Question

14

Which of the following does NOT decrease the threat of entry in an industry?

High switching costs

Large economies of scale

Brand loyalty

Threat of competitor retaliation

None of these

15

Which of the following is the most important reason a strategic analyst should always do an industry structure analysis when evaluating a single firm’s strategy?

Helps identify all the competitors trying to take profits from the firm.

Helps identify the ways the firm should try to change the industry structure through its strategy.

None of these.

Helps identify if it is impossible for the firm to gain a competitive advantage in the future.

Helps identify opportunities for the firm in the future

16

Which of the following best describes the halo effect?

A CEO is considered effective if he or she is very popular with shareholders.

A CEO is considered effective because they have achieved the highest position in the organization.

A CEO is considered effective because they follow the practices of other successful firms.

A CEO is considered effective if the firm is performing well.

None of these

Answer 1

14. Large economies of scale

This does not decrease the threat of new entries in the competition because even if the cost is decreased with the help of large economies of scale, there can be organizations who can actually introduce products at a lower price than existing. The other options possess factor that will help decreasing the threat to new entrants.

15. Helps identify opportunities for the firm in the future

In this case the strategy should be prepared after there is a proper study and analysis of the industry as a whole which will provide insights for understanding the strength and weakness of the organization and also the opportunities that the organization possess in this context.

16. A CEO is considered effective because they follow the practices of other successful firms.

The Halo effect is a judgement based on on a person based on information that is ambiguous and in this case a CEO is effectiveness cannot be based on the practices of other firms hence this is an example of a Halo effect.