Test Bank – Chapter 3 Marketing Management
Essay Preview: Test Bank – Chapter 3 Marketing Management
Report this essay
CHAPTER 3The External AssessmentTrue/FalseIntroductionIndustry analysis is also referred to as external strategic management audit.(t; easy; p. 72)An external audit focuses on identifying and evaluating trends and events within the control of management.(f; medium; p. 72)The Nature of an External AuditThe aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.(f; medium; p. 72)External audits attempt to identify key variables that offer actionable responses.(t; easy; p. 72)Five major categories of external variables are: (1) economic forces, (2) social and cultural forces, (3) political, governmental and legal forces, (4) technological forces and (5) demographic forces.(f; difficult; p. 72; AACSB: Reflective thinking skills)As many managers and employees as possible should be involved in the process of performing an external audit.(t; easy; p. 73)To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental and technological trends.(t; medium; p. 73)Freund argues that key external factors must not be hierarchical.(f; medium; p. 74)The Industrial Organization (I/O) ViewResearch findings suggest that a greater percentage of a firm’s profitability can be explained by the industry than can be explained by the firm’s internal factors. (f; medium; p. 74; AACSB: Reflective thinking skills)Economic ForcesAn economic trend in America is the increasing numbers of two-income households.(t; medium; p. 72; AACSB: Multicultural and diversity understanding)Economic factors do not have much impact on the attractiveness of strategies.(f; easy; p. 74)An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.(f; difficult; p. 74)Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.(f; medium; p. 75; AACSB: Multicultural and diversity understanding)A low value of the dollar means lower exports and higher imports.(f; difficult; p. 75; AACSB: Multicultural and diversity understanding)
An advantage of adopting the Euro is the ability of the country to fix its own interest rate(f; difficult; p. 75; AACSB: Multicultural and diversity understanding)Social, Cultural, Demographic and Environmental ForcesThe United States is getting older and less Caucasian.(t; medium; p. 76; AACSB: Multicultural and diversity understanding)It is predicted that, by 2025, over 18% of the population in the United States will be over 65 years old.         (t; difficult; p. 76; AACSB: Multicultural and diversity understanding)The average age of the residents in Maine makes it one of the five youngest states.(f; medium; p. 76)The average age of the residents in Texas makes it one of the five youngest states(t; medium; p. 76)Nevada has the highest percentage of minority residents.(t; medium; p. 76; AACSB: Multicultural and diversity understanding)Recent consumption trends in the United States indicate that wine consumption is increasing at 5% while beer consumption is increasing at 10%.(f; medium; p. 76)In the United States, the population has been moving from the south and west to the Northeast and Midwest.(f; easy; p. 77; AACSB: Multicultural and diversity understanding)Population growth in Texas makes it the fastest growing state.(f; easy; p. 77)Population growth in New York makes it one of the five fastest growing states.(f; easy; p. 77)Population growth in Idaho makes it one of the five fastest growing states. (t; easy; p. 77)Political, Governmental and Legal ForcesPolitical, governmental, and legal factors are considered key threats for most small and large organizations. (f; medium; p. 77)Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.(t; medium; p. 77)The Business Roundtable, a group of 10 CEOs, are pressuring the government to reduce the limits on greenhouse-gas emissions.(f; medium; p. 79; AACSB: Ethical understanding and reasoning ability)The U.S. Air Force is one of the top five buyers of green power. (t; medium; p. 79; AACSB: Ethical understanding and reasoning ability)Within the European Union (EU), tax rates have been standardized to end competitive tax breaks among member countries. (f; difficult; p. 78; AACSB: Multicultural and diversity understanding)Technological ForcesThe Internet is changing the very nature of many industries by altering product life cycles and changing the historical trade-off between production standardization and flexibility.(t; medium; p. 81; AACSB: Use of information technology)In practice, critical technology decisions are too often delegated to lower organizational levels or are made without an understanding of their strategic implications.(t; medium; p. 81; AACSB: Use of information technology)Competitive ForcesPepsi Bottling is the top beverage company in the U.S.(f; difficult; p. 82)A characteristic that describes the most competitive companies in America is “whether it’s broke or not, fix it—make it better; not just products, but the whole company if necessary.”(t; medium; p. 83)“Innovate or evaporate; particularly in technology-driven businesses, nothing quite recedes like success,” is a characteristic given that describes the most competitive companies in America.(t; medium; p. 83)Corporate intelligence can be defined as a systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’s own goals. (f; difficult; p. 83; AACSB: Ethical understanding and reasoning ability)