Test Bank - Chapter 3 Marketing Management

CHAPTER 3

The External Assessment

True/False

Introduction

1. Industry analysis is also referred to as external strategic management audit.

(t; easy; p. 72)

1. 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 Audit

1. The aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.

(f; medium; p. 72)

1. External audits attempt to identify key variables that offer actionable responses.
   

(t; easy; p. 72)

1. 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)

1. As many managers and employees as possible should be involved in the process of performing an external audit.

(t; easy; p. 73)

1. 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)

1. Freund argues that key external factors must not be hierarchical.

(f; medium; p. 74)

The Industrial Organization (I/O) View

1. Research 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 Forces

1. An economic trend in America is the increasing numbers of two-income households.

(t; medium; p. 72; AACSB: Multicultural and diversity understanding)

1. Economic factors do not have much impact on the attractiveness of strategies.

(f; easy; p. 74)

1. 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)

1. 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)

1. A low value of the dollar means lower exports and higher imports.

(f; difficult; p. 75; AACSB: Multicultural and diversity understanding)

1. 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 Forces

1. The United States is getting older and less Caucasian.

(t; medium; p. 76; AACSB: Multicultural and diversity understanding)

1. 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)

1. The average age of the residents in Maine makes it one of the five youngest states.

(f; medium; p. 76)

1. The average age of the residents in Texas makes it one of the five youngest states

(t; medium; p. 76)

1. Nevada has the highest percentage of minority residents.

(t; medium; p. 76; AACSB: Multicultural and diversity understanding)

1. 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)

1. 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)

1. Population growth in Texas makes it the fastest growing state.

(f; easy; p. 77)

1. Population growth in New York makes it one of the five fastest growing states.

(f; easy; p. 77)

1. Population growth in Idaho makes it one of the five fastest growing states.

(t; easy; p. 77)

Political, Governmental and Legal Forces

1. Political, governmental, and legal factors are considered key threats for most small and large organizations.

(f; medium; p. 77)

1. Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.

(t; medium; p. 77)

1. 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)

1. 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)

1. 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 Forces

1. The 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)

1. 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 Forces

1. Pepsi Bottling is the top beverage company in the U.S.

(f; difficult; p. 82)

1. 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)

1. “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)

1. 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)