estimated.

AACSB: Analytic Blooms: Understand Learning Objective: 02-01 The importance of developing forecasts of the business environment. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

6.	Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process.    TRUE Environmental monitoring tracks the evolution of environmental trends, sequences of events, or streams of activities.

AACSB: Analytic Blooms: Remember Learning Objective: 02-02 Why environmental scanning; environmental monitoring; and collecting competitive intelligence are critical inputs to forecasting. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

7.

Competitor Intelligence (CI) is a tool that can provide management with early warnings about both threats and opportunities.    TRUE Competitive intelligence (CI) helps firms define and understand their industry and identify strengths and weaknesses of rivals. Done properly, competitive intelligence helps a company avoid surprises by anticipating competitor moves and decreasing response time.

AACSB: Analytic Blooms: Remember Learning Objective: 02-02 Why environmental scanning; environmental monitoring; and collecting competitive intelligence are critical inputs to forecasting. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

8.

Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain.    FALSE Competitive intelligence is frequently done effectively through public sources of information. Examples are evident in daily newspapers and periodicals such as The Wall Street Journal, BusinessWeek, and Fortune. For example, banks continually track home loan, auto loan, and certificate of deposit (CD) interest rates charged by rivals. Major airlines change hundreds of fares daily in response to competitor tactics.

AACSB: Analytic Blooms: Understand Learning Objective: 02-02 Why environmental scanning; environmental monitoring; and collecting competitive intelligence are critical inputs to forecasting. Level of Difficulty: 2 Medium Topic: Creating the Environmentally Aware Organization

9.

Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions.    FALSE Environmental forecasting involves the development of plausible projections about the direction, scope, speed, and intensity of environmental change. Its purpose is to predict change.

AACSB: Analytic Blooms: Understand Learning Objective: 02-02 Why environmental scanning; environmental monitoring; and collecting competitive intelligence are critical inputs to forecasting. Level of Difficulty: 2 Medium Topic: Creating the Environmentally Aware Organization

10.	Scenario planning is usually concerned with short-term forecasts.    FALSE Scenario analysis is an in-depth approach to environmental forecasting that involves detailed assessments by experts of societal trends, economics, politics, technology, or other dimensions of the external environment.

AACSB: Analytic Blooms: Remember Learning Objective: 02-03 Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

11.	The strengths and weaknesses of a SWOT analysis refer to the external conditions of the firm.    FALSE The Strengths and Weaknesses refer to the internal conditions of the firm in which a firm excels (strengths) and where it may be lacking relative to competitors (weaknesses).

AACSB: Analytic Blooms: Remember Learning Objective: 02-03 Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

12.

The opportunities and threats of a SWOT analysis refer to the internal conditions of the firm.    FALSE The Opportunities and Threats are environmental conditions external to the firm. These could be factors either in the general or competitive environment. In the general environment, one might experience developments beneficial for most companies such as improving economic conditions, that lower borrowing costs or trends that benefit some companies and harm others.

AACSB: Analytic Blooms: Remember Learning Objective: 02-03 Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

13.

To understand the business environment of a particular firm, you need to analyze both the general environment and the firm industry and competitive environment.    TRUE Generally, firms compete with other firms in the same industry. An industry is composed of a set of firms that produce similar products or services, sell to similar customers, and use similar methods of production. Gathering industry information and understanding competitive dynamics among the different companies in your industry is key to successful strategic management. To understand the business environment of a particular firm, you need to analyze both the general environment and the firm industry and competitive environment.

AACSB: Analytic Blooms: Remember Learning Objective: 02-03 Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. Level of Difficulty: 1 Easy Topic: Creating the Environmentally Aware Organization

14.	Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry.    FALSE The general environment is composed of factors that can have dramatic effects on firm strategy.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

15.

The impact of a demographic trend varies across industries.    TRUE The impact of a demographic trend, like all segments of the general environment, varies across industries. Rising levels of affluence in many developed countries bode well for brokerage services as well as for upscale pets and supplies. However, this trend may adversely affect fast-food restaurants because people can afford to dine at higher-priced restaurants.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

16.

A major sociocultural trend in the United States is the increased educational attainment by women.    TRUE Increased educational attainment by women in the workplace has led to more women in upper management positions. Given such educational attainment, it is hardly surprising that companies owned by women have been one of the driving forces of the U.S. economy.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

17.

Technological innovations can create entirely new industries and alter the boundaries of industries.    TRUE Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

18.

There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators.    FALSE Economic indicators are associated with equity markets. When stock market indexes increase, consumer discretionary income rises and there is often an increased demand for luxury items such as jewelry and automobiles.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

19.

The Internet is a leading component in the rising emergence of digital technology.    TRUE The Internet has been a leading and highly visible component of a broader technological phenomenon—the emergence of digital technology. These technologies are altering the way business is conducted and are having an effect on nearly every business domain.

AACSB: Analytic Blooms: Understand Learning Objective: 02-04 The impact of the general environment on a firm's strategies and performance. Level of Difficulty: 2 Medium Topic: The General Environment

20.

Crowdsourcing is used by companies to develop products.    TRUE In June 2006, Wired magazine defined crowdsourcing as the tapping of the latent talent of the (online) crowd. It has become the term of choice for a process that is infiltrating many aspects of business life and has claimed some well-known successes, particularly on the product development front.

AACSB: Analytic Blooms: Remember Learning Objective: 02-05 How forces in the competitive environment can affect profitability; and how a firm can improve its competitive position by increasing its power vis-à-vis these forces. Level of Difficulty: 1 Easy Topic: The Competitive Environment