21) Which of the following is one of the five competitive forces proposed by Porter?
A) employee productivity
B) threat of substitutes
C) market volatility
D) governmental influence
22) Durodoll is a leading manufacturer of decorative crafts in Canada. Which of the following, if true, will indicate that the threat of new entrants is high for Durodoll?
A) Durodoll has a patent for its manufacturing process.
B) The crafts that Durodoll manufactures are low-priced commodities.
C) The process of manufacturing the crafts is labor intensive.
D) The decorative goods’ industry is capital intensive.
23) Facebook, the world’s most visited Web site as of June 2011, has millions of users. The large membership base of Facebook would mean that a user is likely to find most of his friends when he logs in to Facebook. Lack of this competence prevents new players from penetrating Facebook’s market. This is an example of ________.
A) monopolistic competition
B) internal marketing
C) network effects
D) guerilla marketing
24) Network effects refer to the ________.
A) increased value of a product or service resulting simply because there are more people using it
B) process of selling a product or service through well established networks and consumer chains
C) value obtained from providing fine services to a complex product or service
D) increased value attached with a product or service that can be used for networking purposes
25) Which of the following is the best example of an attempt to create network effects?
A) An Internet service provider gives free access to social networking sites.
B) A retailer gives volume discounts on large purchases.
C) A kitchenware manufacturer introduces a differentiated range of products.
D) AT&T introduces a family plan that provides free calls within the family.
26) ________ are the costs that customers incur when they change suppliers.
A) Network costs
B) Switching costs
C) Capital expenditures
D) Opportunity costs
27) Which of the following strategies is devised to raise switching costs?
A) A major supermarket issues loyalty cards to its customers.
B) A vendor offers short-term incentives to retailers for stocking a product.
C) An automotive company conducts a trade contest.
D) A company offers commission to its employees for pushing the company’s products.
28) Which of the following industries has the highest switching cost?
A) packaged food
B) textile
C) software
D) food and beverage
29) Which of the following companies will have the highest buying power?
A) a company that sells agricultural products procured from numerous farmers
B) a firm that is an exclusive dealer for an automotive company
C) a bank that borrows from the Federal Reserve
D) a company that procures IT services from a large software company
30) ABC Company supplies milk to retail customers in the U.S. There are many sellers offering milk and price is a major determinant of market success. Which of the following predictions about ABC Company is most likely to be true?
A) It will have strong control over its suppliers.
B) It will be in a position to dictate terms with the buyers.
C) It will have to face powerful buyers.
D) It will have strong control over the market.
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