Supplier power has increased because of the Internet for all of the following reasons EXCEPT:

81.

Incumbent firms may enjoy increased bargaining power because the Internet ___________.    A.  focuses marketing efforts on end users B.  diminishes the power of many distribution channel intermediaries C.  increases channel conflict D.  has reduced the number of wholesalers and distributors In some industries, buyer channel intermediaries are dominated by powerful players that control who gains access to the latest goods or the best merchandise. The Internet and wireless communications, however, make it much easier and less expensive for businesses to reach customers directly. Thus, the Internet may increase the power of incumbent firms relative to that of traditional buyer channels.

AACSB: Analytic Blooms: Understand Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 2 Medium Topic: The Competitive Environment

82.

Supplier power has increased because of the Internet for all of the following reasons EXCEPT:    A.  the growth of new Web-based businesses has created more outlets for suppliers to sell to B.  some suppliers have created Web-based purchasing systems that encourage switching C.  the process of disintermediation makes it possible for some suppliers to reach end users directly D.  software that links buyers to a supplier's website has created rapid, low-cost order capabilities Several factors contribute to stronger supplier power. First, Web-based business may create more downstream outlets for suppliers to sell to. Second, Web-based purchasing arrangements make purchasing easier and discourage customers from switching. Online procurement systems directly link suppliers and customers, reducing transaction costs and paperwork. Third, the use of proprietary software that links buyers to a supplier website may create a rapid, low-cost ordering capability that discourages the buyer from seeking other sources of supply. Finally, suppliers will have greater power to the extent that they can reach end users directly without intermediaries.

AACSB: Analytic Blooms: Understand Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 2 Medium Topic: The Competitive Environment

83.

In general, the threat of substitutes is heightened because the Internet ____________.    A.  introduces new ways to accomplish the same task B.  lowers switching costs C.  lowers barriers to entry D.  increases output per unit of cost Along with traditional marketplaces, the Internet has created a new marketplace and a new channel. In general, therefore, the threat of substitutes is heightened because the Internet introduces new ways to accomplish the same tasks.

AACSB: Analytic Blooms: Understand Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 2 Medium Topic: The Competitive Environment

84.

How do infomediaries and consumer information websites increase the intensity of competitive rivalry?    A.  by shifting customers away from issues of price B.  by making competitors in cyberspace seem less equally balanced C.  by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over D.  by highlighting unique selling advantages of a firm Some shopping infomediaries, such as CNET, not only search for the lowest prices on many different products but also rank the customer service quality of different sites that sell similarly priced items. They increase rivalry by consolidating the marketing message that consumers use to make a purchase decision into a few key pieces of information over which the selling company has little control.

AACSB: Analytic Blooms: Understand Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 2 Medium Topic: The Competitive Environment

85.

The value net is a game-theoretic approach that _____________.    A.  extends the value chain analysis B.  is a way to analyze all the players in a game and analyze how their interactions affect the ability of a firm to generate and appropriate value C.  helps us to understand the evolution of the five forces over time D.  uses network analysis to understand the relationships among different companies Based on game-theoretic considerations, Brandenburger and Nalebuff recently introduced the concept of the value net, which in many ways is an extension of the five-forces analysis. The value net represents all the players in the game and analyzes how their interactions affect a firm's ability to generate and appropriate value.

AACSB: Analytic Blooms: Understand Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 2 Medium Topic: The Competitive Environment

86.

In the value net analysis, complementors are _________________.    A.  firms that produce substitute products B.  customers who compliment the company for their good products and services C.  firms that produce products or services that have a positive impact on the value of firm products or services D.  firms that supply critical inputs to a company Complements typically are products or services that have a potential impact on the value of firm's own products or services. Those who produce complements are usually referred to as complementors. Powerful hardware is of no value to a user unless there is software that runs on it.

AACSB: Analytic Blooms: Remember Learning Objective: 02-06 How the Internet and digitally based capabilities are affecting the five competitive forces and industry profitability. Level of Difficulty: 1 Easy Topic: The Competitive Environment

87.

Strategic groups consist of ________________.    A.  a group of top executives that makes strategies for a company B.  a group of firms within an industry that follows similar strategies C.  a group of executives drawn from different companies within an industry that makes decisions on industry standards D.  a group of firms within an industry that decides to collude rather than compete with each other so that they can increase their profits Strategic groups are clusters of firms that share similar strategies. Rivalry tends to be greater among firms that are alike.

AACSB: Analytic Blooms: Remember Learning Objective: 02-07 The concept of strategic groups and their strategy and performance implications. Level of Difficulty: 1 Easy Topic: The Competitive Environment

88.

Which of the following statements about strategic groups is FALSE?    A.  Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same. B.  Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. C.  Strategic groups help chart the future directions of firm strategies. D.  Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole. In an industry analysis, two assumptions are unassailable: (1) no two firms are totally different, and (2) no two firms are exactly the same. What value is the strategic group concept as an analytical tool? First, strategic groupings help a firm identify barriers to mobility that protect a group from attacks by other groups. They also help chart the future directions of firm strategies and are helpful in thinking through the implications of each industry trend for the strategic group as a whole.

AACSB: Analytic Blooms: Understand Learning Objective: 02-07 The concept of strategic groups and their strategy and performance implications. Level of Difficulty: 2 Medium Topic: The Competitive Environment