Test you understanding of key chapter concepts by working through this quiz. You can check your answer by clicking on the arrow to the right or on what you think the correct answer is.  The correct answer will then be revealed to you for that question. 

1. What is part of a firm’s business environment?

  1. Market environment
  2. Legal frameworks
  3. Institutional structures
  4. All of the above


d. All of the above

2. Strategists refer to _______ as factors shaping ________ for the organization’s goods and services in the environments in which the organization operates.

  1. properties/demand
  2. demand drivers/demand
  3. technology drivers/goals
  4. properties/objectives


b. demand drivers/demand

3. ________ are relationships with other entities, such as competing firms or government.

  1. Competitive relationships
  2. Horizontal relationships
  3. Thorough relationships
  4. Vertical relationships


b. Horizontal relationships

4. _______ are about the management of suppliers and buyers.

  1. Vertical relationships
  2. Horizontal relationships
  3. Governmental relationships
  4. Institutional relationships


a. Vertical relationships

5. _________ takes an external perspective and is concerned with the industry within which firms operate and behave as producers, sellers and buyers of goods and services.

  1. Resource-based view
  2. Value chain
  3. Industrial organization
  4. Macro economics


c. Industrial organization

6. According to industrial organization theory, which factor does NOT influence market structure?

  1. Supply conditions
  2. Demand for a product
  3. Manufacturing base of the leading firm
  4. The degree of differentiation of products


c. Manufacturing base of the leading firm

7. ________ refers to the characteristics of the product and is the way through which firms improve the quality of their offerings over time (usually by means of innovation).

  1. Product differentiation
  2. Augmented product
  3. Core product
  4. Product development


a. Product differentiation

8. What do we call firms that invest in a variety of different product markets to reduce exposure to risk in single product markets?

  1. Investment firms
  2. Diversified firms
  3. Monopolies
  4. Oligopolies


b. Diversified firms

9. National, regional and local governments, as well as economic or political unions like the European Union (EU) or the North American Free Trade Agreement (NAFTA), often enforce regulations that can do which of the following?

  1. Guide and restrict competition
  2. Impose taxes and subsidies
  3. Regulate employment
  4. All of the above


d. All of the above

10. Michael Porter (1980, 1985) suggested that factors such as initial capital requirements, the threat of price-cutting by established firms and the level of product differentiation represent _______ for new-firm entrants into markets.

  1. barriers to entry
  2. opportunities
  3. market ideas
  4. threats


a. barriers to entry