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Question 1
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To determine its opportunities and threats, a firm should focus on internal processes and capabilities.

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Question 2
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Opportunities arise when a company can take advantage of conditions in its environment to formulate and implement strategies that allow it to become more profitable.

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Question 3
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Threats arise when conditions in the external environment endanger the integrity and profitability of a company's business.

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Question 4
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The bottled water industry created new competitors for Coca-Cola, but it did not change the basic industry boundaries.

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Question 5
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In Porter's competitive forces framework, the stronger the five forces, the ability of established companies to raise prices and earn greater profits becomes more limited.

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Question 6
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Substitute products are not a threat if a company is the market leader.

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Question 7
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Suppliers are most powerful when the products that they sell have many substitutes.

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Question 8
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Cost reductions gained through mass-producing a standardized output are a source of scale economies.

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Question 9
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The risk of entry by potential competitors is a function of the height of the barriers to entry.

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Question 10
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The more commodity-like that an industry's product is, the lower the intensity of any price war that may develop.

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Question 11
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A group of firms all make tools for baking-pots, pans, measuring cups, and utensils. This group should be referred to as a market segment.

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Question 12
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Strong brand loyalty and high customer switching costs are low barriers to entering an industry.

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Question 13
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Growing demand tends to reduce rivalry because all companies can sell more without taking market share away from each other.

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Question 14
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Government deregulation of telephone service lowered the barriers to entry and lowered industry profit rates.

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Question 15
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When buyers are in a weak bargaining position, companies in the industry must lower their prices to increase profits.

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Question 16
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Market segments are distinct groups of customers within a market that can be distinguished from each other based on their individual attributes and specific demands.

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Question 17
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Intense rivalry lowers prices and raises costs.

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Question 18
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Companies operating in high-technology industries are dependent on complementary products for their mutual success.

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Question 19
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Starbucks and an independent local café are different in terms of their business techniques. They both sell coffee, and therefore belong to the same strategic group.

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Question 20
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A company's closest competitors are those in its strategic group.

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