Question 1

The entry barriers are high and the threat of entry is low in each of the following instances except when

Options :

A : capital requirements are high.

B : companies have large cost advantages over potential entrants due to high economies of scale.

C : patents or other forms of intellectual properties are in place.

D : customers do not have strong brand preferences or loyalty.

Answer: D

Question 2

According to Michael Porter, a company’s competitive advantage is the

Options :

A : product feature that allows it to charge higher prices than its rivals.

B : activity within the value chain that does better than other activities.

C : activity within the value chain that the company performs better than its rivals.

D : combination of differentiated activities that contribute to superior profitability.

Answer: D

Question 3

ABC is a well-established clothing designer and retailer, catering mainly for the over 60s market. ABC is carrying out a corporate appraisal and some of the findings are shown below. Which following findings to the SWOT heading they would most likely fall under are correct?.

Options :

A : Strengths: Good designs

B : Weaknesses: A lack of in-house IT expertise -

C : Strengths: A large cash balance.

D : Threat: Customer resistance to on-line shopping

E : Opportunity: A respected and entrepreneurial leader

Answer: A,B,C,D

Question 4

Which of the following are possible disadvantages of a joint venture arrangement?(i) There may be disagreements between the venture partners over management and marketing strategy.

(ii) Profits have to be shared among the venture partners.

(iii) Confidential information about the partners could get shared between them.

Options :

A : (i) and (iii) only

B : (i), (ii) and (iii)

C : (i) and (ii) only

D : (ii) and (iii) only

Answer: B

Question 5

A software application development company sells its products to a laptop manufacturing company. The combined products better satisfy customer demands. The software development company is an example of a

Options :

A : new entry.

B : substitutor.

C : competitor.

D : complementor.

Answer: D

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