Quiz Over Air Frame Manufacturing Market

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Airframe Quizzes & Trivia

Questions and Answers
  • 1. 

    Which of the following is not a potential limitation of the five-forces framework?

    • A.

      It pays little attention to factors that might affect demand

    • B.

      It focuses on a whole industry rather than on individual firms that may occupy unique positions that insulate them from some competitive forces

    • C.

      The framework does not explicitly account for the role of government, except when government is a supplier or buyer

    • D.

      The framework provides a structured way to systematically work through wide-ranging and often complex issues

    • E.

      The framework is a qualitative analysis method

    Correct Answer
    D. The framework provides a structured way to systematically work through wide-ranging and often complex issues
    Explanation
    The given answer states that the five-forces framework provides a structured way to systematically work through wide-ranging and often complex issues. This means that the framework helps in organizing and analyzing various factors that may affect a business or industry. It suggests that the framework is a useful tool for understanding and evaluating competitive forces.

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  • 2. 

    Which of the following is not a part of five-forces framework?

    • A.

      Supplier Power

    • B.

      Internal rivalry

    • C.

      Regulation

    • D.

      Buyer Power

    • E.

      Substitutes and Complements

    Correct Answer
    C. Regulation
    Explanation
    The five-forces framework, developed by Michael Porter, is a tool used to analyze the competitive environment of an industry. It includes five key forces that shape the industry's profitability. These forces are supplier power, buyer power, substitutes and complements, internal rivalry, and barriers to entry. Regulation, although important in shaping the business environment, is not considered one of the five forces in Porter's framework. It is not directly related to the competitive dynamics within an industry.

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  • 3. 

    Which of the following conditions does not tend to heat up price competition?

    • A.

      Many sellers in the market

    • B.

      Products are differentiated/buyers have high switching costs

    • C.

      Some firms have excess capacity

    • D.

      The industry is stagnant or declining

    • E.

      There are large/infrequent sales orders

    Correct Answer
    B. Products are differentiated/buyers have high switching costs
    Explanation
    When products are differentiated and buyers have high switching costs, it creates a situation where customers are less likely to switch between different brands or products. This reduces the intensity of price competition as buyers are more focused on the unique features or benefits offered by a particular product rather than its price. Therefore, this condition does not tend to heat up price competition.

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  • 4. 

    In which of the following ways can entry erode incumbents' profits?

    • A.

      Entrants divide market demand among fewer sellers

    • B.

      Entrants decrease market concentration

    • C.

      Entrants usually grow the market for all parties

    • D.

      Entrants increase market concentration

    • E.

      Entrants reduce internal rivalry

    Correct Answer
    B. Entrants decrease market concentration
    Explanation
    Entrants decrease market concentration by introducing new competitors into the market. This means that there are more sellers competing for the same market demand, which can lead to a decrease in market share and profits for the incumbents. With more options available to consumers, incumbents may have to lower their prices or improve their products to remain competitive, thereby eroding their profits.

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  • 5. 

    Which of the following does not tend to affect the threat of entry?

    • A.

      Expectations about pre-entry competition

    • B.

      Government protection of incumbents

    • C.

      Consumers highly valuable reputation/consumers are brand loyal

    • D.

      Experience curve

    • E.

      Network externalities

    Correct Answer
    A. Expectations about pre-entry competition
    Explanation
    Expectations about pre-entry competition do not tend to affect the threat of entry. This means that even if there are high expectations of competition from potential entrants, it does not necessarily impact the likelihood of new firms entering the market. Factors such as government protection of incumbents, consumer loyalty, experience curve, and network externalities are more likely to influence the threat of entry.

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  • 6. 

    Which of the following factors should be considered when assessing complements and substitutes?

    • A.

      Availability of close substitutes and/or complements

    • B.

      Price-value characteristics of substitutes/complements

    • C.

      Price elasticity of industry demand

    • D.

      All of the above

    • E.

      None of the above

    Correct Answer
    D. All of the above
    Explanation
    When assessing complements and substitutes, all of the factors mentioned should be considered. The availability of close substitutes and/or complements is important as it determines the level of competition and potential alternatives for consumers. The price-value characteristics of substitutes/complements are also crucial as they influence consumer preferences and purchasing decisions. Additionally, the price elasticity of industry demand should be taken into account as it indicates the responsiveness of demand to changes in price. Therefore, all of these factors play a significant role in assessing complements and substitutes.

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  • 7. 

    Why are suppliers in a competitive upstream market said to have “indirect power”?

    • A.

      They can sell their services to the lowest bidder

    • B.

      They are always concentrated

    • C.

      Their customers are always locked into relationships with them

    • D.

      The price they charge never depends on supply and demand in the upstream market

    • E.

      The can sell their services to the highest bidder

    Correct Answer
    E. The can sell their services to the highest bidder
    Explanation
    Suppliers in a competitive upstream market are said to have "indirect power" because they have the ability to sell their services to the highest bidder. This means that suppliers have the advantage of being able to choose who they sell to based on who is willing to pay the most for their services. This gives them a certain level of control and influence in the market, as they can dictate the terms of the transaction and potentially drive up prices.

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  • 8. 

    What term refers to the ability of individual customers to negotiate purchase prices that extract profits from sellers?

    • A.

      Substitutes and Complements

    • B.

      Competitions

    • C.

      Customer power

    • D.

      Seller power

    • E.

      Buyer power

    Correct Answer
    E. Buyer power
    Explanation
    Buyer power refers to the ability of individual customers to negotiate purchase prices that extract profits from sellers. This means that buyers have the leverage to demand lower prices or better terms from sellers, which can reduce the seller's profit margin. This power is often influenced by factors such as the availability of alternative suppliers, the size and importance of the buyer, and the competitiveness of the market.

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  • 9. 

    Which of the following factors requires the least consideration when assessing supplier power relative to the downstream industry it sells to?

    • A.

      Competitiveness of the output market

    • B.

      Purchase volume of downstream firms

    • C.

      Availability of substitute inputs

    • D.

      Threat of forward integration by suppliers

    • E.

      Ability of suppliers to price discriminate

    Correct Answer
    A. Competitiveness of the output market
    Explanation
    The competitiveness of the output market requires the least consideration when assessing supplier power relative to the downstream industry it sells to. This means that the level of competition among the buyers in the market where the supplier sells its products or services is not a significant factor in determining the supplier's power. Other factors such as the purchase volume of downstream firms, availability of substitute inputs, threat of forward integration by suppliers, and ability of suppliers to price discriminate are more important in assessing supplier power.

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  • 10. 

    What concept developed by Brandenburger and Nalebuff as a counterpart to Porters' five-forces consists of suppliers, customers, competitors and complementors?

    • A.

      McKinsey 7-S Framework

    • B.

      Value net

    • C.

      BCG Market Share Matrix

    • D.

      6 C's of Marketing

    • E.

      4 P's of Marketing

    Correct Answer
    B. Value net
    Explanation
    The concept developed by Brandenburger and Nalebuff as a counterpart to Porter's five-forces is called the Value Net. This concept considers not only suppliers, customers, and competitors but also complementors. Complementors are companies that provide complementary products or services that enhance the value of the main product or service. The Value Net framework helps analyze and understand the interdependencies and relationships among these four key players in a market.

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  • 11. 

    Which of the following is not a factor that could intensify internal rivalry in the Chicago hospital market?

    • A.

      Relatively large number of hospitals

    • B.

      Considerable variation in production costs

    • C.

      Relatively small number of doctors

    • D.

      Excess capacity

    • E.

      Aging baby boomers increasing demand for admissions

    Correct Answer
    C. Relatively small number of doctors
    Explanation
    A relatively small number of doctors would not intensify internal rivalry in the Chicago hospital market because it would mean there is less competition among doctors for patients. With fewer doctors, each doctor would have a larger patient pool, reducing the need for aggressive competition. This factor would actually decrease internal rivalry rather than intensify it.

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  • 12. 

    Which of the following is not a feature of selective contracting (used by Managed Care Organizations) that intensified internal rivalry?

    • A.

      Had infrequent (contract lengths of two to three years) and lumpy (one insurer may have represented over 5% of a hospital's business) sales

    • B.

      Treated all hospitals as identical

    • C.

      Kept price negotiations between insurers and hospitals secret, encouraging hospitals to lower prices to win contracts

    • D.

      Contracted with hospitals that patients were most loyal to

    • E.

      Created pressure for hospitals to win each individual contract with no thought of future consequences

    Correct Answer
    D. Contracted with hospitals that patients were most loyal to
    Explanation
    Selective contracting, used by Managed Care Organizations, intensifies internal rivalry by creating pressure for hospitals to win each individual contract with no thought of future consequences. This feature does not include contracting with hospitals that patients were most loyal to, as this would not necessarily create internal rivalry among hospitals.

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  • 13. 

    Which of the following trends or methods has since helped reduce the pricing rivalry that had intensified by the late 1990s?

    • A.

      Patients began accepting MCOs with “narrow networks” and MCOs had the upper hand in negotiating with hospitals for inclusion in networks

    • B.

      Hospitals removed brand identities

    • C.

      Hospitals dropped “centers of excellence” from their hospitals

    • D.

      Hospitals consolidating away from related products

    • E.

      Hospitals consolidated (conducted mergers)

    Correct Answer
    E. Hospitals consolidated (conducted mergers)
    Explanation
    Hospitals consolidated (conducted mergers) is the correct answer because when hospitals merge or consolidate, it reduces competition in the market. This consolidation helps to reduce pricing rivalry as it leads to fewer hospitals in the market, giving them more negotiating power with insurance companies and reducing the need for intense price competition.

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  • 14. 

    What type of entrant would be described as a new entrant with no current brand identity, distribution channels or presence within an industry?

    • A.

      Fast follower

    • B.

      Passive

    • C.

      Aggressive

    • D.

      Innovative

    • E.

      De novo

    Correct Answer
    E. De novo
    Explanation
    A de novo entrant refers to a new player in the industry who has no existing brand identity, distribution channels, or presence. They are starting from scratch and have to establish themselves in the market. This term is commonly used in the legal and financial sectors to describe a new bank or a new law firm, for example.

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  • 15. 

    Which of the following is generally thought of as a buyer in the hospital industry?

    • A.

      Pharmaceutical drug houses

    • B.

      Medical equipment companies

    • C.

      Technician

    • D.

      Patients

    • E.

      Nurse

    Correct Answer
    D. Patients
    Explanation
    Patients are generally thought of as buyers in the hospital industry because they are the ones who receive and pay for the healthcare services provided by hospitals. They have the power to make decisions about their treatment options and choose which hospital or healthcare provider to go to. Patients also have the ability to influence the demand for certain healthcare services and products, making them an important stakeholder in the hospital industry.

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  • 16. 

    Which of the following is generally thought of as a supplier in the hospital industry?

    • A.

      Medicaid

    • B.

      Admitting physicians

    • C.

      Hospital-based physician

    • D.

      Patients

    • E.

      Medicare

    Correct Answer
    C. Hospital-based physician
    Explanation
    Hospital-based physicians are generally thought of as suppliers in the hospital industry. These physicians work within the hospital setting and provide medical services to patients who are admitted to the hospital. They play a crucial role in diagnosing and treating patients, collaborating with other healthcare professionals, and ensuring the overall quality of patient care. Their services are billed separately from the hospital's services and are often reimbursed by insurance companies or government programs like Medicare.

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  • 17. 

    Which of the following is a trend that Chicago area hospitals should least likely be worried about with respect to pricing?

    • A.

      The FTC recently won an antitrust case that forced the members of the Evanston Northwestern Healthcare system to negotiate independently with insurers

    • B.

      There has been considerable consolidation (hospital mergers) in regional submarkets, including the city of Chicago and the important North Shore suburbs

    • C.

      Employers are asking employees to bear more of their own health care costs. At the same time some employers are reconsidering the decision to opt for wide, but costly MCO networks

    • D.

      If regulatory barriers fall, entry by specialty hospitals in wealthier communities could skim off some of the areas’ most profitable patients

    • E.

      Employers, payers, regulators and patients are demanding and getting more information about hospital quality

    Correct Answer
    B. There has been considerable consolidation (hospital mergers) in regional submarkets, including the city of Chicago and the important North Shore suburbs
    Explanation
    The trend of hospital mergers and consolidation in the Chicago area is least likely to be a concern for pricing because it can lead to increased efficiency and cost savings. When hospitals merge, they can streamline operations, eliminate redundancies, and negotiate better contracts with suppliers, which can help reduce costs. Additionally, larger hospital systems may have more bargaining power with insurers, allowing them to negotiate better reimbursement rates. Therefore, this trend is unlikely to negatively impact pricing for Chicago area hospitals.

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  • 18. 

    How did European governments help Airbus aggressively pursue a 50% market share in its early years of operation?

    • A.

      Subsidies

    • B.

      High-interest loans

    • C.

      Helping to ensure scope economies from military aircraft division

    • D.

      Paying in excess of cost for military aircraft

    • E.

      Guaranteeing a set level of annual aircraft purchases

    Correct Answer
    A. Subsidies
    Explanation
    European governments helped Airbus aggressively pursue a 50% market share in its early years of operation by providing subsidies. These subsidies would have provided financial support and incentives to Airbus, allowing them to lower their costs and offer competitive prices in the market. This would have given Airbus an advantage over its competitors and helped them to gain a larger market share.

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  • 19. 

    Which of the following is not a significant entry barrier in the commercial airframe manufacturing market?

    • A.

      High development costs

    • B.

      Learning curve in production

    • C.

      Raw materials and labor

    • D.

      Airlines prefer to purchase from the same manufacturer

    • E.

      Airlines are reluctant to purchase from startups

    Correct Answer
    C. Raw materials and labor
    Explanation
    Raw materials and labor are not significant entry barriers in the commercial airframe manufacturing market because they are readily available and can be sourced from various suppliers. High development costs, learning curve in production, airlines preferring to purchase from the same manufacturer, and airlines being reluctant to purchase from startups are all significant barriers that can limit new entrants in the market.

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  • 20. 

    Which of the following is the most likely substitute for commercial aircraft travel between Chicago and Tokyo?

    • A.

      Bicycle

    • B.

      Teleconferencing

    • C.

      Automobile

    • D.

      Commuter train

    • E.

      Walking

    Correct Answer
    B. Teleconferencing
    Explanation
    Teleconferencing is the most likely substitute for commercial aircraft travel between Chicago and Tokyo because it allows for virtual meetings and communication without the need for physical travel. This technology enables individuals from different locations to connect and interact in real-time, making it a convenient and efficient alternative to air travel for business meetings and collaborations. Additionally, teleconferencing reduces costs, saves time, and minimizes environmental impact by eliminating the need for long-distance flights.

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  • 21. 

    What entity as a supplier has the most substantial power over manufacturers in the commercial aircraft market?

    • A.

      Raw materials suppliers

    • B.

      Airlines

    • C.

      Aircraft leasing companies

    • D.

      Unions

    • E.

      Passengers

    Correct Answer
    D. Unions
    Explanation
    Unions have the most substantial power over manufacturers in the commercial aircraft market. Unions represent the collective interests of the workers and have the ability to negotiate for better wages, working conditions, and benefits. They can also organize strikes or other forms of industrial action, which can disrupt the manufacturing process and impact the profitability of manufacturers. Therefore, unions have significant leverage over manufacturers and can exert considerable power in shaping labor policies and practices in the commercial aircraft industry.

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  • 22. 

    Which of the following is not a way teams "collude" within professional sports markets?

    • A.

      Agreeing on ticket prices

    • B.

      Agreeing on rules and schedules

    • C.

      Employing the same pool of referees

    • D.

      Sharing national broadcast revenues

    • E.

      Agreeing on rookie drafts

    Correct Answer
    A. Agreeing on ticket prices
    Explanation
    Teams colluding on ticket prices would involve them agreeing to set prices at a certain level, which would eliminate competition and allow them to maximize their profits. This would be considered illegal and anti-competitive behavior, as it would restrict consumer choice and potentially lead to higher prices for fans. Therefore, agreeing on ticket prices is not a way teams collude within professional sports markets.

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  • 23. 

    Which of the following is not a barrier to entry in professional sports markets?

    • A.

      Each league has rules governing the addition of new franchises

    • B.

      Potential new owners must pay current owners hundreds of millions of dollars

    • C.

      Most potential owners must offer to build new stadiums

    • D.

      Incumbent teams have rights to veto franchises in their own geographic markets

    • E.

      Because the number of potential billionaire owners has risen dramatically, the purchase prices have dropped

    Correct Answer
    E. Because the number of potential billionaire owners has risen dramatically, the purchase prices have dropped
    Explanation
    The given answer states that the rise in the number of potential billionaire owners has led to a decrease in purchase prices. This suggests that the availability of wealthy individuals who can afford to purchase professional sports franchises has increased, making it easier for new owners to enter the market. This does not act as a barrier to entry but rather facilitates it.

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  • 24. 

    What professional sports complement poses the biggest dilemma?

    • A.

      Cheerleaders

    • B.

      Mascots

    • C.

      Gambling

    • D.

      Television

    • E.

      Radio

    Correct Answer
    C. Gambling
    Explanation
    Gambling poses the biggest dilemma in professional sports as it raises ethical concerns and can lead to various issues such as match-fixing, corruption, and addiction. It creates a conflict of interest for players and officials, compromising the integrity of the game. Additionally, it can have negative social consequences, including financial ruin for individuals and families. The influence of gambling on sports can undermine fair competition and tarnish the reputation of the industry.

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  • 25. 

    Who are the most powerful suppliers in professional sports?

    • A.

      Players unions

    • B.

      Referees

    • C.

      Owners

    • D.

      Politicians

    • E.

      Cities

    Correct Answer
    A. Players unions
    Explanation
    Players unions are considered the most powerful suppliers in professional sports because they represent the collective interests of the players and negotiate on their behalf with team owners and league management. Through collective bargaining agreements, players unions secure rights and benefits for athletes, such as fair wages, working conditions, and health and safety standards. They have the ability to organize strikes or lockouts, which can significantly impact the operations and financial success of professional sports leagues. Players unions hold considerable influence and play a crucial role in shaping the landscape of professional sports.

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 17, 2012
    Quiz Created by
    Orsay
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